Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

QUARTERLY PERIOD ENDED June 30, 2004

Commission File Number 0-2525

Huntington Bancshares Incorporated

Maryland

31-0724920

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

41 South High Street, Columbus, Ohio 43287

Registrant’s telephone number (614) 480-8300

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

There were 229,685,385 shares of Registrant’s without par value common stock outstanding on July 31, 2004.

Huntington Bancshares Incorporated

INDEX


Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at June 30, 2004, December 31, 2003, and June 30, 2003	3

	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2004 and 2003	4

	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2004 and 2003	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	74

Item 4.	Controls and Procedures	74

Part II.	Other Information

Item 2.	Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	75

Item 4.	Submission of Matters to a Vote of Shareholders	75

Item 6.	Exhibits and Reports on Form 8-K	76

Signatures		77

Part 1. Financial Information

Item 1. Financial Statements

Huntington Bancshares Incorporated

Condensed Consolidated Balance Sheets


*(in thousands, except number of shares)*	June 30, 2004			December 31, 2003			June 30, 2003
	*(Unaudited)*						*(Unaudited)*
Assets
Cash and due from banks	$	1,162,995		$	899,689		$	1,153,108
Federal funds sold and securities purchased under resale agreements		193,772			96,814			74,473
Interest bearing deposits in banks		24,009			33,627			44,906
Trading account securities		20,577			7,589			19,426
Loans held for sale		314,262			226,729			713,722
Securities available for sale - at fair value		4,988,270			4,925,232			3,702,761
Investment securities held to maturity - fair value $3,224; $3,937 and $6,780, respectively		3,169			3,828			6,593
Loans and leases		21,775,669			21,075,118			19,059,533
Allowance for loan and lease losses		(286,935	)		(299,732	)		(307,667	)

Net loans and leases		21,488,734			20,775,386			18,751,866

Operating lease assets		888,612			1,260,440			1,672,608
Bank owned life insurance		944,892			927,671			906,823
Premises and equipment		354,534			349,712			332,916
Goodwill and other intangible assets		216,215			217,009			218,080
Customers’ acceptance liability		6,613			9,553			8,372
Accrued income and other assets		814,552			786,047			731,559

Total Assets	$	31,421,206		$	30,519,326		$	28,337,213

Liabilities
Deposits	$	19,465,146		$	18,487,395		$	18,371,359
Short-term borrowings		1,130,830			1,452,304			918,771
Federal Home Loan Bank advances		1,270,455			1,273,000			1,273,000
Other long-term debt		4,557,373			4,544,509			3,508,397
Subordinated notes		1,011,506			990,470			496,666
Company obligated mandatorily redeemable preferred capital securities of subsidiary trusts holding solely junior subordinated debentures of the parent company		—			—			300,000
Allowance for unfunded loan commitments and letters of credit		31,193			35,522			33,280
Bank acceptances outstanding		6,613			9,553			8,372
Accrued expenses and other liabilities		1,561,721			1,451,571			1,225,169

Total Liabilities		29,034,837			28,244,324			26,135,014

Shareholders’ Equity
Preferred stock - authorized 6,617,808 shares; none outstanding		—			—			—
Common stock - without par value; authorized 500,000,000 shares; issued 257,866,255 shares; outstanding 229,475,821; 229,008,088 and 228,660,038 shares, respectively		2,482,069			2,483,542			2,483,105
Less 28,390,434; 28,858,167 and 29,206,217 treasury shares, respectively		(539,852	)		(548,576	)		(555,176	)
Accumulated other comprehensive income (loss)		(27,204	)		2,678			40,817
Retained earnings		471,356			337,358			233,453

Total Shareholders’ Equity		2,386,369			2,275,002			2,202,199

Total Liabilities and Shareholders’ Equity	$	31,421,206		$	30,519,326		$	28,337,213

See notes to unaudited condensed consolidated financial statements

Huntington Bancshares Incorporated

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,

*(in thousands, except per share amounts)*	2004			2003			2004		2003
Interest and fee income
Loans and leases
Taxable	$	268,409		$	265,694		$	538,771	$	535,939
Taxable-exempt		444			675			950		1,409
Securities
Taxable		43,926			37,014			88,072		74,139
Taxable-exempt		7,247			5,019			14,760		9,972
Other		4,141			8,923			7,545		15,880

Total Interest Income		324,167			317,325			650,098		637,339

Interest expenses
Deposits		59,372			76,383			118,998		156,093
Short-term borrowings		2,789			4,313			6,102		9,872
Federal Home Loan Bank advances		8,098			5,634			16,139		11,219
Subordinated notes and other long-term debt including preferred capital securities		31,345			28,554			63,611		55,955

Total Interest Expense		101,604			114,884			204,850		233,139

Net Interest Income		222,563			202,441			445,248		404,200
Provision for credit losses		5,027			49,193			30,623		86,037

Net Interest Income After Provision for Credit Losses		217,536			153,248			414,625		318,163

Operating lease income		78,706			128,574			167,573		266,767
Service charges on deposit accounts		43,596			40,914			85,433		80,783
Trust services		16,708			15,580			33,031		30,491
Brokerage and insurance income		13,523			14,196			28,720		29,693
Mortgage banking		23,322			7,185			19,026		18,310
Bank owned life insurance income		11,309			11,043			21,794		22,180
Gain on sales of automobile loans		4,890			13,496			13,894		23,751
Other service charges and fees		10,645			11,372			20,158		21,710
Securities gains (losses)		(9,230	)		6,887			5,860		8,085
Other		24,659			27,704			50,278		48,105

Total Non-Interest Income		218,128			276,951			445,767		549,875

Personnel costs		119,715			105,242			241,339		218,331
Operating lease expense		62,563			102,939			133,273		214,527
Outside data processing and other services		17,563			16,104			36,025		32,683
Equipment		16,228			16,341			32,314		32,753
Net occupancy		16,258			15,377			33,021		31,986
Professional services		7,836			9,872			15,135		19,157
Marketing		8,069			8,454			15,908		15,080
Telecommunications		4,638			5,394			9,832		11,095
Printing and supplies		3,098			2,253			6,114		5,934
Amortization of intangibles		204			204			408		408
Restructuring reserve releases		—			(5,315	)		—		(6,315	)
Other		25,981			20,168			44,438		36,873

Total Non-Interest Expense		282,153			297,033			567,807		612,512

Income Before Income Taxes		153,511			133,166			292,585		255,526
Provision for income taxes		43,384			36,676			78,285		67,306

Net Income	$	110,127		$	96,490		$	214,300	$	188,220

Average Common Shares:
Basic		229,429			228,633			229,328		229,987
Diluted		232,659			230,572			232,787		231,684
Per Common Share:
Net Income - Basic	$	0.48		$	0.42		$	0.93	$	0.82
Net Income - Diluted		0.47			0.42			0.92		0.81
Cash Dividends Declared		0.175			0.16			0.35		0.32

See notes to unaudited condensed consolidated financial statements

Huntington Bancshares Incorporated

Consolidated Statements of Changes in Shareholders’ Equity


*(in thousands)*	Common Stock				Treasury Shares					Accumulated Other Comprehensive Income			Retained Earnings			Total
*(in thousands)*	Shares	Amount			Shares		Amount			Accumulated Other Comprehensive Income			Retained Earnings			Total
*Six Months Ended June 30, 2003 (Unaudited***):
Balance, beginning of period	257,866	$	2,484,421		(24,987	)	$	(475,399	)	$	62,300		$	118,471		$	2,189,793
Comprehensive Income:
Net income														188,220			188,220
Unrealized net holding losses on securities available for sale arising during the period, net of reclassification adjustment for net gains included in net income											(4,391	)					(4,391	)
Unrealized losses on derivative instruments used in cash flow hedging relationships											(17,092	)					(17,092	)

Total comprehensive income																	166,737

Cash dividends declared ($0.32 per share)														(73,238	)		(73,238	)
Stock options exercised			(1,316	)	118			1,902									586
Treasury shares purchased					(4,300	)		(81,061	)								(81,061	)
Other					(37	)		(618	)								(618	)

Balance, end of period (Unaudited)	257,866	$	2,483,105		(29,206	)	$	(555,176	)	$	40,817		$	233,453		$	2,202,199

*Six Months Ended June 30, 2004 (Unaudited***):
Balance, beginning of period	257,866	$	2,483,542		(28,858	)	$	(548,576	)	$	2,678		$	337,358		$	2,275,002
Comprehensive Income:
Net income														214,300			214,300
Unrealized net holding losses on securities available for sale arising during the period, net of reclassification adjustment for net gains included in net income											(52,165	)					(52,165	)
Unrealized gains on derivative instruments used in cash flow hedging relationships											22,283						22,283

Total comprehensive income																	184,418

Cash dividends declared ($0.35 per share)														(80,302	)		(80,302	)
Stock options exercised			(951	)	442			8,467									7,516
Other			(522	)	26			257									(265	)

*Balance, end of period (Unaudited***)	257,866	$	2,482,069		(28,390	)	$	(539,852	)	$	(27,204	)	$	471,356		$	2,386,369

See notes to unaudited condensed consolidated financial statements.

Huntington Bancshares Incorporated

Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
*(in thousands)*	2004			2003
Operating Activities
Net Income	$	214,300		$	188,220
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses		30,623			86,037
Depreciation on operating lease assets		132,388			187,914
Other depreciation and amortization		38,995			42,209
Deferred income tax expense		66,243			31,479
Increase in trading account securities		(12,988	)		(19,185	)
Increase in mortgages held for sale		(87,783	)		(185,343	)
Gains on sales of securities available for sale		(5,860	)		(8,085	)
Gains on sales/securitizations of loans		(15,407	)		(30,797	)
Restructuring reserve releases		—			(6,315	)
Other, net		(8,146	)		(68,002	)

Net Cash Provided by Operating Activities		352,365			218,132

Investing Activities
Decrease (increase) in interest bearing deposits in banks		9,618			(7,606	)
Proceeds from:
Maturities and calls of investment securities held to maturity		670			954
Maturities and calls of securities available for sale		544,419			945,534
Sales of securities available for sale		885,554			591,497
Purchases of securities available for sale		(1,457,477	)		(1,649,721	)
Proceeds from sales/securitizations of loans		1,382,596			1,390,378
Net loan and lease originations, excluding sales		(2,234,989	)		(2,119,933	)
Net decrease in operating lease assets		240,523			340,003
Proceeds from sale of premises and equipment		334			4,049
Purchases of premises and equipment		(29,298	)		(22,220	)
Proceeds from sales of other real estate		6,460			4,872

Net Cash Used for Investing Activities		(651,590	)		(522,193	)

Financing Activities
Increase in deposits		982,401			869,313
Decrease in short-term borrowings		(321,474	)		(1,222,245	)
Proceeds from issuance of subordinated notes		148,830			—
Maturity of subordinated notes		(100,000	)		(250,000	)
Proceeds from Federal Home Loan Bank advances		455			270,000
Maturity of Federal Home Loan Bank advances		(3,000	)		(10,000	)
Proceeds from issuance of long-term debt		625,000			1,235,000
Maturity of long-term debt		(600,000	)		(225,000	)
Dividends paid on common stock		(80,239	)		(73,714	)
Repurchases of common stock		—			(81,061	)
Net proceeds from issuance of common stock		7,516			586

Net Cash Provided by Financing Activities		659,489			512,879

Change in Cash and Cash Equivalents		360,264			208,818
Cash and Cash Equivalents at Beginning of Period		996,503			1,018,763

Cash and Cash Equivalents at End of Period	$	1,356,767		$	1,227,581

Supplemental disclosures:
Income taxes paid	$	9,490		$	65,859
Interest paid		206,500			247,126
Non-cash activities
Residential mortgage loans securitized and retained in securities available for sale		115,929			171,586
Common stock dividends accrued not paid		31,562			27,932

See notes to unaudited condensed consolidated financial statements.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – Basis of Presentation

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

Certain amounts in the prior year’s financial statements have been reclassified to conform to the 2004 presentation.

For statement of cash flows purposes, cash and cash equivalents are defined as the sum of “Cash and due from banks” and “Federal funds sold and securities purchased under resale agreements”.

Note 2 – New Accounting Pronouncements

Emerging Issues Task Force Issue No. 03-1, The Meaning of Other-Than-Temporary Impairments and Its Application to Certain Investments (EITF 03-1): The Emerging Issues Task Force reached a consensus about the criteria that should be used to determine when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. EITF 03-1 also included accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. EITF 03-1 will apply to the evaluation of other-than-temporary impairment in reporting periods beginning after June 15, 2004.

At June 30, 2004, Huntington had $3.3 billion of securities whose fair value was less than book value. The unrealized loss in these securities totaled $88.9 million. Of these securities, Huntington held $3.1 billion of securities, with an unrealized loss of $80.0 million, where the security cannot be contractually prepaid or where Huntington would recover substantially all of its cost if the securities were contractually prepaid. Management continues to evaluate its options with respect to adopting this new accounting guidance and cannot currently estimate the impact of adopting EITF 03-1.

Emerging Issues Task Force Issue No. 03-16, Accounting for Investment in Limited Liability Companies (EITF 03-16): The Task Force reached a consensus that an investment in a limited liability company (LLC) that maintains a “specific ownership account” for each investor should be viewed as similar to an investment in a limited partnership for purposes of determining whether a noncontrolling investment in an LLC should be accounted for using the cost method or the equity method. The current rules require a noncontrolling investment in a limited partnership to be accounted for under the equity method unless the interest is so minor that the limited partner may have virtually no influence over the partnership operating and financial policies. The guidance for evaluating an investment in a LLC should be applied for reporting periods beginning after June 15, 2004. The impact of EITF 03-16 is not expected to be material to Huntington’s financial condition, results of operations, or cash flows.

SEC Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments (SAB 105): On March 9, 2004, the SEC issued SAB 105, which summarizes the views of the SEC staff regarding the application of generally accepted accounting principles to loan commitments accounted for as derivative instruments. Specifically, SAB 105 indicated that the fair value of loan commitments that are required to follow derivative accounting under FAS 133, Accounting for Derivative Instruments and Hedging Activities, should not consider the expected future cash flows related to the associated servicing of the future loan. Prior to SAB 105, Huntington did not consider the expected future cash flows related to the associated servicing in determining the fair value of loan commitments. The adoption of SAB 105 did not have a material effect on Huntington’s financial results.

FASB Staff Position No. 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-2): In December 2003, a law was approved that expands Medicare benefits, primarily adding a prescription drug benefit for Medicare-eligible retirees beginning in 2006. The law also provides a federal subsidy to companies that sponsor postretirement benefit plans providing prescription drug coverage. FSP 106-2 was issued in May 2004 and supersedes FSP 106-1 issued in January 2004. FSP 106-2 specifies that any Medicare subsidy must be taken into account in measuring the employer’s postretirement health care benefit obligation and will also reduce the net periodic postretirement cost in future periods. The new guidance is effective for the reporting periods beginning on or after June 15, 2004. Accordingly, the postretirement benefit obligations and net periodic costs reported in the accompanying financial statements and notes do not reflect the impact of this legislation. The impact of this new pronouncement is not expected to be material to Huntington’s financial condition, results of operations, or cash flows.

AICPA Statement of Position No. 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3): In December 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued SOP 03-3 to address accounting for differences between the contractual cash flows of certain loans and debt securities and the cash flows expected to be collected when loans or debt securities are acquired in a transfer and those cash flow differences are attributable, at least in part, to credit quality. As such, SOP 03-3 applies to loans and debt securities acquired in purchase business combinations and does not apply to originated loans. The application of SOP 03-3 limits the interest income, including accretion of purchase price discounts, that may be recognized for certain loans and debt securities. Additionally, SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) not be recognized as an adjustment of yield or valuation allowance, such as the allowance for credit losses. Subsequent to the initial investment, increases in expected cash flows generally should be recognized prospectively through adjustment of the yield on the loan or debt security over its remaining life. Decreases in expected cash flows should be recognized as impairment. SOP 03-3 is effective for loans and debt securities acquired in fiscal years beginning after December 15, 2004, with early application encouraged. The impact of this new pronouncement is not expected to be material to Huntington’s financial condition, results of operations, or cash flows.

FASB Statement No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (FAS 148): FAS 148 was issued in December 2002, as an amendment of Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to FAS 123’s fair value method of accounting for stock-based employee compensation. FAS 148 also amends the disclosure provisions of FAS 123 and Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting (APB 28), to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. While FAS 148 does not require companies to account for employee stock options using the fair value method, the disclosure provisions of FAS 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair value method of FAS 123 or the intrinsic value method of APB 25, which is the method currently used by Huntington. See note 11 for the disclosures.

Note 3 – Securities and Exchange Commission Investigation

As previously disclosed, the Securities and Exchange Commission (SEC) is conducting a formal investigation regarding certain financial accounting and disclosure matters, including certain matters that were the subject of prior restatements by Huntington. The SEC staff has notified Huntington that the staff is considering recommending to the SEC that it institute enforcement action against Huntington and certain of its senior officers for, among other possible matters, violations of various provisions of the Securities Exchange Act of 1934 and the Securities Act of 1933 in connection with certain financial accounting matters relating to fiscal years 2002 and earlier, and certain related disclosure matters.

Huntington is presently in negotiations with the staff of the SEC regarding a settlement of its investigation. Huntington’s chief executive officer has indicated he accepts responsibility in his position as the chief executive officer for matters that occur on his watch, and has indicated a willingness to negotiate a settlement with the SEC of these matters. Huntington expects that a settlement of this matter would involve the entry of an order requiring, among other possible matters, Huntington to comply with various provisions of the Securities Exchange Act of 1934 and the Securities Act of 1933, along with the imposition of a fine and other possible measures. No assurances, however, can be provided as to the ultimate timing or outcome of these matters.

Huntington also remains in active dialogue with its bank regulators concerning these matters and is working diligently with the regulators to resolve them in a manner that permits it to proceed with its pending Unizan acquisition. No assurances, however, can be provided as to the ultimate timing or outcome of these matters.

Donald R. Kimble, who joined Huntington earlier this year as executive vice president in the Finance area, has been named chief financial officer and controller. Prior to joining Huntington, Kimble was executive vice president and controller of AmSouth Bancorporation, and previously held various subsidiary chief financial officer or accounting positions at Bank One Corporation. Michael J. McMennamin and John D. Van Fleet have relinquished their positions of chief financial officer and controller, respectively. Both remain with the company.

Note 4 – Pending Acquisition

On January 27, 2004, Huntington announced the signing of a definitive agreement to acquire Unizan Financial Corp. (Unizan), a financial holding company based in Canton, Ohio, with $2.7 billion of assets at December 31, 2003. Under the terms of the agreement, Unizan shareholders will receive 1.1424 shares of Huntington common stock, on a tax-free basis, for each share of Unizan. Based on the $23.10 closing price of Huntington’s common stock on January 26, 2004, this represented a price of $26.39 per Unizan share, and valued the transaction at approximately $587 million. Both boards unanimously approved the merger, and on May 25, 2004, Unizan shareholders approved the merger. Approval by Huntington shareholders is not required.

As reported on June 16, 2004, the Federal Reserve Board had informed Huntington that it had extended its review period to coordinate further with the staff of the SEC regarding the SEC’s ongoing formal investigation of Huntington and to complete its review of the Community Reinvestment Act aspects of the merger. Huntington remains in active dialogue with its bank regulators concerning these matters and is working diligently with the regulators to resolve them in a manner that permits it to proceed with its pending Unizan acquisition. No assurances, however, can be provided as to the ultimate timing or outcome of these matters (see Note 3 for additional discussion).

Huntington and Unizan are ready to close the merger, subject to the receipt of all necessary regulatory approvals. After the merger, Huntington also intends to purchase approximately 2.5 million common shares from time-to-time in the open market or through privately negotiated transactions depending on market conditions, to offset the dilutive effect of issuing shares to Unizan shareholders.

Note 5 – Stock Repurchase Plan

Effective April 27, 2004, the board of directors authorized a new share repurchase program (the 2004 Repurchase Program) which cancelled the 2003 Repurchase Program and authorized Management to repurchase not more than 7,500,000 shares of Huntington common stock. Any share repurchases will be made under this authorization. Purchases will be made from time-to-time in the open market or through privately negotiated transactions depending on market conditions. No share repurchases were made under the 2004 repurchase program.

Note 6 – Operating Lease Assets

Operating lease assets at June 30, 2004, December 31, 2003, and June 30, 2003, were as follows:


*(in thousands)*	June 30, 2004			December 31, 2003			June 30, 2003
Cost of assets under operating leases	$	1,629,552		$	2,136,502		$	2,689,413
Deferred lease origination fees and costs		(1,033	)		(2,117	)		(44,586	)
Accumulated depreciation		(739,907	)		(873,945	)		(972,219	)

Operating Lease Assets, Net	$	888,612		$	1,260,440		$	1,672,608

Depreciation and residual losses at termination related to operating lease assets was $57.4 million and $91.4 million for the three months ended June 30, 2004 and 2003, respectively. For the respective six-month periods, depreciation and residual losses at termination was $121.3 million and $190.7 million.

Note 7 – Securities Available for Sale

Securities available for sale at June 30, 2004, December 31, 2003, and June 30, 2003 were as follows:


	June 30, 2004				December 31, 2003				June 30, 2003
*(in thousands of dollars)*	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Treasury
Under 1 year	$	796	$	800	$	1,374	$	1,376	$	327	$	331
1-5 years		24,480		24,404		31,356		31,454		38,930		39,543
6-10 years		754		824		271,271		275,540		64,063		66,158
Over 10 years		—		—		—		—		—		—

Total U.S. Treasury		26,030		26,028		304,001		308,370		103,320		106,032

Federal Agencies
Mortgage backed securities
1-5 years		14,181		14,548		19,899		20,434		23,879		24,661
6-10 years		155,460		155,628		198,755		201,995		248,896		254,564
Over 10 years		1,352,082		1,331,790		1,593,139		1,595,594		1,668,613		1,699,875

Total Mortgage-Backed		1,521,723		1,501,967		1,811,793		1,818,023		1,941,388		1,979,100

Other Federal Agencies
Under 1 year		116,357		118,776		173,181		175,505		137,797		141,375
1-5 years		728,472		719,339		585,561		593,662		294,977		313,029
6-10 years		343,226		322,398		403,953		390,164		171,343		169,976
Over 10 years		—		—		201		192		—		—

Total Other Agencies		1,188,055		1,160,512		1,162,896		1,159,523		604,117		624,380

Total U.S. Treasury and Other Federal Agencies		2,735,808		2,688,507		3,278,690		3,285,916		2,648,825		2,709,512

Municipal Securities
Under 1 year		6,679		6,731		6,594		6,663		6,639		6,728
1-5 years		14,191		14,424		20,015		20,569		20,402		21,150
6-10 years		69,861		68,928		69,511		71,013		52,995		54,707
Over 10 years		311,972		303,309		332,181		334,188		219,011		223,072

Total Municipal Securities		402,703		393,391		428,301		432,433		299,047		305,657

Private Label CMO
Under 1 year		—		—		1,973		1,973		—		—
1-5 years		—		—		—		—		—		—
6-10 years		—		—		—		—		—		—
Over 10 years		585,920		577,013		388,933		388,684		197,080		198,617

Total Private Label CMO		585,920		577,013		390,906		390,657		197,080		198,617

Asset Backed Securities
Under 1 year		—		—		—		—		—		—
1-5 years		30,000		30,038		30,000		29,944		30,000		29,944
6-10 years		11,187		11,339		20,000		19,984		—		—
Over 10 years		1,074,239		1,075,608		590,826		589,788		96,875		96,693

Total Asset Backed Securities		1,115,426		1,116,984		640,826		639,716		126,875		126,637

Other
Under 1 year		1,611		1,642		500		502		1,081		1,003
1-5 years		9,703		9,877		7,169		7,346		8,605		8,641
6-10 years		2,854		2,948		5,047		5,510		4,994		5,267
Over 10 years		193,652		190,545		145,103		146,685		136,226		132,948
Retained interest in securitizations		—		—		5,593		6,356		148,177		163,664
Marketable equity securities		6,658		7,364		8,547		10,111		50,809		50,815

Total Other		214,479		212,375		171,959		176,510		349,892		362,338

Total Securities Available for Sale	$	5,054,335	$	4,988,270	$	4,910,682	$	4,925,232	$	3,621,719	$	3,702,761

The growth from year-end and the year-ago quarter primarily consisted of over 10-year variable-rate asset backed securities.

Note 8 – Segment Reporting

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

Management relies on “operating earnings” for review of performance and for critical decision making purposes. Operating earnings exclude the impact of the significant items listed in the reconciliation table below. See Note 12 for further discussions regarding Restructuring Reserves.

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

Regional Banking: This segment provides products and services to retail, business banking, and commercial customers. These products and services are offered in seven operating regions within the five states of Ohio, Michigan, West Virginia, Indiana, and Kentucky through the company’s traditional banking network. Each region is further divided into Retail and Commercial Banking units. Retail products and services include home equity loans and lines of credit, first mortgage loans, direct installment loans, business loans, personal and business deposit products, as well as sales of investment and insurance services. Retail products and services comprise 57% and 81% of total Regional Banking loans and deposits, respectively. These products and services are delivered to customers through banking offices, ATMs, Direct Bank—Huntington’s customer service center, and Web Bank at huntington.com. Commercial banking serves middle-market and commercial banking relationships, which use a variety of banking products and services including, commercial loans, international trade, cash management, leasing, interest rate protection products, capital market alternatives, 401(k) plans, and mezzanine investment capabilities.

Dealer Sales: This segment serves automotive dealerships within Huntington’s primary banking markets, as well as in Arizona, Florida, Georgia, Pennsylvania, and Tennessee. This segment finances the purchase of automobiles by customers of the automotive dealerships, purchases automobiles from dealers and simultaneously leases the automobiles under long-term direct financing leases, finances dealership floor plan inventories, real estate, or working capital needs, and provides other banking services to the automotive dealerships and their owners.

Private Financial Group: This segment provides products and services designed to meet the needs of the company’s higher net worth customers. Revenue is derived through trust, asset management, investment advisory, brokerage, insurance, and private banking products and services.

Treasury/Other: This segment includes revenue and expense related to assets, liabilities, and equity that are not directly assigned or allocated to one of the three business segments. Assets included in this segment include bank owned life insurance, investment securities, and mezzanine loans originated through Huntington Capital Markets Group.

A match-funded transfer pricing system is used to attribute appropriate interest income and interest expense to other business segments. The Treasury/Other segment includes the net impact of interest rate risk management, including derivative activities. Furthermore, this segment’s results include the investment securities portfolios and capital markets activities. Additionally, income or expense and provision for income taxes, not allocated to other business segments, are also included.

Listed below is certain reported financial information reconciled to Huntington’s three and six month 2004 and 2003 operating results by line of business.


	Three Months Ended June 30,
Income Statements *(in thousands)*	Regional Banking			Dealer Sales			PFG			Treasury/ Other			Huntington Consolidated
2004
Net interest income	$	155,083		$	43,586		$	11,166		$	12,728		$	222,563
Provision for credit losses		3,949			(8,261	)		(654	)		(61	)		(5,027	)
Non-Interest income		82,475			85,983			27,680			21,990			218,128
Non-Interest expense		(147,840	)		(85,768	)		(28,559	)		(19,986	)		(282,153	)
Provision for income taxes		(32,783	)		(12,439	)		(3,372	)		5,210			(43,384	)

Net income, as reported		60,884			23,101			6,261			19,881			110,127
Gain on sale of automobile loans, net of tax		—			(2,068	)		—			(1,110	)		(3,178	)

Operating Earnings	$	60,884		$	21,033		$	6,261		$	18,771		$	106,949

2003
Net interest income	$	150,418		$	11,639		$	9,785		$	30,599		$	202,441
Provision for credit losses		(40,525	)		(9,191	)		457			66			(49,193	)
Non-Interest income		71,790			153,303			27,850			24,008			276,951
Non-Interest expense		(143,319	)		(125,464	)		(25,886	)		(2,364	)		(297,033	)
Provision for income taxes		(13,427	)		(10,600	)		(4,272	)		(8,377	)		(36,676	)

Net income, as reported		24,937			19,687			7,934			43,932			96,490
Gain on sale of automobile loans, net of tax		—			(2,216	)		—			(6,556	)		(8,772	)
Restructuring releases, net of taxes		—			—			—			(3,455	)		(3,455	)

Operating Earnings	$	24,937		$	17,471		$	7,934		$	33,921		$	84,263


	Six Months Ended June 30,
Income Statements *(in thousands)*	Regional Banking			Dealer Sales			PFG			Treasury/ Other			Huntington Consolidated
2004
Net interest income	$	306,145		$	73,891		$	22,295		$	42,917		$	445,248
Provision for credit losses		1,844			(29,916	)		(97	)		(2,454	)		(30,623	)
Non-Interest income		154,526			196,538			56,307			38,396			445,767
Non-Interest expense		(294,932	)		(177,137	)		(58,020	)		(37,718	)		(567,807	)
Provision for income taxes		(58,654	)		(22,182	)		(7,170	)		9,721			(78,285	)

Net income, as reported		108,929			41,194			13,315			50,862			214,300
Gain on sale of automobile loans, net of tax		—			(8,214	)		—			(817	)		(9,031	)

Operating Earnings	$	108,929		$	32,980		$	13,315		$	50,045		$	205,269

2003
Net interest income	$	296,832		$	27,286		$	19,280		$	60,802		$	404,200
Provision for credit losses		(64,078	)		(20,576	)		(1,443	)		60			(86,037	)
Non-Interest income		143,389			311,819			55,063			39,604			549,875
Non-Interest expense		(283,623	)		(259,633	)		(52,521	)		(16,735	)		(612,512	)
Provision for income taxes		(32,382	)		(20,614	)		(7,133	)		(7,177	)		(67,306	)

Net income, as reported		60,138			38,282			13,246			76,554			188,220
Gain on sale of automobile loans, net of tax		—			(4,807	)		—			(10,631	)		(15,438	)
Restructuring releases, net of taxes		—			—			—			(4,105	)		(4,105	)

Operating Earnings	$	60,138		$	33,475		$	13,246		$	61,818		$	168,677


	Total Assets at						Total Deposits at
Period-end Balance Sheet Data *(in millions)*	June 30, 2004		December 31, 2003		June 30, 2003		June 30, 2004		December 31, 2003		June 30, 2003
Regional Banking	$	16,526	$	14,971	$	14,585	$	16,435	$	15,539	$	16,628
Dealer Sales		6,162		7,335		6,607		71		77		67
PFG		1,540		1,461		1,328		1,016		1,164		1,027
Treasury / Other		7,193		6,752		5,817		1,943		1,707		649

Total	$	31,421	$	30,519	$	28,337	$	19,465	$	18,487	$	18,371

Note 9 – Comprehensive Income

The components of Huntington’s Other Comprehensive Income in the three and six months ended June 30 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
*(in thousands)*	2004			2003			2004			2003
Unrealized holding (losses) gains on securities available for sale arising during the period:
Unrealized net (losses) gains		(136,458	)		9,046			(74,755	)		1,799
Related tax benefit (expense)		47,760			(3,162	)		26,399			(935	)

Net		(88,698	)		5,884			(48,356	)		864

Less: Reclassification adjustment for net gains (losses) included in net income:
Realized net gains (losses)		9,230			(6,887	)		(5,860	)		(8,085	)
Related tax (expense) benefit		(3,231	)		2,410			2,051			2,830

Net		5,999			(4,477	)		(3,809	)		(5,255	)

Total unrealized holding (losses) gains on securities available for sale arising during the period, net of reclassification adjustment for net gains included in net income.

