EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 1 - ------------------------------------------------------------------------------------------------------------------------------------ CONSOLIDATED SELECTED FINANCIAL DATA YEAR ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------------------ SUMMARY OF OPERATIONS Total interest income .................. $ 1,219,721 $ 1,236,311 $ 1,202,286 $ 1,208,407 $ 1,266,770 $ 1,177,754 Total interest expense ................. 463,671 440,111 504,846 659,918 780,759 730,386 Net interest income .................... 756,050 796,200 697,440 548,489 486,011 447,368 Securities gains ....................... 2,594 27,189 36,332 16,951 579 302 Provision for loan losses .............. 15,284 79,294 81,562 62,061 76,434 43,739 Net income ............................. 242,593 236,912 161,046 133,940 99,765 122,829 PER COMMON SHARE(1) Net income ............................. 1.87 1.85 1.27 1.06 .79 1.02 Cash dividends declared ................ .72 .60 .50 .46 .41 .35 Book value at year end ................. 10.84 10.21 8.87 8.10 7.43 7.06 BALANCE SHEET HIGHLIGHTS Total assets at year-end ............... 17,770,640 17,618,707 16,246,526 14,500,477 13,671,182 13,353,001 Total long-term debt at year-end ....... 1,214,052 762,310 478,872 261,168 206,578 209,808 Average long-term debt ................... 927,797 640,976 299,905 218,645 200,939 206,356 Average shareholders' equity ............. 1,403,314 1,216,470 1,074,159 977,073 917,474 815,270 Average total assets ..................... $16,749,850 $16,850,719 $15,165,151 $13,612,543 $13,489,939 $12,247,488

- ------------------------------------------------------------------------------------------------------------------------------------ KEY RATIOS AND STATISTICS 1994 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------------------ MARGIN ANALYSIS - AS A % OF AVERAGE EARNING ASSETS(2) Interest income ........................ 7.97% 8.03% 8.75% 9.85% 10.51% 10.85% Interest expense ....................... 3.01 2.83 3.63 5.30 6.37 6.59 ----- ----- ----- ----- ----- ----- Net interest margin ...................... 4.96% 5.20% 5.12% 4.55% 4.14% 4.26% ===== ===== ===== ===== ===== ===== RETURN ON Average total assets ................... 1.45% 1.41% 1.06% .98% .74% 1.00% Average earning assets ................. 1.57% 1.53% 1.16% 1.08% .81% 1.11% Average shareholders' equity ........... 17.29% 19.48% 14.99% 13.71% 10.87% 15.07% Dividend payout ratio .................... 38.50% 32.47% 38.99% 42.86% 51.52% 34.65% Average shareholders' equity to average total assets ................... 8.38% 7.22% 7.08% 7.18% 6.80% 6.66% Tier I risk-based capital ratio .......... 9.55% 9.60% 9.39% 9.07% 8.68% 8.69% Total risk-based capital ratio ........... 13.57% 14.02% 12.56% 11.27% 11.19% 11.16% Tier I leverage ratio .................... 7.99% 7.03% 6.72% 7.00% 6.54% 6.34%

- ------------------------------------------------------------------------------------------------------------------------------------ OTHER DATA 1994 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------------------ Full-time equivalent employees 8,152 8,395 8,039 7,562 7,074 6,884 Banking and thrift offices 344 352 346 334 318 304

(1) Restated for the five-for-four stock split distributed in July 1994. (2) Presented on a fully tax equivalent basis assuming a 35% tax rate in 1994 and 1993 and a 34% tax rate in years 1989 through 1992. 18 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OVERVIEW Huntington reported net income of $242.6 million in 1994, compared with $236.9 million and $161.0 million in 1993 and 1992, respectively. On a per share basis, net income increased to $1.87 in 1994, up from $1.85 and $1.27 in the preceding two years. Huntington's earnings were stronger in the first half of 1994 than in the final six months. Although earnings were higher in 1994, adverse changes in market conditions such as rising interest rates caused compression in the margin and reduced fee-based income from mortgage banking activities and investment management and sales, particularly in the last half of the year. Per share amounts for all prior periods have been restated to reflect the five-for-four stock split distributed to shareholders in July 1994. Huntington's returns on average assets (ROA) and average equity (ROE) during 1994 were 1.45% and 17.29%, respectively, which compare favorably with industry averages and the performance of its peer group. In the prior two years, ROA was 1.41% and 1.06%, and ROE was 19.48% and 14.99%. Total assets were $17.8 billion at December 31, 1994, representing a slight increase from December 31 of last year. The most significant growth in the balance sheet has been in the area of loans, particularly in the consumer component of the portfolio, which is indicative of Huntington's continued penetration into new and existing markets and a general improvement in economic conditions. Average total loans of $11.5 billion for the year ended December 31, 1994, increased 13.7% from the average balance of $10.1 billion reported for 1993. Conversely, mortgages held for sale dropped significantly from an average balance of $827 million in 1993 to $367 million in the year just ended. This resulted as a rapid rise in interest rates precipitated a substantial curtailment of residential loan originations. The average balance of securities

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 2 - ------------------------------------------------------------------------------------------------------------------------------------ CHANGES IN EARNINGS PER SHARE(1) 1994/1993 1993/1992 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per share for 1993 and 1992, respectively ................................... $ 1.85 $ 1.27 Increase (decrease) attributable to: Net interest income .................................................................. (.31) .77 Provision for loan losses ............................................................ .49 .01 Mortgage banking income .............................................................. (.38) .28 Service charges on deposit accounts .................................................. .03 .07 Securities transactions .............................................................. (.19) (.07) Other income ......................................................................... (.01) .16 Salaries ............................................................................. -- (.15) Commissions .......................................................................... .08 (.02) Employee benefits .................................................................... (.02) (.06) Provision for other real estate ...................................................... .05 .40 Other expense ........................................................................ .28 (.36) Income taxes ......................................................................... .02 (.43) Additional shares outstanding ........................................................ (.02) (.02) ------ ------ Net change ..................................................................... .02 .58 ------ ------ Net income per share for 1994 and 1993, respectively ................................... $ 1.87 $ 1.85 ====== ======

(1) Restated for the five-for-four stock split distributed in July 1994.

- ------------------------------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1994 1993 1992 ----------------- ------------------ ------------------- CONTRI- % OF CONTRI- % OF CONTRI- % OF (IN MILLIONS) BUTION TOTAL BUTION TOTAL BUTION TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ BANKING SUBSIDIARIES NET INCOME: Ohio ............................................... $179.1 73.8% $162.1 68.4% $ 99.6 61.9% West Virginia ...................................... 34.0 14.0 33.1 14.0 26.4 16.4 Michigan ........................................... 27.5 11.3 23.2 9.8 20.0 12.4 Indiana ............................................ 14.2 5.9 7.4 3.1 10.1 6.3 Kentucky ........................................... 6.7 2.8 5.9 2.5 5.1 3.2 Florida ............................................ 2.9 1.2 3.3 1.4 1.3 .8 ------ ----- ------ ----- ------ ----- Total Banking Subsidiaries ................... 264.4 109.0 235.0 99.2 162.5 101.0 NON-BANKING SUBSIDIARIES NET INCOME(LOSS) Huntington Mortgage Company ........................ (11.2) (4.6) 15.0 6.3 10.5 6.5 Trust Services ..................................... 4.0 1.6 3.2 1.4 2.1 1.3 Other Non-banking .................................. 1.7 .7 .8 .3 2.3 1.4 Parent Company, debt service, and other supporting operations ............................ (16.3) (6.7) (17.1) (7.2) (16.4) (10.2) ------ ----- ------ ----- ------ ----- NET INCOME ........................................... $242.6 100.0% $236.9 100.0% $161.0 100.0% ====== ===== ====== ===== ====== =====

19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- available for sale also declined in 1994, as management repositioned the balance sheet during the first half of the year to reduce the portfolio's exposure to rising rates. The timing of this repositioning was such that Huntington was able to achieve a lower level of interest rate risk without incurring significant losses from securities sales. Total deposits have declined slightly from the prior year amount, in large part because of an expected decrease in time deposits of $100,000 or more and foreign time deposits, as well as a lower amount of funds held in escrow in connection with Huntington's mortgage banking activities. The decline in large domestic and foreign time deposits reflects management's decision to utilize alternative sources to raise national market liabilities. In doing so, Huntington was able to reduce its FDIC insurance premiums without impeding balance sheet liquidity. As more fully discussed in the liquidity section, Huntington's core deposit base has been its most significant source of funding. Management recognizes the continued importance of core deposits and anticipates that they will remain the primary source of funding in the future. Shareholders' equity was $1.4 billion at December 31, 1994, an increase of 6.6% from one year ago. Huntington's regulatory capital ratios, including those of its banking and thrift subsidiaries, show continued strength and exceed the minimum levels established for well-capitalized institutions. In addition, Huntington and its subsidiaries meet all other requirements to be considered well-capitalized. UNIT PROFITABILITY Net income at all of Huntington's banking and thrift subsidiaries increased during each of the past two years, with the exception of its Indiana operations which reported a decrease from 1992 to 1993 as a result of certain nonrecurring acquisition costs, and its Florida location which reported lower net income in the most recent year principally because of a lower contribution from its mortgage banking activities. In terms of the non-banking results over these same periods, The Huntington Mortgage Company reported a net loss of $11.2 million during 1994, compared with net income of $15.0 million and $10.5 million, respectively, in the two preceding years. Huntington's mortgage banking activities are more fully discussed in the sections which follow. RESULTS OF OPERATIONS NET INTEREST INCOME Huntington reported net interest income of $756.1 million in 1994, compared

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 3 - ------------------------------------------------------------------------------------------------------------------------------------ CHANGE IN NET INTEREST INCOME DUE TO CHANGES IN AVERAGE VOLUME AND INTEREST RATES(1) - ------------------------------------------------------------------------------------------------------------------------------------ FULLY TAX EQUIVALENT BASIS(2) 1994 1993 ---------------------------------- ---------------------------------- (IN MILLIONS OF DOLLARS) INCREASE (DECREASE) INCREASE (DECREASE) FROM PREVIOUS FROM PREVIOUS YEAR DUE TO: YEAR DUE TO: ---------------------------------- ---------------------------------- VOLUME YIELD/RATE TOTAL VOLUME YIELD/RATE TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ Interest bearing deposits in banks ................... $ (1.3) $ .4 $ (.9) $ (2.7) $ (.2) $ (2.9) Trading account securities ........................... .2 .2 .4 (.6) (.1) (.7) Federal funds sold and securities purchased under resale agreements ................... 1.5 .9 2.4 (1.7) (.6) (2.3) Mortgages held for sale .............................. (32.5) (1.8) (34.3) 11.0 (5.9) 5.1 Taxable securities ................................... (69.9) 13.7 (56.2) 39.4 (29.4) 10.0 Tax-exempt securities ................................ (7.6) (1.0) (8.6) (7.9) 5.3 (2.6) Total loans .......................................... 119.1 (40.7) 78.4 90.4 (66.1) 24.3 ------ ------ ------ ------ ------ ------ TOTAL EARNING ASSETS ............................ 9.5 (28.3) (18.8) 127.9 (97.0) 30.9 ------ ------ ------ ------ ------ ------ Interest bearing demand deposits ..................... 1.2 (5.0) (3.8) 4.3 (17.1) (12.8) Savings deposits ..................................... 1.3 (9.8) (8.5) 14.4 (21.0) (6.6) Certificates of deposit of $100,000 or more ................................... (9.1) 3.6 (5.5) (16.9) (8.7) (25.6) Other domestic time deposits ......................... (2.1) (.1) (2.2) (23.3) (33.2) (56.5) Foreign time deposits ................................ (6.5) 3.6 (2.9) 10.0 (.7) 9.3 Short-term borrowings ................................ (6.5) 23.8 17.3 24.8 (8.3) 16.5 Long-term debt ....................................... 17.6 11.6 29.2 19.1 (8.1) 11.0 ------ ------ ------ ------ ------ ------ TOTAL INTEREST BEARING LIABILITIES .............. (4.1) 27.7 23.6 32.4 (97.1) (64.7) ------ ------ ------ ------ ------ ------ NET INTEREST INCOME ............................. $ 13.6 $(56.0) $(42.4) $ 95.5 $ .1 $ 95.6 ====== ====== ====== ====== ====== ======

(1) The change in interest due to both rate and volume has been allocated between the factors in proportion to the relationship of the absolute dollar amounts of the change in each. (2) Calculated assuming a 35% tax rate. 20 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 4 - ------------------------------------------------------------------------------------------------------------------------------------ SUMMARY OF ALLOWANCE FOR LOAN LOSSES AND SELECTED STATISTICS - ------------------------------------------------------------------------------------------------------------------------------------ (in thousands of dollars) 1994 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------------------ ALLOWANCE FOR LOAN LOSSES, BEGINNING OF YEAR ..... $ 211,835 $ 153,654 $ 134,770 $ 123,622 $ 91,039 $ 79,110 Loan losses Commercial ..................................... (10,404) (20,289) (26,634) (26,610) (17,524) (13,180) Real estate Construction ................................. (5,957) (422) (14,001) (34) (850) (4,077) Mortgage ..................................... (5,428) (2,060) (6,665) (6,859) (8,115) (1,825) Consumer ....................................... (23,356) (21,492) (25,621) (28,773) (26,276) (23,585) Lease financing ................................ (977) (1,329) (2,734) (1,338) (1,255) (1,048) ---------- ---------- ---------- ---------- ---------- ---------- Total loan losses .............................. (46,122) (45,592) (75,655) (63,614) (54,020) (43,715) ---------- ---------- ---------- ---------- ---------- ---------- RECOVERIES OF LOANS PREVIOUSLY CHARGED OFF Commercial ..................................... 7,724 3,564 3,607 2,589 3,527 4,235 Real estate Construction ................................. 1 1 -- 400 -- -- Mortgage ..................................... 506 352 120 736 179 155 Consumer ....................................... 9,503 9,058 8,313 6,781 6,229 5,166 Lease financing ................................ 368 263 424 230 197 214 ---------- ---------- ---------- ---------- ---------- ---------- Total recoveries of loans previously charged off 18,102 13,238 12,464 10,736 10,132 9,770 ---------- ---------- ---------- ---------- ---------- ---------- NET LOAN LOSSES .................................. (28,020) (32,354) (63,191) (52,878) (43,888) (33,945) ---------- ---------- ---------- ---------- ---------- ---------- PROVISION FOR LOAN LOSSES ........................ 15,284 79,294 81,562 62,061 76,434 43,739 ALLOWANCE OF ASSETS ACQUIRED ..................... 1,393 11,241 513 1,965 37 2,135 ---------- ---------- ---------- ---------- ---------- ---------- ALLOWANCE FOR LOAN LOSSES, END OF YEAR ........... $ 200,492 $ 211,835 $ 153,654 $ 134,770 $ 123,622 $ 91,039 ========== ========== ========== ========== ========== ========== AS A % OF AVERAGE TOTAL LOANS Net loan losses ................................ .24% .32% .69% .61% .52% .44% Provision for loan losses ...................... .13% .78% .89% .72% .91% .57% Allowance for loan losses as a % of total loans (end of period) ................. 1.63% 1.93% 1.61% 1.52% 1.42% 1.12% Net loan loss coverage (1) ....................... 13.62x 13.69x 4.98x 4.77x 4.82x 6.08x

(1) Income before income taxes and the provision for loan losses to net loan losses. - -------------------------------------------------------------------------------- with $796.2 million and $697.4 million, respectively, in 1993 and 1992. The net interest margin, on a fully tax equivalent basis, was 4.96% during the most recent twelve months, a decrease from 5.20% in 1993 and 5.12% in 1992. Rising interest rates put downward pressure on the net interest margin and further compression is expected in 1995. The drop in 1994 reflects the impact of the increase in short-term interest rates (e.g. a 250 basis point increase occurred in the federal funds rate) which increased Huntington's funding costs more rapidly than its yields on earning assets. The lower margin and reduced level of net interest income also were due to the decrease in mortgages held for sale, competitive pricing pressures on new loans, and actions taken to reposition the balance sheet to reduce Huntington's exposure to increases in interest rates. The competitive pressures on loan pricing existed throughout the entire portfolio and were particularly evident in terms of indirect automobile lending, a significant component of Huntington's consumer business. PROVISION AND ALLOWANCE FOR LOAN LOSSES The provision for loan losses was $15.3 million in 1994, $79.3 million in 1993 and $81.6 million in 1992. The decrease from prior years is directly related to a significant improvement in credit quality, as total nonperforming loans decreased $32.7 million, or 42.4%, over the last twelve months. Moreover, Huntington's net charge-offs decreased 13.4% from 1993, a significant achievement given the loan growth during 1994 and the sharp drop in net charge-offs from 1992 to 1993 of $30.8 million, or 48.8%. The allowance for loan losses (ALL) is maintained at a level considered appropriate by management, based on its estimate of losses inherent in the loan portfolio. The procedures employed by Huntington in evaluating the adequacy of the ALL include an analysis of specific credits which 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 5 - ------------------------------------------------------------------------------------------------------------------------------------ ALLOCATION OF ALLOWANCE FOR LOAN LOSSES - ------------------------------------------------------------------------------------------------------------------------------------ 1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF LOANS TO LOANS TO LOANS TO LOANS TO LOANS TO TOTAL TOTAL TOTAL TOTAL TOTAL AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS - ------------------------------------------------------------------------------------------------------------------------------------ Commercial ........... $ 31,682 29.3% $ 33,156 31.4% $ 51,764 32.8% $ 55,778 32.4% $ 48,309 35.2% Tax-free ............. -- .5 -- .7 47 .7 10 .9 15 1.0 Real estate Construction ....... 908 2.5 1,636 3.1 1,329 4.0 6,672 4.9 19,046 5.8 Mortgage ........... 16,677 24.5 18,008 24.5 12,274 23.7 10,545 23.6 7,833 20.8 Consumer ............. 28,672 37.9 24,901 35.9 23,604 34.9 23,836 34.6 22,407 33.5 Lease financing ...... 2,972 5.3 2,107 4.4 1,943 3.9 1,565 3.6 1,381 3.7 Unallocated .......... 119,581 -- 132,027 -- 62,693 -- 36,364 -- 24,631 -- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- Total ........ $200,492 100.0% $211,835 100.0% $153,654 100.0% $134,770 100.0% $123,622 100.0% ======== ===== ======== ===== ======== ===== ======== ===== ======== ===== - ------------------------------------------------------------------------------------------------------------------------------------

are generally selected for review on the basis of size and relative risk, portfolio trends, current and historical loss experience, prevailing economic conditions and other relevant factors. For analytical purposes, the ALL has been allocated to various portfolio segments. However, the total ALL is available to absorb losses from any segment of the portfolio. The methods used by Huntington to allocate the ALL are also subject to change and accordingly, the December 31, 1994 allocation is not necessarily indicative of the trend of future loan losses in any particular loan category. At year end 1994, the ALL of $200.5 million represented 1.63% of total loans, compared with ratios of 1.93% and 1.61%, respectively, at December 31, 1993 and 1992. Huntington believes this decrease from one year ago is appropriate based on the trend in nonperforming loans, as evidenced by the coverage ratio improving from 274.4% at the end of last year to 450.8% as of December 31, 1994. Additional information regarding the ALL and asset quality appears in the section "CREDIT RISK". NON-INTEREST INCOME Non-interest income totaled $235.4 million in 1994, down from $305.8 million in 1993, and $250.1 million in 1992. Excluding securities transactions, the respective amounts were $232.8 million, $278.6 million, and $213.8 million. A significant downturn in mortgage banking operations was the predominant reason for the decrease in fee-based income from prior years. In 1993, mortgage loan originations increased substantially in response to mortgage interest rates which had reached their lowest level in several years. This trend began to level off at the beginning of 1994, and Huntington's mortgage loan production decreased dramatically throughout the year from a total volume of $6.1 billion in 1993 to $2.2 billion in 1994. Moreover, the decline in residential mortgage loan production, coupled with sales of servicing rights, resulted in a decline in the volume of mortgage loans serviced by Huntington from $9.6 billion, including loans subject to temporary subservicing agreements of $2.6 billion, to $5.4 billion at year end 1994. Given the current market conditions, and Huntington's outlook for mortgage interest rates in the coming months, this trend of decreasing fees from mortgage loan originations and other mortgage banking activities is expected to continue into 1995. A comparative analysis of the major components of mortgage banking income follows:

- -------------------------------------------------------------------------------- (IN THOUSANDS) 1994 1993 1992 - -------------------------------------------------------------------------------- Net servicing fees ............. $21,586 $15,105 $16,777 Fee income ..................... 13,428 38,639 33,734 Gain on sale of servicing rights ............. 11,583 31,765 1,539 Other income ................... 3,770 13,676 11,247 ------- ------- ------- Total ........................ $50,367 $99,185 $63,297 ======= ======= ======= - --------------------------------------------------------------------------------

Net servicing fees for 1993 were significantly affected by accelerated amortization of excess mortgage servicing rights (EMSRs) during the year. As the refinancing volume which fueled the accelerated amortization last year declined dramatically in 1994, amortization of EMSRs decreased $18.1 million, from $21.2 million in 1993, to $3.1 million in the most recent twelve months. Servicing rights sold by Huntington for each of the last two years were related to loans totaling $2.2 billion in 1994 and $3.8 billion in 1993. Gains on such sales were the primary reason for the increase in mortgage banking income of 56.7% from 1992 to 1993, as no significant servicing sales occurred during 1992. At the end of the most recent year, the servicing portfolio had an average contractual maturity of approximately 22 years, which was comparable to a year ago, and an average coupon rate of 8.12%, versus 7.92% in 1993. The decrease between years in other mortgage banking income is a reflection 22 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 6 - ------------------------------------------------------------------------------------------------------------------------------------ ANALYSIS OF NON-INTEREST INCOME - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) PERCENT YEAR ENDED DECEMBER 31, INCREASE (DECREASE) - ------------------------------------------------------------------------------------------------------------------------------------ 1994 1993 1992 1994/93 1993/92 - ------------------------------------------------------------------------------------------------------------------------------------ Service charges on deposit accounts ................ $ 76,836 $ 73,172 $ 64,471 5.0% 13.5% Mortgage banking ................................... 50,367 99,185 63,297 (49.2) 56.7 Credit card fees ................................... 34,045 31,794 27,037 7.1 17.6 Trust services ..................................... 28,448 27,948 25,129 1.8 11.2 Investment product sales ........................... 6,624 9,016 5,193 (26.5) 73.6 Net gains on sales of securities available for sale ............................... 2,481 22,973 19,174 (89.2) 19.8 Net investment securities gains .................... 113 4,216 17,158 (97.3) (75.4) Other .............................................. 36,446 37,474 28,680 (2.7) 30.7 -------- -------- -------- TOTAL NON-INTEREST INCOME .......................... $235,360 $305,778 $250,139 (23.0)% 22.2% ======== ======== ======== - ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 7 - ------------------------------------------------------------------------------------------------------------------------------------ ANALYSIS OF NON-INTEREST EXPENSE - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) PERCENT YEAR ENDED DECEMBER 31, INCREASE (DECREASE) - ------------------------------------------------------------------------------------------------------------------------------------ 1994 1993 1992 1994/93 1993/92 - ------------------------------------------------------------------------------------------------------------------------------------ Salaries ...................................... $226,668 $226,405 $206,429 .1% 9.7% Commissions ................................... 10,775 20,992 18,310 (48.7) 14.6 Employee benefits ............................. 58,158 55,259 46,596 5.2 18.6 Net occupancy ................................. 40,291 39,955 36,272 .8 10.2 Equipment ..................................... 38,792 37,230 34,184 4.2 8.9 Credit card ................................... 26,539 24,248 20,474 9.4 18.4 FDIC insurance ................................ 25,271 25,322 25,500 (.2) (.7) Advertising ................................... 15,320 13,259 13,308 15.5 (.4) Printing and supplies ......................... 14,821 14,721 13,588 .7 8.3 Legal and loan collection ..................... 8,298 11,361 13,109 (27.0) (13.3) Other ......................................... 144,719 190,141 204,812 (23.9) (7.2) -------- -------- -------- TOTAL NON-INTEREST EXPENSE .................... $609,652 $658,893 $632,582 (7.5)% 4.2% ======== ======== ========

of general market conditions which resulted in lower gains from the sale of loans during 1994. Huntington realized gains from securities transactions of $2.6 million in 1994, $27.2 million in 1993, and $36.3 million in 1992. These gains resulted principally from different programs in each of the years. In the most recent year, management initiated a program to sell certain fixed rate securities in anticipation of increased market interest rates, while the more significant sales of 1993 were the result of a program to change the earning asset mix, which was effected by deploying proceeds from securities sales into loans. Finally, expectations of accelerated prepayments of mortgage-backed securities were the primary reason for the 1992 sales. The remaining components of non-interest income were, in the aggregate, relatively flat when comparing 1994 results with 1993. Service charges on deposits and credit card fees represented the largest increases and were mostly volume related, while income from investment product sales showed the most significant decrease. Many of these components showed more significant increases from 1992 to 1993 as a result of changes in the pricing of service charges on various corporate and retail products, and market conditions which benefitted fee-based activities such as trust services and investment product sales. NON-INTEREST EXPENSE Non-interest expense decreased $49.2 million, or 7.5%, when comparing 1994 results with the prior year, while the 1993 23 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- total exceeded the corresponding amount for 1992 by $26.3 million, or 4.2%. In 1993, Huntington experienced unsurpassed levels of mortgage refinancings resulting in significant prepayments of the mortgage servicing portfolio. As discussed previously, the upward trend in mortgage interest rates which began in early 1994 considerably slowed the pace of refinancings during the year. Accordingly, amortization of purchased mortgage servicing rights (PMSRs), which is included in other non-interest expense, decreased from $37.2 million in the prior year to $5.8 million in the year just ended. PMSR amortization in 1993 exceeded the 1992 total by $22.2 million. Huntington has seen reductions in various components of other non-interest expense in each of the past two years from continued improvements in asset quality, particularly in terms of costs associated with other real estate owned and loan collection. Salaries increased only slightly

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 8 - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT SECURITIES DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Treasury and Federal agencies ............................ $ 317,713 $ 94,466 $3,420,855 States and political subdivisions ............................. 153,649 232,721 282,426 Other ......................................................... 4,330 32,158 228,626 ---------- ---------- ---------- Total ................................................. $ 475,692 $ 359,345 $3,931,907 ========== ========== ==========

- ------------------------------------------------------------------------------------------------------------------------------------ AMORTIZED COST AND FAIR VALUES BY MATURITY AT DECEMBER 31, 1994 (IN THOUSANDS OF DOLLARS) AMORTIZED COST FAIR VALUE YIELD(1) - ------------------------------------------------------------------------------------------------------------------------------------ U.S Treasury Under 1 year ...................................................... $ 150 $ 150 8.63% -------- -------- Total ....................................................... 150 150 -------- -------- Federal agencies Mortgage-backed securities 1-5 years ......................................................... 371 344 4.90 6-10 years ........................................................ 4,812 4,806 8.54 Over 10 years ..................................................... 3,130 3,133 8.94 -------- -------- Total ....................................................... 8,313 8,283 -------- -------- Other agencies 1-5 years ......................................................... 101,774 99,446 6.23 6-10 years ........................................................ 207,043 205,358 6.12 Over 10 years ..................................................... 433 350 5.60 -------- -------- Total ....................................................... 309,250 305,154 -------- -------- Total U.S. Treasury and Federal agencies ............................ 317,713 313,587 -------- -------- States and political subdivisions Under 1 year ...................................................... 56,361 57,080 10.99 1-5 years ......................................................... 72,812 74,975 10.18 6-10 years ........................................................ 18,433 18,059 8.14 Over 10 years ..................................................... 6,043 6,196 10.08 -------- -------- Total ....................................................... 153,649 156,310 -------- -------- Other Under 1 year ...................................................... 1,508 1,508 9.82 1-5 years ......................................................... 5 5 5.50 6-10 years ........................................................ 1,504 1,424 9.74 Over 10 years ..................................................... 1,313 1,313 9.14 -------- -------- Total ....................................................... 4,330 4,250 -------- -------- Total Investment Securities ......................................... $475,692 $474,147 ======== ========

(1) Weighted average yields are calculated on the basis of book value. Such yields have been adjusted to a fully tax equivalent basis, assuming a 35% tax rate. At December 31, 1994, Huntington had no concentrations of securities by a single issuer in excess of 10% of shareholders' equity. 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- during 1994, as the effects of merit raises were largely negated by reductions in staff at Huntington's mortgage subsidiary. Employee benefits were up 5.2% from the prior year, as a result of the change made at the end of 1993 to an actuarial assumption associated with the defined benefit pension plan and other general cost increases. Commissions expense decreased significantly during 1994, principally because of reduced mortgage loan originations. Advertising costs increased 15.5% during the most recent year in connection with several new initiatives undertaken by Huntington such as Huntington Direct, the National Clearinghouse Association, and Direct Bill Pay. Huntington's expanded mortgage banking activities and, to a lesser extent, two purchase business combinations consummated during 1993 were significant reasons for the increase in non-interest expense from 1992 to 1993. Salaries were 9.7% higher in 1993 than 1992 primarily

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 9 - ------------------------------------------------------------------------------------------------------------------------------------ SECURITIES AVAILABLE FOR SALE DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Treasury and Federal agencies ............................ $3,006,277 $3,691,190 $ 393,535 States and political subdivisions ............................. -- -- 5,686 Other ......................................................... 298,216 148,874 -- ---------- ---------- ---------- Total ................................................. $3,304,493 $3,840,064 $ 399,221 ========== ========== ==========

- ------------------------------------------------------------------------------------------------------------------------------------ AMORTIZED COST AND FAIR VALUES BY MATURITY AT DECEMBER 31, 1994 (IN THOUSANDS OF DOLLARS) AMORTIZED COST FAIR VALUE YIELD(1) - ------------------------------------------------------------------------------------------------------------------------------------ U.S Treasury Under 1 year ................................................... $ 25,399 $ 25,320 6.12% 1-5 years ...................................................... 662,106 643,100 6.27 6-10 years ..................................................... 166,909 147,671 5.60 ---------- ---------- Total .................................................... 854,414 816,091 ---------- ---------- Federal agencies Mortgage-backed securities 1-5 years ...................................................... 17,727 16,922 6.65 6-10 years ..................................................... 369,061 362,716 7.72 Over 10 years .................................................. 114,742 110,119 6.21 ---------- ---------- Total .................................................... 501,530 489,757 ---------- ---------- Other agencies Under 1 year ................................................... 531,082 526,617 5.78 1-5 years ...................................................... 506,740 499,748 7.01 6-10 years ..................................................... 382,849 369,404 6.16 Over 10 years .................................................. 323,451 304,660 6.52 ---------- ---------- Total .................................................... 1,744,122 1,700,429 ---------- ---------- Total U.S. Treasury and Federal agencies ......................... 3,100,066 3,006,277 ---------- ---------- Other 1-5 years ...................................................... 95,410 94,887 5.78 6-10 years ..................................................... 165,422 164,087 6.13 Over 10 years .................................................. 32,854 32,818 6.57 Marketable equity securities ................................... 8,359 6,424 4.95 ---------- ---------- Total .................................................... 302,045 298,216 ---------- ---------- Total Securities Available for Sale .............................. $3,402,111 $3,304,493 ========== ==========

(1) Weighted average yields are calculated on the basis of book value. Such yields have been adjusted to a fully tax equivalent basis, assuming a 35% tax rate. At December 31, 1994, Huntington had no concentrations of securities by a single issuer in excess of 10% of shareholders' equity. 25 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- as a result of an increased workforce at Huntington's mortgage subsidiary and normal merit increases, while related employee benefits were up 18.6% due to the additional personnel and increased costs of providing post-retirement, post-employment, and employee stock purchase plan benefits. The remaining components of non-interest expense also generally increased at a greater rate from 1992 to 1993 than was experienced during the most recent year. These increases were the result of higher volumes of mortgage originations and credit card transactions, as well as corporate expansion. PROVISION FOR INCOME TAXES The provision for income taxes was $123.9 million in 1994, compared with $126.9 million in 1993 and $72.4 million in 1992. Huntington's effective tax rate decreased slightly during the most recent twelve months, principally as a result of a one-time charge recorded in 1993 of $4.0 million related to the conversion of an acquired thrift to a bank charter. In each of the three years, the major difference in the statutory and effective tax rates is tax-exempt interest income. A change in the federal income tax rate from 34% to 35% in 1993 also contributed to the higher effective rate when comparing the immediately preceding year to 1992. On January 1, 1993, Huntington prospectively adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Adoption of this standard did not materially impact the consolidated financial statements. INTEREST RATE RISK AND LIQUIDITY MANAGEMENT INTEREST RATE RISK MANAGEMENT The principal objective of asset/liability management is to maximize shareholder value in a manner consistent with prudent balance sheet management. Through its asset/liability management process, Huntington seeks to achieve consistent growth in both net interest income and net income while managing volatility arising from shifts in interest rates. This is accomplished with the oversight of the Asset/Liability Management Committee (ALCO), which is comprised of key members of executive management. ALCO establishes policies and operating limits that govern the management of both interest rate and market risk as well as ensure maintenance of adequate liquidity. Both on- and off-balance sheet tactics and strategies are regularly reviewed and monitored by ALCO to confirm their consistency with Huntington's operating objectives as well as to evaluate their appropriateness and effectiveness in light of changing market and business conditions. Huntington monitors its interest rate risk exposure by measuring the amount that net interest income will change over a twelve to twenty-four month period given a directional shift in interest rates. The net interest income-at-risk estimation is determined using multiple interest rate and balance sheet scenarios to provide management a framework for evaluating its risk tolerance under various market conditions. Actively and effectively managing interest rate risk requires the use of a variety of financial instruments and funding sources. On-balance sheet investment and funding vehicles, along with off-balance sheet financial instruments such as interest rate swaps, interest rate caps/floors, and financial futures, represent the primary means by which Huntington responds to the balance sheet mismatches created by customer loan and deposit preferences and to changing market conditions. These activities are closely monitored by ALCO. Over the past year, Huntington has undertaken several strategies to protect earnings against rising rates. These have included the sale of approximately $2.1 billion of fixed rate securities designated as available for sale, the issuance of term fixed-rate retail deposits and wholesale liabilities, and the adjustment of interest rate swap and other off-balance sheet positions. These initiatives reduced Huntington's interest rate risk exposure during 1994 and have better positioned the company in light of expectations for further rate increases in 1995. At December 31, 1994, the results of Huntington's internal interest sensitivity analysis indicate that a 100 basis point increase in the federal funds rate from the current 5.50% level (assuming a 25 basis point increase per quarter) and corresponding changes in other market rates, reflected in Huntington's interest rate forecast, would result in a decrease in annual net interest income of 0% to 0.9%. This represents a significant decrease from the end of 1993, at which time Huntington's equivalent exposure was a 4-5% decline in net interest income. Assuming a gradual 200 basis point increase in rates, the sensitivity analysis indicates a decrease in net interest income ranging between 0.1% and 1.8%. Huntington uses a range in measuring its "at-risk" position because of varying assumptions regarding the volume and rate behaviors of certain loans and core deposits under the rising rate scenarios. Interest rate swaps are the principal off-balance sheet vehicles used by Huntington for asset/liability management. In addition to the transactional efficiencies afforded by a swap structure, which is less costly to execute than a comparable cash instrument, the overall swap strategy has enabled Huntington to lower the costs of raising wholesale funds and has allowed management to synthetically alter, or customize, the repricing characteristics of selected on-balance sheet financial instruments. Financial futures and interest rate caps/floors, as well as forward delivery contracts purchased in connection with Huntington's mortgage banking activities, are also integral to asset/liability management. These off-balance sheet financial instruments are often more attractive than the use of cash securities or other on-balance sheet alternatives because, though they provide similar protection against interest rate movements, they require less capital and may not impede liquidity. 26 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The notional amounts of off-balance sheet positions used by Huntington for purposes other than interest rate risk management, consisting principally of transactions entered into on behalf of customers for which the related interest rate risk is countered by offsetting third party contracts, were $700 million and $572 million, respectively, at the end of 1994 and 1993. Total credit exposure from such contracts was $12.6 million at December 31, 1994. These separate activities, which are accounted for at fair value, are not a significant part of Huntington's operations. Accordingly, they have been excluded from the discussion of off-balance sheet financial instruments and the related tables which follow. The contributions to net interest income from swaps and other off-balance sheet financial instruments used for asset/liability management purposes, including amortization of $21.6 million in 1994 and $12.2 million in 1993 attributable to deferred net gains from previously terminated contracts, are presented below.

- -------------------------------------------------------------------------------- (IN MILLIONS) 1994 1993 1992 - -------------------------------------------------------------------------------- Interest income ...................... $29.0 $61.0 $42.1 Interest expense ..................... 5.6 30.0 22.7 ----- ----- ----- Net interest income .................. $34.6 $91.0 $64.8 ===== ===== =====

Expressed in terms of the net interest margin, the contribution was 22 basis points in 1994, compared with 59 basis points and 55 basis points, respectively, in the two preceding years. The following table illustrates the estimated maturities and weighted average rates of the interest rate swaps used by Huntington in its interest rate risk management program. In preparing the information presented below, management has made no assumptions with respect to future changes in interest rates. Accordingly, as interest rates change, both the maturity and variable rate information below are subject to change. The portfolio of amortizing swaps consists of contracts with notional values that are indexed to certain market interest rates, primarily the London inter-bank offered rate (LIBOR) or Constant Maturity U.S. Treasury yields (CMT). To a much lesser degree, other contracts are amortized based upon the prepayment experience of a specified pool of mortgage loans. As market interest rates increase, amortization of the notional values will change, generally slowing. Basis swaps are contracts which provide for both parties to receive floating rates of interest according to different indices. All receive and pay amounts applicable to Huntington's basis swaps are determined by LIBOR, the prime rate, or other indices common to the banking industry. Certain basis swaps, with a notional value of $700 million at December 31, 1994, have embedded written periodic caps and, in some cases, purchased periodic floors. Also, embedded in the receive fixed-generic swaps is $250 million of written caps.