Net		(82,699	)		1,407			(52,165	)		(4,391	)

Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period:
Unrealized net gains (losses)		52,315			(23,415	)		34,282			(26,295	)
Related tax (expense) benefit		(18,310	)		8,195			(11,999	)		9,203

Net		34,005			(15,220	)		22,283			(17,092	)

Total Other Comprehensive Loss	$	(48,694	)	$	(13,813	)	$	(29,882	)	$	(21,483	)

Activity in Accumulated Other Comprehensive Income for the six months ended June 30, 2004 and 2003 was as follows:


*(in thousands)*	Minimum pension liability			Unrealized gains (losses) on securities available for sale			Unrealized gains (losses) on derivative instruments used in cash flow hedging relationships			Total
Balance, December 31, 2002	$	(195	)	$	56,856		$	5,639		$	62,300
Period change		—			(4,391	)		(17,092	)		(21,483	)

Balance, June 30, 2003	$	(195	)	$	52,465		$	(11,453	)	$	40,817

Balance, December 31, 2003	$	(1,309	)	$	9,429		$	(5,442	)	$	2,678
Period change		—			(52,165	)		22,283			(29,882	)

Balance, June 30, 2004	$	(1,309	)	$	(42,736	)	$	16,841		$	(27,204	)

Note 10 – Earnings per Share

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


	Three Months Ended June 30,				Six Months Ended June 30,
*(in thousands, except per share amount)*	2004		2003		2004		2003
Net Income	$	110,127	$	96,490	$	214,300	$	188,220

Average common shares outstanding		229,429		228,633		229,328		229,987
Dilutive effect of common stock equivalents		3,230		1,939		3,459		1,697

Diluted Average Common Shares Outstanding	$	232,659	$	230,572	$	232,787	$	231,684

Earnings Per Share
Basic	$	0.48	$	0.42	$	0.93	$	0.82
Diluted	$	0.47	$	0.42	$	0.92	$	0.81

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

Approximately 6.8 million and 5.1 million stock options were vested and outstanding at June 30, 2004 and 2003, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares for the period and, therefore, the effect would be antidilutive. The weighted average exercise price for these options was $22.06 per share and $23.73 per share at the end of the same respective periods.

On July 30, 2004, Huntington entered into an agreement with the former shareholders of LeaseNet, Inc. to issue in early 2005 up to 86,118 shares of Huntington common stock previously held in escrow subject to LeaseNet meeting certain contractual performance criteria. A total of 366,576 common shares, previously held in escrow, will be returned to Huntington. All shares in escrow had been accounted for as treasury stock.

Note 11 – Stock-Based Compensation

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

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Stock Options Outstanding at period end *(in thousands)*		19,252			17,399			19,252			17,399

Assumptions
Risk-free interest rate		3.89	%		4.46	%		3.82	%		4.30	%
Expected dividend yield		3.33	%		3.26	%		3.28	%		3.30	%
Expected volatility of Huntington’s common stock		30.9	%		33.8	%		30.9	%		33.8	%

Pro Forma Results *(in millions of dollars)*
Net income, as reported	$	110.1		$	96.5		$	214.3		$	188.2
Less pro forma expense, net of tax, related to options granted		3.1			2.9			6.4			5.9

Pro Forma Net Income	$	107.0		$	93.6		$	207.9		$	182.3

Net Income Per Common Share:
Basic, as reported	$	0.48		$	0.42		$	0.93		$	0.82
Basic, pro forma	$	0.47		$	0.41		$	0.91		$	0.79
Diluted, as reported	$	0.47		$	0.42		$	0.92		$	0.81
Diluted, pro forma	$	0.46		$	0.41		$	0.89		$	0.79

Note 12 – Restructuring Reserves

On a quarterly basis, Huntington assesses its remaining restructuring reserves and makes adjustments to those reserves as necessary. Huntington had remaining reserves for restructuring of $8.3 million, $9.7 million, and $9.4 million as of June 30, 2004, December 31, 2003, and June 30, 2003, respectively. Huntington expects that the reserves will be adequate to fund the estimated future cash outlays.

Note 13 – Benefit Plans

Huntington sponsors the Huntington Bancshares Retirement Plan (the Plan), a non-contributory defined benefit pension plan covering substantially all employees. The Plan provides benefits based upon length of service and compensation levels. The funding policy of Huntington is to contribute an annual amount that is at least equal to the minimum funding requirements but not more than that deductible under the Internal Revenue Code. In addition, Huntington has an unfunded defined benefit post-retirement plan that provides certain healthcare and life insurance benefits to retired employees who have attained the age of 55 and have at least 10 years of vesting service under this plan. For any employee retiring on or after January 1, 1993, post-retirement healthcare benefits are based upon the employee’s number of months of service and are limited to the actual cost of coverage. Life insurance benefits are a percentage of the employee’s base salary at the time of retirement, with a maximum of $50,000 of coverage.

The following table shows the components of net periodic benefit expense:


	Pension Benefits Three Months Ended June 30,						Post Retirement Benefits Three Months Ended June 30,
*(in thousands)*	2004			2003			2004		2003
Service cost	$	3,040		$	2,454		$	326	$	280
Interest cost		4,371			4,162			802		870
Expected return on plan assets		(5,383	)		(6,285	)		—		—
Amortization of transition asset		—			(63	)		276		276
Amortization of prior service cost		—			—			146		151
Settlements		1,000			1,089			—		—
Recognized net actuarial loss		1,984			444			—		—

Benefit Expense	$	5,012		$	1,801		$	1,550	$	1,577


	Pension Benefits Six Months Ended June 30,						Post Retirement Benefits Six Months Ended June 30,
*(in thousands)*	2004			2003			2004		2003
Service cost	$	6,078		$	4,909		$	650	$	561
Interest cost		8,741			8,323			1,604		1,739
Expected return on plan assets		(10,764	)		(12,568	)		—		—
Amortization of transition asset		—			(126	)		552		551
Amortization of prior service cost		—			—			291		303
Settlements		2,000			2,176			—		—
Recognized net actuarial loss		3,968			886			—		—

Benefit Expense	$	10,023		$	3,600		$	3,097	$	3,154

Huntington also sponsors other retirement plans. One of those plans is an unfunded Supplemental Executive Retirement Plan. This plan is a nonqualified plan that provides certain former officers of Huntington and its subsidiaries with defined pension benefits in excess of limits imposed by federal tax law. Other plans, including plans assumed in various past acquisitions, are unfunded, nonqualified plans that provide certain active and former officers of Huntington and its subsidiaries nominated by Huntington’s compensation committee with deferred compensation, post-employment, and/or defined pension benefits in excess of the qualified plan limits imposed by federal tax law.

Huntington has a 401(k) plan, which is a defined contribution plan that is available to eligible employees. Matching contributions by Huntington equal 100% on the first 3%, then 50% on the next 2%, of participant elective deferrals. The cost of providing this plan was $2.3 million and $2.1 million for the three months ended June 30, 2004 and 2003, respectively. For the respective six-month periods, the cost was $4.7 million and $4.3 million.

Note 14 – Commitments and Contingent Liabilities

In the ordinary course of business, Huntington makes various commitments to extend credit that are not reflected in the financial statements. The contract amount of these financial agreements at June 30, 2004, December 31, 2003, and June 30, 2003, were as follows:


*(in millions)*	June 30, 2004		December 31, 2003		June 30, 2003
Contract amount represents credit risk
Commitments to extend credit
Commercial	$	4,993	$	5,712	$	4,924
Consumer		3,868		3,652		3,157
Commercial real estate		586		952		891
Standby letters of credit		962		983		978
Commercial letters of credit		231		166		215

Commitments to extend credit:

Commitments to extend credit generally have fixed expiration dates, are variable-rate, and contain clauses that 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.

Commercial letters of credit represent short-term, self-liquidating instruments that facilitate customer trade transactions and generally have maturities of no longer than 90 days. The merchandise or cargo being traded normally secures these instruments.

Litigation:

In the ordinary course of business, there are various legal proceedings pending against Huntington and its subsidiaries. In the opinion of management, the aggregate liabilities, if any, arising from such proceedings are not expected to have a material adverse effect on Huntington’s consolidated financial position. (See also Note 3.)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

INTRODUCTION

Huntington Bancshares Incorporated (Huntington or the company) is a multi-state diversified financial holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through its subsidiaries, Huntington is engaged in providing full-service commercial and consumer banking services, mortgage banking services, automobile financing, equipment leasing, investment management, trust services, and discount brokerage services, as well as reinsuring credit life and disability insurance, and selling other insurance and financial products and services. Huntington’s banking offices are located in Ohio, Michigan, West Virginia, Indiana, and Kentucky. Selected financial services are also conducted in other states including Arizona, Florida, Georgia, Maryland, New Jersey, Pennsylvania, and Tennessee. Huntington has a foreign office in the Cayman Islands and a foreign office in Hong Kong. The Huntington National Bank (the Bank), organized in 1866, is Huntington’s only bank subsidiary.

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

Forward-Looking Statements

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

By their nature, forward-looking statements are subject to numerous assumptions, risks, and uncertainties. A number of factors could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. These factors include, but are not limited to, those set forth below and under the heading “Business Risks” included in Item 1 of Huntington’s Annual Report on Form 10-K for the year ended December 31, 2003 (2003 Form 10-K), and other factors described in this report and from time to time in other filings with the Securities and Exchange Commission.

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

Risk Factors

Huntington, like other financial companies, is subject to a number of risks, many of which are outside of Management’s control, though Management strives to manage those risks while optimizing returns. Among the risks assumed are: (1) credit risk, which is the risk that loan and lease customers or other counter parties will be unable to perform their contractual obligations, (2) market risk, which is the risk that changes in market rates and prices will adversely affect Huntington’s financial condition or results of operations, (3) liquidity risk, which is the risk that Huntington and / or the Bank will have insufficient cash or access to cash to meet operating needs, and (4) operational risk, which is the risk of loss resulting from inadequate or failed internal processes, people, or systems, or external events. The description of Huntington’s business contained in Item 1 of its 2003 Form 10-K, while not all inclusive, discusses a number of business risks that, in addition to the other information in this report, readers should carefully consider.

Securities and Exchange Commission Investigation

Critical Accounting Policies and Use of Significant Estimates

Note 1 to the company’s Notes to Consolidated Financial Statements included in Huntington’s 2003 Form 10-K lists significant accounting policies used in the development and presentation of its financial statements. These significant accounting policies, as well as the following discussion and analysis and other financial statement disclosures, identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of Huntington, its financial position, results of operations, and cash flows.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires Huntington’s management to establish critical accounting policies and make accounting estimates, assumptions, and judgments that affect amounts recorded and reported in its financial statements. An accounting estimate requires assumptions about uncertain matters that could have a material effect on the financial statements of Huntington if a different amount within a range of estimates were used or if estimates changed from period to period. Readers of this interim report should understand that estimates are made under facts and circumstances at a point in time and changes in those facts and circumstances could produce actual results that differ from when those estimates were made. Huntington’s management has identified the most significant accounting estimates and their related application in Huntington’s 2003 Form 10-K.

SUMMARY DISCUSSION OF RESULTS

Earnings comparisons from the second quarter of 2003 through the second quarter of 2004 were impacted by a number of factors, some related to changes in the economic and competitive environment, while others reflected specific Management strategies or changes in accounting practices. Understanding the nature and implications of these factors on financial results is important in understanding the company’s income statement, balance sheet, and credit quality trends and the comparison of the current quarter and year-to-date performance with comparable prior-year periods. The key factors impacting the current reporting period comparisons are more fully described in the Significant Factors Influencing Financial Performance Comparisons section, which follows the summary of results below.

2004 Second Quarter versus 2003 Second Quarter

Huntington’s 2004 second quarter earnings were $110.1 million, or $0.47 per common share, up 14% and 12%, respectively, from $96.5 million and $0.42 per common share in the year-ago quarter. This increase in earnings reflected:

•

90% decrease in provision for credit losses,

•

10% increase in fully taxable equivalent net interest income, and

•

5% decline in non-interest expenses

Partially offset by a 21% decline in non-interest income.

The return on average assets (ROA) and return on average equity (ROE), were 1.41% and 19.1%, respectively, compared with 1.38% and 18.0% in the year-ago quarter (see Table 1).

2004 Second Quarter versus 2004 First Quarter

Compared with 2004 first quarter net income of $104.2 million, or $0.45 per common share, 2004 second quarter earnings were up 6% and 4%, respectively. This increase in earnings primarily reflected:

•

80% decline in provision for credit losses, and

•

1% decline in non-interest expenses

Partially offset by a 4% decline in non-interest income.

The ROA and ROE were 1.41% and 19.1%, respectively, in the current quarter, compared with 1.36% and 18.4% in the 2004 first quarter (see Table 1).

Table 1 - Selected Quarterly Income Statement Data


*(in thousands, except per share amounts)*	2004						2003									2Q04 vs. 2Q03
*(in thousands, except per share amounts)*	Second			First			Fourth			Third			Second			Amount			%
Total interest income	$	324,167		$	325,931		$	335,097		$	333,320		$	317,325		$	6,842		2.2	%
Total interest expense		101,604			103,246			110,782			112,849			114,884			(13,280	)	(11.6	)%

Net interest income		222,563			222,685			224,315			220,471			202,441			20,122		9.9	%
Provision for credit losses		5,027			25,596			26,341			51,615			49,193			(44,166	)	(89.8	)%

Net interest income after provision for credit losses		217,536			197,089			197,974			168,856			153,248			64,288		42.0	%

Operating lease income		78,706			88,867			105,307			117,624			128,574			(49,868	)	(38.8	)%
Service charges on deposit accounts		43,596			41,837			44,763			42,294			40,914			2,682		6.6	%
Trust services		16,708			16,323			15,793			15,365			15,580			1,128		7.2	%
Brokerage and insurance		13,523			15,197			14,344			13,807			14,196			(673	)	(4.7	)%
Mortgage banking		23,322			(4,296	)		9,677			30,193			7,185			16,137		N.M.
Bank owned life insurance		11,309			10,485			10,410			10,438			11,043			266		2.4	%
Gain on sale of automobile loans		4,890			9,004			16,288			—			13,496			(8,606	)	(63.8	)%
Gain on sale of branch office		—			—			—			13,112			—			—		N.M.
Other service charges and fees		10,645			9,513			9,237			10,499			11,372			(727	)	(6.4	)%
Securities gains (losses)		(9,230	)		15,090			1,280			(4,107	)		6,887			(16,117	)	N.M.
Other		24,659			25,619			19,411			23,543			27,704			(3,045	)	(11.0	)%

Total non-interest income		218,128			227,639			246,510			272,768			276,951			(58,823	)	(21.2	)%

Personnel costs		119,715			121,624			115,762			113,170			105,242			14,473		13.8	%
Operating lease expense		62,563			70,710			85,609			93,134			102,939			(40,376	)	(39.2	)%
Outside data processing and other services		17,563			18,462			15,957			17,478			16,104			1,459		9.1	%
Equipment		16,228			16,086			16,840			16,328			16,341			(113	)	(0.7	)%
Net occupancy		16,258			16,763			14,925			15,570			15,377			881		5.7	%
Professional services		7,836			7,299			12,175			11,116			9,872			(2,036	)	(20.6	)%
Marketing		8,069			7,839			6,895			5,515			8,454			(385	)	(4.6	)%
Telecommunications		4,638			5,194			5,272			5,612			5,394			(756	)	(14.0	)%
Printing and supplies		3,098			3,016			3,417			3,658			2,253			845		37.5	%
Amortization of intangibles		204			204			204			204			204			—		N.M.
Loss on early extinguishment of debt		—			—			15,250			—			—			—		N.M.
Restructuring reserve releases		—			—			(351	)		—			(5,315	)		5,315		N.M.
Other		25,981			18,457			25,510			18,397			20,168			5,813		28.8	%

Total non-interest expense		282,153			285,654			317,465			300,182			297,033			(14,880	)	(5.0	)%

Income before provision for income taxes		153,511			139,074			127,019			141,442			133,166			20,345		15.3	%
Provision for income taxes		43,384			34,901			33,758			37,230			36,676			6,708		18.3	%

Income before cumulative effect effect of change in accounting principle		110,127			104,173			93,261			104,212			96,490			13,637		14.1	%
Cumulative effect of change in accounting principle, net of tax ⁽¹⁾		—			—			—			(13,330	)		—			—		N.M.

Net Income	$	110,127		$	104,173		$	93,261		$	90,882		$	96,490		$	13,637		14.1	%

Per Common Share
Income before cumulative effect of change in accounting
principle - Diluted	$	0.47		$	0.45		$	0.40		$	0.45		$	0.42		$	0.05		11.9	%
Net income - Diluted		0.47			0.45			0.40			0.39			0.42			0.05		11.9	%
Cash dividends declared		0.175			0.175			0.175			0.175			0.16			0.02		9.4	%
Return on:
Average total assets ⁽²⁾		1.41	%		1.36	%		1.22	%		1.38	%		1.38	%		0.03	%	2.2	%
Average total shareholders’ equity ⁽²⁾		19.1	%		18.4	%		16.6	%		18.5	%		18.0	%		1.1	%	6.1	%
Net interest margin ⁽³⁾		3.29	%		3.36	%		3.42	%		3.46	%		3.47	%		(0.18	)%	(5.2	)%
Efficiency ratio ⁽⁴⁾		62.3	%		65.1	%		67.1	%		60.0	%		62.5	%		(0.2	)%	(0.3	)%
Effective tax rate		28.3	%		25.1	%		26.6	%		26.3	%		27.5	%		0.8	%	2.9	%
Revenue - Fully Taxable Equivalent (FTE)
Net interest income	$	222,563		$	222,685		$	224,315		$	220,471		$	202,441		$	20,122		9.9	%
Tax equivalent adjustment ⁽³⁾		2,919			3,023			2,954			2,558			2,076			843		40.6	%

Net Interest Income		225,482			225,708			227,269			223,029			204,517			20,965		10.3	%
Non-Interest Income		218,128			227,639			246,510			272,768			276,951			(58,823	)	(21.2	)%

Total Revenue	$	443,610		$	453,347		$	473,779		$	495,797		$	481,468		$	(37,858	)	(7.9	)%

⁽¹⁾	Due to the adoption of FASB Interpretation No. 46 for variable interest entities.

⁽²⁾	Based on income before cumulative effect change in accounting principle, net of tax.

⁽³⁾	On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.

⁽⁴⁾	Non-interest expense less amortization of intangibles divided by the sum of FTE net interest income and non-interest income excluding securities gains (losses).

N.M.	- Not Meaningful

Table 2 - Selected Year to Date Income Statement Data


	Six Months Ending June 30,						2004 vs. 2003
*(in thousands, except per share amounts)*	2004			2003			Amount			%
Total interest income	$	650,098		$	637,339		$	12,759		2.0	%
Total interest expense		204,850			233,139			(28,289	)	(12.1	)%

Net interest income		445,248			404,200			41,048		10.2	%
Provision for credit losses		30,623			86,037			(55,414	)	(64.4	)%

Net interest income after provision for credit losses		414,625			318,163			96,462		30.3	%

Operating lease income		167,573			266,767			(99,194	)	(37.2	)%
Service charges on deposit accounts		85,433			80,783			4,650		5.8	%
Trust services		33,031			30,491			2,540		8.3	%
Brokerage and insurance		28,720			29,693			(973	)	(3.3	)%
Mortgage banking		19,026			18,310			716		3.9	%
Bank owned life insurance		21,794			22,180			(386	)	(1.7	)%
Gain on sale of automobile loans		13,894			23,751			(9,857	)	(41.5	)%
Other service charges and fees		20,158			21,710			(1,552	)	(7.1	)%
Securities gains		5,860			8,085			(2,225	)	(27.5	)%
Other		50,278			48,105			2,173		4.5	%

Total non-interest income		445,767			549,875			(104,108	)	(18.9	)%

Personnel costs		241,339			218,331			23,008		10.5	%
Operating lease expense		133,273			214,527			(81,254	)	(37.9	)%
Outside data processing and other services		36,025			32,683			3,342		10.2	%
Equipment		32,314			32,753			(439	)	(1.3	)%
Net occupancy		33,021			31,986			1,035		3.2	%
Professional services		15,135			19,157			(4,022	)	(21.0	)%
Marketing		15,908			15,080			828		5.5	%
Telecommunications		9,832			11,095			(1,263	)	(11.4	)%
Printing and supplies		6,114			5,934			180		3.0	%
Amortization of intangibles		408			408			—		N.M.
Restructuring reserve releases		—			(6,315	)		6,315		N.M.
Other		44,438			36,873			7,565		20.5	%

Total non-interest expense		567,807			612,512			(44,705	)	(7.3	)%

Income before provision for income taxes		292,585			255,526			37,059		14.5	%
Provision for income taxes		78,285			67,306			10,979		16.3	%

Net Income	$	214,300		$	188,220		$	26,080		13.9	%

Per Common Share
Net income - Diluted	$	0.92		$	0.81		$	0.11		13.6	%
Cash dividends declared	$	0.35		$	0.32		$	0.03		9.4	%

Return on:
Average total assets		1.36	%		1.35	%		0.01	%	0.8	%
Average total shareholders’ equity		18.4	%		17.3	%		1.1	%	6.1	%
Net interest margin ⁽¹⁾		3.32	%		3.52	%		(0.20	)%	(5.7	)%
Efficiency ratio ⁽²⁾		63.7	%		64.4	%		(0.7	)%	(1.1	)%
Effective tax rate		26.8	%		26.3	%		0.5	%	1.7	%

Revenue - Fully Taxable Equivalent (FTE)
Net interest income	$	445,248		$	404,200		$	41,048		10.2	%
Tax equivalent adjustment ⁽¹⁾		5,942			4,172			1,770		42.4	%

Net Interest Income		451,190			408,372			42,818		10.5	%
Non-Interest Income		445,767			549,875			(104,108	)	(18.9	)%

Total Revenue	$	896,957		$	958,247		$	(61,290	)	(6.4	)%

⁽¹⁾	On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.

⁽²⁾	Non-interest expense less amortization of intangibles divided by the sum of FTE net interest income and non-interest income excluding securities gains.

2004 First Six Months versus 2003 First Six Months

Earnings for the first six months of 2004 were $214.3 million, or $0.92 per common share, both up 14% from the comparable year-ago period earnings of $188.2 million, or $0.81 per common share. This increase in earnings reflected:

•

64% decrease in provision for credit losses,

•

10% increase in fully taxable equivalent net interest income, and

•

7% decline in non-interest expenses

Partially offset by a 19% decline in non-interest income.

The ROA and ROE were 1.36% and 18.4%, respectively, compared with 1.35% and 17.3% in the year-ago six-month period (see Table 2).

Significant Factors Influencing Financial Performance Comparisons

Automobile leases originated through April 2002 accounted for as operating leases – Automobile leases originated before May 2002 are accounted for using the operating lease method of accounting because they do not qualify as direct financing leases. Operating leases are a non-interest earning asset with the related rental income, other revenue, and credit recoveries reflected as operating lease income, a component of non-interest income. Under this accounting method, depreciation expenses, as well as other costs and charge-offs, are reflected as operating lease expense, a component of non-interest expense. With no new operating leases originated since April 2002, the operating lease assets are rapidly decreasing and will eventually run-off, along with related operating lease income and expense. Since operating lease income and expense represent a significant percentage of total non-interest income and expense, respectively, throughout this reporting period, their downward trend influences total non-interest income and non-interest expense trends.

All automobile leases originated since April 2002 are accounted for as direct financing leases, an interest earning asset included in total loans and leases with the related income reflected as interest income and included in the calculation of the net interest margin. Credit charge-offs and recoveries are reflected in the allowance for loan and lease losses (ALLL), with related changes in the ALLL reflected in provision for credit losses. The relative newness and rapid growth of this portfolio has resulted in higher reported automobile lease growth rates than in a more mature portfolio. To better understand overall trends in automobile lease exposure it is helpful to compare trends of the combined total of automobile leases plus operating leases (see the company’s 2003 Form 10-K for a full discussion).

Transition from a weak economic environment in 2003 to a recovering economic environment in 2004. The weak economic environment resulted in significant reductions in non-performing assets (NPAs), charge-offs, and the ALLL, as well as continued weak demand for commercial and industrial (C&I) loans, which contributed to declining C&I loans through the first quarter of 2004.

Declining interest rates in 2003 with generally increasing interest rates in 2004. Interest rates impacted, among other factors, loan and deposit growth, the net interest margin, and the valuation of mortgage servicing rights (MSRs) and investment securities.

•

The historically low interest rate environment resulted in strong demand and resultant growth in residential real estate, home equity, and commercial real estate (CRE) loans generally throughout this period. Mortgage banking revenue was also favorably impacted by the significant mortgage origination activity.

•

As interest rates fell in 2003 and attained historically low absolute levels, it became increasingly difficult to lower interest rates offered on deposit accounts commensurate with the overall decline in interest rates and yields on earning assets. This created an extremely competitive environment in which to grow deposits. These factors resulted in an inability to lower deposit rates commensurate with the overall decline in earning asset rates, which contributed to the decline in the net interest margin throughout this period.

•

Since the second quarter of 2002, the company generally has retained the servicing on mortgage loans it originates and sells. The mortgage servicing right, or MSR, represents the present value of expected future net servicing income for the loan. MSR values are very sensitive to movements in interest rates. Expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be greatly affected by prepayments. Prepayments usually increase when interest rates decline and decrease when interest rates rise. Thus, as interest rates decline, less future income is expected and the value of MSRs declines and becomes impaired when the valuation is less than the recorded book value. The company recognizes temporary impairment due to change in interest rates through a valuation reserve and records a direct write-down of the book value of its MSRs for other-than-temporary declines in valuation. Changes in interest rate levels between quarters resulted in some quarters reporting an MSR temporary impairment, with others reporting a recovery of previously reported MSR temporary impairment. Such swings in MSR valuations have significantly impacted quarterly mortgage banking income throughout this period (see Table 3).

•

The company uses gains or losses on investment securities to offset MSR temporary valuation changes. As a result, changes in interest rate levels have also resulted in securities gains or losses. As such, in quarters where an MSR temporary impairment is recognized, investment securities were sold resulting in a gain on sale, and vice versa. The earnings impact of the MSR valuation change and securities gain/loss may not exactly offset due to, among other factors, the difference in the timing of when the MSR valuation is determined and recorded, compared with when the securities are sold and any gain or loss is recorded (see Table 3).

Management strategies to lower the overall credit risk profile of the balance sheet. Throughout this period, certain strategies were implemented to lower the overall credit risk profile of the balance sheet with the objective of lowering the volatility of earnings.

•

Automobile loan sales – One strategy has been to lower the credit exposure to automobile loans and leases to 20% of total credit exposure, as manifested through the sale of automobile loans. These sales of higher-rate, higher-risk loans impact results in a number of ways including: lower growth rates in automobile, total consumer, and total company loans; the generation of gains reflected in non-interest income; lower net interest income than otherwise would be the case if the loans were not sold; and lower net interest margin (see Table 3).

•

Reduction in large-individual C&I and CRE credits – This strategy has been reflected in the reduction in shared national credits, as well as other, mostly C&I, loans. In addition, the company sold and charged-off lower-quality C&I and CRE credits in 2003 and 2004. This strategy was a contributing factor in the declines in C&I loan balances, NPAs, and the ALLL. In certain quarters, this strategy contributed to higher C&I net charge-offs.

Adoption of FIN 46 – Effective July 1, 2003, the company adopted Financial Accounting Standards Board (FASB) Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. The adoption of FIN 46 resulted in the consolidation of $1.0 billion of previously securitized automobile loans and a $13.3 million after-tax charge in the 2003 third quarter for the cumulative effect of a change in accounting principle (see Tables 1 and 2).

Corporate Restructuring Charges – The 2001 strategic refocusing plan included the intent to sell the Florida banking and insurance operations, credit-related and other actions to strengthen the balance sheet and financial performance, and the consolidation of numerous non-Florida banking offices. As a result, non-interest expenses in 2001 and 2002 were higher than they otherwise would have been as they included net restructuring charges based on estimated costs associated with implementing these strategic initiatives. In contrast, 2003 non-interest expense reflected recoveries of previously established reserves, which were no longer needed (see Table 3) and lowered 2003 non-interest expense (see Note 21 of the company’s 2003 Form 10-K Notes to Consolidated Financial Statements). There were no increases or releases of restructuring charges in the first half of 2004.

Single commercial recovery – A single commercial credit recovery in the 2004 second quarter on a loan previously charged off in the 2002 fourth quarter favorably impacted the 2004 second quarter provision expense (see Table 3), as well as C&I, total commercial, and total net charge-offs for the quarter (see Table 11).

The following table quantifies the earnings impact of changes in MSR and investment securities valuation, sales of automobile loans, restructuring reserve releases, and a single, large commercial credit recovery on the specified periods.

Table 3 - Significant Items Influencing Earnings Performance Comparisons


*(in millions, except per share )*	Pre-tax			Impact After-tax⁽¹⁾			EPS
*(in millions, except per share )*	Pre-tax			Impact After-tax⁽¹⁾			EPS
Three Months Ended:
June 30, 2004 - GAAP earnings	$	153.5		$	110.1		$	0.47
Gain on sale of automobile loans		4.9			3.2			0.01
Mortgage servicing right (MSR) temporary impairment recovery		10.4			6.8			0.03
Investment securities losses		(9.2	)		(6.0	)		(0.03	)
Single commercial credit recovery		9.7			6.3			0.03

June 30, 2003 - GAAP earnings	$	133.2		$	96.5		$	0.42
Gain on sale of automobile loans		13.5			8.8			0.04
MSR temporary impairment		(6.4	)		(4.1	)		(0.02	)
Investment securities gains		6.9			4.5			0.02
Restructuring reserve releases		5.3			3.5			0.01

Six Months Ended:
June 30, 2004 - GAAP earnings	$	292.6		$	214.3		$	0.92
Gain on sale of automobile loans		13.9			9.0			0.04
MSR temporary impairment recovery		0.3			0.2			—
Investment securities gain on sale		5.9			4.0			0.02
Single commercial credit recovery		9.7			6.3			0.03

June 30, 2003 - GAAP earnings	$	255.5		$	188.2		$	0.81
Gain on sale of automobile loans		23.8			15.0			0.06
MSR temporary impairment		(6.4	)		(4.1	)		(0.02	)
Investment securities gains		8.1			5.0			0.02
Restructuring reserve releases		6.3			4.0			0.02

⁽¹⁾	Increase (decrease) to GAAP earnings.

RESULTS OF OPERATIONS

Net Interest Income

2004 Second Quarter versus 2003 Second Quarter

Fully taxable equivalent net interest income increased $21.0 million, or 10%, from the year-ago quarter, reflecting the favorable impact of a 16% increase in average earning assets, partially offset by an 18 basis point, or an effective 5%, decline in the net interest margin. The fully taxable equivalent net interest margin decreased to 3.29% from 3.47%, reflecting the continued impact of historically low interest rates and the strategic repositioning of portfolios to reduce automobile loans and increase the relative proportion of lower-rate, and lower-risk, residential real estate-related loans and investment securities.

Average total loans and leases increased $2.5 billion, or 13%, from the 2003 second quarter due primarily to a $2.2 billion, or 23%, increase in average consumer loans. Contributing to the consumer loan growth was a $1.1 billion, or 58%, increase in average residential mortgages and a $0.8 billion, or 23%, increase in average home equity loans. Average total automobile loans and leases increased $0.3 billion, or 8%. This growth from the year-ago quarter reflected the positive impact of underlying new automobile loan originations, the 2003 third quarter consolidation of a $1.0 billion automobile loan securitization trust, and the rapid growth in direct financing leases due to the migration from operating lease assets, which are no longer being originated. Offsetting these positive impacts was the sale of $2.4 billion of automobile loans over this 12-month period (see Loan and Lease Composition for additional discussion and Table 10).

Average total C&I and CRE loans increased $0.3 billion, or 3%, from the year-ago quarter, reflecting an 11% increase in small business C&I and CRE loans and a 9% increase in middle-market CRE loans. Average middle-market C&I loans were down 4% from the year-ago period and reflected both weak demand and the impact from continued strategies to specifically lower exposure to large individual commercial credits, including shared national credits.

Average investment securities increased $1.6 billion, or 43%, from the year-ago quarter, primarily reflecting the investment of a portion of the proceeds from the automobile loan sales. The growth from the year-ago quarter primarily consisted of 10-year variable-rate securities.

Average total core deposits in the second quarter were $16.2 billion, up $0.8 billion, or 5%, from the year-ago quarter. This growth primarily reflected a $1.1 billion, or 18%, increase in interest bearing demand deposits, partially offset by a $0.4 billion, or 14%, decline in retail CDs.

Tables 4 and 5 reflect quarterly average balance sheets and rates earned and paid on interest-earning assets and interest-bearing liabilities:

Table 4 - Condensed Consolidated Quarterly Average Balance Sheets


	Average Balances										2Q04 vs. 2Q03
*(in millions)*	2004				2003						2Q04 vs. 2Q03
Fully Tax Equivalent Basis	Second		First		Fourth		Third		Second		Amount			Percent
Assets
Interest bearing deposits in banks	$	69	$	79	$	83	$	90	$	45	$	24		53.3	%
Trading account securities		28		16		11		11		22		6		27.3
Federal funds sold and securities purchased under resale agreements		168		92		117		103		69		99		N.M.
Loans held for sale		254		207		295		898		601		(347	)	(57.7	)
Securities:
Taxable		4,861		4,646		4,093		3,646		3,385		1,476		43.6
Tax exempt		410		437		424		358		291		119		40.9

Total Securities		5,271		5,083		4,517		4,004		3,676		1,595		43.4

Loans and Leases:
Commercial and industrial		5,536		5,365		5,382		5,380		5,626		(90	)	(1.6	)
Real Estate
Construction		1,322		1,322		1,297		1,258		1,239		83		6.7
Commercial		2,906		2,876		2,830		2,744		2,621		285		10.9
Consumer
Automobile loans		2,337		3,041		3,529		3,594		2,830		(493	)	(17.4	)
Automobile leases		2,139		1,988		1,802		1,590		1,306		833		63.8

Automobile loans and leases		4,476		5,029		5,331		5,184		4,136		340		8.2

Home equity		4,142		3,880		3,678		3,503		3,359		783		23.3
Residential mortgage		2,986		2,674		2,501		2,075		1,887		1,099		58.2
Other loans		399		356		387		367		379		20		5.3

Total Consumer		12,003		11,939		11,897		11,129		9,761		2,242		23.0

Total Loans and Leases		21,767		21,502		21,406		20,511		19,247		2,520		13.1

Allowance for loan and lease losses		310		313		350		330		304		6		2.0

Net loans and leases		21,457		21,189		21,056		20,181		18,943		2,514		13.3

Total earning assets		27,557		26,979		26,429		25,617		23,660		3,897		16.5

Operating lease assets		977		1,166		1,355		1,565		1,802		(825	)	(45.8	)
Cash and due from banks		772		740		766		747		735		37		5.0
Intangible assets		216		217		217		218		218		(2	)	(0.9	)
All other assets		2,101		2,046		2,005		2,067		1,988		113		5.7

Total Assets	$	31,313	$	30,835	$	30,422	$	29,884	$	28,099	$	3,214		11.4	%

Liabilities and Shareholders’ Equity
Core deposits
Non-interest bearing deposits	$	3,223	$	3,017	$	3,131	$	3,218	$	3,046	$	177		5.8	%
Interest bearing demand deposits		7,168		6,609		6,466		6,558		6,100		1,068		17.5
Savings deposits		2,839		2,819		2,824		2,808		2,804		35		1.2
Retail certificates of deposit		2,400		2,399		2,492		2,561		2,798		(398	)	(14.2	)
Other domestic time deposits		600		637		631		656		673		(73	)	(10.8	)

Total core deposits		16,230		15,481		15,544		15,801		15,421		809		5.2

Domestic time deposits of $100,000 or more		795		788		828		803		808		(13	)	(1.6	)
Brokered time deposits and negotiable CDs		1,737		1,907		1,851		1,421		1,241		496		40.0
Foreign time deposits		542		549		522		536		426		116		27.2

Total deposits		19,304		18,725		18,745		18,561		17,896		1,408		7.9

Short-term borrowings		1,396		1,603		1,433		1,393		1,635		(239	)	(14.6	)
Federal Home Loan Bank advances		1,270		1,273		1,273		1,273		1,267		3		0.2
Subordinated notes and other long-term debt,
including preferred capital securities		5,623		5,557		5,432		5,197		4,010		1,613		40.2

Total interest bearing liabilities		24,370		24,141		23,752		23,206		21,762		2,608		12.0

All other liabilities		1,397		1,399		1,311		1,221		1,140		257		22.5
Shareholders’ equity		2,323		2,278		2,228		2,239		2,151		172		8.0

Total Liabilities and Shareholders’ Equity	$	31,313	$	30,835	$	30,422	$	29,884	$	28,099	$	3,214		11.4	%

Table 5 - Condensed Consolidated Quarterly Net Interest Margin Analysis


	Average Rates ⁽²⁾
*(in millions)*	2004				2003
Fully Tax Equivalent Basis ⁽¹⁾	Second		First		Fourth		Third		Second
Assets
Interest bearing deposits in banks	1.07	%	0.71	%	0.60	%	0.51	%	1.58	%
Trading account securities	3.02		3.98		2.39		4.70		4.15
Federal funds sold and securities purchased under resale agreements	1.21		1.41		1.30		1.92		2.19
Loans held for sale	5.17		5.33		5.31		5.16		5.42
Securities:
Taxable	3.83		4.06		4.24		4.23		4.58
Tax exempt	7.07		6.88		6.91		6.93		6.91

Total Securities	4.09		4.30		4.49		4.47		4.77

Loans and Leases: ⁽²⁾
Commercial and industrial	4.25		4.49		4.82		4.84		5.26
Real Estate
Construction	3.70		3.68		4.24		4.17		4.07
Commercial	4.57		4.70		4.99		5.22		5.28
Consumer
Automobile loans	7.20		6.93		6.90		7.19		7.74
Automobile leases	5.06		4.94		4.98		4.99		4.69

Automobile loans and leases	6.17		6.14		6.25		6.51		6.78

Home equity	4.92		4.82		4.87		5.09		5.02
Residential mortgage	5.30		5.44		5.20		5.32		5.76
Other loans	7.48		7.24		7.19		7.38		7.22

Total Consumer	5.49		5.52		5.64		5.87		5.99

Total Loans and Leases	4.95		5.04		5.26		5.41		5.56

Total earning assets	4.76	%	4.89	%	5.11	%	5.23	%	5.42	%


Liabilities and Shareholders’ Equity
Core deposits
Non-interest bearing deposits
Interest bearing demand deposits	0.81	%	0.88	%	0.91	%	1.04	%	1.39	%
Savings deposits	0.82		0.94		1.22		1.35		1.55
Retail certificates of deposit	3.27		3.47		3.54		3.51		3.75
Other domestic time deposits	3.19		3.48		3.69		3.89		3.85

Total core deposits	1.45		1.53		1.65		1.76		2.09

Domestic time deposits of $100,000 or more	2.37		2.14		2.37		2.32		2.55
Brokered time deposits and negotiable CDs	1.57		1.51		1.52		1.63		1.79
Foreign time deposits	0.76		0.72		0.75		0.85		1.03

Total deposits	1.48		1.53		1.64		1.75		2.06

Short-term borrowings	0.80		0.83		0.78		0.85		1.06
Federal Home Loan Bank advances	2.52		2.50		2.24		1.81		1.76
Subordinated notes and other long-term debt, including preferred capital securities	2.24		2.33		2.63		2.78		2.85

Total interest bearing liabilities	1.66	%	1.71	%	1.85	%	1.93	%	2.11	%

Net interest rate spread	3.10	%	3.18	%	3.26	%	3.30	%	3.31	%
Impact of non-interest bearing funds on margin	0.19		0.18		0.16		0.16		0.16

Net Interest Margin	3.29	%	3.36	%	3.42	%	3.46	%	3.47	%

⁽¹⁾	Fully tax equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 20 for the fully taxable equivalent adjustment.

⁽²⁾	Loan and lease and deposit average rates include impact of applicable derivatives and non-deferrable fees.

2004 Second Quarter versus 2004 First Quarter

Compared with the 2004 first quarter, fully taxable equivalent net interest income decreased only $0.2 million, reflecting the adverse impact of automobile loan sales. The fully taxable equivalent net interest margin declined 7 basis points, or an effective 2%, to 3.29% from 3.36%. Average earnings assets, despite the negative impact from the sale of automobile loans, increased $0.6 billion, or 2%. The decline in the net interest margin from the first quarter reflected the same factors as those impacting the decrease from the year-ago quarter.

Average total loans and leases in the second quarter increased $0.3 billion, or 1%, from the first quarter, as the growth rate was mitigated by a $0.7 billion, or 23%, decline in average automobile loans due to the first quarter sale of $868 million of automobile loans. Growth in mortgage-related consumer loans remained strong with average residential mortgages up $0.3 billion, or 12%, and average home equity loans up $0.3 billion, or 7%. Total average C&I and CRE loans increased $0.2 billion, or 2%, reflecting a 2% increase in small business C&I and CRE loans, a 3% increase in middle-market C&I loans, and a 1% increase in middle-market CRE loans.

Average investment securities increased $0.2 billion, or 4%, from the first quarter, primarily reflecting the investment of a portion of the proceeds from the first quarter automobile loan sale. However, investment securities at June 30, 2004, were down $0.5 billion, or 9%, from the end of the first quarter. Average loans held for sale decreased $0.3 billion, or 58%, from the year-ago quarter.

Average total core deposits in the second quarter increased $0.7 billion, or 5%, reflecting strong growth in interest bearing demand deposits, up $0.6 billion, or 8%, as well as non-interest bearing deposits, up $0.2 billion, or 7%.

2004 First Six Months versus 2003 First Six Months

Fully taxable equivalent net interest income for the first six months of 2004 increased $42.8 million, or 10%, from the comparable year-ago period, reflecting the favorable impact of a 17% increase in average earning assets, partially offset by an 20 basis point, or an effective 6%, decline in the net interest margin. The fully taxable equivalent net interest margin decreased to 3.32% from 3.52%, reflecting the impact of lower rates and the strategic repositioning of portfolios to reduce automobile loans and increase the relative proportion of lower-rate, and lower-risk, residential real estate-related loans and investment securities.

Average total loans and leases increased $2.6 billion, or 13%, from the first six months of 2003 due primarily to a $2.3 billion, or 24%, increase in average consumer loans. Contributing to the consumer loan growth was a $1.0 billion, or 52%, increase in average residential mortgages and a $0.7 billion, or 22%, increase in average home equity loans. Average total automobile loans and leases increased $0.6 billion, or 16%. This growth from the year-ago six-month period reflected the positive impact of underlying new automobile loan originations, the 2003 third quarter consolidation of a $1.0 billion automobile loan securitization trust, and the rapid growth in direct financing leases due to the migration from operating lease assets, which are no longer being originated. Partially offsetting these positive impacts was the sale of automobile loans over this period.

Average total C&I and CRE loans in the first six months of 2004 increased $0.2 billion, or 2%, from the comparable year-ago period, reflecting an 11% increase in small business C&I and CRE loans and a 10% increase in middle-market CRE loans. Average middle-market C&I loans were down 5% from the year-ago period and reflected both weak demand and the impact from continued strategies to specifically lower exposure to large individual commercial credits, including shared national credits.

Average investment securities increased $1.7 billion, or 48%, from the year-ago six-month period, primarily reflecting the investment of a portion of the proceeds from the automobile loan sales.

Average total core deposits in the first six months of 2004 were $15.9 billion, up $0.7 billion, or 4%, from the year-ago period. This growth primarily reflected a $1.0 billion, or 17%, increase in interest bearing demand deposits, partially offset by a $0.5 billion, or 17%, decline in retail CDs.

Table 6 reflects average balance sheets and rates earned and paid on interest-earning assets and interest-bearing liabilities, respectively for the first six-month periods of 2004 and 2003:

Table 6 - Condensed Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis


*(in millions)*	YTD Average Balances									YTD Average Rates ⁽³⁾
					2004 vs. 2003					YTD Average Rates ⁽³⁾
Fully Tax Equivalent Basis	2004		2003		Amount			%		2004		2003
Assets
Interest bearing deposits in banks	$	74	$	41	$	33		80.5		0.88	%	1.58	%
Trading account securities		22		17		5		29.4		3.36		4.40
Federal funds sold and securities purchased under resale agreements		130		63		67		N.M.		1.28		2.15
Mortgages held for sale		231		531		(300	)	(56.5	)	5.25		5.47
Securities:
Taxable		4,753		3,202		1,551		48.4		3.94		4.85
Tax exempt		423		290		133		45.9		6.97		6.88

Total Securities		5,176		3,492		1,684		48.2		4.19		5.02

Loans and Leases:
Commercial and industrial		5,451		5,625		(174	)	(3.1	)	4.37		5.28
Real Estate
Construction		1,322		1,214		108		8.9		3.69		4.06
Commercial		2,891		2,593		298		11.5		4.63		5.35
Consumer
Automobile loans		2,689		2,954		(265	)	(9.0	)	7.05		7.73
Automobile leases		2,064		1,153		911		79.0		5.02		5.29

Automobile loans and leases		4,753		4,107		646		15.7		6.17		7.05

Home equity		4,011		3,298		713		21.6		4.88		5.08
Residential mortgage		2,830		1,859		971		52.2		5.37		5.80
Other loans		377		383		(6	)	(1.6	)	7.37		6.85

Total Consumer		11,971		9,647		2,324		24.1		5.51		6.13

Total Loans and Leases		21,635		19,079		2,556		13.4		5.00		5.64

Allowance for loan and lease losses		328		343		(15	)	(4.4	)

Net loans and leases		21,307		18,736		2,571		13.7

Total earning assets		27,268		23,223		4,045		17.4		4.83	%	5.52	%

Operating lease assets		1,070		1,937		(867	)	(44.8	)
Cash and due from banks		756		738		18		2.4
Intangible assets		217		218		(1	)	(0.5	)
All other assets		2,075		1,974		101		5.1

Total Assets	$	31,058	$	27,747	$	3,311		11.9

Liabilities and Shareholders’ Equity
Core deposits
Non-interest bearing deposits	$	3,120	$	2,984	$	136		4.6
Interest bearing demand deposits		6,889		5,868		1,021		17.4		0.92	%	1.44	%
Savings deposits		2,829		2,788		41		1.5		0.88		1.63
Retail certificates of deposit		2,400		2,880		(480	)	(16.7	)	3.37		3.81
Other domestic time deposits		618		678		(60	)	(8.8	)	3.34		3.92

Total core deposits		15,856		15,198		658		4.3		1.49		2.18

Domestic time deposits of $100,000 or more		792		789		3		0.4		2.26		2.66
Brokered time deposits and negotiable CDs		1,822		1,198		624		52.1		1.54		1.88
Foreign time deposits		545		470		75		16.0		0.74		1.05

Total deposits		19,015		17,655		1,360		7.7		1.51		2.15

Short-term borrowings		1,499		1,790		(291	)	(16.3	)	0.82		1.11
Federal Home Loan Bank advances		1,272		1,242		30		2.4		2.51		1.80
Subordinated notes and other long-term debt, including preferred capital securities		5,590		3,791		1,799		47.5		2.28		2.97

Total interest bearing liabilities		24,256		21,494		2,762		12.9		1.68	%	2.19	%

All other liabilities		1,381		1,111		270		24.3
Shareholders’ equity		2,301		2,158		143		6.6

Total Liabilities and Shareholders’ Equity	$	31,058	$	27,747	$	3,311		11.9

Net interest rate spread										3.15	%	3.33	%
Impact of non-interest bearing funds on margin										0.17		0.19

Net Interest Margin										3.32	%	3.52	%

Provision for Credit Losses

The provision for credit losses is the expense necessary to maintain the ALLL and the allowance for unfunded loan commitments (AULC) at levels adequate to absorb Management’s estimate of inherent losses in the total loan and lease portfolio, unfunded loan commitments, and letters of credit. Taken into consideration are such factors as current period net charge-offs that are charged against these allowances, current period loan and lease growth and any related estimate of likely losses associated with that growth based on historical experience, the current economic outlook, and the anticipated impact on credit quality of existing loans and leases and unfunded commitments and letters of credit (see Allowances for Credit Losses for additional discussion and Table 14).

The provision for credit losses in the 2004 second quarter was $5.0 million, a $44.2 million reduction from the year-ago quarter and a $20.6 million decline from the 2004 first quarter. This reduction in provision expense reflected the $9.7 million commercial loan recovery and overall improved portfolio quality performance, as well as an improved economic outlook, only partially offset by provision expense related to loan growth. As previously disclosed, effective January 1, 2004, the company adopted a more quantitative approach to calculating the economic reserve component of the ALLL, making this component more responsive to changes in economic conditions. This change, combined with the existing quantitative approach for determining the transaction reserve component, as well as changes to the specific reserve component, will result in more volatility in the total ALLL and corresponding provision for credit losses (see Credit Risk for additional discussion).

The provision for credit losses in the first six months of 2004 was $30.6 million, a $55.4 million, or 64%, decline from the comparable year-ago period. This reduction reflected the same factors impacting second quarter year-over-year performance.

Non-Interest Income

Table 7 reflects non-interest income detail for each of the past five quarters, and the first six-months of 2004 and 2003:

Table 7 - Non-Interest Income


	2004						2003							2Q04 vs. 2Q03
*(in thousands)*	Second			First			Fourth		Third			Second		Amount			%
Service charges on deposit accounts	$	43,596		$	41,837		$	44,763	$	42,294		$	40,914	$	2,682		6.6	%
Trust services		16,708			16,323			15,793		15,365			15,580		1,128		7.2
Brokerage and insurance		13,523			15,197			14,344		13,807			14,196		(673	)	(4.7	)
Mortgage banking		23,322			(4,296	)		9,677		30,193			7,185		16,137		N.M.
Bank owned life insurance		11,309			10,485			10,410		10,438			11,043		266		2.4
Gain on sale of automobile loans		4,890			9,004			16,288		—			13,496		(8,606	)	(63.8	)
Gain on sale of branch offices		—			—			—		13,112			—		—		—
Other service charges and fees		10,645			9,513			9,237		10,499			11,372		(727	)	(6.4	)
Securities gains (losses)		(9,230	)		15,090			1,280		(4,107	)		6,887		(16,117	)	N.M.
Other		24,659			25,619			19,411		23,543			27,704		(3,045	)	(11.0	)

Sub-total before operating lease income		139,422			138,772			141,203		155,144			148,377		(8,955	)	(6.0	)
Operating lease income		78,706			88,867			105,307		117,624			128,574		(49,868	)	(38.8	)

Total Non-Interest Income	$	218,128		$	227,639		$	246,510	$	272,768		$	276,951	$	(58,823	)	(21.2	)%


	Six Months Ending June 30,				YTD 2004 vs. 2003
*(in thousands)*	2004		2003		Amount			%
Service charges on deposit accounts	$	85,433	$	80,783	$	4,650		5.8	%
Trust services		33,031		30,491		2,540		8.3
Brokerage and insurance		28,720		29,693		(973	)	(3.3	)
Mortgage banking		19,026		18,310		716		3.9
Bank owned life insurance		21,794		22,180		(386	)	(1.7	)
Gain on sale of automobile loans		13,894		23,751		(9,857	)	(41.5	)
Other service charges and fees		20,158		21,710		(1,552	)	(7.1	)
Securities gains (losses)		5,860		8,085		(2,225	)	(27.5	)
Other		50,278		48,105		2,173		4.5

Sub-total before operating lease income		278,194		283,108		(4,914	)	(1.7	)
Operating lease income		167,573		266,767		(99,194	)	(37.2	)

Total Non-Interest Income	$	445,767	$	549,875	$	(104,108	)	(18.9	)%

N.M. - Not Meaningful.

2004 Second Quarter versus 2003 Second Quarter

Non-interest income decreased $58.8 million, or 21%, from the year-ago quarter. Comparisons with prior-period results are heavily influenced by the decline in operating leases and related operating lease income. These trends are expected to continue as all automobile leases originated since April 2002 are direct financing leases with income reflected in net interest income, not non-interest income. Reflecting the run-off of the operating lease portfolio, operating lease income declined $49.9 million, or 39%, from the 2003 second quarter. Excluding operating lease income, non-interest income decreased $9.0 million, or 6%, from the year-ago quarter with the primary drivers being:

•

$16.1 million decline in investment securities gains with current quarter securities losses of $9.2 million, including $10.2 million of losses related to investment securities used to offset MSR temporary valuation changes.

•

$8.6 million, or 64%, decrease in gains on the sale of automobile loans, as the current quarter included $4.9 million of pre-tax gains, compared with $13.5 million of such pre-tax gains in the year-ago quarter. The higher relative gain in the year-ago quarter reflected the higher average rate of the loans sold in that quarter.

•

$3.0 million, or 11%, decline in other income due to lower fees collected at the end of leases, partially offset by higher letter of credit fees.

Partially offset by:

•

$16.1 million increase in mortgage banking income. This reflected a $16.8 million change in MSR temporary impairment valuations, as the current quarter included a $10.4 million recovery of previously recorded MSR temporary impairment compared with $6.4 million of MSR temporary impairment recognized in the year-ago quarter. The valuation changes included $4.5 million of MSR hedge losses in the current quarter.

•

$2.7 million, or 7%, increase in service charges on deposit accounts.

•

$1.1 million, or 7%, increase in trust services income.

2004 Second Quarter versus 2004 First Quarter

Compared with the 2004 first quarter, non-interest income declined $9.5 million, or 4%. This comparison is also heavily influenced by the decline in operating lease income for the reasons noted above. Reflecting the run-off of the operating lease portfolio, operating lease income declined $10.2 million, or 11%, from the 2004 first quarter. Excluding operating lease income, non-interest income increased $0.7 million from the 2004 first quarter with the primary drivers being:

•

$27.6 million increase in mortgage banking income. This reflected a $20.5 million change in MSR temporary impairment valuations, as the current quarter included a $10.4 million recovery of previously recorded MSR temporary impairment compared with $10.1 million of MSR temporary impairment recognized in the first quarter. This reversal in MSR temporary impairment valuation between quarters reflected an upward movement in mortgage interest rates in the second quarter. The MSR temporary impairment valuation reserve at June 30, 2004, was $1.4 million. Reflecting the rise of interest rates during the quarter, the value of MSRs as a percent of mortgages serviced for others was 1.21%, up from 0.93% at March 31, 2004. Excluding the MSR temporary impairment valuation change between quarters, mortgage banking income increased $7.1 million, primarily reflecting higher mortgage originations and sales and including $4.5 million of MSR hedge losses in the current quarter.

•

$1.8 million, or 4%, increase in service charges on deposit accounts.

•

$1.1 million, or 12%, increase in other service charges and fees.

Partially offset by:

•

$24.3 million decline in securities gains (losses), with the current quarter reflecting $9.2 million in securities losses, compared with $15.1 million of securities gains in the 2004 first quarter. Investment securities are used as an on balance sheet hedge to MSR temporary valuation changes.

•

$4.1 million decrease in gains on the sale of automobile loans as the current quarter reflected $4.9 million of such gains, compared with $9.0 million of gains in the first quarter.

•

$1.7 million, or 11%, decline in brokerage and insurance income primarily due to lower annuity sales.

2004 First Six Months versus 2003 First Six Months

Non-interest income for the first six months of 2004 declined $104.1 million, or 19%, from the comparable year-ago period. Comparisons with prior-period results are heavily influenced by the decline in operating leases and related operating lease income (see above discussion). Reflecting the run-off of the operating lease portfolio, operating lease income for the first six months of 2004 declined $99.2 million, or 37%, from the comparable year-ago period. Excluding operating lease income, non-interest income for the first six months of 2004 decreased $4.9 million, or 2%, from the year-ago period with the primary drivers being:

•

$9.9 million, or 42%, decrease in gains on the sale of automobile loans, as the current six-month period included $13.9 million of pre-tax gains, compared with $23.8 million of such pre-tax gains in the year-ago period.

•

$2.2 million decline in investment securities gains with current six-month period securities gains of $5.9 million, compared with $8.1 million of gains in the year-ago six-month period.

Partially offset by:

•

$4.7 million, or 6%, increase in service charges on deposit accounts, primarily reflecting higher NSF and overdraft fees.

•

$2.5 million, or 8%, increase in trust services income.

•

$2.2 million, or 4%, increase in other income.

Non-Interest Expense

Table 8 reflects non-interest expense detail for each of the last five quarters and the first six-month period for 2004 and 2003:

Table 8 - Non-Interest Expense


	2004				2003								2Q04 vs. 2Q03
*(in thousands)*	Second		First		Fourth			Third		Second			Amount			%
Personnel costs	$	119,715	$	121,624	$	115,762		$	113,170	$	105,242		$	14,473		13.8	%
Outside data processing and other services		17,563		18,462		15,957			17,478		16,104			1,459		9.1
Equipment		16,228		16,086		16,840			16,328		16,341			(113	)	(0.7	)
Net occupancy		16,258		16,763		14,925			15,570		15,377			881		5.7
Professional services		7,836		7,299		12,175			11,116		9,872			(2,036	)	(20.6	)
Marketing		8,069		7,839		6,895			5,515		8,454			(385	)	(4.6	)
Telecommunications		4,638		5,194		5,272			5,612		5,394			(756	)	(14.0	)
Printing and supplies		3,098		3,016		3,417			3,658		2,253			845		37.5
Amortization of intangible assets		204		204		204			204		204			—		—
Loss on early extinguishment of debt		—		—		15,250			—		—			—		—
Restructuring reserve releases		—		—		(351	)		—		(5,315	)		5,315		N.M.
Other		25,981		18,457		25,510			18,397		20,168			5,813		28.8

Sub-total before operating lease expense		219,590		214,944		231,856			207,048		194,094			25,496		13.1
Operating lease expense		62,563		70,710		85,609			93,134		102,939			(40,376	)	(39.2	)

Total Non-Interest Expense	$	282,153	$	285,654	$	317,465		$	300,182	$	297,033		$	(14,880	)	(5.0	)%


	Six Months Ending June 30,					YTD 2004 vs. 2003
*(in thousands)*	2004		2003			Amount			%
Personnel costs	$	241,339	$	218,331		$	23,008		10.5	%
Outside data processing and other services		36,025		32,683			3,342		10.2
Equipment		32,314		32,753			(439	)	(1.3	)
Net occupancy		33,021		31,986			1,035		3.2
Professional services		15,135		19,157			(4,022	)	(21.0	)
Marketing		15,908		15,080			828		5.5
Telecommunications		9,832		11,095			(1,263	)	(11.4	)
Printing and supplies		6,114		5,934			180		3.0
Amortization of intangible assets		408		408			—		—
Restructuring reserve releases		—		(6,315	)		6,315		N.M.
Other		44,438		36,873			7,565		20.5

Sub-total before operating lease expense		434,534		397,985			36,549		9.2
Operating lease expense		133,273		214,527			(81,254	)	(37.9	)

Total Non-Interest Expense	$	567,807	$	612,512		$	(44,705	)	(7.3	)%

N.M.	- Not Meaningful.