- ----------------------------------------------------------------------------------------------------------------------------------- EXPIRING OR AMORTIZING IN - ------------------------------------------------------------------------------------------------------------------------------------ (IN MILLIONS) 1995 1996 1997 1998 1999 THEREAFTER TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ DECEMBER 31, 1994 Receive fixed-generic swaps Notional value $134 $434 $600 -- $850 $400 $2,418 Weighted average receive rate 4.50% 4.22% 4.70% -- 7.76% 7.22% 6.10% Weighted average pay rate 5.75% 5.94% 5.94% -- 5.98% 7.79% 6.25% Receive fixed-amortizing swaps Notional value $389 $216 $213 $198 $295 $178 $1,489 Weighted average receive rate 4.93% 4.93% 4.95% 5.19% 5.74% 5.66% 5.22% Weighted average pay rate 5.70% 6.00% 5.98% 6.51% 5.97% 5.98% 5.98% Pay fixed-generic swaps Notional value $325 $1,608 -- -- -- -- $1,933 Weighted average receive rate 5.57% 5.91% -- -- -- -- 5.85% Weighted average pay rate 5.19% 6.82% -- -- -- -- 6.54% Basis swaps Notional value $750 -- -- -- $250 -- $1,000 Weighted average receive rate 5.99% -- -- -- 6.19% -- 6.04% Weighted average pay rate 6.08% -- -- -- 5.73% -- 5.99%

27 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- As of December 31, 1994, interest rate swaps were designated to the assets and liabilities presented below. The notional values of the swap portfolio represent contractually determined amounts on which calculations of interest payments to be exchanged are based. These notional values do not represent direct credit exposures. At the end of the most recent twelve months, Huntington's credit risk from interest rate swaps and other off-balance sheet financial instruments used for asset/liability management purposes was $49.7 million, which is significantly less than the notional value of the contracts, and represents the sum of the aggregate fair value of positions that have become favorable to Huntington and any accrued interest receivable due from counterparties. In order to minimize the risk that a swap counterparty will not satisfy its interest payment obligation under the terms of the contract, Huntington performs credit reviews on all counterparties, restricts the number of counterparties used to a select group of high quality institutions, obtains collateral, and enters into formal netting arrangements. Huntington has never experienced any past due amounts from a swap counterparty and does not anticipate non-performance in the future by any such counterparties. The second table on this page summarizes activity in the interest rate swap portfolio and other off-balance sheet financial instruments used for asset/liability management purposes during each of the last three years. Terminations reflect the decisions made by ALCO to modify, refine, or change balance sheet management strategies, as a result of either a change in overall interest rate risk tolerances or changes in balance sheet composition. During 1993, Huntington entered into basis swaps to protect a portion of its prime based loan portfolio against an expected narrowing in the prime/LIBOR spread. Based upon the market conditions over the past year

DESIGNATED ASSETS/LIABILITIES - --------------------------------------------------------------------------------------------- SHORT-TERM LONG-TERM (IN MILLIONS) SECURITIES LOANS DEPOSITS BORROWINGS DEBT TOTAL - --------------------------------------------------------------------------------------------- Receive fixed-generic $ 233 $1,350 $ 200 $ 135 $ 500 $2,418 Receive fixed-amortizing 198 727 549 -- 15 1,489 Pay fixed-generic -- -- -- 1,008 925 1,933 Basis -- 250 -- 750 -- 1,000 ------ ------ ------ ------ ------ ------ Total $ 431 $2,327 $ 749 $1,893 $1,440 $6,840 ====== ====== ====== ====== ====== ====== - ---------------------------------------------------------------------------------------------

PURCHASED INTEREST RATE FORWARD INTEREST INTEREST CAPS, COLLARS, DELIVERY (IN MILLIONS) RATE SWAPS RATE FUTURES AND FLOORS CONTRACTS - --------------------------------------------------------------------------------------------- Balance December 31, 1991 $ 2,380 $ 138 $ 300 $ 669 Additions 3,677 1,775 2,525 4,963 Maturities/Amortization (505) (121) (100) (4,749) Terminations (1,125) (535) (300) -- ------- ------- -------- ------- Balance December 31, 1992 4,427 1,257 2,425 883 ------- ------- -------- ------- Additions 6,585 1,556 2,320 7,064 Maturities/Amortization (1,210) (1,187) (2,625) (6,655) Terminations (2,900) (1,123) (300) -- ------- ------- -------- ------- Balance December 31, 1993 6,902 503 1,820 1,292 ------- ------- -------- ------- Additions 3,492 5,802 860 1,065 Maturities/Amortization (904) (275) (1,250) (2,281) Terminations (2,650) (6,014) (300) -- ------- ------- -------- ------- Balance December 31, 1994 $ 6,840 $ 16 $ 1,130 $ 76 ======= ======= ======== =======

and Huntington's current interest rate forecast, a significant narrowing of the spread between these indices is not expected in the foreseeable future. Accordingly, basis swaps with a notional value of $1.5 billion were terminated in December 1994. The realized loss of approximately $69.5 million is being amortized over the 2.5 year remaining life of the original contracts. Unrealized gains and losses on interest rate swaps are presented in the table below. The combined net unrealized loss of $268.9 million at December 31, 1994, compares unfavorably with a net unrealized gain of $14.1 million at the end of 1993. Short-term interest rate increases during 1994 have significantly changed the fair value of the swap portfolio during the year. The unrealized gains and losses on forward delivery contracts and other off-balance sheet financial instruments used for asset/liability management purposes were not significant at either period end.

- ----------------------------------------------------------------------------------------- NOTIONAL UNREALIZED UNREALIZED NET UNREALIZED (IN MILLIONS) VALUE GAINS LOSSES GAINS(LOSSES) - ----------------------------------------------------------------------------------------- DECEMBER 31, 1994: Receive fixed-generic swaps $2,418 $ -- $119.9 $(119.9) Receive fixed-amortizing swaps 1,489 -- 123.0 (123.0) ------ ------ ------ ------- Total receive fixed swaps 3,907 -- 242.9 (242.9) Less: Pay fixed-generic swaps 1,933 31.8 -- 31.8 ------ ------ ------ ------- Net receive fixed position $1,974 $ 31.8 $242.9 $(211.1) ====== ====== ====== ======= Basis swaps $1,000 $ -- $ 57.8 $ (57.8) ====== ====== ====== =======

28 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 10 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM BORROWINGS YEAR ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------------ FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS Balance at year-end ................................................. $1,442,138 $2,164,752 $2,547,972 Weighted average interest rate at year-end .......................... 4.82% 2.62% 3.07% Maximum amount outstanding at month-end during the year ............. $1,798,524 $2,361,306 $2,808,686 Average amount outstanding during the year .......................... $1,374,741 $1,964,282 $1,941,199 Weighted average interest rate during the year ...................... 3.58% 2.89% 3.39% SHORT-TERM BANK NOTES Balance at year-end ................................................. $ 640,000 $ 860,000 $ 20,000 Weighted average interest rate at year-end .......................... 5.55% 3.49% 3.25% Maximum amount outstanding at month-end during the year ............. $ 785,000 $1,000,000 $ 40,000 Average amount outstanding during the year .......................... $ 637,055 $ 719,767 $ 9,508 Weighted average interest rate during the year ...................... 4.28% 3.55% 3.23% MEDIUM-TERM BANK NOTES WITH ORIGINAL MATURITIES OF LESS THAN ONE YEAR Balance at year-end ................................................. $ 624,000 Weighted average interest rate at year-end .......................... 5.55% Maximum amount outstanding at month-end during the year ............. $ 724,000 Average amount outstanding during the year .......................... $ 501,225 Weighted average interest rate during the year ...................... 4.73%

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 11 - ------------------------------------------------------------------------------------------------------------------------------------ MATURITY OF DOMESTIC CERTIFICATES OF DEPOSIT GREATER THAN $100,000 AS OF DECEMBER 31, 1994 (IN THOUSANDS OF DOLLARS) - ------------------------------------------------------------------------------------------------------------------------------------ Three months or less .............................................................................. $380,569 Over three through six months ..................................................................... 85,569 Over six through twelve months .................................................................... 62,088 Over twelve months ................................................................................ 77,537 -------- Total ............................................................................................. $605,763 ======== NOTE: All foreign time deposits are denominated in amounts greater than $100,000. - ------------------------------------------------------------------------------------------------------------------------------------

The valuation of interest rate swap contracts is largely a function of the financial market's expectations regarding the future direction of interest rates. The recent high degree of market uncertainty surrounding short-term interest rates has significantly contributed to the drop in the fair value of Huntington's swap portfolio. However, current market values are not necessarily indicative of the future impact of the swaps on net interest income. This will depend, in large part, on the shape of the yield curve as well as interest rate levels. Including the effects of the basis swap terminations, Huntington had deferred approximately $(74.1) million and $45.7 million, respectively, at December 31, 1994 and 1993, of net realized (losses) gains from interest rate swaps. The net losses as of the most recent year end are to be amortized as yield adjustments over the remaining term of the original contracts, as presented below. Deferred realized gains and losses on other off-balance sheet financial instruments used for asset/liability management purposes were not significant at either period end.

- ------------------------------------------------------------- AMORTIZING IN - ------------------------------------------------------------- (IN MILLIONS) 1995 1996 1997 TOTAL - ------------------------------------------------------------- DECEMBER 31, 1994: - ------------------------------------------------------------- Deferred gains $ 16.3 $ 7.4 $ 1.3 $ 25.0 Deferred losses (41.3) (41.3) (16.5) (99.1) ------ ------ ------ ------ Net losses $(25.0) $(33.9) $(15.2) $(74.1) ====== ====== ====== ======

LIQUIDITY MANAGEMENT Liquidity management is also a significant responsibility of ALCO. The goal of ALCO in this regard is to maintain an optimum balance of maturities among Huntington's assets and liabilities such that sufficient cash, or access to cash, is available at all times to meet the needs of borrowers, depositors, and creditors, as well as to fund corporate expansion and other activities. A chief source of Huntington's liquidity is derived from the large retail deposit base accessible by its extensive network of geographically dispersed banking offices. Retail deposits and other core funding sources provided a 29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 12 - ------------------------------------------------------------------------------------------------------------------------------------ NON-PERFORMING ASSETS AND PAST DUE LOANS - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) 1994 1993 1992 1991 1990 1989 Non-accrual loans ................................ $ 41,929 $ 75,933 $ 87,541 $139,024 $100,899 $ 81,356 Renegotiated loans ............................... 2,550 1,254 2,508 5,491 9,447 3,969 -------- -------- -------- -------- -------- -------- Total Non-Performing Loans ....................... 44,479 77,187 90,049 144,515 110,346 85,325 -------- -------- -------- -------- -------- -------- Other real estate, net ........................... 51,909 62,446 73,130 99,646 57,467 17,897 -------- -------- -------- -------- -------- -------- Total Non-Performing Assets ...................... $ 96,388 $139,633 $163,179 $244,161 $167,813 $103,222 ======== ======== ======== ======== ======== ======== Non-performing loans as a % of total loans ....... .36% .70% .95% 1.63% 1.27% 1.05% Non-performing assets as a % of total loans and other real estate ................................ .78% 1.27% 1.70% 2.72% 1.91% 1.27% Allowance for loan losses as a % of non-performing loans ........................................... 450.76% 274.44% 170.63% 93.26% 112.03% 106.70% Allowance for loan losses and other real estate as a % of non-performing assets ..................... 193.13% 143.41% 95.22% 56.53% 74.36% 88.20% Accruing loans past due 90 days or more .......... $ 20,877 $ 25,550 $ 24,298 $ 36,270 $ 30,169 $ 32,169 ======== ======== ======== ======== ======== ======== Accruing loans past due 90 days or more to total loans ............................................ .17% .23% .26% .41% .35% .40% - ------------------------------------------------------------------------------------------------------------------------------------

NOTE: For 1994, the amount of interest income which would have been recorded under the original terms for total loans classified as non-accrual or renegotiated was $5.6 million. Amounts actually collected and recorded as interest income for these loans totalled $1.7 million. minimum of 70% of all funding needs in both 1994 and 1993. This core funding is supplemented by Huntington's demonstrated ability to raise funds in capital markets and to access national funds. During 1993, Huntington, through its lead subsidiary, The Huntington National Bank, initiated a bank note program which provides short and medium term funding. Significant additional funds were generated under the bank note program over the most recent twelve months, and a total of $1.9 billion was outstanding at year end. A similar program was begun at the parent company in 1994 to fund certain non-banking activities, of which $75 million was outstanding at year end. Huntington also has a fully available $200 million line of credit which supports commercial paper borrowings and other short-term working capital needs. In addition, Huntington has significant asset liquidity from its sizeable portfolio of securities available for sale, loans which may be securitized and sold, and maturing investments. ALCO regularly monitors the liquidity position and ensures that various alternative strategies exist to cover unanticipated reductions in presently available funding sources. At December 31, 1994, Huntington's liquidity was within all key parameters established by ALCO. CREDIT RISK Huntington's exposure to credit risk is managed through the use of underwriting standards which emphasize "in-market" lending to established borrowers. Highly leveraged transactions and industry or other concentrations are avoided. The credit administration function also employs extensive monitoring procedures to ensure problem loans are promptly identified and adherence with corporate compliance policies. These procedures provide executive management with information necessary to implement appropriate change and take corrective action as needed. Asset quality continues to improve. Net charge-offs as a percentage of average total loans were .24% in 1994, compared with .32% in 1993 and .69% in 1992. Non-performing assets, which include loans that are no longer accruing interest, loans that have been renegotiated based upon financial difficulties of the borrower, and real estate acquired through foreclosure, have trended significantly downward and are at their lowest level since 1989. The most substantial decrease in non-performing loans occurred in the construction and commercial real estate segments, which showed a combined reduction from 1993 of $28.9 million, largely as a result of additional principal paydowns. An analysis of the activity in other real estate (ORE) during the past three years follows:

- ------------------------------------------------------------------ (IN MILLIONS) 1994 1993 1992 - ------------------------------------------------------------------ Beginning balance $89.1 $109.2 $107.1 Additions 29.3 15.9 50.0 Write-downs (6.6) (11.8) (24.3) Sales (44.5) (24.2) (23.6) ----- ------ ------ Total ORE 67.3 89.1 109.2 ORE reserve (15.4) (26.7) (36.1) ----- ------ ------ Ending balance, net $51.9 $ 62.4 $ 73.1 ===== ====== ======

30 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 13 - ------------------------------------------------------------------------------------------------------------------------------------ LOAN PORTFOLIO COMPOSITION YEAR ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ (IN MILLIONS OF DOLLARS) 1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------------------------------------------ Commercial .................................... $ 3,611 $ 3,435 $ 3,121 $ 2,879 $ 2,941 Tax-free ...................................... 58 72 70 81 87 Real estate Construction ................................ 305 337 379 439 492 Mortgage .................................... 3,002 2,685 2,252 2,097 2,059 Consumer ...................................... 4,642 3,944 3,325 3,061 2,821 Lease financing ............................... 646 481 368 321 311 ------- ------- ------- ------- ------- Total loans ............................... $12,264 $10,954 $ 9,515 $ 8,878 $ 8,711 ======= ======= ======= ======= =======

NOTE: There are no loans outstanding which would be considered a concentration of lending in any particular industry or group of industries.

- ------------------------------------------------------------------------------------------------------------------------------------ TABLE 14 - ------------------------------------------------------------------------------------------------------------------------------------ MATURITY SCHEDULE OF SELECTED LOANS - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) DECEMBER 31, 1994 - ------------------------------------------------------------------------------------------------------------------------------------ AFTER ONE WITHIN BUT WITHIN AFTER ONE YEAR FIVE YEARS FIVE YEARS TOTAL ---------- ---------- ---------- ---------- Commercial and tax-free ........................ $2,222,656 $1,136,707 $ 309,535 $3,668,898 Real estate - construction ..................... 140,663 126,685 37,421 304,769 ---------- ---------- ---------- ---------- Total ..................................... $2,363,319 $1,263,392 $ 346,956 $3,973,667 ========== ========== ========== ========== Variable interest rates ........................ $ 993,707 $ 229,717 ========== ========== Fixed interest rates ........................... $ 269,685 $ 117,239 ========== ========== - ------------------------------------------------------------------------------------------------------------------------------------

Huntington's management continues to aggressively pursue the sale of its ORE to further reduce non-performing assets. Huntington also has certain loans which are past due ninety days or more but have not been placed on nonaccrual status. These loans, which total $20.9 million at year end 1994, are primarily consumer and residential real estate loans that are considered well-secured and in the process of collection. There were also loans outstanding of $51.5 million and $84.5 million, respectively, at December 31, 1994 and 1993, that Huntington considers to be potential problem credits and monitors closely for any further deterioration in borrower performance. All significant loan categories, except construction, experienced growth during 1994, the most significant occurring in the consumer and leasing segments of the portfolio which were up, in terms of average balances outstanding, 20.8% and 31.1%, respectively. Huntington has enjoyed success in the installment lending business for more than thirty years, and continues to increase its market share through higher volumes from traditional banking offices, complemented significantly by the additional market opportunities afforded by The Huntington Acceptance Company, an indirect auto lending affiliate. Huntington has achieved this growth without compromising credit quality, as its indirect lending function uses sophisticated credit scoring systems, applies consistent underwriting standards, and has a well-designed portfolio tracking system. Over the past two years, net losses resulting from this segment of the portfolio were only .21% and .20%, respectively, of related average loans. Average commercial real estate loans as a percent of average total loans increased only slightly from 11.2% in 1993 to 11.5% in 1994. This increase represents additional extensions of credit to borrowers within the small to middle markets for which the underlying collateral is typically owner-occupied properties with a demonstrated trend of positive cash flows. CAPITAL AND DIVIDENDS Huntington places significant emphasis on the maintenance of strong capital, which promotes investor confidence, provides access to the national markets under favorable terms, and enhances the ability to capitalize on business growth and acquisition opportunities. Capital is managed at each subsidiary based upon the respective risks and growth opportunities, as well as regulatory requirements. Shareholders' equity at December 31, 1994 was approximately $1.4 billion, up 6.6% from one year ago. Huntington's ratio of average equity to average assets increased significantly over the last twelve months to 8.38%, compared with 7.22% and 7.08%, respectively, in the two preceding years. In addition to the increase in the ratio of average equity to average assets during 1994, Huntington continues to show strength in each of the key regulatory capital ratios. At December 31, 1994, the Tier 1 and total risk-based capital ratios were 9.55% and 13.57%, respectively, and exceeded the corresponding minimum levels to be considered "well capitalized" of 6% and 10%, respectively. These same ratios one year ago were 9.60% and 14.02%, respectively. The year end Tier 1 leverage ratio of 7.99% also exceeded the minimum regulatory requirement of 5%, and compares favorably with the ratio at the end of 1993 of 7.03%. Huntington increased its cash dividends to shareholders during 1994 to $.72 a share, which was 20% higher than the corresponding amount in 1993 of $.60 per share. That increase, which resulted in a pay-out ratio during the most recent year of 38.5%, was accompanied by the distribution of a five-for-four stock split in July 1994. Huntington also announced a con- 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- tinuation of its common stock repurchase program during 1994, upon receiving Board of Directors' authorization in July to acquire up to 5.0 million shares (as adjusted for the July 1994 stock split) through open market purchases and privately negotiated transactions. Approximately 1.3 million of the shares repurchased pursuant to the 1994 authorization were reissued prior to year end in connection with the acquisition of a thrift holding company. Certain shares have also been reissued in connection with Huntington's dividend reinvestment, stock purchase, stock option, and other benefit plans. The treasury stock on hand at year end and all other shares to be repurchased pursuant to the 1994 authorization, of which 3.0 million shares remains available at December 31, 1994, are expected to be reissued as required by the terms and provisions of these benefit plans. NEW ACCOUNTING STANDARDS On January 1, 1994, Huntington adopted Statement of Financial Accounting Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires entities to classify debt and equity securities as either held to maturity, available for sale, or trading securities. Held to maturity securities are recorded at amortized cost, whereas available for sale securities and trading securities are carried at fair value. The statement further requires that unrealized gains and losses on available for sale securities be reported, net of tax, as a separate component of shareholders' equity. At the date of adoption, the unrealized gain on available for sale securities, net of applicable income taxes, increased Huntington's equity by $67.2 million. During 1994, as market interest rates rose, the available for sale portfolio depreciated in value, resulting in a year end reduction of shareholders' equity of $63.3 million. In the latter part of 1993, in anticipation of adopting SFAS No. 115, Huntington transferred the majority of its securities to the available for sale category. Adoption of the new accounting standard had no effect on earnings. In May 1993, the Financial Accounting Standards Board (FASB) issued SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", which applies to financial statements for fiscal years beginning after December 15, 1994. SFAS No. 114 requires that "impaired loans" be measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The adoption of SFAS No. 114, which will occur in the first quarter of 1995, is not expected to have a material effect on Huntington's consolidated financial statements. The FASB has also issued an Exposure Draft (ED) dated June 1994, "Accounting for Mortgage Servicing Rights and Excess Servicing Receivables and for Securitization of Mortgage Loans", that would amend certain provisions of SFAS No. 65, which currently governs the accounting for mortgage banking activities. The most significant change proposed in the ED involves the recognition of rights to service loans for others as separate assets, regardless of whether purchased or originated. A final statement from the FASB is expected in the first half of 1995, the provisions of which are expected to be applied prospectively to transactions subsequent to the date of adoption. Because a final pronouncement has not yet been issued, Huntington is unable to determine the potential effects of the accounting change. FOURTH QUARTER RESULTS Net income for the fourth quarter of 1994 was $52.5 million, or $.41 per share, compared with $63.4 million, or $.49 per share, in the same period last year. ROA and ROE for the most recent quarter were 1.22% and 14.78%, respectively, versus 1.44% and 19.60% in the final quarter of 1993. Net interest income was $177.3 million in the final quarter of 1994, down $31.7 million from the corresponding period of the prior year. Similarly, a decrease occurred in the net interest margin, which was 4.54% and 5.24% in the respective quarters. The downward pressures on net interest income which began in the second quarter of 1994 continued into the fourth quarter of the year, most notably in terms of reduced spreads in the rising rate environment and the effects of initiatives undertaken by Huntington to reduce exposure to further increases in interest rates. The provision for loan losses was $2.5 million in the final quarter of the year versus $15.3 million in the same period of 1993. The significant factors which were noted earlier as contributing to the decrease on an annual basis are also the principal considerations when comparing the quarterly results, as net loan losses were only .31% of average loans in the three months ended December 31, 1994, and period end asset quality was strong. Non-interest income was $54.7 million and $82.0 million, respectively, for the quarters ended December 31, 1994 and 1993. Securities transactions were not significant in either period. The sharp drop in fee income from mortgage banking activities during the most recent year was most pronounced when comparing the fourth quarter 1994 results with the corresponding amounts for 1993. For the 32 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- quarter just ended, mortgage banking income was $8.6 million versus the record level in the same quarter one year ago of $36.0 million. A $13.6 million decrease in gains on the sale of servicing rights, coupled with a $9.4 million decrease in origination fees, was the primary reason for this downturn. Income from certain other fee-based activities such as investment management and sales was also down when comparing these two quarters as a result of rising interest rates. Non-interest expenses of $150.5 million in the fourth quarter of 1994 were 12.6% less than the total for the corresponding period last year of $181.3 million. Personnel costs, including commissions, declined $10.5 million, or 13.2% largely because of lower loan production at Huntington's mortgage banking subsidiary which resulted in staff reductions and decreased volume-based compensation. Costs associated with ORE were down from the final quarter of 1993, as were legal and loan collection expenses, due to the continued improvement in asset quality. The provision for income taxes decreased considerably when comparing the last three months of 1994 to the same period a year ago, principally because of a drop in pre-tax earnings. A non-recurring charge of $4.0 million in the final quarter of 1993 related to the conversion of an acquired thrift to a bank charter was also a significant reason for the lower provision. FOREIGN ACTIVITIES Huntington has very limited foreign activities, consisting principally of deposits accepted by its Cayman Islands branch. At December 31, 1994, Huntington had no investments in foreign assets. INFLATION Huntington's assets and liabilities are principally monetary in nature. Accordingly, its financial condition is affected by changes in interest rates to a much greater degree than by inflation. Although interest rates are determined in large measure by changes in the general level of inflation, they do not change at the same rate or in the same magnitude, but rather react in correlation with changes in the expected rate of inflation and changes to monetary and fiscal policy. A financial institution's ability to react to changes in interest rates is a better indicator of its ability to perform. More information regarding the effects of changing interest rates appears in the section "Interest Rate Risk and Liquidity Management". 33 CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES (ANNUAL DATA) - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