2004 Second Quarter versus 2003 Second Quarter

Non-interest expense decreased $14.9 million, or 5%, from the year-ago quarter. Comparisons with prior-period results are influenced by the decline in operating lease expense as the operating lease portfolio continues to run-off (see above operating lease income discussion). Operating lease expense declined $40.4 million, or 39%, from the 2003 second quarter. Excluding operating lease expense, non-interest expense increased $25.5 million, or 13%, from the year-ago quarter with the primary drivers being:

•

$14.5 million, or 14%, increase in personnel costs, primarily reflecting a $4.3 million increase in pension costs and a $4.2 million increase in health care expense.

•

$5.8 million, or 29%, increase in other expense, primarily attributable to costs recorded in the current quarter related to investments in partnerships generating tax benefits, of which $3.2 million related to previous periods.

•

$5.3 million in restructuring reserve releases that lowered expenses in the year-ago quarter.

•

$1.5 million, or 9%, increase in outside data processing and other services.

Partially offset by:

•

$2.0 million, or 21%, decline in professional services expense.

2004 Second Quarter versus 2004 First Quarter

Compared with the 2004 first quarter, non-interest expense declined $3.5 million, or 1%. Comparisons with prior-period results are also heavily influenced by the decline in operating lease expense. Operating lease expense declined $8.1 million, or 12%, from the 2004 first quarter. Excluding operating lease expense, non-interest expense increased $4.6 million, or 2%, from the first quarter with the primary drivers being:

•

$7.5 million increase in other expense primarily related to $5.8 million of costs consisting of investments in partnerships generating tax benefits.

Partially offset by:

•

$1.9 million, or 2%, decrease in personnel costs, primarily reflecting lower employment taxes.

•

$0.9 million, or 5%, decline in outside data processing and other services.

2004 First Six Months versus 2003 First Six Months

Non-interest expense for the first six months of 2004 declined $44.7 million, or 7%, from the comparable year-ago period. Comparisons with prior-period results are influenced by the decline in operating lease expense as the operating lease portfolio continues to run-off (see above operating lease income discussion). Operating lease expense declined $81.3 million, or 38%, from the 2003 six-month period. Excluding operating lease expense, non-interest expense for the first six months of 2004 increased $36.5 million, or 9%, from the year-ago period with the primary drivers being:

•

$23.0 million, or 11%, increase in personnel costs, primarily reflecting a $14.7 million, or 37%, increase in benefits expense and an $8.8 million, or 6%, increase in salaries.

•

$7.6 million, or 21%, increase in other expense, primarily attributable to $5.8 million of costs related to investments in partnerships generating tax benefits in the current six-month period.

•

$6.3 million in restructuring reserve releases that lowered expenses in the year-ago six-month period.

•

$3.3 million, or 10%, increase in outside data processing and other services.

Partially offset by:

•

$4.0 million, or 21%, decline in professional services expense.

Operating Lease Assets

Table 9 reflects operating lease assets performance detail for each of the last five quarters, and the first six-month period for 2004 and 2003:

Table 9 - Operating Lease Assets Performance


	2004						2003									2Q04 vs. 2Q03
	Second			First			Fourth			Third			Second			Amount			%
*Balance Sheet (in millions***)
Average operating lease assets outstanding	$	977		$	1,166		$	1,355		$	1,565		$	1,802		$	(825	)	(45.8	)%
*Income Statement (in thousands***)
Net rental income		72,402		$	83,517		$	98,223		$	109,645		$	120,502		$	(48,100	)	(39.9	)%
Fees		4,838			3,543			5,204			5,372			5,414			(576	)	(10.6	)
Recoveries - early terminations		1,466			1,807			1,880			2,607			2,658			(1,192	)	(44.8	)

Total Operating Lease Income		78,706			88,867			105,307			117,624			128,574			(49,868	)	(38.8	)

Depreciation and residual losses at termination		57,412			63,932			76,768			83,112			91,387			(33,975	)	(37.2	)
Losses - early termination		5,151			6,778			8,841			10,022			11,552			(6,401	)	(55.4	)

Total Operating Lease Expense		62,563			70,710			85,609			93,134			102,939			(40,376	)	(39.2	)

Net Earnings Contribution	$	16,143		$	18,157		$	19,698		$	24,490		$	25,635		$	(9,492	)	(37.0	)%

Earnings ratios ⁽¹⁾
Net rental income		29.6	%		28.7	%		29.0	%		28.0	%		26.7	%		2.9	%	10.9	%
Depreciation and residual losses at termination		23.5	%		21.9	%		22.7	%		21.2	%		20.3	%		3.2	%	15.8	%

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


	Six Months Ended June 30,						YTD 2004 vs. 2003
	2004			2003			Amount			%
*Balance Sheet (in millions***)
Average operating lease assets outstanding	$	1,070		$	1,937		$	(867	)	(44.8	)%
*Income Statement (in thousands***)
Net rental income		155,919		$	250,776		$	(94,857	)	(37.8	)
Fees		8,381			11,047			(2,666	)	(24.1	)
Recoveries - early terminations		3,273			4,944			(1,671	)	(33.8	)

Total Operating Lease Income		167,573			266,767			(99,194	)	(37.2	)

Depreciation and residual losses at termination		121,344			190,670			(69,326	)	(36.4	)
Losses - early termination		11,929			23,857			(11,928	)	(50.0	)

Total Operating Lease Expense		133,273			214,527			(81,254	)	(37.9	)

Net Earnings Contribution	$	34,300		$	52,240		$	(17,940	)	(34.3	)%

Earnings ratios ⁽¹⁾
Net rental income		29.1	%		25.9	%		3.3	%	12.6	%
Depreciation and residual losses at termination		22.7	%		19.7	%		3.0	%	15.2	%

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

Operating lease assets represent automobile leases originated before May 2002. This operating lease portfolio will run-off over time since all automobile lease originations after April 2002 have been recorded as direct financing leases and are reported in the automobile loan and lease category in earning assets. As a result, the non-interest income and non-interest expenses associated with the operating lease portfolio will also decline over time.

2004 Second Quarter versus 2003 Second Quarter and 2004 First Quarter

Average operating lease assets in the 2004 second quarter were $1.0 billion, down 46% from the year-ago quarter and 12% from the 2004 first quarter.

Operating lease income, which totaled $78.7 million in the 2004 second quarter, represented 36% of non-interest income in the quarter. Operating lease income was down $49.9 million, or 39%, from the year-ago quarter and $10.2 million, or 11%, from the 2004 first quarter, reflecting the declines in average operating leases. As no new operating leases have been originated after April 2002, the operating lease asset balances will continue to decline through both depreciation and lease terminations. Net earnings contribution was down 37% and 11%, respectively, from the year-ago and 2004 first quarter. Fees declined 11% from the year-ago quarter, but increased $1.3 million, or 37%, from the first quarter, reflecting the recognition of deferred fees resulting from higher than expected prepayments of operating lease assets. Recoveries from early terminations declined 45% from the year-ago quarter and 19% from the first quarter.

Operating lease expense totaled $62.6 million, down $40.4 million, or 39%, from the year-ago quarter and down $8.1 million, or 12%, from the 2004 first quarter. These declines also reflected the fact that this portfolio is decreasing over time as no new operating leases are being originated. Losses on early terminations, included in operating lease expense, declined $6.4 million, or 55%, from the year-ago quarter, and $1.6 million, or 24%, from the prior quarter.

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

The ratio of operating lease asset credit losses, net of recoveries, to average operating lease assets outstanding was an annualized 1.51% in the current quarter, 1.97% in the year-ago quarter, and 1.78% in the 2004 first quarter.

On a quarterly basis, Management evaluates the amount of residual value losses that it anticipates will result from the estimated fair value of a leased vehicle being less than the residual value inherent in the lease. Fair value includes estimated net proceeds from the sale of the leased vehicle plus expected residual value insurance proceeds and amounts expected to be collected from the lessee for excess mileage and other items that are billable under terms of the lease contract. When estimating the amount of expected insurance proceeds, Management takes into consideration policy caps that exist in two of the residual value insurance policies and whether it expects aggregate claims under such policies to exceed these caps. Management currently anticipates that aggregate claims for losses under the policy that insures residual values on automobile leases originated prior to October 2000 will exceed the policy cap of $120 million. Residual value losses exceeding the insurance policy cap are reflected in higher depreciation expense over the remaining life of the affected automobile lease. Also as part of its quarterly analysis, Management evaluates automobile leases individually for impairment.

All automobile leases covered under the two policies containing caps are accounted for using the operating lease method of accounting. Accordingly, residual value losses are provided for as additional depreciation expense over the remaining term to maturity of the underlying lease so that the carrying amount of the operating lease asset at the end of the lease term does not exceed its estimated fair value. At June 30, 2004, estimated future residual value losses on operating leases outstanding were expected to be between $15 million to $19 million. As of June 30, 2004, $11.7 million of this amount had been provided for through additional depreciation expense. Any remaining losses above $11.7 million will be provided for through additional depreciation expense over future periods.

2004 First Six Months versus 2003 First Six Months

Average operating lease assets in the first six months of 2004 were $1.1 billion, down 45% from the comparable year-ago period.

Operating lease income, which totaled $167.6 million in the first six months of 2004, was down $99.2 million, or 37%, from the comparable year-ago period, reflecting the decline in average operating leases. As no new operating leases have been originated after April 2002, the operating lease asset balances will continue to decline through both depreciation and lease terminations. Net rental income for the first six months of 2004 was down 38%, with fees declining 24%. Recoveries from early terminations declined 34% from the comparable year-ago six-month period.

Operating lease expense for the first six months of 2004 totaled $133.3 million, down $81.3 million, or 38%, from the year-ago period. This decline also reflected the fact that this portfolio is decreasing over time as no new operating leases are being originated. Losses on early terminations for the first six months of 2004, included in operating lease expense, declined $11.9 million, or 50%, from the comparable year-ago period.

The ratio of operating lease asset credit losses, net of recoveries, to average operating lease assets outstanding for the first six months was an annualized 1.62% in the current six-month period, down from 1.95% in the comparable year-ago period.

Provision for Income Taxes

The provision for income taxes in the second quarter of 2004 was $43.4 million and represented an effective tax rate on income before taxes of 28.3%. The provision for income taxes increased $6.7 million from the year-ago quarter, primarily due to higher pre-tax income. The effective tax rates in the second quarter of 2003 and first quarter of 2004 were 27.5% and 25.1%, respectively. For the first six months of 2004, provision for income taxes was $78.3 million and represented an effective tax rate on income before taxes of 26.8%. This increased $11.0 million from the same period in 2003, in which the effective tax rate was 26.3%, reflecting higher pre-tax income.

Each quarter, taxes for the full year are estimated and year-to-date tax accrual adjustments are made. Revisions to the full year estimate of accrued taxes occur periodically due to changes in the tax rates, audit resolution with taxing authorities, and newly enacted statutory, judicial, and regulatory guidance. These changes, when they occur, affect accrued taxes and can result in fluctuations in the quarterly effective tax rate.

The cost of investments in partnerships, along with the related tax credit is recognized in the financial statements as a component of income taxes under the effective yield method. The cost of the investment in partnerships is reported in non-interest expense. During the second quarter 2004, $5.8 million of costs related to such investments in partnerships were recorded in non-interest expense.

In accordance with FAS 109, Accounting for Income Taxes, no deferred income taxes are to be recorded when a company intends to permanently reinvest their earnings from a foreign activity. As of June 30, 2004, the company intended to permanently reinvest the earnings from its foreign asset securitization activities of approximately $79.4 million.

Management expects the 2004 effective tax rate to remain below 30% as the level of tax-exempt income, general business credits, and asset securitization activities remain consistent with prior years.

CREDIT RISK

Credit risk is the risk of loss due to adverse changes in a borrower’s ability to meet its financial obligations under agreed upon terms. The company is subject to credit risk in lending, trading, and investment activities. The nature and degree of credit risk is a function of the types of transactions, the structure of those transactions, and the parties involved. The majority of the company’s credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable lending. Credit risk represents a limited portion of the total risks associated with the investment portfolio and is incidental to trading activities. Credit risk is mitigated through a combination of credit policies and processes and portfolio diversification. These include origination/underwriting criteria, portfolio monitoring processes, and effective problem asset management. There are very specific and differing methodologies for managing credit risk for commercial credits compared with consumer credits (see Credit Risk Management section of the company’s 2003 Form 10-K for a complete discussion).

Loan and Lease Composition

Table 10 reflects period-end loan and lease portfolio mix by type of loan or lease, as well as by business segment:

Table 10 - Loans and Lease Portfolio Composition


	June 30, 2004 ⁽¹⁾				March 31, 2004				December 31, 2003				September 30, 2003				June 30, 2003
*(in millions)*	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
By Type
Commercial and industrial	$	5,277	23.3	%	$	5,480	25.9	%	$	5,314	25.2	%	$	5,433	25.7	%	$	5,532	28.9	%
Commercial real estate		4,514	19.9			4,272	20.2			4,172	19.8			4,047	19.1			3,951	20.7

Total Commercial		9,791	43.2			9,752	46.0			9,486	45.0			9,480	44.8			9,483	49.6

Consumer
Automobile loans		1,815	8.0			2,267	10.7			2,992	14.2			3,709	17.5			2,367	12.4
Automobile leases		2,185	9.6			2,066	9.7			1,902	9.0			1,688	8.0			1,481	7.9
Home equity		4,315	19.0			3,980	18.8			3,792	18.0			3,590	17.0			3,436	18.0
Residential mortgage		3,284	14.5			2,757	13.0			2,531	12.0			2,326	11.0			1,915	10.0
Other loans		386	1.7			372	1.8			372	1.8			380	1.7			378	2.1

Total Consumer		11,984	52.9			11,442	54.0			11,589	55.0			11,693	55.2			9,577	50.4

Total Loans and Leases	$	21,776	96.1	%	$	21,194	100.0	%	$	21,075	100.0	%	$	21,173	100.0	%	$	19,060	100.0	%

Total automobile loans and leases	$	3,999	17.6		$	4,333			$	4,894			$	5,397			$	3,848
Operating lease assets		889	3.9			1,071				1,260				1,455				1,673
Securitized loans		—	—			28				37				49				1,076

Total Automobile Exposure⁽²⁾	$	4,888	21.6	%	$	5,432	24.4	%	$	6,191	27.7	%	$	6,901	30.4	%	$	6,597	30.2	%

Total Credit Exposure	$	22,664	100.0	%	$	22,293	100.0	%	$	22,372	100.0	%	$	22,677	100.0	%	$	21,809	100.0	%

By Business Segment ⁽³⁾
Regional Banking
Central Ohio	$	5,652	24.9	%	$	4,988	22.4	%	$	4,652	20.8	%	$	4,491	19.8	%	$	4,080	18.7	%
Northern Ohio		2,694	11.9			2,681	12.0			2,579	11.5			2,639	11.6			2,712	12.4
Southern Ohio/Kentucky		1,759	7.8			1,703	7.6			1,677	7.5			1,623	7.2			1,547	7.1
West Michigan		2,216	9.8			2,155	9.7			2,077	9.3			2,028	8.9			1,967	9.0
East Michigan		1,359	6.0			1,341	6.0			1,268	5.7			1,306	5.8			1,225	5.6
West Virginia		811	3.6			808	3.6			802	3.6			802	3.5			796	3.6
Indiana		811	3.6			753	3.4			731	3.3			741	3.3			729	3.3

Total Regional Banking		15,302	67.5			14,429	64.7			13,786	61.7			13,630	60.1			13,056	59.9

Dealer Sales		5,840	25.8			6,399	28.7			7,095	31.6			7,598	33.5			7,373	33.8
Private Financial Group		1,381	6.1			1,322	5.9			1,296	5.8			1,260	5.6			1,181	5.4
Treasury / Other		141	0.6			143	0.7			195	0.9			189	0.8			199	0.9

Total Credit Exposure	$	22,664	100.0	%	$	22,293	100.0	%	$	22,372	100.0	%	$	22,677	100.0	%	$	21,809	100.0	%

⁽¹⁾	Effective June 30, 2004, $282 million of commercial and industrial loans were reclassified to commercial real estate to conform to the classification of these loans with the presentation of similar loans.

⁽²⁾	Total Loans and leases, operating lease assets and securitized loans.

⁽³⁾	Prior period amounts have been reclassified to conform to the current period business segment structure.

During 2004, the composition of the loan and lease portfolio changed such that lower credit risk home equity loans and residential mortgages represented 19% and 14%, respectively, of total credit exposure at June 30, 2004, up from 18% and 10%, respectively, a year earlier. Conversely, C&I loans have declined from 29% a year ago to 23% at June 30, 2004, reflecting, in part, strategies to exit large, individual commercial credits, including out-of-footprint shared national credits.

At the beginning of the 2004 second quarter, the criteria for categorizing commercial loans as either C&I loans or CRE loans was clarified. The new criteria are based on the purpose of the loan. Previously, the categorization was based on the nature of the collateral securing, or partially securing, the loan. As a result of this change, $282 million in C&I loans were reclassified to CRE loans effective June 30, 2004. This change had no impact on total commercial loans, underlying credit quality, or 2004 second quarter reported income. Under this new methodology, as new loans are originated or existing loans renewed, loans secured by owner-occupied real estate will be categorized as C&I loans (previously CRE loans) and unsecured loans for the purpose of developing real estate will be categorized as CRE loans (previously C&I loans).

The company also has a portfolio of automobile operating lease assets. Although these assets are reflected on the balance sheet, they are not part of total loans and leases or earning assets. In addition, prior to June 30, 2004, there was a small pool of securitized automobile loans, which represented off-balance sheet securitized automobile loan assets. Both of these asset classes represent automobile financing credit exposure, despite not being components of total loans and leases. As such, operating lease assets and securitized loans are added to the on-balance sheet automobile loans and leases to determine a total automobile financing exposure, which Management finds helpful in evaluating the overall credit risk for the company.

On June 30, 2004, $512 million of automobile loans were sold and $102 million of automobile loans were transferred to loans held for sale. Combined, these transactions resulted in second quarter net pre-tax gains on the sale of automobile loans of $4.9 million: $5.1 million associated with the $512 million sale, partially offset by a $0.2 million lower of cost or market write-down on the loans held for sale. On a combined basis, these transactions increased the total automobile loans sold since the beginning of 2003 to $3.6 billion. These sales represented a continuation of a strategy to reduce exposure to automobile financing to approximately 20% of total credit exposure (see Table 10). At June 30, 2004, this exposure was $4.9 billion, down from $6.2 billion at year-end, and represented 22% of total credit exposure, down from 24% at the end of the last quarter and from 33% at the end of 2002.

Net Loan and Lease Charge-offs

Table 11 reflects net loan and lease charge-off detail for each of the last five quarters, and the first six-month period for 2003 and 2004:

Table 11 - Net Loan and Lease Charge-offs


Net Charge-offs by Loan and Lease Type

	2004						2003
*(in thousands)*	Second			First			Fourth			Third			Second
Commercial and industrial	$	(2,803	)	$	5,956		$	31,186		$	12,222		$	26,546
Commercial real estate		2,940			1,637			5,743			3,621			607

Total Commercial		137			7,593			36,929			15,843			27,153

Consumer
Automobile loans		5,604			13,422			11,346			10,773			7,524
Automobile direct financing leases		2,159			3,159			1,936			1,450			1,422

Automobile loans and leases		7,763			16,581			13,282			12,223			8,946

Home equity		3,019			3,116			3,464			3,416			3,671
Residential mortgage		302			316			174			246			267
Other loans		1,294			1,021			1,294			1,046			1,019

Total Consumer		12,378			21,034			18,214			16,931			13,903

Total Net Charge-offs	$	12,515		$	28,627		$	55,143		$	32,774		$	41,056


Net Charge-offs - Annualized Percentages

	2004						2003
	Second			First			Fourth			Third			Second
Commercial and industrial		(0.20	)%		0.44	%		2.32	%	$	0.91	%		1.89	%
Commercial real estate		0.28			0.16			0.56			0.36			0.06

Total Commercial		0.01			0.32			1.55			0.68			1.14

Consumer
Automobile loans		0.96			1.77			1.29			1.20			1.06
Automobile direct financing leases		0.40			0.64			0.43			0.36			0.44

Automobile loans and leases		0.69			1.32			1.00			0.94			0.87

Home equity		0.29			0.32			0.38			0.39			0.44
Residential mortgage		0.04			0.05			0.03			0.05			0.06
Other loans		1.30			1.15			1.34			1.14			1.08

Total Consumer		0.41			0.70			0.61			0.61			0.57

Net Charge-offs as a % of Average Loans		0.23	%		0.53	%		1.03	%		0.64	%		0.85	%

Table 11 - Net Loan and Lease Charge-offs, Continued

Net Charge-offs by Loan and Lease Type


	Six Months Ending June 30,
*(in thousands)*	2004			2003
Commercial and industrial	$	3,153		$	41,450
Commercial real estate		4,577			1,153

Total Commercial		7,730			42,603

Consumer
Automobile loans		19,026			18,147
Automobile direct financing leases		5,318			2,342

Automobile loans and leases		24,344			20,489

Home equity		6,135			7,724
Residential mortgage		618			412
Other loans		2,315			2,664

Total Consumer		33,412			31,289

Total Net Charge-offs	$	41,142		$	73,892


Net Charge-offs - Annualized Percentages

	Six Months Ending June 30,
	2004			2003
Commercial and industrial		0.12	%		1.47	%
Commercial real estate		0.22			0.06

Total Commercial		0.16			0.90

Consumer
Automobile loans		1.42			1.23
Automobile direct financing leases		0.52			0.40

Automobile loans and leases		1.02			1.63

Home equity		0.31			0.47
Residential mortgage		0.04			0.04
Other loans		1.23			1.39

Total Consumer		0.56			0.65

Net Charge-offs as a % of Average Loans		0.38	%		0.77	%

2004 Second Quarter versus 2003 Second Quarter and 2004 First Quarter

Total net charge-offs for the 2004 second quarter were $12.5 million, or an annualized 0.23% of average total loans and leases. This was a reduction from $41.1 million, or 0.85%, in the year-ago quarter and from $28.6 million, or 0.53% of average total loans and leases, in the prior quarter. Total net charge-offs in the current and 2004 first quarter were influenced by one-time events.

Current quarter total net charge-offs were reduced by a $9.7 million one-time recovery on a C&I loan charged-off in the fourth quarter of 2002. This recovery lowered total commercial (C&I and CRE) net charge-offs by an annualized 39 basis points and total loan and lease net charge-offs by 18 basis points. Excluding the impact of this recovery, current quarter total net charge-offs would have been $22.2 million, or an annualized 0.41% of average total loans and leases. As previously reported, total net charge-offs in the 2004 first quarter included a one-time $4.7 million cumulative increase in automobile loan and lease charge-offs related to the accounting treatment of certain auto-related insurance policies. Excluding the 8 basis point impact of this adjustment, 2004 first quarter net charge-offs would have represented 0.45% of average total loans and leases.

Total commercial (C&I and CRE) net charge-offs in the second quarter were only $0.1 million. Adjusting for the $9.7 million recovery noted above (39 basis point impact), total commercial net charge-offs would have been $9.8 million, or an annualized 0.40% of related loans, down from $27.2 million, or 1.14% of related loans, in the year-ago quarter, and up from $7.6 million, or 0.32%, in the 2004 first quarter.

Total consumer net charge-offs in the current quarter were $12.4 million, or an annualized 0.41% of related loans. This compared with $13.9 million, or 0.57%, in the year-ago quarter, and $21.0 million, or 0.70% of related loans, in the 2004 first quarter. First quarter net consumer charge-offs included 15 basis points related to the one-time $4.7 million cumulative adjustment noted above.

Total automobile loan and lease net charge-offs in the 2004 second quarter were $7.8 million, or 0.69% of average automobile loans and leases. This compared with $8.9 million of net charge-offs, or 0.87%, in the year-ago quarter and $16.6 million, or 1.32%, in the first quarter. The first quarter net charge-offs included 37 basis points from the one-time $4.7 million cumulative adjustment.

2004 First Six Months versus 2003 First Six Months

Total net charge-offs for the first six months of 2004 were $41.1 million, or an annualized 0.38% of average total loans and leases. This was a reduction from $73.8 million, or 0.77%, in the comparable year-ago period.

Total commercial (C&I and CRE) net charge-offs in the first six months of 2004 were only $7.7 million, or 0.16%, down from $42.6 million, or 0.90%, in the comparable year-ago period. The decline from the year-ago period reflected a $9.7 million C&I recovery in the 2004 first six-month period.

Total consumer net charge-offs in the first six months of 2004 were $33.4 million, or 0.56% of related loans. This compared with $31.2 million, or 0.65%, in the comparable year-ago period.

Total automobile loan and lease net charge-offs in the first six months of 2004 were $24.3 million, or 1.02% of average automobile loans and leases. This compared with $20.5 million, or 1.00% of average automobile loans and leases, in the year-ago six-month period.

For the second half of 2004, total loan and lease net charge-offs are expected to be in the 0.40%-0.45% range, including third and fourth quarter seasonality associated with automobile loan and lease net charge-offs.

Non-performing Assets and Past Due Loans and Leases

Table 12 reflects period-end NPAs and past due loans and leases detail for each of the last five quarters:

Table 12 - Non-Performing Assets and Past Due Loans and Leases


	Three Months Ended
*(in thousands)*	June 30, 2004			March 31, 2004			December 31, 2003			September 30, 2003			June 30, 2003
Non-accrual loans and leases
Commercial and industrial	$	32,044		$	45,056		$	43,387		$	82,413		$	86,021
Commercial real estate		15,782			20,019			22,399			30,545			22,398
Residential mortgage		13,952			12,052			9,695			8,923			11,735

Total non-performing loans and leases (NPLs)		61,778			77,127			75,481			121,881			120,154
Other real estate, net		12,918			14,567			11,905			15,196			13,568

Total Non-performing Assets (NPAs)	$	74,696		$	91,694		$	87,386		$	137,077		$	133,722

Accruing loans and leases past due 90 days or more	$	51,490		$	59,697		$	55,913		$	66,060		$	55,287

NPLs as a % of total loans and leases		0.28	%		0.36	%		0.36	%		0.58	%		0.63	%
NPLs as a % of total loans and leases and other real estate		0.34	%		0.43	%		0.41	%		0.65	%		0.70	%

Allowance for loan and lease losses as a % of:
NPLs		464	%		383	%		397	%		276	%		256	%
NPAs		384	%		322	%		343	%		245	%		230	%

Allowance for loan and lease losses plus allowance for unfunded commitments and letters of credit:
NPLs		515	%		425	%		444	%		304	%		284	%
NPAs		426	%		357	%		384	%		270	%		255	%

Accruing loans and leases past due 90 days or more to total loans and leases		0.24	%		0.28	%		0.27	%		0.31	%		0.29	%

NPAs were $74.7 million at June 30, 2004, down $59.0 million, or 44%, from the prior year, and down $17.0 million, or 19%, from March 31, 2004. NPAs as a percent of total loans and leases and other real estate were 0.34% at June 30, 2004, down from 0.70% a year-ago and from 0.43% at March 31, 2004. NPAs at June 30, 2004, included $23.3 million of lower-risk residential real estate related assets, which represented 31% of total NPAs. This compared with $20.7 million, or 15%, at the end of the year-ago quarter.

The over 90-day delinquent, but still accruing, ratio was 0.24% at June 30, 2004, down from 0.29% a year ago and 0.28% at March 31, 2004.

Table 13 - Non-Performing Asset Activity


	Three Months Ended
*(in thousands)*	June 30, 2004			March 31, 2004			December 31, 2003			September 30, 2003			June 30, 2003
Beginning of Period	$	91,694		$	87,386		$	137,077		$	133,722		$	140,725
New non-performing assets		25,727			27,208			38,367			52,213			83,104
Returns to accruing status		(1,493	)		(54	)		(454	)		(319	)		(9,866	)
Loans and lease losses		(12,872	)		(10,463	)		(39,657	)		(22,090	)		(30,204	)
Payments		(13,571	)		(10,717	)		(22,710	)		(18,905	)		(26,831	)
Sales		(14,789	)		(1,666	)		(25,237	)		(7,544	)		(23,206	)

End of Period	$	74,696		$	91,694		$	87,386		$	137,077		$	133,722

Table 13 reflects NPA activity and shows that during the 2004 second quarter the level of new NPAs continued to decline and totaled $25.7 million, down 69% from the year-ago quarter, and 5% less than in the first quarter. Also, impacting the decline in period-end NPAs was the sale of $14.8 million of NPAs during the 2004 second quarter.

Allowances for Credit Losses (ACL)

The allowances for credit losses (ACL) include the allowance for loan and lease losses (ALLL) and the allowance for unfunded loan commitments and letters of credit (AULC). Table 14 reflects activity in the ALLL and AULC for the past five quarters:

Table 14 - Allowances for Credit Losses


	Three Months Ended
*(in thousands)*	June 30, 2004			March 31, 2004			December 31, 2003			September 30, 2003			June 30, 2003
Allowance for Loan and Lease Losses, Beginning of Period	$	295,377		$	299,732		$	336,398		$	307,667		$	303,636
Loan and lease losses		(30,845	)		(37,167	)		(68,023	)		(43,261	)		(49,985	)
Recoveries of loans previously charged off		18,330			8,540			12,880			10,487			8,929

Net loan and lease losses		(12,515	)		(28,627	)		(55,143	)		(32,774	)		(41,056	)

Provision for credit losses		5,027			25,596			26,341			51,615			49,193
Net change in allowance for unfunded loan commitments and lettes of credit		896			3,433			(1,785	)		(457	)		101
Allowance of assets sold and securitized ⁽¹⁾		(1,850	)		(4,757	)		(6,079	)		10,347			(4,207	)

Allowance for Loan and Lease Losses, End of Period	$	286,935		$	295,377		$	299,732		$	336,398		$	307,667

Allowance for Unfunded Loan Commitments and Letters of Credit, Beginning of Period	$	32,089		$	35,522		$	33,737		$	33,280		$	33,381
Net change		(896	)		(3,433	)		1,785			457			(101	)

Allowance for Unfunded Loan Commitments and Letters of Credit, End of Period	$	31,193		$	32,089		$	35,522		$	33,737		$	33,280

Total Allowances for Credit Losses	$	318,128		$	327,466		$	335,254		$	370,135		$	340,947

Allowances for Credit Losses as a % of total loans and leases		1.46	%		1.55	%		1.59	%		1.75	%		1.79	%
The ALL as a % of total loans and leases		1.32	%		1.39	%		1.42	%		1.59	%		1.61	%
Components:
Transaction reserve		0.86	%		0.91	%		0.88	%		0.98	%		1.05	%
Economic reserve		0.36			0.38			0.40			0.47			0.45
Specific reserve		0.10			0.10			0.14			0.14			0.11

(1)	The third quarter 2003 includes the reserve for loan losses associated with automobile loans contained in one of Huntington’s securitizations trusts consolidated as a result of the adoption of FASB Interpretation No. 46 on July 1, 2003.

The June 30, 2004, ALLL was $286.9 million, down from $307.7 million a year ago and from $295.4 million at March 31, 2004. These declines primarily reflected improving credit quality and the change in the mix of the loan portfolio to lower-risk residential mortgages and home equity loans. Expressed as a percent of period-end loans and leases, the ALLL at June 30, 2004, was 1.32%, down from 1.61% a year-ago and from 1.39% at March 31, 2004. The ALLL as a percent of NPAs was 384% at June 30, 2004, up from 230% a year ago and from 322% at March 31, 2004.

The June 30, 2004, AULC was $31.2 million, down slightly from $33.3 million at the end of the year-ago quarter, and from $32.1 million at March 31, 2004.

On a combined basis, the ACL as a percent of total loans and leases was 1.46% at June 30, 2004, compared with 1.79% a year ago and 1.55% at the end of last quarter. Similarly, the ACL as a percent of NPAs was 426% at June 30, 2004, compared with 255% a year earlier and 357% at March 31, 2004.

The ALLL consists of three components, the transaction reserve, the economic reserve, and specific reserves (see the Credit Risk discussion in company’s 2003 Form 10-K for additional discussion).

Transaction reserve – This ALLL component is based on historical portfolio performance information. Specifically, the probability-of-default and the loss-in-event-of-default are assigned an expected risk factor based on the type and structure of each credit. Reserve factors are then calculated and applied at an individual loan level for all products.

Specific reserve – This ALLL component represents the sum of credit-by-credit reserve decisions for individual C&I and CRE loans when it is determined that the related expected risk factor is insufficient to cover the estimated losses embedded in the specified credit facility.

Economic reserve – This ALLL component reflects anticipated losses impacted by changes in the economic environment. As previously reported, effective January 1, 2004, the company adopted a significantly more quantitative approach to the calculation of the economic reserve component. In order to quantify the economic reserve, the company identified four statistically significant indicators of loss volatility over the seven-year period from 1996 through 2003. The four variables as identified by the regression model are: (1) the US Index of Leading Economic Indicators, (2) the US Corporate Profits Index, (3) the US Unemployment Index, and (4) the University of Michigan Current Consumer Confidence Index.

This methodology permits the decomposition of the total ALLL ratio into these three components and provides increased insight into the rationale for increases or decreases in the overall ALLL ratio. As shown in Table 14, the ALLL ratio at June 30, 2004 was 1.32%, of which 0.86% represented the transaction reserve, 0.36% the economic reserve, and 0.10% specific reserves. This analysis shows that of the 7 basis point decline in the ALLL ratio from 1.39% at March 31, 2004, the transaction reserve accounted for 5 basis points. The sale of lower-performing commercial credits during the 2004 second quarter, along with the release of their inherent higher than average transaction reserve component, as well as the change in the overall loan and lease portfolio toward higher credit quality loans, contributed to this decline. The remaining 2 basis points of decline in the ALLL ratio represented lower relative economic reserves, reflecting an improved economic outlook. Specific reserves were unchanged at 10 basis points. This more quantitative methodology for determining the ALLL will be more responsive to changes in the portfolio mix, the economic environment, and to individual credit situations, with the result being an ALLL ratio that exhibits greater quarterly fluctuations.

MARKET RISK

Market risk is the potential for losses in the fair value of the company’s assets and liabilities due to changes in interest rates, exchange rates, and equity prices. The company incurs market risk in the normal course of business. Market risk arises when the company extends fixed-rate loans, purchases fixed-rate securities, originates fixed-rate certificates of deposit (CDs), obtains funding through fixed-rate borrowings, and leases automobiles and equipment based on expected lease residual values. Market risk arising from changes in interest rates, which affects the market values of fixed-rate assets and liabilities, is interest rate risk. Market risk arising from the possibility that the uninsured residual value of leased assets will be different at the end of the lease term than was estimated at the lease’s inception is residual value risk. From time to time, the company also has small exposures to trading risk and foreign exchange risk. At June 30, 2004, the company had $20.6 million of trading assets, primarily in its broker/dealer businesses.

Interest Rate Risk

Interest rate risk is the primary market risk incurred by the company. It results from timing differences in the repricing and maturity of assets and liabilities and changes in relationships between market interest rates and the yields on assets and rates on liabilities, including the impact of embedded options.

Management seeks to minimize the impact of changing interest rates on the company’s net interest income and the fair value of assets and liabilities. The board of directors establishes broad policies regarding interest rate and market risk and liquidity risk. The asset and liability committee (ALCO) establishes specific operating limits within the parameters of the board of directors’ policies. ALCO regularly monitors position concentrations and the level of interest rate sensitivity to ensure compliance with board of directors approved risk tolerances (see Interest Rate Risk discussion in the company’s 2003 Form 10-K for a complete discussion.)

Interest rate risk modeling is performed monthly. Two broad approaches to modeling interest rate risk are employed: income simulation and economic value analysis. An income simulation analysis is used to measure the sensitivity of forecasted net interest income to changes in market rates over a one-year horizon. The economic value analysis (Economic Value of Equity or EVE) is calculated by subjecting the period-end balance sheet to changes in interest rates and measuring the impact of the changes in the value of the assets and liabilities.

The simulations for evaluating short-term interest rate risk exposure are scenarios that model gradual 100 and 200 basis point increasing and decreasing parallel shifts in interest rates over the next twelve-month period beyond the interest rate change implied by the current yield curve. The table below shows the results of the scenarios as of June 30, 2004, and March 31, 2004. All of the positions were well within the board of directors’ policy limits.

Net Interest Income at Risk (%)


Basis point change scenario	-200		-100		+100		+200
Board Policy Limits	-4.0	%	-2.0	%	-2.0	%	-4.0	%

June 30, 2004	N.M.		-0.3	%	-0.0	%	-0.1	%
March 31, 2004	N.M.		-0.5	%	-0.1	%	-0.3	%
December 31, 2003	N.M.		-0.3	%	-0.2	%	-0.5	%

N.M., not meaningful.

The primary simulations for EVE risk assume an immediate and parallel increase in rates of +/- 100 and +/- 200 basis points beyond any interest rate change implied by the current yield curve. The table below outlines the results compared to the previous quarter and policy limits.

Economic Value of Equity at Risk (%)


Basis point change scenario	-200		-100		+100		+200
Board Policy Limits	-12.0	%	-5.0	%	-5.0	%	-12.0	%

June 30, 2004	N.M.		+1.5	%	-2.8	%	-6.2	%
March 31, 2004	N.M.		+0.1	%	-2.7	%	-6.2	%
December 31, 2003	N.M.		+1.8	%	-3.5	%	-7.9	%

N.M., not meaningful.

LIQUIDITY RISK

The objective of effective liquidity management is to ensure that cash flow needs can be met on a timely basis at a reasonable cost under both normal operating conditions and unforeseen or unpredictable circumstances. The liquidity of the Bank is available to originate loans and leases and to repay deposit and other liabilities as they become due or are demanded by customers. Liquidity risk arises from the possibility that funds may not be available to satisfy current or future commitments based on external macro market issues, investor perception of financial strength, and events unrelated to the company such as war, terrorism, or financial institution market specific issues (see Liquidity discussion in the company’s 2003 Form 10-K for a complete discussion.)

The primary source of funding is core deposits from retail and commercial customers (see Table 15). As of June 30, 2004, core deposits totaled $16.5 billion, and represented 85% of total deposits. This compared with $15.9 billion, or 87% of total deposits, a year earlier. Most of the growth in core deposits was attributable to growth in interest bearing and non-interest bearing demand deposits as retail CDs declined.

Table 15 - Deposit Liabilities


	June 30, 2004				March 31, 2004				December 31, 2003				September 30, 2003				June 30, 2003
*(in millions)*	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
By Type
Demand deposits
Non-interest bearing	$	3,327	17.1	%	$	2,918	15.4	%	$	2,987	16.2	%	$	3,003	15.9	%	$	3,110	16.9	%
Interest bearing		7,124	36.6			6,866	36.2			6,411	34.7			6,425	34.1			6,332	34.5
Savings deposits		3,011	15.5			3,002	15.8			2,960	16.0			3,000	15.9			3,085	16.8
Retail certificates of deposit		2,412	12.4			2,395	12.6			2,462	13.3			2,484	13.2			2,739	14.9
Other domestic time deposits		595	3.1			608	3.2			631	3.4			638	3.4			664	3.6

Total Core Deposits		16,470	84.7			15,789	83.2			15,451	83.6			15,550	82.5			15,930	86.7
Domestic time deposits of $100,000 or more		808	4.2			791	4.2			789	4.3			844	4.5			826	4.5
Brokered time deposits and negotiable CDs		1,679	8.6			1,942	10.2			1,772	9.6			1,837	9.8			1,224	6.7
Foreign time deposits		508	2.5			467	2.4			475	2.5			603	3.2			391	2.1

Total Deposits	$	19,465	100.0	%	$	18,989	100.0	%	$	18,487	100.0	%	$	18,834	100.0	%	$	18,371	100.0	%

By Business Segment ⁽²⁾
Central Ohio	$	4,386	22.5	%	$	4,378	23.1	%	$	4,184	22.6	%	$	4,189	22.3	%	$	5,045	27.5	%
Northern Ohio		3,774	19.4			3,517	18.5			3,505	19.0			3,531	18.8			3,529	19.2
Southern Ohio/Kentucky		1,559	8.0			1,476	7.8			1,442	7.8			1,437	7.6			1,413	7.7
West Michigan		2,599	13.4			2,609	13.7			2,457	13.3			2,529	13.4			2,582	14.1
East Michigan		2,081	10.7			2,030	10.7			1,988	10.8			2,000	10.6			2,078	11.3
West Virginia		1,369	7.0			1,292	6.8			1,315	7.1			1,324	7.0			1,339	7.3
Indiana		668	3.4			637	3.4			648	3.5			661	3.5			640	3.4

Total Regional Banking		16,435	84.4			15,939	84.0			15,539	84.1			15,671	83.2			16,626	90.5
Dealer Sales		71	0.4			77	0.4			77	0.4			65	0.4			68	0.4
Private Financial Group		1,016	5.2			1,057	5.6			1,164	6.3			1,117	5.9			1,029	5.6
Treasury/Other ⁽¹⁾		1,943	10.0			1,916	10.0			1,707	9.2			1,981	10.5			648	3.5

Total Deposits	$	19,465	100.0	%	$	18,989	100.0	%	$	18,487	100.0	%	$	18,834	100.0	%	$	18,371	100.0	%

⁽¹⁾	Comprised largely of brokered deposits and negotiable CDs.

⁽²⁾	Prior period amounts have been reclassified to conform to the current period business segment structure.

Liquidity policies and limits are established by the board of directors, with operating limits set by ALCO. Two primary liquidity measures are the ratio of loans and operating lease assets to deposits and the percentage of assets funded with non-core, or wholesale, liabilities. The limits set by the board for these two liquidity measures are 135% and 40%, respectively. At June 30, 2004, the actual ratio of loans and operating leases to deposits was 116%, while the percentage of assets funded with non-core or wholesale liabilities was 35%. In addition, guidelines are established by ALCO to ensure diversification of wholesale funding by type, source, and maturity and provide sufficient balance sheet liquidity to cover 100% of wholesale funds maturing within a six-month time period. A contingency funding plan is in place, which includes forecasted sources and uses of funds under various scenarios in order to prepare for unexpected liquidity shortages, including the implications of any rating agency changes. ALCO meets monthly to identify and monitor liquidity issues, provide policy guidance, and oversee adherence to, and the maintenance of, an evolving contingency funding plan.

Credit ratings by the three major credit rating agencies are an important component of the company’s liquidity profile. Among other factors, the credit ratings are based on the financial strength, credit quality and concentrations in the loan portfolio, the level and volatility of earnings, capital adequacy, the quality of management, the liquidity of the balance sheet, the availability of a significant base of core retail and commercial deposits, and the company’s ability to access a broad array of wholesale funding sources. Adverse changes in these factors could result in a negative change in credit ratings and impact not only the ability to raise funds in the capital markets, but also the cost of these funds. In addition, certain financial on- and off-balance sheet arrangements contain credit rating triggers that could increase funding needs if a negative rating change occurs. Letter of credit commitments for marketable securities, interest rate swap collateral agreements, and certain asset securitization transactions contain credit rating provisions.

As a result of the formal SEC investigation announced June 26, 2003, Standard and Poor’s rating agency placed the company’s debt ratings on “CreditWatch Negative”. On April 15, 2004, Standard and Poor’s removed the company’s debt rating from “CreditWatch Negative” and revised the outlook to “Stable” from “Negative.” Credit ratings are as follows:


	Senior Unsecured Notes	Subordinated Notes	Short Term	Outlook
Huntington Bancshares Incorporated
Moody’s Investor Service	A2	A3	P1	Negative
Standard and Poor’s	A-	BBB+	A2	Stable
Fitch Ratings	A	A-	F1	Stable

The Huntington National Bank
Moody’s Investor Service	A1	A2	P1	Negative
Standard and Poor’s	A	A-	A1	Stable
Fitch Ratings	A	A-	F1	Stable

Management believes that sufficient liquidity exists to meet the funding needs of the Bank and the parent company.

OFF-BALANCE SHEET ARRANGEMENTS

Like other financial organizations, Huntington has various commitments in the ordinary course of business that, under GAAP, are not recorded in the financial statements. Specifically, Huntington makes various commitments to extend credit to customers, to sell loans, and to maintain obligations under operating-type non-cancelable leases for its facilities. Derivatives and other off-balance sheet arrangements are discussed under the “Market Risk” section of the company’s 2003 Form 10-K.

Standby letters of credit are conditional commitments issued 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. There were $962 million of outstanding standby letters of credit at June 30, 2004. Non-interest income was recognized from the issuance of these standby letters of credit of $2.8 million for the period ended June 30, 2004. The carrying amount of deferred revenue related to standby letters of credit at June 30, 2004, was $3.2 million. Standby letters of credit are included in the determination of the amount of risk-based capital that the company and the Bank are required to hold.

CAPITAL

Capital is managed both at the parent and the Bank levels. Capital levels are maintained based on regulatory capital requirements and the economic capital required to support credit, market, and operation risks inherent in the company’s business and to provide the flexibility needed for future growth and new business opportunities. Management places significant emphasis on the maintenance of a strong capital position, which promotes investor confidence, provides access to the national markets under favorable terms, and enhances business growth and acquisition opportunities. The importance of managing capital is also recognized, and Management continually strives to maintain an appropriate balance between capital adequacy and providing attractive returns to shareholders.

Shareholders’ equity totaled $2.4 billion at June 30, 2004. This balance represented a $111 million increase from December 31, 2003. The growth in shareholders’ equity resulted from the retention of net income after dividends to shareholders of $134 million and stock option exercises of $7 million. The growth was offset by a decrease in accumulated other comprehensive income of $30 million. The decrease in accumulated other comprehensive income primarily resulted from a decline in the market value of securities available for sale, partially offset by an increase in the market value of cash flow hedges at June 30, 2004, compared with December 31, 2003.

At June 30, 2004, the company had unused authority to repurchase up to 7.5 million shares. On September 4, 2001, options totaling 3.2 million shares were granted to all employees, the vesting of which occurs on September 4, 2006, or earlier should Huntington’s common stock closing price for five consecutive trading days be at or

above $25.00. Huntington’s common stock price closed at $25.07 on August 2, 2004, thus increasing the possibility that the remaining 2.2 million options outstanding at June 30, 2003, may vest in the near future. Should that occur, there is also the possibility that a portion of the current stock repurchase authorization would be used to help mitigate the dilutive earnings impact resulting from the issuance of these shares. These, and any additional purchases including the 2.5 million shares associated with the Unizan merger, will be made from time-to-time in the open market or through privately negotiated transactions depending on market conditions.

On July 16, 2004, the board of directors declared a quarterly cash dividend on its common stock of $0.20 per common share, up 14.3% from the current quarterly dividend of $0.175 per common share. The dividend is payable October 1, 2004, to shareholders of record on September 17, 2004.

Table 16 - Quarterly Common Stock Summary


	2004				2003
	Second		First		Fourth		Third		Second
Common Stock Price
High ⁽¹⁾	$	23.120	$	23.780	$	22.550	$	20.890	$	21.540
Low ⁽¹⁾		20.890		21.000		19.850		19.220		18.030
Close		22.980		22.030		22.500		19.850		19.510
Average closing price		22.050		22.501		21.584		20.199		19.790
Book value per share	$	10.40	$	10.31	$	9.93	$	9.79	$	9.63

Dividends
Cash dividends declared	$	0.175	$	0.175	$	0.175	$	0.175	$	0.160

Common shares outstanding (000s)

Average — Basic		229,429		229,227		228,902		228,715		228,633
Average — Diluted		232,659		232,915		231,986		230,966		230,572
Ending		229,476		229,410		229,008		228,870		228,660

Common Share Repurchase Program (000s)

Number of Shares Repurchased		—		—		—		—		—

⁽¹⁾	High and low stock prices are intra-day quotes obtained from NASDAQ.

Average equity to average assets in the 2004 second quarter was 7.42%, down from 7.66% a year earlier, but up from 7.39% for the first quarter of 2004 (see Table 17). At June 30, 2004, the tangible equity to assets ratio was 6.95%, down from 7.06% a year ago, and from 6.97% March 31, 2004. The decline from the year-ago period primarily reflected the impact of the 2003 third quarter adoption of FIN 46, which resulted in the consolidation of $1.0 billion of securitized automobile loans, partially offset by earnings-related growth in capital. The increase from March 31, 2004, primarily reflected growth in retained earnings.

Table 17 - Capital Adequacy


	Three Months Ended
*(in millions)*	June 30, 2004			March 31 2004			December 31, 2003			September 30, 2003			June 30, 2003
Total Risk-Adjusted Assets	$	28,413		$	28,236		$	28,164		$	27,949		$	27,456

Tier 1 Risk-Based Capital Ratio		9.00	%		8.74	%		8.53	%		8.40	%		8.32	%
Total Risk-Based Capital Ratio		12.58	%		12.38	%		11.95	%		11.19	%		11.11	%
Tier 1 Leverage Ratio		8.22	%		8.08	%		7.98	%		7.94	%		8.25	%

Tangible Equity / Assets Ratio		6.95	%		6.97	%		6.79	%		6.77	%		7.06	%
Tangible Equity / Risk-Weighted Assets Ratio		7.64	%		7.61	%		7.30	%		7.24	%		7.23	%
Average equity / average assets		7.42	%		7.39	%		7.32	%		7.49	%		7.66	%

At June 30, 2004, the tangible equity to risk-weighted assets ratio was 7.64%, up significantly from 7.23% in the year-ago quarter, and up from 7.61% at March 31, 2004. The increase in the tangible equity to risk-weighted assets ratio reflected primarily the positive impact resulting from reducing the overall risk profile of earning assets throughout this period, most notably a less risky loan portfolio mix, as well as growth in low risk investment securities.

The Federal Reserve Board, which supervises and regulates the company, sets minimum capital requirements for each of these regulatory capital ratios. In the calculation of these risk-based capital ratios, risk weightings are assigned to certain asset and off-balance sheet items such as interest rate swaps, loan commitments, and securitizations. Huntington’s Tier 1 Risk-based Capital, Total Risk-based Capital, Tier 1 Leverage ratios, and risk-adjusted assets for the recent five quarters are well in excess of minimum levels established for “well capitalized” institutions of 6.00%, 10.00%, and 5.00%, respectively. At June 30, 2004, the company had regulatory capital ratios in excess of “well capitalized” regulatory minimums.

The Bank is primarily supervised and regulated by the Office of the Comptroller of the Currency, which establishes regulatory capital guidelines for banks similar to those established for bank holding companies by the Federal Reserve Board. At June 30, 2004, the Bank had regulatory capital ratios in excess of “well capitalized” regulatory minimums.

LINES OF BUSINESS DISCUSSION

Huntington has three distinct lines of business: Regional Banking, Dealer Sales, and the Private Financial Group (PFG). A fourth segment includes the company’s Treasury functions and capital markets activities and other unallocated assets, liabilities, revenue, and expense. Lines of business results are determined based upon the company’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. A description of each segment and discussion of financial results is provided below.

Management uses earnings on an operating basis, rather than on a GAAP basis, to measure underlying performance trends for each business segment. Operating earnings represent GAAP earnings adjusted to exclude the impact of the significant items discussed in Note 8 to the Condensed Consolidated Financial Statements. Analyzing earnings on an operating basis is very helpful in assessing underlying performance trends, a critical factor used by Management to determine the success of strategies and future earnings capabilities.

Regional Banking

Regional Banking provides products and services to retail, business banking, and commercial customers. These products and services are offered in seven operating regions within the five states of Ohio, Michigan, West Virginia, Indiana, and Kentucky through the company’s traditional banking network. Each region is further divided into Retail and Commercial Banking units. Retail products and services include home equity loans and lines of credit, first mortgage loans, direct installment loans, business loans, personal and business deposit products, as well as sales of investment and insurance services. Retail products and services comprise 57% and 81% of total Regional Banking loans and deposits, respectively. These products and services are delivered to customers through banking offices, ATMs, Direct Bank—Huntington’s customer service center, and Web Bank at huntington.com. Commercial banking serves middle-market and commercial banking relationships, which use a variety of banking products and services including, commercial loans, international trade, cash management, leasing, interest rate protection products, capital market alternatives, 401(k) plans, and mezzanine investment capabilities.

2004 Second Quarter versus 2003 Second Quarter

Regional banking contributed $60.9 million of the company’s net operating earnings in the second quarter of 2004, up $35.9 million from the second quarter of 2003. This increase primarily reflected a $44.5 million reduction in provision for credit losses. Also benefiting comparisons with the year-ago quarter was a $15.3 million, or 7%, growth in revenue, reflecting a $4.7 million, or 3%, increase in net interest income and $10.7 million, or 15%, increase in non-interest income. The benefits of lower provision for credit losses and higher revenue from the year-ago quarter were partially offset by expense growth of $4.5 million, or 3%. The ROA in the 2004 second quarter was 1.52%, up from 0.69% in the year-ago quarter. The ROE was 23.9% in the current quarter, up from 9.8% in the 2003 second quarter.

Compared with the year-ago quarter, 2004 second quarter net interest income increased $4.7 million, or 3%, reflecting a 14% increase in average total loans and 5% increase in average total deposits, partially offset by a 28 basis point decline in net interest margin to 4.15% from 4.43%.

Average total loans increased $1.8 billion, or 14%, primarily reflecting a $1.0 billion, or 66%, increase in average residential mortgages, a $0.7 billion, or 24%, increase in home equity loans and lines of credit, as well as a $0.3 billion, or 10%, increase in average CRE loans. The growth in home equity, residential mortgages, and CRE loans reflected the favorable impact of low interest rates on demand for real estate-related financing. In addition, the launch of a new Consumer First Mortgage, targeted at high convenience, low loan-to-value ratio borrowers, accounted for $0.3 billion of the $0.7 billion increase in average home equity loans and lines of credit. Total average C&I loans declined $0.3 billion, or 7%, from the year-ago quarter. The decline in C&I loans was due in part to weak demand, as well as the impact from continued strategies to lower exposure to large individual commercial credits, including shared national credits. Small Business C&I and CRE loans (included in total average C&I and CRE loans) increased $0.2 billion, or 11%, due to specific strategies that focus on this business segment.

Average total deposits increased $0.8 billion, or 5%. This reflected strong growth in average interest bearing demand deposits, up $1.0 billion, or 19%, and a $0.1 billion, or 5%, increase in non-interest bearing deposits, which was partially offset by a $0.5 billion, or 12%, decline in domestic time deposits. Of the $0.8 billion increase in average total deposits, Corporate Banking accounted for $0.6 billion and Small Business $0.4 billion, with average total deposits in Retail Banking declining $0.1 billion.

The company continued to focus on customer service and delivery channel optimization. From the year-ago quarter, eight banking offices were opened while nine were closed. Progress was made in improving the Retail Banking 90-day cross sell ratio, from 1.9 products or services to 2.2, a 19% improvement. Further, the online banking penetration of retail households with on-line banking increased to 35% from 26% a year earlier, with a 37% increase in the number of online customers.

The 28 basis points, or an effective 6%, decline in the net interest margin to 4.15% from 4.43% reflected a combination of factors. This included a shift in the loan portfolio mix to lower-margin, but higher credit quality, consumer residential real estate-related loans. In addition, interest rates offered on deposits have been near historical lows throughout this period, and as rates continued to fall from a year-ago, it was increasingly difficult to make commensurate reductions in deposit rates compared with reductions in loan yields.

Provision for credit losses for the second quarter of 2004 represented a credit of $3.9 million, or $44.5 million less than in the year-ago quarter. This decline reflected the overall improvement in credit quality, as well as the shift to lower-rate, lower-risk residential mortgages and home equity loans and lines. Net charge-offs were only $1.8 million, or an annualized 0.05% of average loans and leases, down from $31.6 million, or 0.97%, in the year-ago quarter. The 2004 second quarter net charge-offs were reduced by a $9.7 million C&I recovery on a single credit charged-off in the 2002 fourth quarter (see Credit Risk for additional discussion regarding charge-offs and allowance for loan loss reserve methodologies).

Non-interest income increased $10.7 million, or 15%, from the year-ago quarter, reflecting a combination of factors including higher mortgage banking income, an increase in deposit service charges, growth in brokerage and insurance income, and an increase in other income, partially offset by a decline in other service charges and fees.

Mortgage banking income increased $6.2 million, or 89%, from the year-ago quarter largely as a result of a change in reporting methodology. In 2004, MSR impairment and recovery is reflected in the Treasury/Other segment, whereas in the year-ago quarter MSR impairment of $6.4 million was reflected in Regional Banking. Deposit service charges increased $2.7 million, or 7%, reflecting higher personal NSF and overdraft fees. The $1.6 million, or 16%, increase in other income was due primarily to the full year impact of the 2003 adoption of FIN 45 for standby letters of credit, which recognizes fees over the life of the related guarantee, rather than at the time of quarterly or annual billings. Brokerage and insurance income increased $0.7 million, or 18%, due to higher credit protection insurance fees. The $0.7 million, or 7%, decline in other service charges and fees reflected lower interchange fees on debit card transactions.

Non-interest expense increased $4.5 million, or 3%, from the year-ago quarter. Higher personnel costs contributed $2.0 million to this increase due to an increase in the number of employees, as well as higher benefit costs. The $2.3 million, or 3%, increase in other expenses reflected higher occupancy, printing and supplies, depreciation, and outside servicing expenses, partially offset by lower marketing, telecommunications, legal and professional, and transportation expenses.

2004 Second Quarter versus 2004 First Quarter

Regional Banking earnings in the 2004 second quarter increased $12.8 million, or 27%, from the 2004 first quarter. This reflected a $14.4 million, or 6%, increase in revenue as non-interest income increased $10.4 million, or 14%, and net interest income increased $4.0 million, or 3%. Also contributing to the increase in earnings was a $6.1 million reduction in provision for credit losses. The benefits of higher revenue and lower provision for credit losses were partially offset by a slight increase in non-interest expense. The ROA in the 2004 second quarter was 1.52%, up from 1.27% in the 2004 first quarter, with the ROE of 23.9%, up from 19.2% in the prior quarter.

Net interest income increased $4.0 million, or 3%, from the prior quarter, reflecting growth in average total loans and deposits, partially offset by a decline in the net interest margin to 4.15% from 4.25%.

Average total loans increased $0.7 billion, or 5%. Consumer loans increased 10%, reflecting strong growth in residential mortgages and home equity loans and lines of credit. Average C&I loans increased 2% with CRE loans increasing 1%. The growth in average C&I loans is encouraging and may reflect the positive impact of a recovering economy. Total average deposits increased $0.7 billion, or 5%, reflecting strong growth in interest bearing and non-interest bearing demand deposits, up 10% and 7%, respectively.

From the end of the 2004 first quarter, the number of demand deposit account (DDA) households increased 1%, and the 90-day cross sell ratio of 2.2 products was unchanged. On-line banking penetration of retail households increased to 35% from 34%, and the number of active online users increased 5%.

The $6.1 million decline in provision for credit losses from the first quarter reflected the combination of improved credit quality performance and improved economic outlook, as well as the continued lowering of the overall credit risk profile of the loan portfolio through the growth in residential real estate-related loans. Net charge offs were $1.8 million, or an annualized 0.05% of average loans and leases in the current quarter, down from $11.6 million, or 0.33%, in the first quarter, primarily attributable to the $9.7 million C&I recovery in the current quarter.

Non-interest expense increased $0.7 million from the first quarter of 2004. This increase was largely due to a $1.9 million increase in other expenses, as personnel expense declined $1.4 million. The increase in other expenses reflected higher other real estate owned expenses, low income housing investment amortization, printing and supplies costs, and operating losses. Personnel expense declined due to higher FASB 91 deferred salary costs associated with higher loan production.