FULLY TAX EQUIVALENT BASIS(1) 1994 1993 (IN MILLIONS OF DOLLARS) ---------------------------------- --------------------------------- INTEREST INTEREST AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE ---------------------------------- --------------------------------- ASSETS Interest bearing deposits in banks-foreign ............ -- -- -- $ 10 $ .5 4.38% Interest bearing deposits in banks-domestic ........... $ 4 $ .3 7.57% 16 .6 4.02 Trading account securities ............................ 14 .9 6.16 10 .5 5.04 Federal funds sold and securities purchased under resale agreements ............................. 115 5.0 4.32 78 2.6 3.36 Mortgages held for sale ............................... 367 25.9 7.06 827 60.2 7.28 Securities available for sale ......................... 2,944 180.7 6.14 1,359 81.6 6.00 Investment securities U.S. Treasury and Federal agencies .................. 257 17.0 6.60 2,669 164.4 6.16 States and political subdivisions ................... 190 20.5 10.80 260 29.1 11.22 Other ............................................... 16 .9 5.71 171 8.9 5.21 ------- -------- ------- -------- Total investment securities ...................... 463 38.4 8.29 3,100 202.4 6.53 ------- -------- ------- -------- Loans Commercial .......................................... 3,501 295.8 8.45 3,216 274.0 8.52 Tax-free ............................................ 64 6.4 9.92 77 7.3 9.41 Real estate Construction ...................................... 298 23.1 7.75 368 26.1 7.09 Mortgage .......................................... 2,786 220.3 7.91 2,473 203.6 8.24 Consumer ............................................ 4,316 354.2 8.21 3,575 323.8 9.06 Lease financing ..................................... 556 40.8 7.34 424 34.4 8.11 ------- -------- ------- -------- Total loans ....................................... 11,521 940.6 8.16 10,133 869.2 8.58 Allowance for loan losses/loan fees ............... 212 37.4 194 30.4 ------- -------- ------- -------- Net Loans ......................................... 11,309 978.0 8.49 9,939 899.6 8.88 ------- -------- ------- -------- Total earning assets .............................. 15,428 $1,229.2 7.97% 15,533 $1,248.0 8.03% ------- -------- ------- -------- Cash and due from banks ............................... 741 693 All other assets ...................................... 793 819 ------- ------- TOTAL ASSETS .......................................... $16,750 $16,851 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits Non-interest bearing ................................ $ 2,116 $ 2,141 Interest bearing .................................... 2,713 $ 59.9 2.21% 2,662 $ 63.7 2.39% Savings deposits ...................................... 2,281 49.0 2.15 2,229 57.5 2.58 Certificates of deposit of $100,000 or more ........... 607 25.6 4.22 831 31.1 3.74 Other domestic time deposits .......................... 3,523 148.1 4.20 3,572 150.3 4.21 Foreign time deposits ................................. 286 12.2 4.25 455 15.0 3.30 ------- -------- ------- -------- Total deposits ...................................... 11,526 294.8 3.13 11,890 317.6 3.26 ------- -------- ------- -------- Short-term borrowings ................................. 2,629 106.7 4.06 2,825 89.4 3.17 Long-term debt ........................................ 928 62.2 6.71 640 33.1 5.18 ------- -------- ------- -------- Interest bearing liabilities ........................ 12,967 $ 463.7 3.58% 13,214 $ 440.1 3.33% ------- -------- ------- -------- All other liabilities ................................. 264 280 Shareholders' equity .................................. 1,403 1,216 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............ $16,750 $16,851 ======= ======= Net interest rate spread .............................. 4.39% 4.70% Impact of non-interest bearing funds on margin ........ .57% .50% NET INTEREST INCOME/MARGIN ............................ $ 765.5 4.96% $ 807.9 5.20% ======== ========

(1) Fully tax equivalent yields are calculated assuming a 35% tax rate in 1994 and 1993 and a 34% tax rate in years 1989 through 1992. Average loan balances include non-accruing loans. Loan income includes cash received on non-accruing loans. 34 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

1992 1991 1990 1989 ------------------------------- ------------------------------ ---------------------------- --------------------------- Interest Interest Interest Interest Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate ------------------------------ ------------------------------ ---------------------------- ---------------------------- $ 54 $ 2.6 4.74% $ 10 $ .7 6.71% $ 3 $ .2 6.91% $ 33 $ 3.3 9.75% 27 1.4 5.15 42 3.1 7.47 60 5.2 8.80 72 6.6 9.29 22 1.2 5.43 27 1.8 6.83 9 .8 8.69 10 1.0 9.66 126 4.9 3.90 152 8.8 5.76 231 18.4 7.94 243 21.7 8.93 681 55.1 8.09 386 34.0 8.80 274 27.0 9.86 111 10.9 9.79 142 11.0 7.79 21 2.0 9.34 -- -- -- -- -- -- 3,163 220.3 6.96 2,459 209.0 8.50 2,563 227.8 8.89 1,921 169.9 8.85 336 31.7 9.43 396 41.6 10.51 458 47.9 10.47 509 52.5 10.30 205 13.6 6.65 281 24.5 8.75 239 21.1 8.80 445 37.0 8.32 ------- -------- ------- -------- ------- -------- ------ ------- 3,704 265.6 7.17 3,136 275.1 8.77 3,260 296.8 9.10 2,875 259.4 9.02 ------- -------- ------- -------- ------- -------- ------ ------- 2,993 249.4 8.34 2,878 264.2 9.18 2,810 294.5 10.48 2,669 300.4 11.25 83 8.2 9.84 89 10.1 11.32 111 13.4 12.04 147 18.5 12.60 393 26.4 6.71 457 38.2 8.37 547 57.4 10.49 522 59.0 11.31 2,145 191.2 8.92 2,036 202.9 9.96 1,947 203.1 10.44 1,703 178.3 10.47 3,190 340.7 10.68 2,904 336.6 11.59 2,710 324.1 11.96 2,427 300.4 12.38 342 30.8 9.00 314 30.0 9.57 298 29.1 9.75 267 26.7 10.00 ------- -------- ------- -------- ------- -------- ------- -------- 9,146 846.7 9.26 8,678 882.0 10.16 8,423 921.6 10.94 7,735 883.3 11.42 144 28.6 131 19.2 100 18.1 84 16.1 ------- -------- ------- -------- ------- -------- ------- -------- 9,002 875.3 9.57 8,547 901.2 10.38 8,323 939.7 11.16 7,651 899.4 11.63 ------- -------- ------- -------- ------- -------- ------- -------- 13,902 $1,217.1 8.75% 12,452 $1,226.7 9.85% 12,260 $1,288.1 10.51% 11,079 $1,202.3 10.85% ------- -------- ------- -------- ------- -------- ------- -------- 636 567 670 680 771 725 660 572 ------- ------- ------- ------- $15,165 $13,613 $13,490 $12,247 ======= ======= ======= ======= $ 1,749 1,401 $ 1,393 $ 1,365 2,513 $ 76.5 3.05% 2,210 $ 103.3 4.68% 2,070 $ 112.1 5.42% 2,017 $ 109.5 5.43% 1,770 64.1 3.62 1,326 64.9 4.89 1,228 61.3 4.99 1,198 60.1 5.01 1,251 56.7 4.53 1,523 100.1 6.57 1,714 142.8 8.34 1,648 149.2 9.06 4,066 206.8 5.09 4,223 288.5 6.83 3,894 307.1 7.89 3,244 265.4 8.18 153 5.7 3.73 69 3.8 5.56 40 3.2 7.85 34 3.2 9.45 ------- -------- ------- -------- ------- --------- ------- -------- 11,502 409.8 4.20 10,752 560.6 5.99 10,339 626.5 7.00 9,506 587.4 6.29 ------- -------- ------- -------- ------- --------- ------- -------- 2,062 72.9 3.54 1,406 81.2 5.77 1,731 136.5 7.89 1,431 124.7 8.72 300 22.1 7.36 219 18.4 8.41 201 17.8 8.88 204 18.3 8.95 ------- -------- ------- -------- ------- --------- ------- -------- 12,115 $ 504.8 4.17% 10,976 $ 660.2 6.01% 10,878 $ 780.8 7.18% 9,776 $ 730.4 7.47% ------- -------- ------- -------- ------- --------- ------- -------- 227 259 302 291 1,074 977 917 815 ------- ------- ------- ------- $15,165 $13,613 $13,490 $12,247 ======= ======= ======= ======= 4.58% 3.84% 3.33% 3.38% .54% .71% .81% .88% $ 712.3 5.12% $ 566.5 4.55% $ 507.3 4.14% $ 471.9 4.26% ======== ======== ========= ========

35 SELECTED ANNUAL INCOME STATEMENT DATA - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

YEAR ENDED DECEMBER 31, (IN THOUSANDS OF DOLLARS) 1994 1993 1992 1991 1990 1989 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INTEREST INCOME ........................ $ 1,219,721 $ 1,236,311 $ 1,202,286 $ 1,208,407 $ 1,266,770 $ 1,177,754 TOTAL INTEREST EXPENSE ....................... 463,671 440,111 504,846 659,918 780,759 730,386 ----------- ----------- ----------- ----------- ----------- ----------- NET INTEREST INCOME .......................... 756,050 796,200 697,440 548,489 486,011 447,368 Provision for loan losses .................... 15,284 79,294 81,562 62,061 76,434 43,739 ----------- ----------- ----------- ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES .................. 740,766 716,906 615,878 486,428 409,577 403,629 ----------- ----------- ----------- ----------- ----------- ----------- Service charges on deposit accounts .......... 76,836 73,172 64,471 57,024 50,559 44,643 Mortgage banking ............................. 50,367 99,185 63,297 41,753 33,949 14,904 Credit card fees ............................. 34,045 31,794 27,037 24,601 24,739 25,052 Trust services ............................... 28,448 27,948 25,129 24,435 23,769 23,878 Investment product sales ..................... 6,624 9,016 5,193 2,548 746 930 Net gains (losses) on sales of securities available for sale ......................... 2,481 22,973 19,174 10,978 (155) (66) Net investment securities gains .............. 113 4,216 17,158 5,973 734 368 Other ........................................ 36,446 37,474 28,680 28,545 30,087 39,711 ----------- ----------- ----------- ----------- ----------- ----------- TOTAL NON-INTEREST INCOME .................... 235,360 305,778 250,139 195,857 164,428 149,420 ----------- ----------- ----------- ----------- ----------- ----------- Salaries ..................................... 226,668 226,405 206,429 175,749 162,621 148,199 Commissions .................................. 10,775 20,992 18,310 9,307 5,908 3,583 Employee benefits ............................ 58,158 55,259 46,596 42,435 37,504 33,619 Net occupancy ................................ 40,291 39,955 36,272 33,542 32,464 27,503 Equipment .................................... 38,792 37,230 34,184 31,735 29,608 27,550 Credit card .................................. 26,539 24,248 20,474 17,726 17,068 18,339 FDIC insurance ............................... 25,271 25,322 25,500 22,126 12,200 7,717 Advertising .................................. 15,320 13,259 13,308 10,526 9,460 9,130 Printing and supplies ........................ 14,821 14,721 13,588 12,599 12,625 12,336 Legal and loan collection .................... 8,298 11,361 13,109 10,807 12,471 10,869 Other ........................................ 144,719 190,141 204,812 125,615 107,013 91,559 ----------- ----------- ----------- ----------- ----------- ----------- TOTAL NON-INTEREST EXPENSE ................... 609,652 658,893 632,582 492,167 438,942 390,404 ----------- ----------- ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES ................... 366,474 363,791 233,435 190,118 135,063 162,645 Provision for income taxes ................... 123,881 126,879 72,389 56,178 35,298 39,816 ----------- ----------- ----------- ----------- ----------- ----------- NET INCOME ................................... $ 242,593 $ 236,912 $ 161,046 $ 133,940 $ 99,765 $ 122,829 =========== =========== ============ =========== =========== =========== PER COMMON SHARE(1) Net income ................................. $ 1.87 $ 1.85 $ 1.27 $ 1.06 $ .79 $ 1.02 Cash dividends declared .................... $ .72 $ .60 $ .50 $ .46 $ .41 $ .35 FULLY TAX EQUIVALENT MARGIN: Net Interest Income .......................... $ 756,050 $ 796,200 $ 697,440 $ 548,489 $ 486,011 $ 447,368 Tax Equivalent Adjustment(2) ................. 9,505 11,670 14,897 18,007 21,321 24,515 ----------- ----------- ----------- ----------- ----------- ----------- Tax Equivalent Net Interest Income ........... $ 765,555 $ 807,870 $ 712,337 $ 566,496 $ 507,332 $ 471,883 =========== =========== =========== ============ =========== ===========

(1) Adjusted for the five-for-four stock split distributed in July 1994. (2) Calculated assuming a 35% tax rate in 1994 and 1993 and a 34% tax rate in years 1989 through 1992. 36 MARKET PRICES, KEY RATIOS AND STATISTICS, NON-PERFORMING ASSETS (QUARTERLY DATA) - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

QUARTERLY COMMON STOCK SUMMARY(1) 1994 1993 IV Q III Q II Q I Q IV Q III Q II Q I Q - ------------------------------------- ------------------------------------------- ------------------------------------------ High ................................ $18 7/8 $21 5/8 $22 1/4 $19 1/4 $21 3/8 $22 $20 1/4 $19 1/8 Low ................................. 16 5/8 18 1/8 17 7/8 17 3/4 16 1/4 19 5/8 17 3/8 15 5/8 Close ............................... 17 1/4 18 1/8 20 1/4 18 3/8 18 7/8 21 3/8 19 5/8 17 5/8 Cash dividends declared ............. .20 .20 .16 .16 .16 .16 .15 .13

(1) Restated for the five-for-four stock split distributed in July 1994. Note: Stock price quotations were obtained from NASDAQ. - --------------------------------------------------------------------------------

KEY RATIOS AND STATISTICS 1994 1993 MARGIN ANALYSIS - AS A % OF AVERAGE EARNING ASSETS(1) IV Q III Q II Q I Q IV Q III Q II Q I Q - -------------------------------------------- --------------------------------------- --------------------------------------- Interest income ............................ 8.11% 7.98% 7.91% 7.86% 7.84% 7.85% 8.16% 8.32% Interest expense ........................... 3.57 3.09 2.78 2.55 2.60 2.76 2.93 3.06 ---- ---- ---- ---- ---- ---- ---- ---- Net Interest Margin .................... 4.54% 4.89% 5.13% 5.31% 5.24% 5.09% 5.23% 5.26% RETURN ON Average total assets ....................... 1.22% 1.35% 1.64% 1.60% 1.44% 1.41% 1.39% 1.39% Average earning assets ..................... 1.32% 1.46% 1.78% 1.73% 1.56% 1.52% 1.50% 1.51% Average shareholders' equity ............... 14.78% 15.77% 19.43% 19.26% 19.60% 19.48% 19.56% 19.25%

(1) Presented on a fully tax equivalent basis assuming a 35% tax rate. - --------------------------------------------------------------------------------

NON-PERFORMING ASSETS 1994 1993 (QUARTER-END) (IN THOUSANDS OF DOLLARS) IV Q III Q II Q I Q IV Q III Q II Q I Q - ------------------------------ ------------------------------------------ --------------------------------------------- Non-accrual loans ............ $ 41,929 $ 40,313 $ 61,015 $ 60,060 $ 75,933 $ 85,092 $ 87,640 $ 78,923 Renegotiated loans ........... 2,550 13,547 5,737 8,048 1,254 1,875 1,770 2,495 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL NON-PERFORMING LOANS ... 44,479 53,860 66,752 68,108 77,187 86,967 89,410 81,418 -------- -------- -------- -------- -------- -------- -------- -------- Other real estate, net ....... 51,909 51,558 59,157 65,664 62,446 64,924 72,261 72,854 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL NON-PERFORMING ASSETS .. $ 96,388 $105,418 $125,909 $133,772 $139,633 $151,891 $161,671 $154,272 ======== ======== ======== ======== ======== ======== ======== ======== NON-PERFORMING LOANS AS A % OF TOTAL LOANS ........... .36% .45% .57% .61% .70% .83% .87% .84% NON-PERFORMING ASSETS AS A % OF TOTAL LOANS AND OTHER REAL ESTATE .......... .78% .88% 1.08% 1.20% 1.27% 1.44% 1.56% 1.59% ALLOWANCE FOR LOAN LOSSES AS A % OF NON-PERFORMING LOANS ...................... 450.76% 382.41% 318.31% 314.37% 274.44% 234.38% 222.64% 208.22% ALLOWANCE FOR LOAN LOSSES AND OTHER REAL ESTATE AS A % OF NON-PERFORMING ASSETS ..................... 193.13% 181.70% 160.22% 152.27% 143.41% 128.97% 119.69% 108.20% ACCRUING LOANS PAST DUE 90 DAYS OR MORE ............ $ 20,877 $ 24,182 $ 23,464 $ 19,601 $ 25,550 $ 25,891 $ 20,018 $ 21,180 ======== ======== ======== ======== ======== ======== ======== ========

37 CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES (QUARTERLY DATA) - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