2004 First Six Months versus 2003 First Six Months

Regional banking contributed $108.9 million of the company’s net operating earnings in the first six months of 2004, up $48.8 million from the comparable year-ago period. This increase primarily reflected a $65.9 million reduction in provision for credit losses. Also benefiting comparisons with the year-ago period was a $20.3 million, or 5%, growth in revenue, reflecting a $9.3 million, or 3%, increase in net interest income and $11.1 million, or 8%, increase in non-interest income. The benefits of lower provision for credit losses and higher revenue from the year-ago period were partially offset by expense growth of $11.3 million, or 4%. The ROA in the first six months of 2004 was 1.39%, up from 0.85% in the year-ago period. The ROE was 21.5% in the first six months, up from 12.1% in the comparable 2003 period.

Net interest income in the first six months of 2004 increased $9.3 million, or 3%, reflecting a 12% increase in average total loans and 4% increase in average total deposits, partially offset by a 27 basis point decline in net interest margin to 4.19% from 4.45%.

Average total loans increased $1.5 billion, or 12%, primarily reflecting a $0.8 billion, or 57%, increase in average residential mortgages, a $0.7 billion, or 22%, increase home equity loans and lines of credit, as well as a $0.4 billion, or 11%, increase in average CRE loans. Total average C&I loans declined $0.4 million, or 8%, from the year-ago six-month period. The growth in home equity, residential mortgages, and CRE loans, as well as the decline in C&I loans reflected the same factors noted above in the year-ago quarter. Small Business C&I and CRE loans (included in total average C&I and CRE loans) increased $0.2 billion, or 11%, due to specific strategies that focus on this business segment.

Average total deposits increased $0.6 billion, or 4%. This reflected strong growth in average interest bearing demand deposits, up $0.9 billion, or 18%, partially offset by a $0.5 billion, or 13%, decline in domestic time deposits. Of the $0.6 billion increase in average total deposits, Corporate Banking accounted for $0.6 billion and Small Business $0.3 billion, with average total Consumer deposits declining $0.3 billion.

The 27 basis points, or an effective 6%, decline in the net interest margin to 4.19% from 4.45% reflected the same factors discussed above in the 2004 second quarter versus 2003 second quarter performance.

Provision for credit losses for the first six months of 2004 represented a credit of $1.8 million, or $65.9 million less than in the year-ago period. This decline reflected the overall improvement in credit quality, as well as the shift to lower risk residential mortgages and home equity loans and lines. Net charge-offs were only $13.4 million, or an annualized 0.19% of average loans and leases, down from $51.9 million, or 0.81% in the comparable year-ago period. The 2004 first-half net charge-offs were reduced by a $9.7 million C&I recovery (see Credit Risk for additional discussion regarding charge-offs and allowance for loan loss reserve methodologies).

Non-interest income for the first six months of 2004 increased $11.1 million, or 8%, from the comparable year-ago period, reflecting a combination of factors including higher other income, an increase in deposit service charges, and higher mortgage banking revenue, partially offset by a decline in other service charges and fees.

The $5.8 million, or 34%, increase in other income from the comparable year-ago six-month period was due primarily to the full year impact of the FIN 45 adjustment discussed above, and $2.3 million of other fees. Deposit service charges increased $4.7 million, or 6%, reflecting higher personal NSF and overdraft fees. Mortgage banking income increased $1.3 million, or 7%, from the year-ago period largely as a result of a change in reporting methodology. In 2004, MSR impairment and recovery is reflected in the Treasury/Other segment, whereas in the comparable year-ago six month period MSR impairment of $6.4 million was reflected in Regional Banking. This was partially offset by changes in origination income, marketing income and MSR amortization, as a result of changes in the interest rate environment. The $1.6 million, or 7%, decline in other service charges and fees reflected lower interchange fees on debit card transactions.

Non-interest expense for the first six months of 2004 increased $11.3 million, or 4%, from the year-ago period. Higher personnel costs contributed $5.7 million to this increase due to a 3% increase in the number of employees, as well as higher benefit costs. The $5.3 million, or 3%, increase in other expenses reflected higher marketing, depreciation, printing and supplies, and charge card processing expenses, partially offset by lower telecommunication, legal and professional, and transportation expenses.

Table 18 - Regional Banking⁽¹⁾


	2004			2004		2003		2Q04 vs. 2Q03					2004			2003		1H04 vs. 1H03
	Second			First		Second		Amount			%		6 Months			6 Months		Amount			%
INCOME STATEMENT (in thousands)
Net Interest Income	$	155,083		$	151,062	$	150,418	$	4,665		3.1	%	$	306,145		$	296,832	$	9,313		3.1	%
Provision for credit losses		(3,949	)		2,105		40,525		(44,474	)	NM			(1,844	)		64,078		(65,922	)	NM

Net Interest Income After Provision for Credit Losses		159,032			148,957		109,893		49,139		44.7	%		307,989			232,754		75,235		32.3	%

Operating lease income		327			49		—		327		NM			376			—		376		NM
Service charges on deposit accounts		42,357			40,703		39,707		2,650		6.7	%		83,060			78,371		4,689		6.0	%
Brokerage and insurance income		4,515			3,856		3,842		673		17.5	%		8,371			7,843		528		6.7	%
Trust services		225			292		280		(55	)	-19.6	%		517			548		(31	)	-5.7	%
Mortgage banking		13,227			6,033		6,997		6,230		89.0	%		19,260			17,941		1,319		7.4	%
Other service charges and fees		10,529			9,413		11,259		(730	)	-6.5	%		19,942			21,499		(1,557	)	-7.2	%
Other		11,295			11,705		9,705		1,590		16.4	%		23,000			17,187		5,813		33.8	%

Total Non-Interest Income Before Securities Gains		82,475			72,051		71,790		10,685		14.9	%		154,526			143,389		11,137		7.8	%
Securities gains		—			—		—		—		NM			—			—		—		NM

Total Non-Interest Income		82,475			72,051		71,790		10,685		14.9	%		154,526			143,389		11,137		7.8	%

Operating lease expense		275			44		—		275		NM			319			—		319		NM
Personnel costs		61,728			63,156		59,761		1,967		3.3	%		124,884			119,193		5,691		4.8	%
Other		85,837			83,892		83,558		2,279		2.7	%		169,729			164,430		5,299		3.2	%

Total Non-Interest Expense		147,840			147,092		143,319		4,521		3.2	%		294,932			283,623		11,309		4.0	%

Income Before Provision for Income Taxes		93,667			73,916		38,364		55,303		NM			167,583			92,520		75,063		81.1	%
Provision for income taxes ⁽²⁾		32,783			25,871		13,427		19,356		NM			58,654			32,382		26,272		81.1	%

Net Income - Operating ⁽¹⁾	$	60,884		$	48,045	$	24,937	$	35,947		NM		$	108,929		$	60,138	$	48,791		81.1	%

Revenue - Fully Taxable Equivalent (FTE)
Net interest income	$	155,083		$	151,062	$	150,418	$	4,665		3.1	%	$	306,145		$	296,832	$	9,313		3.1	%
Tax equivalent adjustment ⁽²⁾		250			249		311		(61	)	-19.6	%		499			642		(143	)	-22.3	%

Net interest income (FTE)		155,333			151,311		150,729		4,604		3.1	%		306,644			297,474		9,170		3.1	%
Non-interest income		82,476			72,051		71,790		10,686		14.9	%		154,527			143,389		11,138		7.8	%

Total Revenue (FTE)	$	237,809		$	223,362	$	222,519	$	15,290		6.9	%	$	461,171		$	440,863	$	20,308		4.6	%

Total Revenue Excluding Securities Gains (FTE)	$	237,809		$	223,362	$	222,519	$	15,290		6.9	%	$	461,171		$	440,863	$	20,308		4.6	%

SELECTED AVERAGE BALANCES (in millions)
Loans:
C&I	$	4,287		$	4,219	$	4,590	$	(303	)	-6.6	%	$	4,253		$	4,631	$	(378	)	-8.2	%
CRE
Construction		1,297			1,290		1,211		86		7.1	%		1,292			1,171		121		10.3	%
Commercial		2,591			2,567		2,335		256		11.0	%		2,578			2,300		278		12.1	%
Consumer
Auto loans - indirect		5			5		7		(2	)	-28.6	%		5			7		(2	)	-28.6	%
Home equity loans & lines of credit		3,848			3,593		3,109		739		23.8	%		3,720			3,053		667		21.8	%
Residential mortgage		2,474			2,163		1,489		985		66.2	%		2,318			1,480		838		56.6	%
Other loans		317			278		315		2		0.6	%		297			320		(23	)	-7.2	%

Total Consumer		6,644			6,039		4,920		1,724		35.0	%		6,340			4,860		1,480		30.5	%

Total Loans	$	14,819		$	14,115	$	13,056	$	1,763		13.5	%	$	14,463		$	12,962	$	1,501		11.6	%

Deposits:
Non-interest bearing deposits	$	2,982		$	2,783	$	2,850	$	132		4.6	%	$	2,882		$	2,787	$	95		3.4	%
Interest bearing demand deposits		6,454			5,854		5,432		1,022		18.8	%		6,154			5,222		932		17.8	%
Savings deposits		2,790			2,773		2,749		41		1.5	%		2,781			2,737		44		1.6	%
Domestic time deposits		3,689			3,728		4,184		(495	)	-11.8	%		3,709			4,249		(540	)	-12.7	%
Foreign time deposits		420			423		325		95		29.2	%		421			314		107		34.1	%

Total Deposits	$	16,335		$	15,561	$	15,540	$	795		5.1	%	$	15,947		$	15,309	$	638		4.2	%

(1)	Operating basis, see page 50 for definition.

(2)	Calculated assuming a 35% tax rate.

NM,	not a meaningful value.

Table 18 - Regional Banking⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
PERFORMANCE METRICS
Return on average assets		1.52	%		1.27	%		0.69	%		0.83	%				1.39	%		0.85	%		0.55	%
Return on average equity		23.9	%		19.2	%		9.8	%		14.1	%				21.5	%		12.1	%		9.5	%
Net interest margin		4.15	%		4.25	%		4.43	%		-0.28	%				4.19	%		4.45	%		-0.27	%
Efficiency ratio		62.2	%		65.9	%		64.4	%		-2.2	%				64.0	%		64.3	%		-0.4	%

CREDIT QUALITY

Net Charge-offs by Loan Type (in thousands)
C&I	$	(3,656	)	$	5,939		$	26,213		$	(29,869	)	NM		$	2,283		$	40,853		$	(38,570	)	-94.4	%
CRE		941			1,636			605			336		55.5	%		2,577			1,151			1,426		NM

Total commercial		(2,715	)		7,575			26,818			(29,533	)	NM			4,860			42,004			(37,144	)	-88.4	%
Consumer
Auto loans		40			(21	)		34			6		17.6	%		19			23			(4	)	-17.4	%
Home equity loans & lines of credit		3,019			2,956			3,609			(590	)	-16.3	%		5,975			7,463			(1,488	)	-19.9	%
Residential mortgage		302			316			267			35		13.1	%		618			391			227		58.1	%
Other loans		1,196			778			819			377		46.0	%		1,974			2,055			(81	)	-3.9	%

Total consumer		4,557			4,029			4,729			(172	)	-3.6	%		8,586			9,932			(1,346	)	-13.6	%

Total Net Charge-offs	$	1,842		$	11,604		$	31,547		$	(29,705	)	-94.2	%	$	13,446		$	51,936		$	(38,490	)	-74.1	%

Net Charge-offs - annualized percentages
C&I		-0.34	%		0.57	%		2.29	%		-2.63	%				0.11	%		1.78	%		-1.67	%
CRE		0.10	%		0.17	%		0.07	%		0.03	%				0.13	%		0.07	%		0.07	%

Total commercial		-0.13	%		0.38	%		1.32	%		-1.45	%				0.12	%		1.05	%		-0.93	%
Consumer
Auto loans		3.22	%		-1.69	%		1.95	%		1.27	%				0.76	%		0.66	%		0.10	%
Home equity loans & lines of credit		0.32	%		0.33	%		0.47	%		-0.15	%				0.32	%		0.49	%		-0.17	%
Residential mortgage		0.05	%		0.06	%		0.07	%		-0.02	%				0.05	%		0.05	%		0.00	%
Other loans		1.52	%		1.13	%		1.04	%		0.48	%				1.33	%		1.30	%		0.04	%

Total consumer		0.28	%		0.27	%		0.39	%		-0.11	%				0.27	%		0.41	%		-0.14	%

Total Net Charge-offs		0.05	%		0.33	%		0.97	%		-0.92	%				0.19	%		0.81	%		-0.62	%

Non-Performing Assets (NPA) (in millions)
C&I	$	30		$	42		$	84		$	(54	)	-64.3	%	$	30		$	84		$	(54	)	-64.3	%
CRE		7			9			22			(15	)	-68.2	%		7			22			(15	)	-68.2	%
Residential mortgage		11			11			11			—		0.0	%		11			11			—		0.0	%

Total Non-accrual Loans		48			62			117			(69	)	-59.0	%		48			117			(69	)	-59.0	%
Renegotiated loans		—			—			—			—		NM			—			—			—		NM

Total Non-performing Loans (NPL)		48			62			117			(69	)	-59.0	%		48			117			(69	)	-59.0	%
Other real estate, net (OREO)		14			16			14			—		0.0	%		14			14			—		0.0	%

Total Non-performing Assets	$	62		$	78		$	131		$	(69	)	-52.7	%	$	62		$	131		$	(69	)	-52.7	%

Accruing loans past due 90 days or more *(eop)*	$	41		$	47		$	40		$	1		2.5	%	$	41		$	40		$	1		2.5	%
Allowance for Loan and Lease Losses (ALLL) *(eop*)	$	186		$	158		$	199		$	(13	)	-6.5	%	$	186		$	199		$	(13	)	-6.5	%
ALLL as a % of total loans and leases		1.22	%		1.10	%		1.52	%		-0.30	%				1.22	%		1.52	%		-0.30	%
ALLL as a % of NPLs		387.5	%		254.8	%		170.1	%		217.4	%				387.5	%		170.1	%		217.4	%
ALLL + OREO as a% of NPAs		322.6	%		223.1	%		162.6	%		160.0	%				322.6	%		162.6	%		160.0	%
NPLs as a % of total loans and leases		0.31	%		0.43	%		0.90	%		-0.59	%				0.31	%		0.90	%		-0.59	%
NPAs as a % of total loans and leases + OREO		0.40	%		0.54	%		1.00	%		-0.60	%				0.40	%		1.00	%		-0.60	%

(1)	Operating basis, see page 50 for definition.

NM,	not a meaningful value.

eop,	end of period.

Table 18 - Regional Banking⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
SUPPLEMENTAL DATA
# employees - full-time equivalent (eop)		4,953			4,823			4,834			119		2.5	%		4,953			4,834			119		2.5	%
Retail Banking
Average loans (in millions)	$	4,545		$	4,236		$	3,694		$	851		23.0	%	$	4,385		$	3,645		$	740		20.3	%
Average deposits (in millions)	$	11,025		$	10,680		$	11,174		$	(149	)	-1.3	%	$	10,851		$	11,116		$	(265	)	-2.4	%
# employees - full-time equivalent (eop)		3,510			3,392			3,378			132		3.9	%		3,510			3,378			132		3.9	%
# banking offices (eop)		335			332			336			(1	)	-0.3	%		335			336			(1	)	-0.3	%
# ATMs (eop)		700			684			855			(155	)	-18.1	%		700			855			(155	)	-18.1	%
# DDA households (eop)		494,960			491,949			493,219			1,741		0.4	%		494,960			493,219			1,741		0.4	%
# New 90-day cross sell (average)⁽³⁾		2.2			2.2			1.9			0.4		18.9	%		2.2			1.8			0.4		22.2	%
# on-line customers (eop)		185,454			179,681			136,700			48,754		35.7	%		185,454			136,700			48,754		35.7	%
% on-line retail household penetration (eop)		35	%		34	%		26	%		9	%				35	%		26	%		9	%

Small Business
Average loans (in millions)	$	1,865		$	1,824		$	1,684		$	181		10.7	%	$	1,845		$	1,660		$	185		11.1	%
Average deposits (in millions)	$	1,980		$	1,844		$	1,620		$	360		22.2	%	$	1,912		$	1,585		$	327		20.6	%
# employees - full-time equivalent (eop)		260			260			252			8		3.2	%		260			252			8		3.2	%
# customers (eop)		64,558			63,440			68,756			(4,198	)	-6.1	%		64,558			68,756			(4,198	)	-6.1	%
# New 90-day cross sell (average) ⁽⁴⁾		2.2			2.1			1.8			0.4		20.2	%		2.1			1.8			0.3		16.7	%

Corporate Banking
Average loans (in millions)	$	6,377		$	6,316		$	6,505		$	(128	)	-2.0	%	$	6,347		$	6,495		$	(148	)	-2.3	%
Average deposits (in millions)	$	3,110		$	2,888		$	2,518		$	592		23.5	%	$	2,999		$	2,411		$	588		24.4	%
# employees - full-time equivalent (eop)		574			567			590			(16	)	-2.7	%		574			590			(16	)	-2.7	%
# customers (eop)		5,684			5,527			7,278			(1,594	)	-21.9	%		5,684			7,278			(1,594	)	-21.9	%

Mortgage Banking
Average loans (in millions)	$	2,032		$	1,739		$	1,173		$	859		73.2	%	$	1,886		$	1,162		$	724		62.3	%
Average deposits (in millions)	$	220		$	149		$	228		$	(8	)	-3.5	%	$	185		$	197		$	(12	)	-6.1	%
# employees - full-time equivalent (eop)		609			604			614			(5	)	-0.8	%		609			614			(5	)	-0.8	%
Closed loan volume (in millions)	$	1,330		$	860		$	1,702		$	(372	)	-21.9	%	$	2,190		$	2,969		$	(779	)	-26.2	%
Portfolio closed loan volume (in millions)	$	863		$	533		$	362		$	501		NM		$	1,396		$	731		$	665		91.0	%
Agency delivery volume (in millions)	$	502		$	342		$	1,128		$	(626	)	-55.5	%	$	844		$	2,038		$	(1,194	)	-58.6	%
Total servicing portfolio (eop and in millions)	$	9,786		$	9,442		$	7,463		$	2,323		31.1	%	$	9,786		$	7,463		$	2,323		31.1	%
Portfolio serviced for others (eop and in millions)	$	6,537		$	6,523		$	5,069		$	1,468		29.0	%	$	6,537		$	5,069		$	1,468		29.0	%
Mortage servicing rights (eop and in millions)	$	79.2		$	60.4		$	36.7		$	42.5		NM		$	79.2		$	36.7		$	42.5		NM

(1)	Operating basis, see page 50 for definition.

(3)	Total cross-sell on new relationships at 90 days (out of 16 core products).

(4)	Total cross-sell on new relationships at 90 days (out of 18 products).

NM,	not a meaningful value.

N/A,	not available.

eop,	end of period.

Dealer Sales

Dealer Sales serves over 3,500 automotive dealerships within Huntington’s primary banking markets, as well as in Arizona, Florida, Georgia, Pennsylvania, and Tennessee. The segment finances the purchase of automobiles by customers of the automotive dealerships, purchases automobiles from dealers and simultaneously leases the automobiles under long-term direct financing leases, finances dealership floor plan inventories, real estate, or working capital needs, and provides other banking services to the automotive dealerships and their owners.

The accounting for automobile leases significantly impacts the presentation of Dealer Sales’ financial results. All automobile leases originated prior to May 2002 are accounted for as operating leases, with leases originated since April 2002 accounted for as direct financing leases. For automobile leases originated prior to May 2002, the related financial results are reported as operating lease income and operating lease expense, components of non-interest income and non-interest expense, respectively, whereas the cost of funding these leases is included in interest expense. Credit losses associated with these leases are also reflected in operating lease expense. With no new operating leases being originated, this portfolio, and related operating lease income and operating lease expense, will decrease over time and eventually become immaterial. In contrast, all new leases since April 2002 are originated as direct financing leases, where the income and funding are included in net interest income. The net interest margin increased during the three and six-month periods ended June 30, 2003, as compared with the same periods in 2004 as the declining operating lease portfolio resulted in less assessed interest expense. Direct financing lease credit losses are charged against an allowance for credit losses with provision for credit losses recorded to maintain an appropriate allowance level.

Residual values on leased automobiles are evaluated periodically for impairment. Residual value losses arise if the market value at the end of the lease term is less than the residual value embedded in the original lease contract. Residual value insurance covers the difference between the recorded residual value and the fair value of the automobile at the end of the lease term. Impairment of the residual values of direct financing leases is recognized by writing the leases down to fair value with a charge to non-interest income. Impairment of residual values of operating leases is evaluated under Statement No. 144. Under that Statement, when the future cash flows from the operating lease, including the expected realizable fair value of the automobile or equipment at the end of the lease, is less than the book value of the lease, an immediate impairment write-down is recognized. Otherwise, reductions in the expected residual value result in additional depreciation of the leased asset over the remaining term of the lease. Upon disposition, a gain or loss is recorded for any difference between the net book value of the lease and the proceeds from the disposition of the asset, including any insurance proceeds.

Second Quarter 2004 versus Second Quarter 2003 Performance

Dealer Sales contributed $21.0 million of the company’s net operating earnings in the second quarter of 2004, up $3.6 million, or 20%, from the 2003 second quarter. This increase was primarily due to higher net income from loan and lease assets (net interest income plus operating lease income less operating lease expense) and a lower provision for credit losses resulting from a decrease in charge-offs. The ROA and ROE for the second quarter of 2004 were 1.27% and 20.5%, respectively, up from 0.99% and 16.1%, respectively, in the 2003 second quarter.

Net interest income was $37.8 million, up $16.0 million, or 74%, from $21.7 million in the year-ago quarter. This significant increase reflected a $0.5 billion, or 10%, increase in average total loans and leases, as well as a 104 basis point increase in the net interest margin to 2.77% from 1.73% a year ago. The increase in average total loans and leases, and the net interest margin was driven by rapid growth in direct financing leases as average automobile loans declined due to loan sales.

Average automobile direct financing leases increased $833 million, reflecting the fact that this is still a relatively young portfolio with relatively fewer maturities and pay-offs than a more mature portfolio. Direct financing lease originations totaled $246 million in the second quarter of 2004, down 37% from $389 million in the 2003 second quarter. The growth in average direct financing lease balances contrasts with the $825 million decline in average operating lease assets, which consists of all leases originated prior to May 2002 with balances running off through maturities and pay-offs.

Average automobile loans declined $491 million compared with the same period a year ago, reflecting sales of automobile loans. Automobile loan originations declined $213 million, or 33%, to $431 million in the 2004 second quarter compared with $644 million in the 2003 second quarter, reflecting a softer market for new and used vehicle sales, as well as a decision to maintain high quality originations. The impact of the loan sales and lower production levels was offset in part by the consolidation in July 2003 of $1.0 billion of previously securitized automobile loans related to the adoption of FIN 46.

Also contributing to the growth in average total loans and leases was a 20% increase in C&I loans, including dealer floor plan loans.

The net interest margin continued to be favorably impacted by the run-off of operating lease assets and the fact that all of the funding cost associated with these assets is reflected in interest expense, whereas the income is reflected in non-interest income. In contrast, the net interest margin was negatively impacted by growth in lower yielding direct financing lease balances, loan sales, and a lower net interest margin associated with securitized loans that are now recorded on balance sheet as a result of the adoption of FIN 46.

The provision for credit losses decreased to $8.3 million from $9.2 million for the year-ago quarter, primarily reflecting a $1.3 million, or 14%, decline in charge-offs. The annualized net charge-off ratio for automobile loans was 0.96% in the second quarter of 2004, down from 1.06% in the 2003 second quarter, while the charge-off ratio for direct financing leases was 0.41%, down from 0.44% in the year-ago quarter.

Non-interest income decreased $51.2 million, or 37%, driven by a $50.2 million, or 39%, decline in operating lease income as that portfolio continued to run-off. Other non-interest income decreased $0.9 million, or 9%, primarily due to declines in securitization income that resulted from the adoption of FIN 46 in the third quarter of 2003. Non-interest expense declined $39.7 million, or 32%, primarily reflecting a $40.7 million, or 39%, decline in operating lease expense. Other non-interest expense increased slightly as lower residual value insurance costs were offset by a loss accrual for expenses associated with pending litigation. In contrast, personnel costs increased $0.8 million, or 16%, primarily due to higher benefit costs and less benefit from deferring loan origination costs, reflecting the decline in loan and lease production.

Second Quarter 2004 versus First Quarter 2004 Performance

Dealer Sales’ net operating earnings of $21.0 million in the second quarter of 2004 were up $9.1 million, or 76%, from the first quarter of 2004. The primary contributor to this increase was a lower provision for credit losses. The ROA and ROE in the 2004 second quarter were 1.27% and 20.5%, respectively, up from 0.65% and 10.7%, respectively, in the 2004 first quarter.

Net interest income was $37.8 million for second quarter of 2004, up $2.8 million, or 8%, from the previous quarter. This increase reflected a 41 basis point increase in the net interest margin to 2.77% from 2.36%, partially offset by an 8% decline in average total loans and leases.

Average automobile loans decreased $704 million, or 23%, primarily as a result of the sale loans. Also contributing to the decline from the 2004 first quarter was a 12% decrease in automobile loan originations in the second quarter of 2004 compared with the first quarter.

Average automobile direct financing leases increased $151 million, or 8%, reflecting the fact that this continues to be a relatively young portfolio. However, direct financing lease originations declined 11% compared with the first quarter of 2004. The $151 million, or 8%, growth in average direct financing lease balances contrasts with the $189 million, or 16%, decline in average operating lease assets.

During the second quarter of 2004, C&I loans, including dealer floor plan loans, increased $52 million, or 7%, from the prior quarter, consistent with seasonal patterns for usage of available credit lines.

The provision for credit losses decreased 62%, reflecting both lower charge-offs and lower provision expense for growth in loans and direct financing leases. Charge-offs in the 2004 second quarter represented an annualized 0.58%, down from 1.14% in the first quarter. The first quarter of 2004 included a $4.7 million one-time charge to correct for the classification of claims received under policies purchased to protect the company from loss in the event repossessed vehicles had physical damage.

Non-interest income decreased $8.3 million, or 9%, primarily due to a $10.4 million, or 12%, decline in operating lease income as that portfolio continues to run-off. This decrease was partially offset by increases in servicing fee income, securitization income, and fee income from lease terminations. Non-interest expense declined $5.6 million, or 6%, primarily reflecting an $8.4 million, or 12%, decline in operating lease expense, offset in part by a loss accrual in other expense associated with pending litigation.

2004 First Six Months versus 2003 First Six Months

Dealer Sales contributed $33.0 million of the company’s net operating earnings for the first six months of 2004, down slightly from $33.5 million for the same period a year ago. Earnings in 2004 compared with 2003 were primarily impacted by a higher provision for credit losses, which was driven by increased charge-offs and the provision for credit losses associated with loan and lease growth, offset by higher net income from loan and lease assets. The ROA and ROE for the first six months of 2004 were 0.95% and 15.3%, respectively, compared with 0.94% and 15.3%, respectively, for the 2003 six-month period.

Net interest income was $72.7 million, up $29.1 million, or 67%, from $43.6 million in the year-ago period. This significant increase reflected an $806 million, or 17%, increase in average total loans and leases, as well as a 79 basis point increase in the net interest margin to 2.55% from 1.76% a year ago. The significant increase in average total loans and leases, as well as the net interest margin, was driven by rapid growth in direct financing leases as average automobile loans declined.

Average automobile direct financing leases increased $911 million, or 79%, reflecting the fact that this is still a relatively young portfolio with fewer maturities and pay-offs than a more mature portfolio. Direct financing lease originations totaled $522 million in the first six months of 2004, down 25% from $699 million in the first six months of 2003. The growth in average direct financing lease balances contrasts with the $867 million, or 45%, decline in average operating lease assets, which consists of all leases originated prior to May 2002 with balances running off through maturities and pay-offs.

Average automobile loans declined $263 million compared with the same period a year ago, reflecting the impact of loan sales, as well as a $436 million, or 32%, decline in originations, reflecting a softer market for new and used vehicle sales, as well as a decision to maintain high quality loan originations. The impact of the loan sales and lower production levels was offset in part by the consolidation in July 2003 of $1.0 billion of previously securitized loans related to the adoption of FIN 46.

Also contributing to the growth in average total loans and leases was a $121 million, or 18%, increase in C&I loans, including dealer floor plan loans.

The net interest margin continued to be favorably impacted by the run-off of the operating lease assets and the fact that all of the funding cost associated with these assets is reflected in interest expense, whereas the income is reflected in non-interest income. In contrast, the net interest margin was negatively impacted by growth in lower yielding direct financing lease balances, loan sales, and a lower net interest margin associated with securitized loans that are now recorded on balance sheet as a result of the adoption of FIN 46.

The provision for credit losses increased from $20.6 million from the year-ago period to $29.9 million, reflecting growth in direct financing leases, an increase in provision allocation factors and a $3.6 million increase in charge-offs. Though net charge-offs increased $3.6 million from the year-ago six-month period, as an annualized percent of average total loans and leases, total net charge-offs were unchanged at 0.87%.

Non-interest income decreased $103.0 million, or 36%, driven by a $99.6 million, or 37%, decline in operating lease income as that portfolio continued to run-off. Other non-interest income decreased $2.5 million, or 14%, primarily due to declines in securitization income that resulted from the adoption of FIN 46 in the third quarter of 2003. Non-interest expense declined $82.5 million, or 32%, primarily reflecting an $81.6 million, or 38%, decline in operating lease expense. Other non-interest expense declined $2.4 million, or 7%, primarily due to lower residual value insurance costs. In contrast, personnel costs increased $1.4 million, or 14%, primarily due to higher benefit costs and less benefit from deferring loan origination costs, reflecting the decline in loan and lease production.