FULLY TAX EQUIVALENT BASIS(1) 4TH QUARTER 1994 3RD QUARTER 1994 2ND QUARTER 1994 (IN MILLIONS OF DOLLARS) ----------------- ------------------ --------------- AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/ BALANCE RATE BALANCE RATE BALANCE RATE - ------------------------------------------------------------------ ----------------- ------------------ --------------- ASSETS Interest bearing deposits in banks ................................ $ 2 8.80% $ 3 7.46% $ 3 8.58% Trading account securities ........................................ 15 6.21 17 6.61 12 6.64 Federal funds sold and securities purchased under resale agreements ............................................... 115 4.91 188 4.48 117 3.76 Mortgages held for sale ........................................... 135 6.75 214 7.74 417 7.19 Securities available for sale ..................................... 2,977 6.33 2,553 5.98 2,788 6.26 Investment securities U.S. Treasury and Federal agencies .............................. 311 6.75 318 6.70 250 6.32 States and political subdivisions ............................... 160 10.50 176 10.61 206 10.80 Other ........................................................... 4 14.66 4 8.08 24 4.72 ------ ------ ------ Total investment securities .................................. 475 8.09 498 8.09 480 8.15 ------ ------ ------ Loans Commercial ...................................................... 3,562 8.75 3,511 8.47 3,519 8.18 Tax-free ........................................................ 59 10.28 62 9.87 67 10.09 Real estate Construction .................................................. 302 7.82 275 8.02 289 7.63 Mortgage ...................................................... 2,905 8.06 2,822 8.04 2,736 7.75 Consumer ........................................................ 4,578 8.24 4,440 8.12 4,243 8.15 Lease financing ................................................. 620 7.24 574 7.26 534 7.38 ------ ------ ------ Total loans ................................................... 12,026 8.29 11,684 8.17 11,388 8.02 Allowance for loan losses ..................................... 205 212 216 ------ ------ ------ Net loans ..................................................... 11,821 8.60 11,472 8.48 11,172 8.37 ------ ------ ------ Total earning assets .......................................... 15,745 8.11% 15,158 7.98% 15,205 7.91% ------ ------ ------ Cash and due from banks ........................................... 770 737 735 All other assets .................................................. 759 781 792 ------ ------ ------ TOTAL ASSETS ...................................................... $17,069 $16,465 $16,516 ====== ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits Non-interest bearing ............................................ $ 2,127 $ 2,061 $2,096 Interest bearing ................................................ 2,652 2.30% 2,695 2.21% 2,744 2.16% Savings deposits .................................................. 2,171 2.43 2,264 2.23 2,336 2.02 Certificates of deposit of $100,000 or more ....................... 581 4.88 589 4.38 599 3.86 Other domestic time deposits ...................................... 3,678 4.62 3,553 4.23 3,474 4.02 Foreign time deposits ............................................. 296 5.41 199 4.66 306 3.82 ------ ------ ------ Total deposits .................................................. 11,505 3.50 11,359 3.18 11,555 2.97 ------ ------ ------ Short-term borrowings ............................................. 2,797 5.06 2,519 4.30 2,468 3.58 Long-term debt .................................................... 1,138 8.19 938 6.99 831 6.44 ------ ------ ------ Interest bearing liabilities .................................... 13,313 4.23% 12,756 3.68% 12,758 3.31% ------ ------ ------ All other liabilities ............................................. 220 242 270 Shareholders' equity .............................................. 1,409 1,406 1,392 ------ ------ ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........................ $17,069 $16,465 $16,516 ====== ====== ====== Net interest rate spread .......................................... 3.88% 4.30% 4.60% Impact of non-interest bearing funds on margin .................... .66% .59% .53% NET INTEREST MARGIN ............................................... 4.54% 4.89% 5.13%

(1) Fully tax equivalent yields are calculated assuming a 35% tax rate. 38 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

1ST QUARTER 1994 4TH QUARTER 1993 3RD QUARTER 1993 2ND QUARTER 1993 1ST QUARTER 1993 -------------------- ------------------- ------------------ -------------------- ------------------ AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/ AVERAG YIELD/ AVERAGE YIELD/ BALANCE RATE BALANCE RATE BALANCE RATE BALANCE RATE BALANCE RATE -------------------- ------------------ ------------------ -------------------- ------------------ $ 6 6.65% $ 14 3.85% $ 15 4.35% $ 18 3.89% $ 56 4.28% 13 5.09 15 3.96 8 5.34 10 5.81 7 5.89 40 3.44 75 3.60 99 3.21 60 3.06 80 3.56 708 6.75 1,015 6.90 904 7.09 880 7.53 501 8.03 3,469 5.98 2,557 5.99 1,840 5.66 704 6.55 307 6.92 146 6.61 1,447 5.76 2,187 6.12 3,365 6.18 3,708 6.30 220 11.12 238 11.10 253 11.20 267 11.36 280 11.18 33 4.84 58 4.63 147 5.17 241 5.12 243 5.40 ------- ------- ------- ------- ------- 399 8.96 1,743 6.46 2,587 6.56 3,873 6.47 4,231 6.57 ------- ------- ------- ------- ------- 3,410 8.39 3,346 8.52 3,218 8.24 3,227 8.58 3,068 8.76 69 9.50 73 9.46 78 9.41 79 9.37 80 9.41 325 7.55 350 7.11 366 7.49 373 6.84 385 6.93 2,675 7.78 2,597 8.12 2,574 8.05 2,444 8.36 2,271 8.46 3,996 8.33 3,846 8.54 3,674 8.87 3,456 9.27 3,315 9.67 495 7.55 468 7.85 440 8.00 407 8.22 380 8.46 ------- ------- ------- ------- ------- 10,970 8.16 10,680 8.36 10,350 8.39 9,986 8.69 9,499 8.92 216 211 207 190 165 ------- ------- ------- ------- ------- 10,754 8.51 10,469 8.64 10,143 8.69 9,796 9.02 9,334 9.22 ------- ------- ------- ------- ------- 15,605 7.86% 16,099 7.84% 15,803 7.85% 15,531 8.16% 14,681 8.32% ------- ------- ------- ------- ------- 720 754 698 686 631 842 819 830 822 803 ------- ------- ------- ------- ------- $16,951 $17,461 $17,124 $16,849 $15,950 ======= ======= ======= ======= ======= $2,181 $ 2,408 $ 2,177 $2,132 $ 1,839 2,763 2.15% 2,719 2.30% 2,669 2.36% 2,649 2.41% 2,610 2.51% 2,358 1.93 2,327 2.21 2,312 2.56 2,211 2.70 2,063 2.90 658 3.80 764 3.26 781 3.69 885 3.99 896 3.94 3,385 3.91 3,413 4.03 3,514 3.97 3,645 4.33 3,720 4.48 344 3.38 418 3.42 531 3.24 614 3.25 253 3.39 ------- ------- ------- ------- ------- 11,689 2.88 12,049 3.02 11,984 3.14 12,136 3.36 11,381 3.52 ------- ------- ------- ------- ------- 2,733 3.22 3,074 3.08 2,972 3.24 2,646 3.18 2,604 3.17 800 4.59 734 4.54 653 5.11 609 5.61 561 5.65 ------- ------- ------- ------- ------- 13,041 3.06% 13,449 3.11% 13,432 3.26% 13,259 3.43% 12,707 3.54% ------- ------- ------- ------- ------- 324 321 278 263 255 1,405 1,283 1,237 1,195 1,149 ------- ------- ------- ------- ------- $16,951 $17,461 $17,124 $16,849 $15,950 ======= ======= ======= ======= ======= 4.80% 4.73% 4.59% 4.73% 4.78% .51% .51% .50% .50% .48% 5.31% 5.24% 5.09% 5.23% 5.26%

39 SELECTED QUARTERLY INCOME STATEMENT DATA - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

1994 1993 (IN THOUSANDS OF DOLLARS) IVQ III Q II Q I Q IV Q III Q II Q I Q - ---------------------------------- ----------------------------------------------- --------------------------------------------- TOTAL INTEREST INCOME ............ $ 318,875 $ 301,724 $ 297,485 $ 301,637 $ 314,369 $ 308,934 $ 313,259 $ 299,749 TOTAL INTEREST EXPENSE ........... 141,625 118,173 105,403 98,470 105,456 110,230 113,416 111,009 --------- --------- --------- --------- --------- --------- --------- --------- NET INTEREST INCOME .............. 177,250 183,551 192,082 203,167 208,913 198,704 199,843 188,740 Provision for loan losses ........ 2,488 1,113 3,219 8,464 15,365 15,280 25,170 23,479 --------- --------- --------- --------- --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ...... 174,762 182,438 188,863 194,703 193,548 183,424 174,673 165,261 --------- --------- --------- --------- --------- --------- --------- --------- Service charges on deposit accounts ............... 19,417 19,628 19,225 18,566 18,700 18,838 18,378 17,256 Mortgage banking ................. 8,630 9,246 15,418 17,073 36,031 25,707 21,187 16,260 Credit card fees ................. 9,728 9,451 7,933 6,933 8,937 8,500 7,693 6,664 Trust services ................... 6,686 6,732 6,902 8,128 7,015 6,885 6,697 7,351 Investment product sales ......... 1,307 1,694 1,750 1,873 2,655 2,153 2,295 1,913 Net gains (losses) on sales of securities available for sale .. (64) 735 62 1,748 565 16,168 1,505 4,735 Net investment securities gains (losses) ................. 9 (87) 141 50 336 778 1,598 1,504 Other ............................ 9,012 9,999 10,553 6,882 7,786 11,692 10,066 7,930 --------- --------- --------- --------- --------- --------- --------- --------- TOTAL NON-INTEREST INCOME ........ 54,725 57,398 61,984 61,253 82,025 90,721 69,419 63,613 --------- --------- --------- --------- --------- --------- --------- --------- Salaries ......................... 54,314 57,740 57,535 57,079 59,651 57,444 55,942 53,368 Commissions ...................... 1,523 3,547 2,624 3,081 5,434 6,025 5,968 3,565 Employee benefits ................ 13,091 13,388 15,244 16,435 14,365 13,343 13,798 13,753 Net occupancy .................... 9,962 10,593 9,621 10,115 10,030 10,526 9,466 9,933 Equipment ........................ 10,151 9,651 9,491 9,499 9,960 9,225 9,247 8,798 Credit card ...................... 7,281 7,382 6,219 5,657 6,887 6,562 5,705 5,094 FDIC insurance ................... 6,218 5,992 6,530 6,531 5,739 5,736 6,757 7,090 Advertising ...................... 4,152 2,684 4,296 4,188 3,231 3,343 3,307 3,378 Printing and supplies ............ 3,911 3,734 3,710 3,466 4,048 3,675 3,636 3,362 Legal and loan collection ........ 3,370 1,719 1,808 1,401 4,065 2,717 2,319 2,260 Other ............................ 36,498 38,531 33,117 36,573 48,681 62,672 41,590 37,198 --------- --------- --------- --------- --------- --------- --------- --------- TOTAL NON-INTEREST EXPENSE ....... 150,471 154,961 150,195 154,025 172,091 181,268 157,735 147,799 --------- --------- --------- --------- --------- --------- --------- --------- INCOME BEFORE INCOME TAXES ....... 79,016 84,875 100,652 101,931 103,482 92,877 86,357 81,075 Provision for income taxes ....... 26,520 28,973 33,199 35,189 40,124 32,142 28,086 26,527 --------- --------- --------- --------- --------- --------- --------- --------- NET INCOME ....................... $ 52,496 $ 55,902 $ 67,453 $ 66,742 $ 63,358 $ 60,735 $ 58,271 $ 54,548 ========= ========= ========= ========= ========= ========= ========= ========= PER COMMON SHARE(1) Net income ..................... $ .41 $ .43 $ .52 $ .51 $ .49 $ .47 $ .46 $ .43 Cash dividends declared ........ $ .20 $ .20 $ .16 $ .16 $ .16 $ .16 $ .15 $ .13 FULLY TAX EQUIVALENT MARGIN: Net Interest Income .............. $ 177,250 $ 183,551 $ 192,082 $ 203,167 $ 208,913 $ 198,704 $ 199,843 $ 188,740 Tax Equivalent Adjustment(2) ..... 2,042 2,211 2,545 2,707 2,708 2,882 3,007 3,073 --------- --------- --------- --------- --------- --------- --------- --------- Tax Equivalent Net Interest Income $ 179,292 $ 185,762 $ 194,627 $ 205,874 $ 211,621 $ 201,586 $ 202,850 $ 191,813 ========= ========= ========= ========= ========= ========= ========= =========

(1) Adjusted for the five-for-four stock split distributed in July 1994. (2) Calculated assuming a 35% tax rate. 40 LOAN LOSS EXPERIENCE (QUARTERLY DATA) - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------ 1994 1993 (IN THOUSANDS OF DOLLARS) IV Q III Q II Q I Q IV Q III Q II Q I Q - ------------------------------------------------------------------------------------------------------------------------------------ ALLOWANCE FOR LOAN LOSSES, BEGINNING OF PERIOD ........ $ 205,964 $ 212,479 $ 214,111 $ 211,835 $ 203,830 $ 199,058 $ 169,525 $ 153,654 Loan losses .................. (14,602) (12,613) (8,932) (9,975) (11,783) (13,664) (9,281) (10,864) Recoveries of loans previously charged off ..... 5,249 4,985 4,081 3,787 3,159 3,660 3,163 3,256 Provision for loan losses .... 2,488 1,113 3,219 8,464 15,365 15,280 25,170 23,479 Allowance of assets acquired (sold) ............ 1,393 -- -- -- 1,264 (504) 10,481 -- --------- --------- --------- --------- --------- --------- --------- --------- ALLOWANCE FOR LOAN LOSSES, END OF PERIOD .............. $ 200,492 $ 205,964 $ 212,479 $ 214,111 $ 211,835 $ 203,830 $ 199,058 $ 169,525 ========= ========= ========= ========= ========= ========= ========= ========= AS A % OF AVERAGE TOTAL LOANS Net loan losses - annualized .31% .26% .17% .23% .32% .38% .25% .32% Provision for loan losses - annualized ............... .08% .04% .11% .31% .57% .59% 1.01% 1.00% Allowance for loan losses as a % of total loans (end of period) ............ 1.63% 1.73% 1.83% 1.93% 1.93% 1.94% 1.94% 1.75% Net loan loss coverage(1) .... 8.71x 11.27x 21.41x 17.84x 13.78x 10.81x 18.23x 13.74x

(1) Income before income taxes and the provision for loan losses to net loan losses. 41 CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

(IN THOUSANDS OF DOLLARS) DECEMBER 31, 1994 1993 ------------ ------------ ASSETS Cash and due from banks ...................................................... $ 885,327 $ 704,007 Interest bearing deposits in banks ........................................... 3,059 12,610 Trading account securities ................................................... 9,427 21,964 Federal funds sold and securities purchased under resale agreements .......... 5,329 41,072 Mortgages held for sale ...................................................... 138,997 1,032,338 Securities available for sale -- at fair value in 1994; fair value in 1993 of $3,947,751 ......................................................... 3,304,493 3,840,064 Investment securities -- fair value $474,147 and $373,567, respectively ...... 475,692 359,345 Total loans .................................................................. 12,264,436 10,953,928 Less allowance for loan losses ............................................. 200,492 211,835 ------------ ------------ Net loans .................................................................... 12,063,944 10,742,093 ------------ ------------ Premises and equipment ....................................................... 288,793 290,218 Customers' acceptance liability .............................................. 53,883 48,603 Accrued income and other assets .............................................. 541,696 526,393 ------------ ------------ TOTAL ASSETS ................................................................. $ 17,770,640 $ 17,618,707 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits Non-interest bearing ....................................................... $ 2,169,095 $ 2,068,515 Interest bearing ........................................................... 2,646,785 2,808,951 Savings deposits ............................................................. 2,227,406 2,716,553 Certificates of deposit of $100,000 or more .................................. 605,763 674,349 Other domestic time deposits ................................................. 3,909,061 3,412,685 Foreign time deposits ........................................................ 406,957 363,637 ------------ ------------ Total deposits ............................................................. 11,965,067 12,044,690 ------------ ------------ Short-term borrowings ........................................................ 2,898,201 3,195,463 Bank acceptances outstanding ................................................. 53,883 48,603 Long-term debt ............................................................... 1,214,052 762,310 Accrued expenses and other liabilities ....................................... 227,617 243,004 ------------ ------------ Total Liabilities .......................................................... 16,358,820 16,294,070 ------------ ------------ Shareholders' equity Preferred stock -- authorized 6,617,808 shares; none outstanding Common stock -- without par value; authorized 200,000,000 shares; issued and outstanding -- 131,119,504 and 104,410,737 shares, respectively 912,318 902,107 Less 904,739 and 608,032 treasury shares, respectively ..................... (16,577) (15,290) Capital surplus ............................................................ 215,084 216,168 Net unrealized losses on securities available for sale ..................... (63,289) -- Retained earnings .......................................................... 364,284 221,652 ------------ ------------ Total Shareholders' Equity ................................................. 1,411,820 1,324,637 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................... $ 17,770,640 $ 17,618,707 ============ ============

See notes to consolidated financial statements. 42 CONSOLIDATED STATEMENTS OF INCOME - -------------------------------------------------------------------------------- Huntington Banchsares Incorporated - --------------------------------------------------------------------------------

(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ Interest and fee income Loans ............................................. $ 975,604 $ 896,932 $ 872,308 Investment securities Taxable ......................................... 17,849 173,247 233,676 Tax-exempt ...................................... 13,663 20,268 20,155 Securities available for sale ..................... 180,745 81,548 11,043 Mortgages held for sale ........................... 25,886 60,188 55,076 Trading account ................................... 716 413 1,137 Other ............................................. 5,258 3,715 8,891 ------------ ------------ ------------ TOTAL INTEREST INCOME ........................... 1,219,721 1,236,311 1,202,286 ------------ ------------ ------------ Interest expense Deposits .......................................... 294,780 317,545 409,798 Short-term borrowings ............................. 106,646 89,444 72,967 Long-term debt .................................... 62,245 33,122 22,081 ------------ ------------ ------------ TOTAL INTEREST EXPENSE ............................ 463,671 440,111 504,846 ------------ ------------ ------------ NET INTEREST INCOME ............................... 756,050 796,200 697,440 ------------ ------------ ------------ Provision for loan losses ........................... 15,284 79,294 81,562 ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 740,766 716,906 615,878 ------------ ------------ ------------ Total non-interest income ........................... 235,360 305,778 250,139 Total non-interest expense .......................... 609,652 658,893 632,582 ------------ ------------ ------------ INCOME BEFORE INCOME TAX EXPENSE .................. 366,474 363,791 233,435 Provision for income taxes .......................... 123,881 126,879 72,389 ------------ ------------ ------------ NET INCOME ........................................ $ 242,593 $ 236,912 $ 161,046 ============ ============ ============ PER COMMON SHARE(1) Net income ........................................ $ 1.87 $ 1.85 $ 1.27 Cash dividends .................................... $ .72 $ .60 $ .50 AVERAGE COMMON SHARES OUTSTANDING ................... 129,723,581 128,313,640 126,425,920

See notes to consolidated financial statements. (1) Restated for the five-for-four stock split distributed in July 1994. 43 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- Huntington Bancshares Incorporated - --------------------------------------------------------------------------------

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) NET UNREALIZED COMMON COMMON TREASURY TREASURY CAPITAL GAINS (LOSSES) RETAINED SHARES STOCK SHARES STOCK SURPLUS ON SECURITIES EARNINGS TOTAL - ----------------------------------------------------------------------------------------------------------------------------------- BALANCE -- JANUARY 1, 1992 ............. 77,197 $ 634,031 (509) $ (9,018) $ 203,062 $ 190,235 $1,018,310 Net income ............................. 161,046 161,046 Cash dividends declared ($.50 per share) ..................... (52,423) (52,423) Stock options exercised ................ 280 4,957 (1,655) (1,078) 2,224 Five-for-four stock split .............. 15,497 (72) (115) (115) Treasury shares purchased .............. (900) (19,149) (19,149) Treasury shares sold: Shareholder dividend reinvestment plan .................. 357 6,830 483 (31) 7,282 Employee stock purchase plan ......... 541 10,311 1,144 11,455 Change in valuation allowance for marketable equity securities ..... 141 141 Pre-merger transactions of pooled banks ................................ 1,046 732 9,569 (9,403) 898 ------- ---------- ------ ---------- ---------- ---------- ---------- ---------- BALANCE -- DECEMBER 31, 1992 ............ 93,740 634,763 (303) (6,069) 212,603 -- 288,372 1,129,669 ------- ---------- ------ ---------- ---------- ---------- ---------- ---------- Stock issued for acquisitions .......... 1,972 42,052 42,052 Net income ............................. 236,912 236,912 Cash dividends declared ($.60 per share) ............................... (68,064) (68,064) Stock options exercised ................ 336 8,278 1,049 (6,897) 2,430 10% stock dividend ..................... 8,479 224,544 (18) (224,747) (203) Treasury shares purchased .............. (1,447) (36,795) (36,795) Treasury shares sold: Shareholder dividend reinvestment plan ............................... 408 9,561 353 (59) 9,855 Employee stock purchase plan ......... 416 9,735 691 (117) 10,309 Conversion of convertible notes ........ 36 346 346 Change in valuation allowance for marketable equity securities ..... 1,098 1,098 Pre-merger transactions of pooled banks ............................... 184 402 1,472 (4,846) (2,972) ------- ---------- ------ ---------- ---------- ---------- ---------- ---------- BALANCE -- DECEMBER 31, 1993 ............104,411 902,107 (608) (15,290) 216,168 -- 221,652 1,324,637 ------- ---------- ------ ---------- ---------- ---------- ---------- ---------- Change in accounting method for securities ....................... $ 65,548 1,624 67,172 Stock issued for acquisition ........... 573 9,842 1,318 24,984 (2,026) 32,800 Net income ............................. 242,593 242,593 Cash dividends declared ($.72 per share) ..................... (93,176) (93,176) Stock options exercised ................ 290 6,625 775 (5,669) 1,731 Five-for-four stock split .............. 26,088 (160) Treasury shares purchased .............. (3,537) (73,634) (73,634) Treasury shares sold: Shareholder dividend reinvestment plan ............................... 1,159 26,635 30 (2,151) 24,514 Employee stock purchase plan ......... 633 14,103 137 (589) 13,651 Conversion of convertible notes ........ 48 369 369 Change in net unrealized gains (losses) on securities available for sale ..... (128,837) (128,837) ------- ---------- ------ ---------- ---------- ---------- ---------- ---------- BALANCE -- DECEMBER 31, 1994 ............131,120 $ 912,318 (905) $ (16,577) $ 215,084 $ (63,289) $ 364,284 $1,411,820 ======= ========== ====== ========== ========== ========== ========== ========== See notes to consolidated financial statements.