	2004		2004		2003		2Q04 vs. 2Q03					2004		2003		1H04 vs. 1H03
	Second		First		Second		Amount			%		6 Months		6 Months		Amount			%
INCOME STATEMENT (in thousands)
Net Interest Income	$	37,757	$	34,951	$	21,727	$	16,030		73.8	%	$	72,708	$	43,642	$	29,066		66.6	%
Provision for credit losses		8,261		21,655		9,191		(930	)	-10.1	%		29,916		20,576		9,340		45.4	%

Net Interest Income After Provision for Credit Losses		29,496		13,296		12,536		16,960		NM			42,792		23,066		19,726		85.5	%

Operating lease income		78,379		88,818		128,574		(50,195	)	-39.0	%		167,197		266,767		(99,570	)	-37.3	%
Service charges on deposit accounts		230		199		231		(1	)	-0.4	%		429		438		(9	)	-2.1	%
Brokerage and insurance income		335		510		851		(516	)	-60.6	%		845		2,193		(1,348	)	-61.5	%
Trust services		—		—		6		(6	)	-100.0	%		—		6		(6	)	-100.0	%
Mortgage banking		—		—		—		—		NM			—		2		(2	)	-100.0	%
Other service charges and fees		—		—		—		—		NM			—		—		—		NM
Other		9,218		6,926		10,145		(927	)	-9.1	%		16,144		18,662		(2,518	)	-13.5	%

Total Non-Interest Income Before Securities Gains		88,162		96,453		139,807		(51,645	)	-36.9	%		184,615		288,068		(103,453	)	-35.9	%
Securities gains		469		—		—		469		NM			469		—		469		NM

Total Non-Interest Income		88,631		96,453		139,807		(51,176	)	-36.6	%		185,084		288,068		(102,984	)	-35.7	%

Operating lease expense		62,288		70,666		102,939		(40,651	)	-39.5	%		132,954		214,527		(81,573	)	-38.0	%
Personnel costs		5,666		5,901		4,882		784		16.1	%		11,567		10,122		1,445		14.3	%
Other		17,814		14,802		17,643		171		1.0	%		32,616		34,984		(2,368	)	-6.8	%

Total Non-Interest Expense		85,768		91,369		125,464		(39,696	)	-31.6	%		177,137		259,633		(82,496	)	-31.8	%

Income Before Provision for Income Taxes		32,359		18,380		26,879		5,480		20.4	%		50,739		51,501		(762	)	-1.5	%
Provision for income taxes ⁽²⁾		11,326		6,433		9,408		1,918		20.4	%		17,759		18,026		(267	)	-1.5	%

Net Income - Operating ⁽¹⁾	$	21,033	$	11,947	$	17,471	$	3,562		20.4	%	$	32,980	$	33,475	$	(495	)	-1.5	%

Revenue - Fully Taxable Equivalent (FTE)
Net Interest Income	$	37,757	$	34,951	$	21,727	$	16,030		73.8	%	$	72,708	$	43,642	$	29,066		66.6	%
Tax Equivalent Adjustment⁽²⁾		—		—		—		—		NM			—		—		—		NM

Net Interest Income (FTE)		37,757		34,951		21,727		16,030		73.8	%		72,708		43,642		29,066		66.6	%
Non-Interest Income		88,631		96,453		139,807		(51,176	)	-36.6	%		185,084		288,068		(102,984	)	-35.7	%

Total Revenue (FTE)	$	126,388	$	131,404	$	161,534	$	(35,146	)	-21.8	%	$	257,792	$	331,710	$	(73,918	)	-22.3	%

Total Revenue Excluding Securities Gains (FTE)	$	125,919	$	131,404	$	161,534	$	(35,615	)	-22.0	%	$	257,323	$	331,710	$	(74,387	)	-22.4	%

SELECTED AVERAGE BALANCES (in millions)
Loans:
C&I	$	808	$	756	$	673	$	135		20.1	%	$	782	$	661	$	121		18.3	%
CRE
Construction		3		8		6		(3	)	-50.0	%		6		4		2		50.0	%
Commercial		80		81		64		16		25.0	%		81		62		19		30.6	%
Consumer
Auto leases – indirect		2,139		1,988		1,306		833		63.8	%		2,064		1,153		911		79.0	%
Auto loans – indirect		2,332		3,036		2,823		(491	)	-17.4	%		2,684		2,947		(263	)	-8.9	%
Home equity loans & lines of credit		0		0		0		0		NM			0		0		0		NM
Other loans		74		70		57		17		29.8	%		72		56		16		28.6	%

Total Consumer		4,545		5,094		4,186		359		8.6	%		4,820		4,156		664		16.0	%

Total Loans	$	5,436	$	5,939	$	4,929	$	507		10.3	%	$	5,689	$	4,883	$	806		16.5	%

Operating lease assets	$	977	$	1,166	$	1,802	$	(825	)	-45.8	%	$	1,070	$	1,937	$	(867	)	-44.8	%

Deposits:
Non-interest bearing deposits	$	67	$	65	$	55	$	12		21.8	%	$	66	$	55	$	11		20.0	%
Interest bearing demand deposits		2		2		1		1		100.0	%		2		1		1		100.0	%
Foreign time deposits		4		4		4		0		0.0	%		4		4		0		0.0	%

Total Deposits	$	73	$	71	$	60	$	13		21.7	%	$	72	$	60	$	12		20.0	%

(1)	Operating basis, see page 50 for definition.

(2)	Calculated assuming a 35% tax rate.

NM, not a meaningful value.

Table 19 - Dealer Sales⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
PERFORMANCE METRICS

Return on average assets		1.27	%		0.65	%		0.99	%		0.28	%				0.95	%		0.94	%		0.00	%
Return on average equity		20.5	%		10.7	%		16.1	%		4.4	%				15.3	%		15.3	%		0.1	%
Net interest margin		2.77	%		2.36	%		1.73	%		1.04	%				2.55	%		1.76	%		0.79	%
Efficiency ratio		68.1	%		69.5	%		77.7	%		-9.6	%				68.8	%		78.3	%		-9.4	%

CREDIT QUALITY
Net Charge-offs by Loan Type (in thousands)
C&I	$	36		$	1		$	—		$	36		NM		$	37		$	(38	)	$	75		NM
CRE		—			—			—			—		NM			—			—			—		NM

Total commercial		36			1			—			36		NM			37			(38	)		75		NM
Consumer
Auto leases		2,159			3,159			1,422			737		51.8	%		5,318			2,342			2,976		NM
Auto loans		5,564			13,443			7,490			(1,926	)	-25.7	%		19,007			18,124			883		4.9	%
Home equity loans & lines of credit		—			—			—			—		NM			—			—			—		NM
Other loans		38			211			177			(139	)	-78.5	%		249			575			(326	)	-56.7	%

Total consumer		7,761			16,813			9,089			(1,328	)	-14.6	%		24,574			21,041			3,533		16.8	%

Total Net Charge-offs	$	7,797		$	16,814		$	9,089		$	(1,292	)	-14.2	%	$	24,611		$	21,003		$	3,608		17.2	%

Net Charge-offs—annualized percentages
C&I		0.02	%		0.00	%		0.00	%		0.02	%				0.01	%		-0.01	%		0.02	%
CRE		0.00	%		0.00	%		0.00	%		0.00	%				0.00	%		0.00	%		0.00	%
Total commercial		0.02	%		0.00	%		0.00	%		0.02	%				0.01	%		-0.01	%		0.02	%
Consumer
Auto leases		0.41	%		0.64	%		0.44	%		-0.03	%				0.52	%		0.41	%		0.11	%
Auto loans		0.96	%		1.78	%		1.06	%		-0.10	%				1.42	%		1.24	%		0.18	%
Home equity loans & lines of credit		NM			NM			NM			NM					NM			NM			NM
Other loans		0.21	%		1.21	%		1.25	%		-1.04	%				0.69	%		2.07	%		-1.38	%

Total consumer		0.69	%		1.33	%		0.87	%		-0.18	%				1.02	%		1.02	%		0.00	%

Total Net Charge-offs		0.58	%		1.14	%		0.74	%		-0.16	%				0.87	%		0.87	%		0.00	%

Non-performing Assets (NPA) (in millions)
C&I	$	—		$	—		$	—		$	—		NM		$	—		$	—		$	—		NM
CRE		—			—			—			—		NM			—			—			—		NM

Total Non-accrual Loans		0			0			0			0		NM			0			0			0		NM
Renegotiated loans		—			—			—			—		NM			—			—			—		NM

Total Non-performing Loans (NPL)		0			0			0			—		NM			0			0			—		NM
Other real estate, net (OREO)		—			—			—			—		NM			—			—			—		NM

Total Non-performing Assets	$	—		$	—		$	—		$	—		NM		$	—		$	—		$	—		NM

Accruing loans past due 90 days or more	$	8		$	9		$	11		$	(3	)	-27.3	%	$	8		$	11		$	(3	)	-27.3	%
Allowance for Loan and Lease Losses (ALLL) *(eop)*	$	50		$	51		$	63		$	(13	)	-20.6	%	$	50		$	63		$	(13	)	-20.6	%
ALLL as a % of total loans and leases		1.01	%		0.96	%		1.36	%		-0.35	%				1.01	%		1.36	%		-0.35	%
ALLL as a % of NPLs		NM			NM			NM			NM					NM			NM			NM
ALLL + OREO as a % of NPAs		NM			NM			NM			NM					NM			NM			NM
NPLs as a % of total loans and leases		0.00	%		0.00	%		0.00	%		0.00	%				0.00	%		0.00	%		0.00	%
NPAs as a % of total loans and leases + OREO		0.00	%		0.00	%		0.00	%		0.00	%				0.00	%		0.00	%		0.00	%

(1)	Operating basis, see page 50 for definition.

NM,	not a meaningful value.

eop,	end of period.

Table 19 - Dealer Sales⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03				2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount		%		6 Months			6 Months			Amount		%
SUPPLEMENTAL DATA
# employees - full-time equivalent (eop)		409			433			441		(32	)	-7.3	%		409			441		(32	)	-7.3	%
Automobile loans
Production (in millions)	$	431.2		$	487.9		$	644.2		(213	)	-33.1	%	$	919.1		$	1,355.5		(436	)	-32.2	%
% Production new vehicles		52.0	%		52.7	%		55.1	%	-3.1	%				52.4	%		53.6	%	-1.2	%
Average term (in months)		65.1			64.7			64.3		0.8					64.9			64.2		0.7

Automobile leases
Production (in millions)	$	246.4		$	275.4		$	388.7		(142	)	-36.6	%	$	521.8		$	698.9		(177	)	-25.3	%
% Production new vehicles		99.1	%		98.9	%		96.9	%	2.2	%				99.0	%		95.7	%	3.3	%
Average term (in months)		54.6			53.4			52.4		2.2					54.0			53.0		0.9
Average residual %		41.0	%		42.3	%		43.7	%	-2.7	%				41.7	%		42.9	%	-1.2	%

(1)	Operating basis, see page 50 for definition.

eop, end of period.

Private Financial Group

The Private Financial Group (PFG) provides products and services designed to meet the needs of the company’s higher net worth customers. Revenue is derived through trust, asset management, investment advisory, brokerage, insurance, and private banking products and services. The trust division provides fiduciary services to more than 11,000 accounts with assets totaling $39.2 billion, including $8.7 billion managed by PFG. In addition, PFG has over $560 million in assets managed by Haberer Registered Investment Advisor, which provides investment management services to nearly 400 customers.

PFG provides investment management and custodial services to the company’s 29 proprietary mutual funds, including ten variable annuity funds, which represented nearly $3 billion in total assets under management at June 30, 2004. The Huntington Investment Company offers brokerage and investment advisory services to both Regional Banking and PFG customers through more than 100 licensed investment sales representatives and 700 licensed personal bankers. This customer base has over $4 billion in mutual fund and annuity assets. PFG’s insurance entities provide a complete array of insurance products including individual life insurance products ranging from basic term life insurance, to estate planning, group life and health insurance, property and casualty insurance, mortgage title insurance, and reinsurance for payment protection products. Income and related expenses from the sale of brokerage and insurance products is shared with the line of business that generated the sale or provided the customer referral, most notably Regional Banking.

2004 Second Quarter versus 2003 Second Quarter

The Private Financial Group (PFG) contributed $6.3 million of the company’s net operating earnings in the second quarter of 2004, down $1.7 million, or 21%, from the second quarter of 2003. The decline primarily reflected higher non-interest expense and provision for credit losses, partially offset by an increase in net interest income. The ROA in the 2004 second quarter was 1.67%, down from 2.45% in the year-ago quarter. The ROE was 21.3% in the current quarter, down from 30.3% in the 2003 second quarter.

Net interest income increased $1.4 million, or 14%, from the year-ago quarter as average loan balances increased $200 million, or 17%, and average deposit balances increased $87 million, or 9%. Most of the loan growth occurred in residential real estate loans and home equity loans and lines, largely due to the favorable mortgage rate environment. Total C&I and CRE loans grew 8% from the prior-year quarter. Loan growth reflected initiatives to add relationship managers in several markets targeted for growth opportunities, most notably East and West Michigan and Central and Southern Ohio. Most of the deposit growth was attributable to growth in commercial non-interest bearing and interest bearing demand deposit accounts aided by favorable rate offerings. The net interest margin declined 9 basis points from the year-ago quarter to 3.14%, reflecting growth in lower-margin loans partially offset by deposit growth.

Provision for credit losses increased $1.1 million from the year-ago quarter. The increase was mainly due to the fact that the year-ago quarter included a provision credit resulting from a large, previously non-performing loan being brought current, thus freeing-up reserves. The annualized total net charge-off ratio increased to 0.27% in the second quarter 2004 from 0.15% in the year-ago quarter, primarily reflecting timing differences as evidenced by the fact that the annualized net charge-offs ratio for the first six months of 2004 was unchanged from the comparable year-ago period.

Non-interest income, net of fees shared with other business units, was down $0.2 million from the year-ago quarter, reflecting declines in brokerage and insurance revenue, other income, and mortgage banking income, only partially offset by growth in trust income. Brokerage and insurance revenue decreased $0.8 million, or 9%. This reflected a $0.7 million, or 20%, decline in insurance revenue mainly due to a decrease in title insurance revenue reflecting the slowdown in mortgage refinancing activity, as well as a $0.2 million, or 3%, decline in annuity revenues. The annuity revenue decrease of 3% was less than the 6% decline in annuity sales, reflecting a shift from lower-margin fixed annuity sales in the year-ago quarter to higher-margin variable and indexed annuity sales in the current quarter. While mutual fund sales volume declined 24%, mutual fund revenue increased 23%, as sales in the year-ago quarter consisted of more low-margin, individual trades greater than $1 million each. Trust income increased $1.2 million, or 8%, mainly due to revenue growth in personal trust and investment management business. Total trust assets grew 15% to $39.2 billion at June 30, 2004, from $34.2 billion at June 30, 2003. For the same periods, managed assets grew 6% to $9.3 billion from $8.8 billion. Asset growth resulted from a combination of market value growth and strong new business development, which continued to reflect the success of the new business delivery model utilizing the brokerage sales force to sell asset management services.

Non-interest expense increased $2.7 million, or 10%, from the 2003 second quarter primarily due to a 14% increase in personnel costs. This increase reflected growth in the brokerage sales force to support the new sales distribution model, an increase in private banking relationship managers to support the expansion of the private banking presence in selected markets, higher trust and investment management sales commissions from increased new business development, and higher benefit costs.

2004 Second Quarter versus 2004 First Quarter

PFG’s $6.3 million net contribution to the company’s operating earnings in the second quarter of 2004 was down $0.8 million, or 11%, from the 2004 first quarter. The decrease was primarily due to higher provision for credit losses, lower non-interest income driven by a decline in broker and insurance revenue, only partially offset by lower non-interest expense. The ROA in the second quarter was 1.67%, down slightly from 1.92% in the first quarter. The ROE was 21.3% in the current quarter, down from 24.2% in the previous quarter.

Net interest income was essentially unchanged from the previous quarter. Average loan balances increased by $34 million, or 3%, while average deposit balances decreased by $23 million, or 2%. Average loan growth in the current quarter was primarily in C&I and CRE loans. The decline in deposit balances partially reflected normal historical trends resulting from annual income tax payments, but also some balance run-off due to higher competitive rates, most notably in East Michigan. The decline in deposits, combined with the increase in lower-margin consumer loans, was reflected in a 10 basis point decline in the net interest margin to 3.14% from 3.24% in the first quarter.

Provision for credit losses increased $1.2 million from the prior quarter. The increase was largely due to a provision credit in the first quarter 2004 resulting from a large, fully-reserved loan being brought current. Although the annualized total net charge-off ratio increased to 0.27% in the current quarter from 0.06% in the first quarter, this had little impact on provision expense in the current period as several of the larger second quarter charge-offs had been fully reserved.

Non-interest income, net of fees shared with other business units, decreased $0.9 million, or 3%, from the first quarter, primarily reflecting a $2.1 million, or 20%, decline in brokerage and insurance income. Annuity revenue decreased $1.5 million as sales volume decreased 17%. The decline in annuity sales was attributable to several factors, including a slowdown in customer demand given future interest rate movement uncertainty, increased focus on growing deposits including increased rates offered on CDs, and normal post income-tax season sales decline. Mutual fund revenue declined 16% as sales in the current quarter consisted of more low-margin, individual trades greater than $1 million each. Insurance income decreased $0.2 million from the prior quarter primarily due to reduced sales in the life insurance agency business.

Trust income increased $0.5 million, or 3%, from the previous quarter. While total trust and managed assets both grew only slightly, the increase in related income was driven by growth in total personal trust assets and managed personal trust assets, both of which grew by more than 4% during the quarter. Personal trust asset growth continued despite flat market trends, which illustrated strong new business development due in part to the success of the new business delivery model, which utilizes the brokerage sales force to sell asset management services. Other income increased $0.4 million from the first quarter due to increased income from annual BOLI insurance premiums and securities gains.

Non-interest expense decreased $0.9 million, or 3%, from the prior quarter, primarily reflecting lower personnel costs due to a decline in commission expense as a result of the reduction in brokerage and insurance revenue.

2004 First Six Months versus 2003 First Six Months

PFG’s $13.3 million net contribution to the company’s operating earnings for the first six months of 2004 was essentially unchanged from the first six months of 2003 as the benefits of the growth in net interest income, lower provision for credit losses, as well as higher non-interest income, was offset by increased non-interest expense. The ROA for 2004 year-to-date was 1.79%, down from 2.10% for the same period in 2003. The ROE was 22.6% and 26.7% for the first six months of 2004 and 2003, respectively.

Net interest income for the first six months of 2004 increased $3.0 million, or 16%, from the comparable 2003 period as a result of strong growth in average loans and deposits. Average loans increased $212 million, or 19%, while average deposit balances increased $125 million, or 13%. Much of the loan growth was in residential real estate loans and home equity loans and lines, largely due to historically low mortgage rates. Loan growth also reflected an initiative to add relationship managers in 2004 in several markets targeted for growth opportunities, most notably East and West Michigan and Central and Southern Ohio. The deposit growth occurred mainly in consumer and commercial interest bearing accounts, which increased $88 million, or 14%, aided by promotional rate offerings resulting in both new accounts and a redirection of sweep account balances from money market mutual fund accounts. Non-interest bearing deposits also contributed to the growth in deposits, increasing $30 million, or 21%, from the comparable year-ago period. The growth in lower-margin consumer loans contributed to the 9 basis point decline in the net interest margin to 3.18% for the first half 2004 from 3.27% in the year-ago period.

Provision for credit losses decreased $1.3 million in the current six-month period from the prior-year period. This was due to a methodology change in 2003, which increased provision expense for unfunded commitments and unsecured credits. The annualized total net charge-off ratio for the first six months of 2004 was 0.17%, unchanged from the first half of 2003.

Non-interest income, net of fees shared with other business units, increased $1.2 million, or 2%, from the first six months of 2003 mainly as a result of increased trust income. Trust income increased $2.6 million, or 9%, primarily due to revenue growth in the personal trust and investment management business. Total trust assets grew 15% to $39.2 billion at June 30, 2004, from $34.2 billion at June 30, 2003. For the same period, managed assets grew 6% from $8.8 billion to $9.3 billion. Asset growth resulted from a combination of market value growth and strong new business development, which continued to reflect the success of the new business delivery model utilizing the brokerage sales force to sell asset management services.

Brokerage and insurance revenue was essentially unchanged from the prior-year six-month period as increased mutual fund revenue was offset by a decrease in insurance fees and annuity income. Mutual fund revenue increased $1.0 million, or 52%, despite a 21% decline in mutual fund sales volumes as sales in the first half of 2003 consisted of more low-margin, individual trades greater than $1 million each. Annuity revenue decreased $0.3 million due to a decline in sales volume. Annuity sales were extremely strong in early 2003 as promotional rates helped capture a significant amount of maturing CD business. Insurance income decreased $1.7 million, or 23%, primarily due to a change in accounting methodology in 2004 related to insurance coverage provided on automobile loans and leases, whereby agency commissions and excess premium refunds are no longer recognized as insurance revenue.

Mortgage banking income decreased by $0.6 million due to increased mortgage portfolio servicing costs resulting from the growth in residential real estate mortgage loans and due to a change in fee sharing methodology that resulted in reduced income shared by Huntington Mortgage Group. Other income decreased by $0.8 million as a result of a decline in fee sharing revenue received from Huntington Capital Corporation based on fewer interest rate swap referrals, and investment portfolio gains realized in the year-ago period.

Non-interest expense increased $5.5 million, or 10%, in the first half 2004 from the first half 2003, primarily due to 13% increase in personnel costs. This increase reflected the same factors which impacted 2004 second quarter versus 2003 second quarter performance. In addition, other expense increased $1.4 million, or 6%, reflecting a $1.1 million increase in allocated expense for corporate overhead and other indirect and product-related expenses.

Table 20 - Private Financial Group⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003		1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months		Amount			%
INCOME STATEMENT (in thousands)
Net Interest Income	$	11,166		$	11,129		$	9,785		$	1,381		14.1	%	$	22,295		$	19,280	$	3,015		15.6	%
Provision for credit losses		654			(557	)		(457	)		1,111		NM			97			1,443		(1,346	)	-93.3	%

Net Interest Income After Provision for Credit Losses		10,512			11,686			10,242			270		2.6	%		22,198			17,837		4,361		24.4	%

Service charges on deposit accounts		1,002			925			966			36		3.7	%		1,927			1,952		(25	)	-1.3	%
Brokerage and insurance income		8,488			10,616			9,287			(799	)	-8.6	%		19,104			19,218		(114	)	-0.6	%
Trust services		16,483			16,031			15,294			1,189		7.8	%		32,514			29,937		2,577		8.6	%
Mortgage banking		(104	)		(129	)		188			(292	)	NM			(233	)		367		(600	)	NM
Other service charges and fees		116			100			113			3		2.7	%		216			211		5		2.4	%
Other		1,445			1,084			2,036			(591	)	-29.0	%		2,529			3,369		(840	)	-24.9	%

Total Non-Interest Income Before Securities Gains		27,430			28,627			27,884			(454	)	-1.6	%		56,057			55,054		1,003		1.8	%
Securities gains		250			—			(34	)		284		NM			250			9		241		NM

Total Non-Interest Income		27,680			28,627			27,850			(170	)	-0.6	%		56,307			55,063		1,244		2.3	%

Personnel costs		17,047			17,800			14,948			2,099		14.0	%		34,847			30,718		4,129		13.4	%
Other		11,512			11,661			10,938			574		5.2	%		23,173			21,803		1,370		6.3	%

Total Non-Interest Expense		28,559			29,461			25,886			2,673		10.3	%		58,020			52,521		5,499		10.5	%

Income Before Provision for Income Taxes		9,633			10,852			12,206			(2,573	)	-21.1	%		20,485			20,379		106		0.5	%
Provision for income taxes (2)		3,372			3,798			4,272			(900	)	-21.1	%		7,170			7,133		37		0.5	%

Net Income - Operating (1)	$	6,261		$	7,054		$	7,934		$	(1,673	)	-21.1	%	$	13,315		$	13,246	$	69		0.5	%

Revenue - Fully Taxable Equivalent (FTE)
Net Interest Income	$	11,166		$	11,129		$	9,785		$	1,381		14.1	%	$	22,295		$	19,280	$	3,015		15.6	%
Tax Equivalent Adjustment (2)		9			9			10			(1	)	-10.0	%		18			25		(7	)	-28.0	%

Net Interest Income (FTE)		11,175			11,138			9,795			1,380		14.1	%		22,313			19,305		3,008		15.6	%
Non-Interest Income		27,680			28,627			27,850			(170	)	-0.6	%		56,307			55,063		1,244		2.3	%

Total Revenue (FTE)	$	38,855		$	39,765		$	37,645		$	1,210		3.2	%	$	78,620		$	74,368	$	4,252		5.7	%

Total Revenue Excluding Securities Gains (FTE)	$	38,605		$	39,765		$	37,679		$	926		2.5	%	$	78,370		$	74,359	$	4,011		5.4	%

SELECTED AVERAGE BALANCES (in millions)
Loans:
C&I	$	339		$	320		$	311		$	28		9.0	%	$	330		$	316	$	14		4.4	%
CRE
Construction		21			24			23			(2	)	-8.7	%		23			20		3		15.0	%
Commercial		176			166			161			15		9.3	%		171			156		15		9.6	%
Consumer
Home equity loans & lines of credit		294			287			250			44		17.6	%		291			245		46		18.8	%
Residential mortgage		512			511			398			114		28.6	%		512			379		133		35.1	%
Other loans		8			8			7			1		14.3	%		8			7		1		14.3	%

Total Consumer		814			806			655			159		24.3	%		811			631		180		28.5	%

Total Loans	$	1,350		$	1,316		$	1,150		$	200		17.4	%	$	1,335		$	1,123	$	212		18.9	%

Deposits:
Non-interest bearing deposits	$	174		$	169		$	141		$	33		23.4	%	$	172		$	142	$	30		21.1	%
Interest bearing demand deposits		712			753			667			45		6.7	%		733			645		88		13.6	%
Savings deposits		49			46			55			(6	)	-10.9	%		48			51		(3	)	-5.9	%
Domestic time deposits		106			96			95			11		11.6	%		101			98		3		3.1	%
Foreign time deposits		21			21			17			4		23.5	%		21			14		7		50.0	%

Total Deposits	$	1,062		$	1,085		$	975		$	87		8.9	%	$	1,075		$	950	$	125		13.2	%

(1)	Operating basis, see page 50 for definition.

(2)	Calculated assuming a 35% tax rate.

NM, not a meaningful value.

Table 20 - Private Financial Group⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
PERFORMANCE METRICS
Return on average assets		1.67	%		1.92	%		2.45	%		-0.78	%				1.79	%		2.10	%		-0.32	%
Return on average equity		21.3	%		24.2	%		30.3	%		-9.0	%				22.6	%		26.7	%		-4.1	%
Net interest margin		3.14	%		3.24	%		3.23	%		-0.09	%				3.18	%		3.27	%		-0.09	%
Efficiency ratio		74.0	%		74.1	%		68.7	%		5.3	%				74.0	%		70.6	%		3.4	%
CREDIT QUALITY
Net Charge-offs by Loan Type (in thousands)
C&I	$	840		$	16		$	333		$	507		NM		$	856		$	635		$	221		34.8	%
CRE		—			—			2			(2	)	-100.0	%		—			2			(2	)	-100.0	%

Total commercial		840			16			335			505		NM			856			637			219		34.4	%
Consumer
Home equity loans & lines of credit		—			160			62			(62	)	-100.0	%		160			261			(101	)	-38.7	%
Residential mortgage		—			—			—			—		NM			—			21			(21	)	-100.0	%
Other loans		60			32			23			37		NM			92			34			58		NM

Total consumer		60			192			85			(25	)	-29.4	%		252			316			(64	)	-20.3	%

Total Net Charge-offs	$	900		$	208		$	420		$	480		NM		$	1,108		$	953		$	155		16.3	%

Net Charge-offs - annualized percentages
C&I		1.00	%		0.02	%		0.43	%		0.57	%				0.52	%		0.41	%		0.11	%
CRE		0.00	%		0.00	%		0.00	%		0.00	%				0.00	%		0.00	%		0.00	%

Total commercial and commercial real estate		0.63	%		0.01	%		0.27	%		0.36	%				0.33	%		0.26	%		0.07	%
Consumer											0.00	%										0.00	%
Home equity loans & lines of credit		0.00	%		0.22	%		0.10	%		-0.10	%				0.11	%		0.21	%		-0.10	%
Residential mortgage		0.00	%		0.00	%		0.00	%		0.00	%				0.00	%		0.01	%		-0.01	%
Other loans		3.02	%		1.61	%		1.32	%		1.70	%				2.31	%		0.98	%		1.33	%

Total consumer		0.03	%		0.10	%		0.05	%		-0.02	%				0.06	%		0.10	%		-0.04	%

Total Net Charge-offs		0.27	%		0.06	%		0.15	%		0.12	%				0.17	%		0.17	%		0.00	%

Non-performing Assets (NPA) (in millions)
C&I	$	2		$	2		$	1		$	1		100.0	%	$	2		$	1		$	1		100.0	%
CRE		1			—			—			1		NM			1			—			1		NM
Residential mortgage		3			1			1			2		NM			3			1			2		NM

Total Non-accrual Loans		6			3			2			4		NM			6			2			4		NM
Renegotiated loans		—			—			—			—		NM			—			—			—		NM

Total Non-performing Loans (NPL)		6			3			2			4		NM			6			2			4		NM
Other real estate, net (OREO)		—			—			—			—		NM			—			—			—		NM

Total Non-performing Assets	$	6		$	3		$	2		$	4		NM		$	6		$	2		$	4		NM

Accruing loans past due 90 days or more	$	2		$	4		$	4		$	(2	)	-50.0	%	$	2		$	4		$	(2	)	-50.0	%
Allowance for Loan and Lease Losses (ALLL)(eop)	$	9		$	9		$	7		$	2		28.6	%	$	9		$	7		$	2		28.6	%
ALLL as a % of total loans and leases		0.65	%		0.68	%		0.59	%		0.06	%				0.65	%		0.59	%		0.06	%
ALLL as a % of NPLs		150.0	%		300.0	%		350.0	%		-200.0	%				150.0	%		350.0	%		-200.0	%
ALLL + OREO as a % of NPAs		150.0	%		300.0	%		350.0	%		-200.0	%				150.0	%		350.0	%		-200.0	%
NPLs as a % of total loans and leases		0.43	%		0.23	%		0.17	%		0.26	%				0.43	%		0.17	%		0.26	%
NPAs as a % of total loans and leases + OREO		0.43	%		0.23	%		0.17	%		0.26	%				0.43	%		0.17	%		0.26	%

(1)	Operating basis, see page 50 for definition.