44 CONSOLIDATED STATEMENTS OF CASH FLOWS

- ------------------------------------------------------------------------------------------------------------------------------------ Huntington Bancshares Incorporated - ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS) YEAR ENDED DECEMBER 31, 1994 1993 1992 ------------ ------------ ------------ OPERATING ACTIVITIES Net Income ............................................. $ 242,593 $ 236,912 $ 161,046 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses ............................ 15,284 79,294 81,562 Provision for other real estate ...................... (4,999) 1,051 52,253 Provision for depreciation and amortization .......... 84,215 127,459 76,856 Deferred income tax expense(benefit) ................. 57,329 (30,412) (26,014) Decrease(increase) in trading account securities ..... 12,537 (20,681) 2,670 Decrease(increase) in mortgages held for sale ........ 893,341 (288,296) (99,768) Net gains on sales of securities available for sale .. (2,481) (22,973) (19,174) Net gains on calls and sales of investment securities (113) (4,216) (17,158) (Increase)decrease in accrued income receivable ..... (247) 3,924 (13,817) Net increase in other assets ......................... (54,963) (68,255) (67,016) Decrease in accrued expenses ......................... (22,033) (8,775) (8,801) Net (decrease)increase in other liabilities ......... (41,018) 54,532 13,612 Other ................................................ 565 3,413 1,893 ----------- ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES .......... 1,180,010 62,977 138,144 ----------- ----------- ----------- INVESTING ACTIVITIES Decrease(increase) in interest bearing deposits in banks 9,551 152,077 (103,504) Proceeds from: Maturities of investment securities .................. 32,923 308,654 615,928 Maturities of securities available for sale .......... 317,031 542,062 24,500 Calls of investment securities ....................... 53,104 -- -- Sales of investment securities ....................... -- 252,590 918,517 Sales and calls of securities available for sale ..... 2,316,843 2,306,111 991,360 Purchases of: Investment securities ................................ (230,676) (239,164) (3,363,276) Securities available for sale ........................ (2,146,362) (2,956,527) -- Net loan originations .................................. (1,187,428) (959,314) (736,814) Proceeds from disposal of premises and equipment ....... 1,200 13,035 1,360 Purchases of premises and equipment .................... (25,938) (56,820) (22,986) Proceeds from sales of other real estate ............... 44,484 24,169 23,698 Net cash received(paid) from purchase/sale of subsidiary 2,670 (10,201) 17,346 ----------- ----------- ----------- NET CASH USED FOR INVESTING ACTIVITIES ............... (812,598) (623,328) (1,633,871) ----------- ----------- ----------- FINANCING ACTIVITIES (Decrease)increase in total deposits ................... (240,219) (300,206) 471,758 (Decrease)increase in short-term borrowings ............ (303,287) 517,008 911,969 Net proceeds from issuance of long-term debt ........... 475,000 560,961 332,417 Payment of long-term debt .............................. (26,415) (278,611) (114,578) Dividends on common stock .............................. (68,662) (58,412) (45,256) Acquisition of treasury stock .......................... (73,634) (36,795) (19,149) Sales of treasury stock ................................ 13,651 10,309 11,455 Proceeds from exercise of stock options ................ 1,731 2,430 2,224 Pre-merger transactions of pooled banks ................ -- (2,972) (5,544) ----------- ----------- ----------- NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (221,835) 413,712 1,545,296 ----------- ----------- ----------- CHANGE IN CASH AND CASH EQUIVALENTS ................ 145,577 (146,639) 49,569 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ..... 745,079 891,718 842,149 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR ........... $ 890,656 $ 745,079 $ 891,718 =========== =========== ===========

NOTE: Huntington made interest payments of $451,694,000, $430,701,000, and $510,830,000 in 1994, 1993, and 1992, respectively. Federal income tax payments were $97,775,000 in 1994, $155,457,000 in 1993, and $93,717,000 in 1992. See notes to consolidated financial statements. 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. Accounting Policies BASIS OF PRESENTATION: The consolidated financial statements include the accounts of Huntington Bancshares Incorporated (Huntington) and its subsidiaries and are presented on the basis of generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in the prior year's financial statements have been reclassified to conform with the 1994 presentation. The reclassifications had no effect on net income. SECURITIES: Effective January 1, 1994, Huntington adopted Statement of Financial Accounting Standards No. 115 (FAS 115), "Accounting for Certain Investments in Debt and Equity Securities". Debt securities that Huntington has both the positive intent and ability to hold to maturity are classified as investments and are carried at amortized cost. Securities purchased with the intention of recognizing short-term profits are placed in the trading account and carried at fair value. Securities not classified as investments or trading are designated available-for-sale and carried at fair value. Unrealized gains and losses on securities classified as available-for-sale are carried as a separate component of shareholders' equity. Unrealized gains and losses on securities classified as trading are reported in earnings. The amortized cost of specific securities sold is used to compute the realized gain or loss at the date of sale. Prior to the adoption of FAS 115, if Huntington had the intent and the ability at the time of purchase to hold securities until maturity or on a long-term basis, they were classified as investment securities and reported at amortized cost. Securities to be held for indefinite periods of time and not intended to be held to maturity or on a long-term basis were considered held for sale and carried at the lower of aggregate cost or market value, with net unrealized losses reflected in earnings. Marketable equity securities were also reported at the lower of aggregate cost or market value, with net unrealized losses reflected as a reduction of shareholders' equity. LOANS: Loans are stated at the principal amount outstanding, net of unearned discount. Interest on loans is recognized primarily on the accrual basis using the "simple interest" method. The accrual of interest income is discontinued when the collection of principal, interest, or both is doubtful. When interest accruals are suspended, interest income accrued in the current period is reversed. Huntington principally uses the financing method of accounting for lease contracts. Under this method, a receivable is recorded for the total amount of lease payments due; lease income, represented by the excess of the total contract receivable plus estimated residual value of the leased asset over the asset cost is recognized in decreasing amounts over the term of the contract, resulting in a level rate of return on the outstanding principal. Significant nonrefundable loan fees and certain loan origination costs are being amortized over the commitment period and/or the term of the loan as an adjustment to the yield. ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses reflects management's judgment as to the level considered appropriate to absorb potential losses inherent in the portfolio. This judgment is based on a review of individual loans, historical loss experience, economic conditions, portfolio trends, and other factors. The allowance is increased by provisions charged to earnings and reduced by charge-offs, net of recoveries. OTHER REAL ESTATE: Other real estate, acquired through partial or total satisfaction of loans, is included in other assets and carried at the lower of cost or fair value. At the date of acquisition, any losses are charged to the allowance for loan losses. Subsequent declines in fair value which are considered permanent or realized losses from disposition of the property are charged to the reserve for other real estate. PREMISES AND EQUIPMENT: Premises and equipment are stated at cost, less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the related assets. Estimated useful lives employed are on average 30 years for premises and 3 to 10 years for equipment. INCOME TAXES: The amounts provided for income taxes are based on the amounts of current and deferred taxes payable (or refundable) at the date of the consolidated financial statements. A deferred tax liability (or asset) is recognized for temporary differences that will result in net taxable or deductible amounts in future years when the temporary differences reverse. MORTGAGE BANKING ACTIVITIES: Mortgages held for sale are valued at the lower of cost or aggregate market value as determined by outstanding commitments from investors. The cost of purchased mortgage servicing rights is capitalized and amortized over the period of, and in proportion to, the related net servicing income to be generated from the various servicing portfolios acquired. Huntington performs evaluations of capitalized servicing rights, including excess servicing receivables arising from loans sold in the secondary market, comparing amortized cost to the estimated value of the discounted future net revenues on an aggregate basis. Adjustments to reduce amortized cost to estimated fair value are recorded as direct reductions in carrying value and are included in non-interest income or non-interest expense, as appropriate. PURCHASE BUSINESS COMBINATIONS: Net assets of entities acquired in transactions accounted for under the purchase method of accounting are recorded at estimated fair value at the date of acquisition. The excess of cost over the fair value of net assets acquired (goodwill) is being amortized over periods ranging from 15 to 25 years. Core deposits and other identifiable acquired intangible assets are amortized on an accelerated basis over their estimated useful lives. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS: Off-balance sheet financial instruments used for trading purposes are recorded in the balance sheet at fair value as of the reporting date. Realized and unrealized changes in fair value are recognized in net trading income in the period in which the changes occur. Amounts receivable or payable under interest rate swap, interest rate cap/floor and forward delivery agreements used in connection with Huntington's asset/liability management activities are recognized as income or expense according to the nature of the designated on-balance sheet financial assets and liabilities. With the exception of 46 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- forward delivery contracts, amounts accrued under these agreements are included as a component of interest income or expense. Amounts receivable or payable on forward delivery contracts, which are used exclusively to manage interest rate risk on loans to be originated for resale in the secondary market, are included in non-interest income along with related mortgage banking activities. Gains and losses on qualifying hedges, consisting principally of interest rate futures, are deferred and recognized in income or expense in the period the hedged transaction occurs. Gains and losses from the early termination of interest rate swaps and other asset/liability management positions for which Huntington applies accrual accounting are also deferred and are amortized over the remaining term of the original contracts. CASH EQUIVALENTS: Cash equivalents are defined as "Cash and due from banks" and "Federal funds sold and securities purchased under resale agreements." EARNINGS PER SHARE: Per common share amounts have been calculated based upon the weighted average number of common shares outstanding in each period, as adjusted for the five-for-four stock split distributed in July 1994. The dilutive effects of unexercised stock options are not significant. - -------------------------------------------------------------------------------- 2. RESTRICTIONS ON CASH AND DUE FROM BANKS The bank and thrift subsidiaries of Huntington are required to maintain reserve balances with the Federal Reserve Bank. During 1994, the average balances were $133,012,738. - -------------------------------------------------------------------------------- 3. SECURITIES AVAILABLE FOR SALE In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Huntington adopted the provisions of the new standard for investments held as of or acquired after January 1, 1994. In accordance with the Statement, prior period financial statements have not been restated to reflect the change in accounting principle. The opening balance of shareholders' equity was increased by $67,172,000 (net of $36,170,000 in deferred income taxes) to reflect the net unrealized holding gains on securities classified as available-for-sale previously carried at the lower of amortized cost or market value. Amortized cost, unrealized gains and losses, and fair values of securities available for sale as of December 31, 1994 and 1993 were:

- ------------------------------------------------------------------------------------------------------------------------------------ UNREALIZED --------------------- AMORTIZED GROSS GROSS FAIR (IN THOUSANDS OF DOLLARS) COST GAINS LOSSES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ AT DECEMBER 31, 1994 U.S. Treasury .............................................. $ 854,414 $ 475 $ 38,798 $ 816,091 Federal Agencies Mortgage-backed securities ............................... 501,530 1,473 13,246 489,757 Other agencies ........................................... 1,744,122 805 44,498 1,700,429 ---------- ---------- ---------- ---------- Total U.S. Treasury and agencies ......................... 3,100,066 2,753 96,542 3,006,277 ---------- ---------- ---------- ---------- Other debt securities ...................................... 293,686 -- 1,894 291,792 Marketable equity securities ............................... 8,359 -- 1,935 6,424 ---------- ---------- ---------- ---------- Total securities available for sale ................ $3,402,111 $ 2,753 $ 100,371 $3,304,493 ========== ========== ========== ==========

UNREALIZED -------------------------- AMORTIZED GROSS GROSS FAIR (IN THOUSANDS OF DOLLARS) COST GAINS LOSSES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ AT DECEMBER 31, 1993 U.S. Treasury .............................................. $1,988,945 $ 95,027 $ 6,348 $2,077,624 Federal Agencies Mortgage-backed securities ............................... 146,055 8,096 4,958 149,193 Other agencies ........................................... 1,556,190 13,915 11 1,570,094 ---------- ---------- ---------- ---------- Total U.S. Treasury and agencies ......................... 3,691,190 117,038 11,317 3,796,911 ---------- ---------- ---------- ---------- Other debt securities ...................................... 140,506 2,084 122 142,468 Marketable equity securities ............................... 8,368 4 -- 8,372 ---------- ---------- ---------- ---------- Total securities available for sale ................ $3,840,064 $ 119,126 $ 11,439 $3,947,751 ========== ========== ========== ==========

Amortized cost and fair values by contractual maturity at December 31, 1994 and 1993 were:

- --------------------------------------------------------------------------------- AMORTIZED FAIR (IN THOUSANDS OF DOLLARS) COST VALUE - --------------------------------------------------------------------------------- AT DECEMBER 31, 1994 Under 1 year ............................... $ 556,481 $ 551,937 1-5 years .................................. 1,281,983 1,254,657 6-10 years ................................. 1,084,241 1,043,878 Over 10 years .............................. 471,047 447,597 Marketable equity securities ............... 8,359 6,424 ---------- ---------- Total ................................. $3,402,111 $3,304,493 ========== ========== AT DECEMBER 31, 1993 Under 1 year ............................... $ 130,828 $ 132,853 1-5 years .................................. 2,160,439 2,264,122 6-10 years ................................. 592,213 591,796 Over 10 years .............................. 948,216 950,608 Marketable equity securities ............... 8,368 8,372 ---------- ---------- Total ................................. $3,840,064 $3,947,751 ========== ==========

Proceeds from sales of securities available for sale were $2,316,843,000, $2,306,111,000, and $991,360,000 during 1994, 1993, and 1992, respectively. Gross gains of $15,194,000, $25,894,000, and $19,284,000 were realized in 1994, 1993, and 1992, respectively. Gross losses totaled $12,713,000 in 1994, $2,921,000 in 1993, and $110,000 in 1992. - -------------------------------------------------------------------------------- 4. INVESTMENT SECURITIES Amortized cost, unrealized gains and losses, and fair values of investment securities as of December 31, 1994 and 1993 were:

- ------------------------------------------------------------------------------------ UNREALIZED ---------------- AMORTIZED GROSS GROSS FAIR (IN THOUSANDS OF DOLLARS) COST GAINS LOSSES VALUE - ------------------------------------------------------------------------------------ AT DECEMBER 31, 1994 U.S. Treasury ...................... $ 150 $ 150 Federal Agencies Mortgage-backed securities ....... 8,313 $ 23 $ 53 8,283 Other agencies ................... 309,250 97 4,193 305,154 -------- -------- -------- -------- Total U.S. Treasury and agencies . 317,713 120 4,246 313,587 -------- -------- -------- -------- States and political subdivisions .. 153,649 3,996 1,335 156,310 Other securities ................... 4,330 -- 80 4,250 -------- -------- -------- -------- Total investment securities ...... $475,692 $ 4,116 $ 5,661 $474,147 ======== ======== ======== ========

47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. INVESTMENT SECURITIES (CONTINUED)

- -------------------------------------------------------------------------------- UNREALIZED ---------------- AMORTIZED GROSS GROSS FAIR (IN THOUSANDS OF DOLLARS) COST GAINS LOSSES VALUE - -------------------------------------------------------------------------------- AT DECEMBER 31, 1993 U.S. Treasury ...................... $ 150 -- -- $ 150 Federal Agencies Mortgage-backed securities ....... 12,868 $ 576 -- 13,444 Other agencies ................... 81,448 1 -- 81,449 -------- -------- -------- -------- Total U.S. Treasury and agencies . 94,466 577 -- 95,043 -------- -------- -------- -------- States and political subdivisions .. 232,721 13,600 $ 137 246,184 Other securities ................... 32,158 195 13 32,340 -------- -------- -------- -------- Total investment securities ... $359,345 $ 14,372 $ 150 $373,567 ======== ======== ======== ========

Amortized cost and fair values by contractual maturity at December 31, 1994 and 1993 were:

- --------------------------------------------------------------------------------- AMORTIZED FAIR (IN THOUSANDS OF DOLLARS) COST VALUE - --------------------------------------------------------------------------------- AT DECEMBER 31, 1994 Under 1 year ............................. $ 58,019 $ 58,738 1-5 years ................................ 174,962 174,770 6-10 years ............................... 231,792 229,647 Over 10 years ............................ 10,919 10,992 -------- -------- Total .............................. $475,692 $474,147 ======== ======== AT DECEMBER 31, 1993 Under 1 year ............................. $ 71,522 $ 73,097 1-5 years ................................ 130,909 140,526 6-10 years ............................... 111,007 112,887 Over 10 years ............................ 45,907 47,057 -------- -------- Total ............................... $359,345 $373,567 ======== ========

There were no sales of investment securities in 1994. Proceeds from sales of investment securities were $252,590,000 and $918,517,000 during 1993 and 1992, respectively. Gross gains of $5,612,000, and $18,829,000 were realized in 1993 and 1992, respectively. Gross losses totaled $1,396,000 in 1993 and $1,671,000 in 1992. - -------------------------------------------------------------------------------- 5. LOANS At December 31, 1994 and 1993, loans were comprised of the following:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Commercial ....................................... $ 3,610,892 $ 3,434,738 Tax-free ......................................... 58,006 71,525 Real estate Construction ................................... 304,769 337,585 Commercial ..................................... 1,378,398 1,214,575 Residential .................................... 1,624,367 1,470,242 Consumer (net of $11,651 and $15,858 unearned discount, respectively) ........................ 4,641,946 3,943,666 Lease financing .................................. 646,058 481,597 ----------- ----------- Total loans ................................. $12,264,436 $10,953,928 =========== ===========

Huntington's subsidiaries have granted loans to its officers, directors, and their associates. Such loans were made in the ordinary course of business at the banking subsidiaries' normal credit terms, including interest rate and collateralization, and do not represent more than the normal risk of collection. These loans to related parties are summarized as follows:

- --------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - --------------------------------------------------------------------------------- Balance, beginning of year ................... $ 100,856 $ 108,594 Loans made ................................. 14,069 52,903 Repayments ................................. (21,066) (36,221) Changes due to status of executive officers and directors .................... 4,366 (24,420) --------- -------- Balance, end of year ......................... $ 98,225 $ 100,856 ========= =========

- -------------------------------------------------------------------------------- 6. ALLOWANCE FOR LOAN LOSSES A summary of the transactions in the allowance for loan losses for the three years ended December 31 follows:

- --------------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - --------------------------------------------------------------------------------------- Balance, beginning of year ........... $ 211,835 $ 153,654 $ 134,770 Allowance of assets acquired ......... 1,393 11,241 513 Loan losses .......................... (46,122) (45,592) (75,655) Recoveries of loans previously charged off ......................... 18,102 13,238 12,464 Provision for loan losses ............ 15,284 79,294 81,562 --------- --------- --------- Balance, end of year ................. $ 200,492 $ 211,835 $ 153,654 ========= ========= =========

In May 1993, the FASB issued Statement No. 114, "Accounting by Creditors for Impairment of a Loan". This Statement applies to financial statements for fiscal years beginning after December 15, 1994. It requires that impaired loans be measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The adoption of this Statement, which will occur in the first quarter of 1995, is not expected to have a material effect on Huntington's consolidated financial statements. - -------------------------------------------------------------------------------- 7. PREMISES AND EQUIPMENT At December 31, 1994 and 1993, premises and equipment stated at cost were comprised of the following:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Land ........................................... $ 44,445 $ 43,614 Buildings ...................................... 215,708 197,071 Leasehold improvements ......................... 79,350 82,979 Equipment ...................................... 250,049 234,728 -------- -------- Total premises and equipment .............. 589,552 558,392 Less accumulated depreciation and amortization ............................. 300,759 268,174 -------- -------- Net premises and equipment ..................... $288,793 $290,218 ======== ========

Depreciation and amortization charged to expense and rental income credited to occupancy expense were as follows:

- --------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - --------------------------------------------------------------------------------- Occupancy expense .................... $11,382 $10,720 $10,011 Equipment expense .................... 16,588 16,399 14,052 ------- ------- ------- Total depreciation and amortization ................. $27,970 $27,119 $24,063 ======= ======= ======= Rental income credited to occupancy expense .................. $11,798 $12,264 $14,490 ======= ======= =======

48 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. SHORT-TERM BORROWINGS At December 31, 1994 and 1993, short-term borrowings were comprised of the following:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Federal funds purchased and securities sold under agreements to repurchase .......... $1,442,138 $2,164,752 Medium-term bank notes with original maturities of less than one year ............. 624,000 -- Short-term bank notes .......................... 640,000 860,000 Commercial paper ............................... 50,987 97,392 Other .......................................... 141,076 73,319 ---------- ---------- Total short-term borrowings .................... $2,898,201 $3,195,463 ========== ==========

Commercial paper is issued by Huntington Bancshares Financial Corporation, a non-bank subsidiary with principal and interest guaranteed by Huntington Bancshares Incorporated (Parent Company). Huntington has the ability to borrow under a line of credit totaling $200,000,000 to support commercial paper borrowings or other short-term working capital needs. Under the terms of agreement, a quarterly fee must be paid and there are no compensating balances required. The line is cancelable, by Huntington, upon written notice and terminates September 30, 1997. There were no borrowings under the line in 1994 and 1993. Securities pledged to secure public or trust deposits, repurchase agreements, and for other purposes were $1,696,674,000 and $1,628,248,000 at December 31, 1994 and 1993, respectively. - -------------------------------------------------------------------------------- 9. LONG-TERM DEBT At December 31, 1994 and 1993, long-term debt was comprised of the following:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Notes, 7 5/8%, maturing in 2003, face value $150,000,000 at December 31, 1994 and 1993, net of discount .......................... $ 149,450 $ 149,382 Notes, 7 7/8%, maturing in 2002, face value $150,000,000 at December 31, 1994 and 1993, net of discount .......................... 148,994 148,866 Notes, 6 3/4%, maturing in 2003, face value $100,000,000 at December 31, 1994 and 1993, net of discount .......................... 99,720 99,687 Debentures, 7 7/8%, retired in 1994 ............... -- 10,519 Debentures, 7 7/8%, retired in 1994 ............... -- 9,368 Medium Term Bank Notes, 4.13% to 6.55% maturing in 1995 to 1997 ....................... 616,600 191,600 Medium Term Notes, 5.50% and 5.67%, maturing in 1995 ............................... 50,000 -- Federal Home Loan Bank Notes, 4.23% to 7.30%, maturing in 1995 to 1997 ............. 148,500 150,500 Other ............................................ 788 2,388 ---------- ---------- Total long-term debt ............................. $1,214,052 $ 762,310 ========== ==========

HOLDING COMPANY OBLIGATIONS: The 7 7/8% Notes are not redeemable prior to maturity in 2002 and do not provide for any sinking fund. The 7 7/8% Debentures due in 1997 and 1998 were redeemed at face value on May 23, 1994 at the option of Huntington. The Medium Term Notes were issued by Huntington in 1994 and are not redeemable prior to their maturity in 1995. SUBSIDIARY OBLIGATIONS: The 7 5/8% Notes and the 6 3/4% Notes were both issued by The Huntington National Bank in 1993. These Notes are not redeemable prior to maturity in 2003, and do not provide for any sinking fund. The Medium Term Bank Notes were issued by The Huntington National Bank in 1993 and 1994. These Notes are not redeemable prior to their maturity in 1995 through 1997. The Federal Home Loan Bank Notes mature serially over the period beginning February 1995 through November 1997. These advances cannot be prepaid without penalty. The terms of Huntington's long-term debt obligations contain various restrictive covenants including limitations on the acquisition of additional debt in excess of specified levels, dividend payments, and the disposition of subsidiaries. As of December 31, 1994, Huntington was in compliance with all such covenants. The following table summarizes the maturities of Huntington's long-term debt (excluding discounts).

- -------------------------------------------------------------------------------- YEAR (IN THOUSANDS OF DOLLARS) - -------------------------------------------------------------------------------- 1995 ................................................. $ 191,166 1996 ................................................. 567,362 1997 ................................................. 57,361 1998 ................................................. -- 1999 ................................................. -- 2000 and thereafter .................................. 400,000 ----------- 1,215,889 Discount ............................................. (1,837) ----------- Total ................................................ $ 1,214,052 ===========

- -------------------------------------------------------------------------------- 10. OPERATING LEASES At December 31, 1994, Huntington and its subsidiaries were obligated under noncancelable leases for land, buildings, and equipment. Many of these leases contain renewal options, and certain leases provide options to purchase the leased property during or at the expiration of the lease period at specified prices. Some leases contain escalation clauses calling for rentals to be adjusted for increased real estate taxes and other operating expenses, or proportionately adjusted for increases in the consumer or other price indices. 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10. OPERATING LEASES (CONTINUED) The following summary reflects the future minimum rental payments, by year, required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 1994.

- ------------------------------------------------------------------------ YEAR (IN THOUSANDS OF DOLLARS) - ------------------------------------------------------------------------ 1995 ..................................................... $ 22,156 1996 ..................................................... 18,860 1997 ..................................................... 15,285 1998 ..................................................... 13,491 1999 ..................................................... 13,107 2000 and thereafter ...................................... 137,741 -------- Total Minimum Payments ................................... $220,640 ========

Total minimum lease payments have not been reduced by minimum sublease rentals of $69,531,000 due in the future under noncancelable subleases. The rental expense for all operating leases, except those with terms of a month or less, was $23,797,000 for 1994 compared with $22,141,000 in 1993 and $19,476,000 in 1992. - -------------------------------------------------------------------------------- 11. OFF-BALANCE SHEET TRANSACTIONS In the normal course of business, Huntington is party to financial instruments with varying degrees of credit and market risk in excess of the amounts reflected as assets and liabilities in the consolidated balance sheet. Loan commitments and letters of credit are commonly used to meet the financing needs of customers, while interest rate swaps, futures, and caps/floors as well as forward delivery contracts are an integral part of Huntington's asset/liability management activities. To a much lesser extent, various financial instrument agreements are entered into to assist customers in managing their exposure to interest rate fluctuations. These customer agreements, for which Huntington counters interest rate risk through offsetting third party contracts, are considered trading activities. The credit risk arising from loan commitments and letters of credit, represented by their contract amounts, is essentially the same as that involved in extending loans to customers, and both arrangements are subject to Huntington's standard credit policies and procedures. Collateral is obtained based on management's credit assessment of the customer and, for commercial transactions, may consist of accounts receivable, inventory, income-producing properties, and other assets. Residential properties are the principal form of collateral for consumer commitments. Notional values of interest rate swaps and other off-balance sheet financial instruments significantly exceed the credit risk associated with these instruments and represent contractual balances on which calculations of amounts to be exchanged are based. Credit exposure is limited to the sum of the aggregate fair value of positions that have become favorable to Huntington and any accrued interest receivable due from counterparties. Potential credit losses are minimized through careful evaluation of counterparty credit standing, selection of counterparties from a limited group of high quality institutions, collateral agreements, and other contract provisions. At December 31, 1994, Huntington's credit risk from these off-balance sheet arrangements, including trading activities, was approximately $62.4 million. The contract or notional amount of financial instruments with off-balance sheet risk at December 31, 1994 and 1993, is presented in the following table:

- -------------------------------------------------------------------------------- (IN MILLIONS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- CONTRACT AMOUNT REPRESENTS CREDIT RISK Commitments to extend credit Commercial ....................................... $2,672 $2,080 Consumer ......................................... 2,169 2,512 Other ............................................ 218 171 Standby letters of credit .......................... 416 360 Commercial letters of credit ....................... 137 148 NOTIONAL AMOUNT EXCEEDS CREDIT RISK Asset/liability management activities Interest rate swaps .............................. 6,840 6,902 Interest rate futures ............................ 16 503 Purchased interest rate caps ..................... 560 1,250 Purchased interest rate floors ................... 570 570 Forward delivery contracts ....................... 76 1,292 Trading activities Interest rate swaps .............................. 303 323 Interest rate collars ............................ 217 41 Interest rate caps ............................... 114 147 Interest rate floors ............................. 66 61

Commitments to extend credit generally have short-term, fixed expiration dates, are variable rate, and contain clauses which permit Huntington to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer's credit quality. These arrangements normally require the payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements. The interest rate risk arising from these financial instruments is insignificant as a result of their predominantly short-term, variable rate nature. 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 60% of standby letters of credit are collateralized, and approximately 85% are expected to expire without being drawn upon. Commercial letters of credit represent short-term, self-liquidating instruments which facilitate customer trade transactions and have maturities of no longer than ninety days. These instruments are normally secured by the merchandise or cargo being traded. Interest rate swaps are agreements between two parties to exchange periodic interest payments that are calculated on a notional principal amount. Huntington enters into swaps to synthetically alter the repricing characteristics of designated earning assets and interest bearing liabilities and, on a much more limited basis, as an intermediary for customers. Because only interest payments are exchanged, cash requirements of swaps are significantly less than the notional amounts. 50 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- At December 31, 1994, $3.9 billion of the swaps related to asset/liability management activities provide for Huntington to receive a fixed rate of interest and pay a variable rate based on the London inter-bank offered rate (LIBOR). For approximately 38% of the receive fixed swaps, the notional amounts amortize according to movements in market interest rates, principally Constant Maturity U.S. Treasury Yields and LIBOR. Generally, as the applicable interest rate indices increase, as they did throughout much of 1994, amortization of the notional amounts occurs at a slower rate. Notional values of the remaining receive fixed swaps and the entire $1.9 billion portfolio of pay fixed swaps, for which Huntington receives LIBOR and pays a fixed rate of interest, do not change during the lives of the contracts. Huntington also has basis swaps of $1 billion outstanding at December 31, 1994, which provide for both parties to receive floating rates of interest according to different indices. These contracts are used to protect against a potential narrowing in the spread between the variable rates paid on certain interest rate swaps and the variable rates of on-balance sheet financial instruments to which the swaps were designated. Interest rate futures and forward contracts are commitments to either purchase or sell a financial instrument at a future date for a specified price or yield and may be settled in cash or through delivery of the underlying financial instrument. During the latter part of 1994, Huntington initiated a program to sell futures contracts on Eurodollar deposits to hedge the risks of certain LIBOR-based funding. Futures contracts were used for this purpose due to their liquidity and credit risk advantages over swaps. Forward delivery contracts, which are used by Huntington in connection with its mortgage banking activities to reduce the exposure of fixed rate loan commitments to changing interest rates, settle in cash at a specified future date based on the differential between agreed interest rates applied to a notional amount. Forward contracts generally have a greater degree of credit risk than futures as daily cash settlements are not required. Huntington also uses interest rate caps/floors to manage fluctuating interest rates. Premiums paid for interest rate caps/floors grant Huntington the right to receive at specified future dates the amount, if any, by which a specified market interest rate exceeds the fixed cap rate or falls below the fixed floor rate, applied to a notional amount. The purchased caps outstanding at December 31, 1994, have an average remaining term of approximately two years. The interest rate floors, which were purchased in September 1993 to protect against mortgage loan prepayments, expired on January 1, 1995. For more detailed information concerning off-balance sheet transactions, refer to the "Interest Rate Risk Management" section of Management's Discussion and Analysis. - -------------------------------------------------------------------------------- 12. LEGAL CONTINGENCIES In the ordinary course of business, there are various legal proceedings pending against Huntington and its subsidiaries. The aggregate liabilities, if any, arising from such proceedings would not have a material adverse effect on Huntington's consolidated financial position. 13. STOCK OPTION PLANS Huntington has non-qualified and incentive stock option plans covering key employees. Most recently, shareholders approved The Huntington Bancshares Incorporated 1994 Stock Option Plan in April, 1994. Under this plan, as adjusted for the five-for-four stock split distributed in July, 1994, a maximum of 7,500,000 shares of common stock may be optioned at prices not less than the fair market value of the common stock at the date of grant. At December 31, 1994 and 1993, total options available for future grants under all stock option plans were 8,313,741 and 1,411,359, respectively. Huntington recognizes stock options when exercised by crediting shareholders' equity for the cash option price paid by the optionee. No amounts are charged or credited to income in connection with the stock option plans. All outstanding options are considered common stock equivalents for purposes of computing primary and fully-diluted earnings per share. Activity in the plans for 1994 and 1993 is summarized as follows:

SHARES UNDER OPTION PRICE RANGE - -------------------------------------------------------------------------------- Outstanding at January 1, 1993 ............ 2,760,758 $ 2.75-$14.14 Granted ................................... 671,040 $ 9.73-$20.65 Exercised ................................. (846,739) $ 2.70-$14.14 Cancelled ................................. (9,205) $ 2.75-$20.65 --------- ------------- Outstanding at December 31, 1993 .......... 2,575,854 $ 2.70-$20.65 - -------------------------------------------------------------------------------- Exercisable at December 31, 1993 .......... 1,901,890 $ 2.70-$17.32 - -------------------------------------------------------------------------------- Outstanding at January 1, 1994 ............ 2,575,854 $ 2.70-$20.65 Granted ................................... 635,861 $20.55-$21.13 Exercised ................................. (532,931) $ 2.70-$17.32 Cancelled ................................. (41,590) $ 7.41-$21.13 --------- ------------- Outstanding at December 31, 1994 .......... 2,637,194 $ 2.75-$21.13 - -------------------------------------------------------------------------------- Exercisable at December 31, 1994 .......... 1,995,643 $ 2.75-$20.65 - --------------------------------------------------------------------------------

14. EMPLOYEE BENEFIT PLANS Huntington sponsors a non-contributory defined benefit pension plan covering substantially all employees of Huntington and its subsidiaries. This plan provides benefits based upon a percent of final average salary for each year of service. The funding policy of Huntington is to contribute an annual amount which is at least equal to the minimum funding requirements but not more than that deductible under the Internal Revenue Code. Plan assets, held in trust, primarily consist of marketable mutual funds. 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 14. EMPLOYEE BENEFIT PLANS (CONTINUED) The following tables show the funded status of the plan at December 31, 1994 and 1993, the components of pension cost recognized in 1994, 1993, and 1992, and a summary of the key assumptions underlying the actuarial valuations.

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefit obligation ........................ $ 64,496 $ 63,790 ========= ========= Accumulated benefit obligation ................... $ 70,172 $ 69,714 ========= ========= Projected benefit obligation ....................... $ 104,381 $ 113,305 Plan assets, at fair value ......................... 97,105 101,372 --------- --------- Projected benefit obligation in excess of plan assets ................................... 7,276 11,933 Unrecognized transition asset, net of amortization .............................. 3,480 4,044 Unrecognized net gain .............................. 14,090 695 Unrecognized prior service cost .................... (1,776) (1,917) --------- --------- Accrued pension cost ............................... $ 23,070 $ 14,755 ========= =========

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - -------------------------------------------------------------------------------- NET PENSION COST INCLUDED THE FOLLOWING COMPONENTS Service cost-benefits earned during the period ............. $ 10,604 $ 7,485 $ 6,937 Interest cost on projected benefit obligation ............ 7,923 7,060 6,656 Net amortization and deferral ... (12,111) (1,292) 3,213 Actual loss (return) on plan assets ................... 1,899 (7,448) (11,512) -------- -------- -------- Net pension expense ............... $ 8,315 $ 5,805 $ 5,294 ======== ======== ======== ACTUARIAL ASSUMPTIONS Discount rate ................... 8.00% 7.00% 8.25% Rate of salary increases ........ 5.00% 5.00% 6.00% Long-term rate of return on assets ..................... 8.75% 8.75% 8.75%

Huntington also sponsors an unfunded Supplemental Executive Retirement Plan, a non-qualified plan that provides certain key officers of Huntington and its subsidiaries with defined pension benefits in excess of limits imposed by federal tax law. At December 31, 1994, the projected benefit obligation for this plan totaled $10,958,000, of which $3,974,000 was subject to later amortization. The remaining $6,984,000 is included in other liabilities. At December 31, 1993, the projected benefit obligation for this plan totaled $7,416,000 of which $1,554,000 was subject to later amortization. The remaining $5,862,000 is included in other liabilities. Pension costs for this plan were $1,188,000 in 1994, $971,000 in 1993, and $980,000 in 1992. In addition to providing pension benefits, Huntington and its subsidiaries provide certain health care and life insurance benefits to retired employees who have attained the age of 55 and have at least 10 years of service. For any employee retiring on or after January 1, 1993, Huntington's contribution is based upon the employees' number of months of service and is limited to the actual cost of coverage. Effective January 1, 1993, Huntington adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Post-retirement Benefits Other Than Pensions." The Statement requires that the expected cost of providing post-retirement benefits be recognized in the financial statements during the employees' active service period. The post-retirement benefit plan is unfunded. Net periodic post-retirement benefit cost for 1994 and 1993 included the following components:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Service cost ......................................... $1,458 $ 782 Interest cost ........................................ 2,853 2,095 Amortization of transition obligation ................ 1,261 1,261 Net amortization and deferral ........................ 722 -- ------ ------ Net periodic post-retirement benefit cost ............ $6,294 $4,138 ====== ======

The following table sets forth the amounts recorded in the consolidated balance sheets at December 31, 1994 and 1993:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Accumulated post-retirement benefit obligation: Retirees ......................................... $ 20,426 $ 16,031 Fully eligible active plan participants .......... 7,045 6,187 Other active plan participants ................... 9,805 9,515 -------- -------- Total accumulated post-retirement benefit obligation ........................... 37,276 31,733 Unrecognized net loss ............................ (1,352) (5,328) Unrecognized prior service cost .................. (6,320) Unrecognized transition obligation ............... (22,693) (23,954) -------- -------- Accrued post-retirement benefit cost ........... $ 6,911 $ 2,451 ======== ========

The transition obligation totaled $25.2 million at January 1, 1993 and is being amortized over 20 years. Prior to 1993, Huntington recognized the cost of providing these benefits as incurred. Post-retirement health care benefits charged to expense were $1,080,000 in 1992. The weighted average discount rate used in determining the accumulated post-retirement benefit obligation was 8.0% in 1994 and 7.0% in 1993. The 1994 health care trend rate was projected to be 11.5% for pre-65 participants and 9.5% for post-65 participants compared to 12.25% and 10.0% in 1993. These rates are assumed to decrease gradually until they reach 5.5% in the year 2004 and remain at that level thereafter. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated post-retirement benefit obligation as of December 31, 1994, by $2.9 million and the aggregate of the service and interest components of net periodic post-retirement benefit cost for 1994 by $418,000. Also in 1993, Huntington adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Post-employment Benefits." This Statement requires the recognition of the cost to provide post-employment benefits, such as long-term disability and unemployment benefits, on an accrual basis. The accrued post-employment benefit obligation totaled $3.6 million at December 31, 1994 and $3.5 million at December 31, 1993. 52 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Huntington has a contributory employee stock purchase plan available to eligible employees. Employee contributions of up to 6% of eligible compensation are matched 75% by Huntington. Huntington may also make additional matching contributions up to an additional 25% of employee contributions, at the discretion of the Board of Directors. Eligible employees may contribute in excess of 6% up to an additional 10% on an after tax basis. These additional contributions are not matched by Huntington. The cost of providing this plan was $8.2 million in 1994, $6.7 million in 1993, and $5.4 million in 1992. The Huntington Supplemental Stock Purchase and Tax Savings Plan was adopted in 1989. The plan is a non-qualified plan created to allow senior officers, whose contributions to the stock purchase plan are limited by federal tax law, to defer compensation on terms similar to those provided by the stock purchase plan. - -------------------------------------------------------------------------------- 15. ACQUISITIONS On December 16, 1994, Huntington acquired FirstFed Northern Kentucky Bancorp, Inc. (FirstFed), a $226 million savings and loan holding company, for approximately 1.9 million shares of Huntington common stock. The acquisition was accounted for as a purchase. Accordingly, results of operations of FirstFed have been included in the consolidated results of Huntington from the date of acquisition.Proforma results of operations relative to the acquisition have not been presented due to the immaterial impact on Huntington's consolidated financial statements. Also in 1994, Huntington signed a definitive merger agreement with Security National Corporation of Maitland, Florida, a $180 million bank holding company, and Reliance Bank of Florida, a $93 million privately-owned bank. Both mergers will be accounted for as a pooling-of-interests and are expected to be completed during the second quarter of 1995. - -------------------------------------------------------------------------------- 16. INCOME TAXES The following is a summary of the provision for income taxes:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - -------------------------------------------------------------------------------- Currently payable Federal ............................. $ 62,648 $ 151,204 $ 94,430 State ............................... 3,904 6,087 3,973 --------- --------- --------- Total current ..................... 66,552 157,291 98,403 Deferred tax expense(benefit) Federal ............................. 56,624 (29,107) (25,973) State ............................... 705 (1,305) (41) --------- --------- --------- Total deferred .................... 57,329 (30,412) (26,014) --------- --------- --------- Total provision for income taxes .... $ 123,881 $ 126,879 $ 72,389 ========= ========= =========

Tax expense associated with securities transactions included in the above amounts was $908,000 in 1994, $9,516,000 in 1993, and $12,353,000 in 1992. The following is a reconcilement of income tax expense to the amount computed at the statutory rate of 35% in 1994 and 1993, respectively, and 34% in 1992.

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - -------------------------------------------------------------------------------- Pre-tax income computed at the statutory rate ........... $ 128,266 $ 127,327 $ 79,369 Increases (decreases): Tax-exempt interest income ...... (6,077) (8,236) (10,191) State income taxes .............. 2,996 3,109 2,595 Other-net ....................... (1,304) 4,679 616 --------- --------- --------- Provision for income taxes ...... $ 123,881 $ 126,879 $ 72,389 ========= ========= =========

The significant components of Huntington's deferred tax assets and liabilities at December 31, 1994 and 1993 are as follows:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 - -------------------------------------------------------------------------------- Deferred tax assets: Allowance for loan losses ...................... $ 63,380 $ 65,894 Allowance for other real estate losses ......... 13,791 19,346 Financial instruments .......................... -- 16,202 Securities ..................................... 33,711 -- Pension and other employee benefits ............ 18,158 11,503 Deferred expenses .............................. 5,509 7,615 Other .......................................... 6,297 8,724 -------- -------- Total deferred tax assets .................... 140,846 129,284 Deferred tax liabilities: Financial instruments .......................... 25,811 -- Lease financing transactions ................... 67,099 53,261 Premises and equipment ......................... 7,790 10,047 Revalued liabilities-net ....................... 7,779 7,971 Other .......................................... 8,081 7,450 -------- -------- Total deferred tax liabilities ............... 116,560 78,729 -------- -------- Net deferred tax asset ....................... $ 24,286 $ 50,555 ======== ========

The components of the provision for deferred income taxes for the year ended December 31, 1992 are as follows:

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1992 - -------------------------------------------------------------------------------- Provision for loan losses ................................... $ (7,476) Provision for other real estate ............................. (16,694) Lease financing ............................................. 2,785 Depreciation on premises and equipment ...................... 228 Pension and other employee benefits ......................... (1,648) Other-net ................................................... (3,209) -------- Total ..................................................... $(26,014) ========

53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 17. NON-INTEREST INCOME A summary of the components in non-interest income for the three years ended December 31 follows:

- --------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - ----------------------------------------- -------- -------- --------- Service charges on deposit accounts ..... $ 76,836 $ 73,172 $ 64,471 Mortgage banking ........................ 50,367 99,185 63,297 Credit card fees ........................ 34,045 31,794 27,037 Trust services .......................... 28,448 27,948 25,129 Investment product sales ................ 6,624 9,016 5,193 Net gains on sales of securities available for sale .................... 2,481 22,973 19,174 Net investment securities gains ......... 113 4,216 17,158 Other ................................... 36,446 37,474 28,680 -------- -------- -------- TOTAL NON-INTEREST INCOME .......... $235,360 $305,778 $250,139 ======== ======== ========

- -------------------------------------------------------------------------------- 18. NON-INTEREST EXPENSE A summary of the components in non-interest expense for the three years ended December 31 follows: - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- (IN THOUSANDS OF DOLLARS) 1994 1993 1992 - -------------------------------------- -------- -------- -------- Salaries ............................. $226,668 $226,405 $206,429 Commissions .......................... 10,775 20,992 18,310 Employee benefits .................... 58,158 55,259 46,596 Net occupancy ........................ 40,291 39,955 36,272 Equipment ............................ 38,792 37,230 34,184 Credit card .......................... 26,539 24,248 20,474 FDIC insurance ....................... 25,271 25,322 25,500 Advertising .......................... 15,320 13,259 13,308 Printing and supplies ................ 14,821 14,721 13,588 Legal and loan collection ............ 8,298 11,361 13,109 Other ................................ 144,719 190,141 204,812 -------- -------- -------- TOTAL NON-INTEREST EXPENSE ...... $609,652 $658,893 $632,582 ======== ======== ========

54 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 1994 and 1993.

- ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) I Q II Q III Q IV Q - ------------------------------------------------------------------------------------------------------------------------------------ 1994 Interest income .................................. $ 301,637 $ 297,485 $ 301,724 $ 318,875 Interest expense ................................. 98,470 105,403 118,173 141,625 --------- --------- --------- --------- Net interest income .............................. 203,167 192,082 183,551 177,250 --------- --------- --------- --------- Provision for loan losses ........................ 8,464 3,219 1,113 2,488 Gains (losses) on sales of securities available for sale .................. 1,748 62 735 (64) Net investment securities gains (losses) ......... 50 141 (87) 9 Non-interest income .............................. 59,455 61,781 56,750 54,780 Non-interest expense ............................. 154,025 150,195 154,961 150,471 --------- --------- --------- --------- Income before income taxes ....................... 101,931 100,652 84,875 79,016 Provision for income taxes ....................... 35,189 33,199 28,973 26,520 --------- --------- --------- --------- Net income ....................................... $ 66,742 $ 67,453 $ 55,902 $ 52,496 ========= ========= ========= ========= Net income per common share(1) ................... $ .51 $ .52 $ .43 $ .41

- ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) I Q II Q III Q IV Q - ------------------------------------------------------------------------------------------------------------------------------------ 1993 Interest income .................................. $ 299,749 $ 313,259 $ 308,934 $ 314,369 Interest expense ................................. 111,009 113,416 110,230 105,456 --------- --------- --------- --------- Net interest income .............................. 188,740 199,843 198,704 208,913 --------- --------- --------- --------- Provision for loan losses ........................ 23,479 25,170 15,280 15,365 Gains on sales of securities available for sale ............................. 4,735 1,505 16,168 565 Net investment securities gains .................. 1,504 1,598 778 336 Non-interest income .............................. 57,374 66,316 73,775 81,124 Non-interest expense ............................. 147,799 157,735 181,268 172,091 --------- --------- --------- --------- Income before income taxes ....................... 81,075 86,357 92,877 103,482 Provision for income taxes ....................... 26,527 28,086 32,142 40,124 --------- --------- --------- --------- Net income ....................................... $ 54,548 $ 58,271 $ 60,735 $ 63,358 ========= ========= ========= ========= Net income per common share(1) ................... $ .43 $ .46 $ .47 $ .49

(1) Restated for the five-for-four stock split distributed in July 1994. - -------------------------------------------------------------------------------- 20. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts and estimated fair values of Huntington's financial instruments are presented in the following table. Certain assets, the most significant being premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, intangible assets such as mortgage servicing rights, deposit base intangibles, and other customer relationships are not considered financial instruments and are not discussed below. Accordingly, this fair value information is not intended to, and does not, represent Huntington's underlying value. Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.

AT DECEMBER 31, 1994 - ------------------------------------------------------------------------------------------------------------------------------------ CARRYING FAIR (IN THOUSANDS OF DOLLARS) AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TRADING INSTRUMENTS Securities ....................................................................... $ 9,427 $ 9,427 Interest rate swaps and other off-balance sheet agreements Assets ......................................................................... 12,643 12,643 Liabilities .................................................................... (12,351) (12,351) NONTRADING INSTRUMENTS Asset Cash and short-term assets ....................................................... 893,715 893,715 Mortgages held for sale .......................................................... 138,997 138,997 Securities ....................................................................... 3,780,185 3,778,640 Related off-balance sheet liabilities .......................................... -- (22,031) Loans ............................................................................ 12,063,944 11,855,952 Related off-balance sheet assets ............................................... 4,768 6,172 Related off-balance sheet liabilities .......................................... -- (169,483) Customers' acceptance liability .................................................. 53,883 53,883 Liabilities Deposits ......................................................................... (11,965,067) (11,925,464) Related off-balance sheet liabilities .......................................... -- (59,938) Short-term borrowings ............................................................ (2,898,201) (2,898,201) Related off-balance sheet assets ............................................... -- 14,647 Related off-balance sheet liabilities .......................................... -- (4,343) Bank acceptances ................................................................. (53,883) (53,883) Long-term debt ................................................................... (1,214,052) (1,183,634) Related off-balance sheet assets ............................................... -- 17,210 Related off-balance sheet liabilities .......................................... -- (44,934)

- ------------------------------------------------------------------------------------------------------------------------------------ AT DECEMBER 31, 1993 - ------------------------------------------------------------------------------------------------------------------------------------ CARRYING FAIR (IN THOUSANDS OF DOLLARS) AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TRADING INSTRUMENTS Securities ....................................................................... $ 21,964 $ 21,964 Interest rate swaps and other off-balance sheet agreements Assets ......................................................................... 5,301 5,301 Liabilities .................................................................... (4,952) (4,952) NONTRADING INSTRUMENTS Asset Cash and short-term assets ....................................................... 757,689 757,689 Mortgages held for sale .......................................................... 1,032,338 1,032,338 Securities ....................................................................... 4,199,409 4,321,318 Related off-balance sheet liabilities .......................................... -- (275) Loans ............................................................................ 10,742,093 10,799,391 Related off-balance sheet assets ............................................... -- 11,032 Related off-balance sheet liabilities .......................................... -- (22,535) Customers' acceptance liability .................................................. 48,603 48,603 Other off-balance sheet financial instruments .................................... 1,438 604 Liabilities Deposits ......................................................................... (12,044,690) (12,083,511) Related off-balance sheet assets ............................................... -- 5,453 Related off-balance sheet liabilities .......................................... -- (5,332) Short-term borrowings ............................................................ (3,195,463) (3,195,463) Related off-balance sheet assets ............................................... -- 1,221 Related off-balance sheet liabilities .......................................... -- (64) Bank acceptances ................................................................. (48,603) (48,603) Long-term debt ................................................................... (762,310) (795,777) Related off-balance sheet assets ............................................... -- 28,181 Related off-balance sheet liabilities .......................................... -- (3,580)

55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 20. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) The terms and short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include cash and due from banks, interest bearing deposits in banks, trading account securities, federal funds sold and securities purchased under resale agreements, customers' acceptance liabilities, short-term borrowings, and bank acceptances outstanding. As indicated in Note 11, loan commitments and letters of credit generally have short-term, variable rate features and contain clauses which limit Huntington's exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value. The following methods and assumptions were used by Huntington to estimate the fair value of the remaining classes of financial instruments: Mortgages held for sale are valued at the lower of aggregate cost or market as determined using outstanding commitments from investors. Accordingly, the carrying amount of mortgages held for sale approximates fair value. Fair values of securities available for sale and investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. For variable rate loans that reprice frequently, fair values are based on carrying amounts, as adjusted for estimated credit losses. The fair values for other loans are estimated using discounted cash flow analyses and employ interest rates currently being offered for loans with similar terms. The rates take into account the position of the yield curve, as well as an adjustment for prepayment risk, operating costs, and profit. This value is also reduced by an estimate of losses inherent in the loan portfolio. The fair values of demand deposits, savings accounts, and money market deposits are, by definition, equal to the amount payable on demand. The fair values of fixed rate time deposits are estimated by discounting cash flows using interest rates currently being offered on certificates with similar maturities. The fair values of Huntington's long-term debt are based substantially upon quoted market prices. The fair values of interest rate swap agreements and other off-balance sheet financial instruments used for asset/liability management and trading purposes are based upon quoted market prices or prices of similar instruments, when available, or calculated with pricing models using current rate assumptions. - -------------------------------------------------------------------------------- 21. REGULATORY RESTRICTIONS Payment of dividends to Huntington by the subsidiary banks and thrifts are subject to various regulatory restrictions. The regulatory agencies must approve the declaration of any dividends in excess of available retained earnings and in excess of the sum of net income for that year and retained net income for the preceding two years, less any required transfers to surplus. Under this formula, subsidiary banks and thrifts could, without such approval, declare dividends in 1995 of approximately $223,984,000 plus an additional amount equal to their net income through the date of declaration. The subsidiary banks and thrifts are also restricted by federal regulation as to the amount and type of loans they may make to Huntington. At December 31, 1994, the subsidiary banks and thrifts could lend to Huntington $161,764,000, subject to the qualifying collateral requirements defined in the regulations. 56 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

22. HUNTINGTON BANCSHARES INCORPORATED (PARENT COMPANY ONLY) FINANCIAL INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE SHEETS (IN THOUSANDS OF DOLLARS) DECEMBER 31, 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and cash equivalents ................................................................ $ 69,767 $ 73,962 Securities available for sale ............................................................ 6,424 7,195 Due from non-bank subsidiaries ........................................................... 102,751 7,783 Investment in subsidiaries on the equity method Bank subsidiaries ...................................................................... 1,426,888 1,371,406 Non-bank subsidiaries .................................................................. 48,195 47,716 Excess of cost of investment in subsidiaries over net assets acquired .................... 25,159 26,391 Other assets ............................................................................. 15,760 10,864 ---------- ---------- TOTAL ASSETS ........................................................................... $1,694,944 $1,545,317 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings .................................................................... $ 25,000 -- Long-term debt ........................................................................... 198,994 $ 168,753 Dividends payable ........................................................................ 25,908 20,278 Accrued expenses and other liabilities ................................................... 33,222 31,649 ---------- ---------- Total Liabilities ...................................................................... 283,124 220,680 Shareholders' Equity ..................................................................... 1,411,820 1,324,637 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................................. $1,694,944 $1,545,317 ========== ==========

- ------------------------------------------------------------------------------------------------------------------------------------ STATEMENTS OF INCOME (IN THOUSANDS OF DOLLARS) YEAR ENDED DECEMBER 31, 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME Dividends from Bank subsidiaries ................................................................. $ 167,729 $ 127,414 $ 58,750 Non-bank subsidiaries ............................................................. 5,245 5,356 4,214 Interest from Bank subsidiaries ................................................................. 2,876 3,759 1,370 Non-bank subsidiaries ............................................................. 2,601 6 -- Other ............................................................................... 407 824 1,703 --------- --------- --------- TOTAL INCOME .................................................................... 178,858 137,359 66,037 --------- --------- --------- EXPENSE Interest on long-term debt .......................................................... 15,056 13,292 12,020 Other ............................................................................... 12,075 15,303 15,347 --------- --------- --------- TOTAL EXPENSE ................................................................... 27,131 28,595 27,367 --------- --------- --------- Income before income taxes and equity in undistributed net income of subsidiaries ..... 151,727 108,764 38,670 Income tax benefit .................................................................... (8,007) (8,324) (7,826) --------- --------- --------- Income before equity in undistributed net income of subsidiaries ...................... 159,734 117,088 46,496 --------- --------- --------- Equity in undistributed net income of Bank subsidiaries ................................................................... 80,004 117,177 112,921 Non-bank subsidiaries ............................................................... 2,855 2,647 1,629 --------- --------- --------- NET INCOME ...................................................................... $ 242,593 $ 236,912 $ 161,046 ========= ========= =========

57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

22. HUNTINGTON BANCSHARES INCORPORATED (PARENT COMPANY ONLY) FINANCIAL INFORMATION (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS) YEAR ENDED DECEMBER 31, 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING ACTIVITIES Net income ....................................................................... $ 242,593 $ 236,912 $ 161,046 Adjustments to reconcile net income to net cash provided by operating activities Equity in undistributed net income of subsidiaries ............................. (82,859) (119,824) (114,550) Amortization ................................................................... 4,974 2,400 1,559 Losses (gains) on sales of securities .......................................... 25 21 (930) Increase in other assets ....................................................... (4,909) (5,400) (2,422) Increase in other liabilities .................................................. 5,926 4,003 8,371 --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES ...................................... 165,750 118,112 53,074 --------- --------- --------- INVESTING ACTIVITIES Proceeds from sales of investment securities ..................................... 173 329 4,390 (Advances to) repayments from subsidiaries ....................................... (94,968) 94,485 (100,282) Acquisitions and additional capitalization of subsidiaries ....................... (10) (31,944) (5,000) --------- --------- --------- NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES ........................... (94,805) 62,870 (100,892) --------- --------- --------- FINANCING ACTIVITIES Net proceeds from issuance of long-term debt ..................................... 49,958 -- 147,747 Payment of long-term debt ........................................................ (23,184) (100,246) (6,648) Increase in short-term borrowings ................................................ 25,000 -- -- Dividends on common stock ........................................................ (68,662) (58,412) (45,256) Acquisition of treasury stock .................................................... (73,634) (36,795) (19,149) Sales of treasury stock .......................................................... 13,651 10,309 11,455 Proceeds from exercise of stock options .......................................... 1,731 2,430 2,224 --------- --------- --------- NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES ........................... (75,140) (182,714) 90,373 --------- --------- --------- CHANGE IN CASH AND CASH EQUIVALENTS ............................................ (4,195) (1,732) 42,555 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................................. 73,962 75,694 33,139 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR ....................................... $ 69,767 $ 73,962 $ 75,694 ========= ========= =========

58 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- To The Board of Directors And Shareholders Huntington Bancshares Incorporated We have audited the accompanying consolidated balance sheets of Huntington Bancshares Incorporated and Subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Huntington Bancshares Incorporated and Subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Columbus, Ohio January 11, 1995 59