NM,	not a meaningful value.

eop,	end of period.


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
SUPPLEMENTAL DATA
# employees - full-time equivalent (eop)		708			703			695			13		1.9	%		708			695			13		1.9	%
# licensed bankers (eop)		698			701			685			13		1.9	%		698			685			13		1.9	%

Brokerage and Insurance Income (in thousands)
Mutual fund revenue	$	1,355		$	1,610		$	1,104		$	251		22.7	%	$	2,965		$	1,954		$	1,011		51.7	%
Annuities revenue		6,776			8,229			6,982			(206	)	-3.0	%		15,005			15,307			(302	)	-2.0	%
12b-1 fees		600			535			525			75		14.3	%		1,135			1,080			55		5.1	%
Discount brokerage commissions and other		1,280			1,290			1,187			93		7.8	%		2,570			2,052			518		25.2	%

Total retail investment sales		10,011			11,664			9,798			213		2.2	%		21,675			20,393			1,282		6.3	%
Investment banking fees		—			—			—			—		NM			—			—			—		NM
Insurance fees and revenue		2,782			2,936			3,459			(677	)	-19.6	%		5,718			7,426			(1,708	)	-23.0	%

Total Brokerage and Insurance Income	$	12,793		$	14,600		$	13,257		$	(464	)	-3.5	%	$	27,393		$	27,819		$	(426	)	-1.5	%

Fee sharing		4,305			3,984			3,970			335		8.4	%		8,289			8,601			(312	)	-3.6	%

Total Brokerage and Insurance Income (net of fee sharing)	$	8,488		$	10,616		$	9,287		$	(799	)	-8.6	%	$	19,104		$	19,218		$	(114	)	-0.6	%

Mutual fund sales volume, excluding direct trades (in thousands)	$	58,002		$	42,965		$	75,995			(17,993	)	-23.7	%	$	100,967		$	128,263			(27,296	)	-21.3	%
Annuities sales volume (in thousands)		133,408			161,332			142,344			(8,936	)	-6.3	%		294,740			316,218			(21,478	)	-6.8	%

Trust Services Income (in thousands)
Personal trust revenue	$	8,423		$	8,191		$	7,502		$	921		12.3	%	$	16,614		$	14,931		$	1,683		11.3	%
Huntington funds revenue		5,195			5,230			4,805			390		8.1	%		10,425			9,480			945		10.0	%
Institutional trust revenue		2,176			2,170			2,218			(42	)	-1.9	%		4,346			3,943			403		10.2	%
Corporate trust revenue		900			708			1,031			(131	)	-12.7	%		1,608			2,077			(469	)	-22.6	%
Other trust revenue		—			—			—			—		NM			—			—			—		NM

Total Trust Services Income	$	16,694		$	16,299		$	15,556		$	1,138		7.3	%	$	32,993		$	30,431		$	2,562		8.4	%

Fee sharing		211			268			262			(51	)	-19.5	%		479			494			(15	)	-3.0	%

Total Trust Services Income (net of fee sharing)	$	16,483		$	16,031		$	15,294		$	1,189		7.8	%	$	32,514		$	29,937		$	2,577		8.6	%

Assets Under Management (eop) (in billions)
Personal trust	$	5.2		$	5.0		$	4.7		$	0.4		9.4	%	$	5.2		$	4.7		$	0.4		9.4	%
Huntington funds		2.9			3.0			3.0			(0.1	)	-1.8	%		2.9			3.0			(0.1	)	-1.8	%
Institutional trust		0.5			0.6			0.5			0.0		9.8	%		0.5			0.5			0.0		9.8	%
Corporate trust		0.0			0.0			0.1			(0.1	)	-62.0	%		0.0			0.1			(0.1	)	-62.0	%
Haberer		0.6			0.5			0.5			0.1		27.7	%		0.6			0.5			0.1		27.7	%
Other		—			—			—			—		NM			—			—			—		NM

Total Assets Under Management	$	9.3		$	9.2		$	8.8		$	0.5		5.8	%	$	9.3		$	8.8		$	0.5		5.8	%

Total Trust Assets (eop) (in billions)
Personal trust	$	8.9		$	8.5		$	7.7		$	1.2		15.4	%	$	8.9		$	7.7		$	1.2		15.4	%
Huntington funds		2.9			3.0			3.0			(0.1	)	-3.0	%		2.9			3.0			(0.1	)	-3.0	%
Institutional trust		23.9			24.6			20.3			3.6		17.7	%		23.9			20.3			3.6		17.7	%
Corporate trust		3.5			3.1			3.2			0.3		8.4	%		3.5			3.2			0.3		8.4	%

Total Trust Assets	$	39.2		$	39.1		$	34.2		$	5.0		14.5	%	$	39.2		$	34.2		$	5.0		14.5	%

Mutual Fund Data
# Huntington mutual funds (eop)		29			24			24			5					29			24			5
Sales penetration ⁽³⁾		5.9	%		6.5	%		6.8	%		-0.9	%				6.2	%		7.0	%		-0.8	%
Revenue penetration (whole dollars) ⁽⁴⁾	$	3,270		$	4,039		$	3,298		$	(28	)	-0.8	%	$	3,700		$	3,436		$	264		7.7	%
Profit penetration (whole dollars) ⁽⁵⁾		987			1,366			1,244			(257	)	-20.7	%		1,173			1,282			(109	)	-8.5	%
Average sales per licensed banker (whole dollars) annualized		70,030			81,567			68,897			1,133		1.6	%		75,774			70,796			4,978		7.0	%
Average revenue per licensed banker (whole dollars) annualized		3,319			3,967			3,049			270		8.9	%		3,639			3,203			436		13.6	%

(1)	Operating basis, see page 50 for definition.

(3)	Sales (dollars invested) of mutual funds and annuities divided by bank’s retail deposits.

(4)	Investment program revenue per million of the bank’s retail deposits.

(5)	Contribution of investment program to pretax profit per million of the bank’s retail deposits.

Contribution is difference between program revenue and program expenses.

NM, not a meaningful value.

eop, end of period.

Treasury / Other

The Treasury/Other segment includes revenue and expense related to assets, liabilities, and equity that are not directly assigned or allocated to one of the other three business segments. Assets included in this segment include bank owned life insurance, investment securities, and mezzanine loans originated through Huntington Capital Markets.

Net interest income includes the net impact of administering Huntington’s investment securities portfolios as part of overall liquidity management. A match-funded transfer pricing system is used to attribute appropriate funding interest income and interest expense to other business segments. As such, net interest income includes the net impact of any over or under allocations arising from centralized management of interest rate risk. Furthermore, net interest income includes the net impact of derivatives used to hedge interest rate sensitivity as well as net interest income related to Huntington Capital Markets loan activity.

Non-interest income includes fee income related to Huntington Capital Markets activities, and miscellaneous non-interest income not allocated to other business segments, including bank owned life insurance income. Fee income also includes MSR temporary impairment valuation recoveries or impairments, as well as any securities gains or losses, which are used to mitigate MSR valuation changes. Prior to 2004, changes in MSR temporary impairment valuations were reflected in the Regional Banking business segment, whereas securities gains or loss were reflected in the Treasury/Other segment. Since securities gains or losses are used to mitigate MSR valuation changes, and since this risk is managed centrally, for 2004 reporting both MSR valuation changes, as well as securities gains or losses, are reflected in Treasury/Other results.

Non-interest expense includes expenses associated with Huntington Capital Markets activities, as well as certain corporate administrative and other miscellaneous expenses not allocated to other business segments.

The provision for income taxes for each of the other business segments is calculated at a statutory 35% tax rate though the company’s overall effective tax rate is lower. As a result, the provision for income taxes in Treasury/Other includes the difference between the actual effective tax rate and the statutory tax rate used to allocate income taxes to the other segments.

2004 Second Quarter versus 2003 Second Quarter

Treasury/Other net income declined $15.2 million, or 45% from the same quarter last year. This reflected a combination of higher non-interest expense, lower non-interest income, and lower net interest income, partially offset by lower provision for income taxes.

Net interest income decreased $2.0 million, or 10%, from the year-ago quarter. Driving this variance were a $5.3 million increase in wholesale funding costs and $7.5 million of lower revenue from derivatives activities, offset by $1.1 million of higher interest income in the Capital Markets margin and $10.0 million of higher interest income on securities.

The provision for credit losses was $0.1 million higher than last year, attributable to increased Huntington Capital Markets lending activity.

Non-interest income was $9.6 million, or 40%, lower than in the year-ago quarter, reflecting the impact of using securities losses to offset MSR impairment recoveries. In 2004, MSR impairment and recovery is reflected in the Treasury/Other segment, whereas in the year-ago quarter MSR impairment of $6.4 million was reflected in Regional Banking. Other non-interest income was also down from the year-ago quarter by $3.1 million, reflecting lower income from trading activities.

Non-interest expense for operational, administrative, and support groups, which was not specifically allocated to the other business segments was up $12.3 million from last year. Driving this variance was $5.5 million of higher incentive plan costs in the second quarter of 2004. Furthermore, $5.8 million of other expense attributable to costs related to investments in partnerships generating tax benefits occurred in the second quarter of 2004.

The provision for income taxes declined $8.8 million, reflecting lower pre-tax income, partially offset by a higher overall effective tax rate in the 2004 second quarter, compared with the year-ago quarter.

2004 Second Quarter versus 2004 First Quarter

Treasury/Other’s net income was $12.5 million, or 40%, lower than the first quarter. This reflected a combination of lower non-interest income, lower net interest income, and higher non-interest expense, partially offset by lower provision for credit losses.

The net interest margin for Treasury/Other was down $7.0 million, or 27%. Driving this variance was lower net earnings from Huntington’s transfer pricing system to centrally manage interest rate risk. These earnings are allocated to the other lines of business units’.

Non-interest income was $7.1 million lower in the second quarter compared with the first quarter. Securities losses, offset by MSR impairment recovery, drive most of this reduction. Furthermore, investment banking activities from Huntington Capital Markets contributed $2.4 million less revenue in the second quarter, than in the first quarter.

Non-interest expense for Treasury/Other increased $2.2 million, or 13%, from the first quarter. Second quarter expenses include $5.8 million of other expense attributable to costs related to investments in partnerships generating tax benefits. Offsetting this variance is a higher net amount of expenses allocated to the other business segments.

The provision for credit losses decline $2.3 million, reflecting lower NPAs.

The provision for income taxes decreased $1.5 million, reflecting the benefit of the company’s lower overall effective tax rate versus the 35% effective tax rate used to allocate provision for income taxes to each line of business, partially offset by an increase in the company’s higher overall effective tax rate in the current quarter compared with the first quarter.

2004 First Six Months versus 2003 First Six Months

Treasury/Other net income for the first six months of 2004 declined $11.8 million, or 19%, from the comparable year-ago period. This reflected a combination of factors primarily consisting of higher non-interest expense, lower non-interest income, and an increase in provision for credit losses, partially offset by lower provision for income taxes.

Net interest income decreased $0.3 million, or 1%, from the comparable year-ago period. Driving this variance were a $10.1 million increase in wholesale funding costs and $14.8 million of lower revenue from derivatives activities, offset by higher interest income in the Huntington Capital Markets margin and $21 million of higher interest income on securities.

The provision for credit losses was $2.5 million higher than the year-ago period, attributable to increased Huntington Capital Markets lending activity.

Non-interest income was $3.6 million, or 9%, lower than in the year-ago period, reflecting the impact of using securities losses to offset MSR impairment recoveries.

Non-interest expense for operational, administrative, and support groups, which was not specifically allocated to other business segments increased $14.7 million from last year, including $5.5 million of higher incentive plan costs, $5.8 million of other expense attributable to costs related to investments in partnerships generating tax benefits, and higher sales incentives of $2.4 million in Huntington Capital Markets.

The provision for income taxes declined $9.4 million, reflecting the benefit of the company’s lower overall effective tax rate versus the 35% effective tax rate used to allocate provision for income taxes to each line of business, partially offset by the company’s higher total effective tax rate in the first six months of 2004 versus the comparable year-ago period.

Table 21 - Treasury/Other⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
INCOME STATEMENT (in thousands)
Net Interest Income	$	18,557		$	25,543		$	20,511		$	(1,954	)	-9.5	%	$	44,100		$	44,446		$	(346	)	-0.8	%
Provision for credit losses		61			2,393			(66	)		127		NM			2,454			(60	)		2,514		NM

Net Interest Income After Provision for Credit Losses		18,496			23,150			20,577			(2,081	)	-10.1	%		41,646			44,506			(2,860	)	-6.4	%

Service charges on deposit accounts		7			10			10			(3	)	-30.0	%		17			22			(5	)	-22.7	%
Brokerage and insurance income		185			215			216			(31	)	-14.4	%		400			439			(39	)	-8.9	%
Mortgage banking		10,199			(10,200	)		—			10,199		NM			(1	)		—			(1	)	NM
Bank Owned Life Insurance income		11,309			10,485			11,043			266		2.4	%		21,794			22,180			(386	)	-1.7	%
Other		2,701			5,904			5,818			(3,117	)	-53.6	%		8,605			8,887			(282	)	-3.2	%

Total Non-Interest Income Before Securities Gains		24,401			6,414			17,087			7,314		42.8	%		30,815			31,528			(713	)	-2.3	%
Securities gains		(9,949	)		15,090			6,921			(16,870	)	NM			5,141			8,076			(2,935	)	-36.3	%

Total Non-Interest Income		14,452			21,504			24,008			(9,556	)	-39.8	%		35,956			39,604			(3,648	)	-9.2	%

Total Non-Interest Expense		19,986			17,732			7,679			12,307		NM			37,718			23,050			14,668		63.6	%

Income Before Provision for Income Taxes		12,962			26,922			36,906			(23,944	)	-64.9	%		39,884			61,060			(21,176	)	-34.7	%
Provision for income taxes ⁽²⁾		(5,809	)		(4,352	)		2,985			(8,794	)	NM			(10,161	)		(758	)		(9,403	)	NM

Net Income - Operating ⁽¹⁾	$	18,771		$	31,274		$	33,921		$	(15,150	)	-44.7	%	$	50,045		$	61,818		$	(11,773	)	-19.0	%

Revenue - Fully Taxable Equivalent (FTE)
Net Interest Income	$	18,557		$	25,543		$	20,511		$	(1,954	)	-9.5	%	$	44,100		$	44,446		$	(346	)	-0.8	%
Tax Equivalent Adjustment ⁽²⁾		2,660			2,765			1,755			905		51.6	%		5,425			3,505			1,920		54.8	%

Net Interest Income (FTE)		21,217			28,308			22,266			(1,049	)	-4.7	%		49,525			47,951			1,574		3.3	%
Non-Interest Income		14,451			21,504			24,008			(9,557	)	-39.8	%		35,955			39,604			(3,649	)	-9.2	%

Total Revenue (FTE)	$	35,668		$	49,812		$	46,274		$	(10,606	)	-22.9	%	$	85,480		$	87,555		$	(2,075	)	-2.4	%

Total Revenue Excluding Securities Gains (FTE)	$	45,617		$	34,722		$	39,353		$	6,264		15.9	%	$	80,339		$	79,479		$	860		1.1	%

SELECTED AVERAGE BALANCES (in millions)
Securities	$	5,233		$	5,045		$	3,495		$	1,737		49.7	%	$	5,139		$	3,310		$	1,829		55.3	%
Loans:
C&I	$	102		$	70		$	52		$	50		96.2	%	$	86		$	17		$	69		NM
CRE
Construction		1			0			(1	)		2		NM			1			19			(18	)	-94.7	%
Commercial		59			62			61			(2	)	-3.3	%		61			75			(14	)	-18.7	%

Total Loans	$	162		$	132		$	112		$	50		44.6	%	$	148		$	111		$	37		33.3	%

Deposits:
Brokered time deposits and negotiable CDs		1,737			1,907			1,241			496		40.0	%		1,822			1,198			624		52.1	%
Foreign time deposits		97			101			80			17		21.3	%		99			138			(39	)	-28.3	%

Total Deposits	$	1,834		$	2,008		$	1,321		$	513		38.8	%	$	1,921		$	1,336		$	585		43.8	%

(1)	Operating basis, see page 50 for definition.

(2)	Reconciling difference between company’s actual effective tax rate and 35% tax rate allocated to each business segment.

NM, not a meaningful value.

Table 21 - Treasury/Other⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
PERFORMANCE METRICS

Return on average assets		1.07	%		1.87	%		2.62	%		-1.55	%				1.45	%		2.49	%		-1.04	%
Return on average equity		9.8	%		17.8	%		22.9	%		-13.1	%				13.6	%		20.3	%		-6.7	%
Net interest margin		1.53	%		2.13	%		2.37	%		-0.84	%				1.82	%		2.71	%		-0.89	%
Efficiency ratio		43.8	%		51.1	%		19.5	%		24.3	%				46.9	%		29.0	%		17.9	%

CREDIT QUALITY

Net Charge-offs by Loan Type (in thousands)
C&I	$	(23	)	$	—		$	—		$	(23	)	NM		$	(23	)	$	—		$	(23	)	NM
CRE		1,999			1			—			1,999		NM			2,000			—			2,000		NM

Total commercial		1,976			1			—			1,976		NM			1,977			—			1,977		NM

Total Net Charge-offs	$	1,976		$	1		$	—		$	1,976		NM		$	1,977		$	—		$	1,977		NM

Net Charge-offs - annualized percentages
C&I		-0.09	%		0.00	%		0.00	%		-0.09	%				-0.05	%		0.00	%		-0.05	%
CRE		13.40	%		0.01	%		0.00	%		13.40	%				6.47	%		0.00	%		6.47	%

Total commercial		4.91	%		0.00	%		0.00	%		4.91	%				2.68	%		0.00	%		2.68	%

Total Net Charge-offs		4.91	%		0.00	%		0.00	%		4.91	%				2.68	%		0.00	%		2.68	%


Non-performing Assets (NPA) (in millions)
C&I	$	—		$	1		$	1		$	(1	)	-100.0	%	$	—		$	1		$	(1	)	-100.0	%
CRE		8			11			—			8		NM			8			—			8		NM
Total Non-accrual Loans		8			12			1			7		NM			8			1			7		NM
Renegotiated loans		—			—			—			—		NM			—			—			—		NM

Total Non-performing Loans (NPL)		8			12			1			7		NM			8			1			7		NM
Other real estate, net (OREO)		(1	)		(1	)		—			(1	)	NM			(1	)		—			(1	)	NM

Total Non-performing Assets	$	7		$	11		$	1		$	6		NM		$	7		$	1		$	6		NM


Accruing loans past due 90 days or more	$	—		$	—		$	—		$	—		NM		$	—		$	—		$	—		NM

Allowance for Loan and Lease Losses (ALLL)(eop)	$	42		$	77		$	39		$	3		7.7	%	$	42		$	39		$	3		7.7	%
ALLL as a % of total loans and leases		29.79	%		53.47	%		20.97	%		8.82	%				29.79	%		20.97	%		8.82	%
ALLL as a % of NPLs		NM			NM			NM			NM					NM			NM			NM
ALLL + OREO as a % of NPAs		NM			NM			NM			NM					NM			NM			NM
NPLs as a % of total loans and leases		5.67	%		8.33	%		0.54	%		5.13	%				5.67	%		0.54	%		5.13	%
NPAs as a % of total loans and leases + OREO		5.00	%		7.69	%		0.54	%		4.46	%				5.00	%		0.54	%		4.46	%

SUPPLEMENTAL DATA
# employees - full-time equivalent (eop)		1,975			1,956			2,016			(41	)	-2.0	%		1,975			2,016			(41	)	-2.0	%

(1)	Operating basis, see page 50 for definition.

NM,	not a meaningful value.

eop,	end of period.

Table 22 - Total Company⁽¹⁾


	2004			2004			2003		2Q04 vs. 2Q03					2004		2003		1H04 vs. 1H03
	Second			First			Second		Amount			%		6 Months		6 Months		Amount			%
INCOME STATEMENT (in thousands)
Net Interest Income	$	222,563		$	222,685		$	202,441	$	20,122		9.9	%	$	445,248	$	404,200	$	41,048		10.2	%
Provision for credit losses		5,027			25,596			49,193		(44,166	)	-89.8	%		30,623		86,037		(55,414	)	-64.4	%

Net Interest Income After Provision for Credit Losses		217,536			197,089			153,248		64,288		42.0	%		414,625		318,163		96,462		30.3	%

Operating lease income		78,706			88,867			128,574		(49,868	)	-38.8	%		167,573		266,767		(99,194	)	-37.2	%
Service charges on deposit accounts		43,596			41,837			40,914		2,682		6.6	%		85,433		80,783		4,650		5.8	%
Brokerage and insurance income		13,523			15,197			14,196		(673	)	-4.7	%		28,720		29,693		(973	)	-3.3	%
Trust services		16,708			16,323			15,580		1,128		7.2	%		33,031		30,491		2,540		8.3	%
Mortgage banking		23,322			(4,296	)		7,185		16,137		NM			19,026		18,310		716		3.9	%
Bank Owned Life Insurance income		11,309			10,485			11,043		266		2.4	%		21,794		22,180		(386	)	-1.7	%
Other service charges and fees		10,645			9,513			11,372		(727	)	-6.4	%		20,158		21,710		(1,552	)	-7.1	%
Other		24,659			25,619			27,704		(3,045	)	-11.0	%		50,278		48,105		2,173		4.5	%

Total Non-Interest Income Before Securities Gains		222,468			203,545			256,568		(34,100	)	-13.3	%		426,013		518,039		(92,026	)	-17.8	%
Securities gains		(9,230	)		15,090			6,887		(16,117	)	NM			5,860		8,085		(2,225	)	-27.5	%

Total Non-Interest Income		213,238			218,635			263,455		(50,217	)	-19.1	%		431,873		526,124		(94,251	)	-17.9	%

Operating lease expense		62,563			70,710			102,939		(40,376	)	-39.2	%		133,273		214,527		(81,254	)	-37.9	%
Personnel costs		119,715			121,624			105,242		14,473		13.8	%		241,339		218,331		23,008		10.5	%
Other		99,875			93,320			94,167		5,708		6.1	%		193,195		185,969		7,226		3.9	%

Total Non-Interest Expense		282,153			285,654			302,348		(20,195	)	-6.7	%		567,807		618,827		(51,020	)	-8.2	%

Income Before Provision for Income Taxes		148,621			130,070			114,355		34,266		30.0	%		278,691		225,460		53,231		23.6	%
Provision for income taxes		41,672			31,750			30,092		11,580		38.5	%		73,422		56,783		16,639		29.3	%

Net Income - Operating ⁽¹⁾	$	106,949		$	98,320		$	84,263	$	22,686		26.9	%	$	205,269	$	168,677	$	36,592		21.7	%

Revenue - Fully Taxable Equivalent (FTE)
Net Interest Income	$	222,563		$	222,685		$	202,441	$	20,122		9.9	%	$	445,248	$	404,200	$	41,048		10.2	%
Tax Equivalent Adjustment ⁽²⁾		2,919			3,023			2,076		843		40.6	%		5,942		4,172		1,770		42.4	%

Net Interest Income (FTE)		225,482			225,708			204,517		20,965		10.3	%		451,190		408,372		42,818		10.5	%
Non-Interest Income		213,238			218,635			263,455		(50,217	)	-19.1	%		431,873		526,124		(94,251	)	-17.9	%

Total Revenue (FTE)	$	438,720		$	444,343		$	467,972	$	(29,252	)	-6.3	%	$	883,063	$	934,496	$	(51,433	)	-5.5	%

Total Revenue Excluding Securities Gains (FTE)	$	447,950		$	429,253		$	461,085	$	(13,135	)	-2.8	%	$	877,203	$	926,411	$	(49,208	)	-5.3	%

SELECTED AVERAGE BALANCES (in millions)
Loans:
C&I	$	5,536		$	5,365		$	5,626	$	(90	)	-1.6	%	$	5,451	$	5,625	$	(174	)	-3.1	%
CRE
Construction		1,322			1,322			1,239		83		6.7	%		1,322		1,214		108		8.9	%
Commercial		2,906			2,876			2,621		285		10.9	%		2,891		2,593		298		11.5	%
Consumer
Auto leases - indirect		2,139			1,988			1,306		833		63.8	%		2,064		1,153		911		79.0	%
Auto loans - indirect		2,337			3,041			2,830		(493	)	-17.4	%		2,689		2,954		(265	)	-9.0	%
Home equity loans & lines of credit		4,142			3,880			3,359		783		23.3	%		4,011		3,298		713		21.6	%
Residential mortgage		2,986			2,674			1,887		1,099		58.2	%		2,830		1,859		971		52.2	%
Other loans		399			356			379		20		5.3	%		377		383		(6	)	-1.6	%

Total Consumer		12,003			11,939			9,761		2,242		23.0	%		11,971		9,647		2,324		24.1	%

Total Loans	$	21,767		$	21,502		$	19,247	$	2,520		13.1	%	$	21,635	$	19,079	$	2,556		13.4	%

Operating lease assets	$	977		$	1,166		$	1,802	$	(825	)	-45.8	%	$	1,070	$	1,937	$	(867	)	-44.8	%
Deposits:
Non-interest bearing deposits	$	3,223		$	3,017		$	3,046	$	177		5.8	%	$	3,120	$	2,984	$	136		4.6	%
Interest bearing demand deposits		7,168			6,609			6,100		1,068		17.5	%		6,889		5,868		1,021		17.4	%
Savings deposits		2,839			2,819			2,804		35		1.2	%		2,829		2,788		41		1.5	%
Domestic time deposits		3,795			3,824			4,279		(484	)	-11.3	%		3,810		4,347		(537	)	-12.4	%
Brokered time deposits and negotiable CDs		1,737			1,907			1,241		496		40.0	%		1,822		1,198		624		52.1	%
Foreign time deposits		542			549			426		116		27.2	%		545		470		75		16.0	%

Total Deposits	$	19,304		$	18,725		$	17,896	$	1,408		7.9	%	$	19,015	$	17,655	$	1,360		7.7	%

(1)	Operating basis, see page 50 for definition.

(2)	Calculated assuming a 35% tax rate.

NM,	not a meaningful value.

Table 22 - Total Company ⁽¹⁾


	2004			2004			2003			2Q04 vs. 2Q03					2004			2003			1H04 vs. 1H03
	Second			First			Second			Amount			%		6 Months			6 Months			Amount			%
PERFORMANCE METRICS

Return on average assets		1.37	%		1.28	%		1.20	%		0.17	%				1.33	%		1.23	%		0.10	%
Return on average equity		18.5	%		17.4	%		15.7	%		2.8	%				17.9	%		15.8	%		2.1	%
Net interest margin		3.29	%		3.36	%		3.47	%		-0.18	%				3.32	%		3.52	%		-0.20	%
Efficiency ratio		63.0	%		66.5	%		65.6	%		-2.6	%				64.7	%		66.8	%		-2.1	%

CREDIT QUALITY (in thousands)

Net Charge-offs by Loan Type
C&I	$	(2,803	)	$	5,956		$	26,546		$	(29,349	)	NM		$	3,153		$	41,450		$	(38,297	)	-92.4	%
CRE		2,940			1,637			607			2,333		NM			4,577			1,153			3,424		NM

Total commercial		137			7,593			27,153			(27,016	)	-99.5	%		7,730			42,603			(34,873	)	-81.9	%
Consumer
Auto leases		2,159			3,159			1,422			737		51.8	%		5,318			2,342			2,976		NM
Auto loans		5,604			13,422			7,524			(1,920	)	-25.5	%		19,026			18,147			879		4.8	%
Home equity loans & lines of credit		3,019			3,116			3,671			(652	)	-17.8	%		6,135			7,724			(1,589	)	-20.6	%
Residential mortgage		302			316			267			35		13.1	%		618			412			206		50.0	%
Other loans		1,294			1,021			1,019			275		27.0	%		2,315			2,664			(349	)	-13.1	%

Total consumer		12,378			21,034			13,903			(1,525	)	-11.0	%		33,412			31,289			2,123		6.8	%

Total Net Charge-offs	$	12,515		$	28,627		$	41,056		$	(28,541	)	-69.5	%	$	41,142		$	73,892		$	(32,750	)	-44.3	%

Net Charge-offs - annualized percentages
C&I		-0.20	%		0.44	%		1.89	%		-2.09	%				0.12	%		1.47	%		-1.35	%
CRE		0.28	%		0.16	%		0.06	%		0.22	%				0.22	%		0.06	%		0.16	%

Total commercial		0.01	%		0.32	%		1.14	%		-1.13	%				0.16	%		0.90	%		-0.74	%
Consumer
Auto leases		0.40	%		0.64	%		0.44	%		-0.04	%				0.52	%		0.40	%		0.12	%
Auto loans		0.96	%		1.77	%		1.06	%		-0.10	%				1.42	%		1.23	%		0.19	%
Home equity loans & lines of credit		0.29	%		0.32	%		0.44	%		-0.15	%				0.31	%		0.47	%		-0.17	%
Residential mortgage		0.04	%		0.05	%		0.06	%		-0.02	%				0.04	%		0.04	%		0.00	%
Other loans		1.30	%		1.15	%		1.08	%		0.22	%				1.23	%		1.39	%		-0.16	%

Total consumer		0.41	%		0.70	%		0.57	%		-0.16	%				0.56	%		0.65	%		-0.09	%

Total Net Charge-offs		0.23	%		0.53	%		0.85	%		-0.62	%				0.38	%		0.77	%		-0.39	%

Non-performing Assets (NPA) (in millions)
C&I	$	32		$	45		$	86		$	(54	)	-62.8	%	$	32		$	86		$	(54	)	-62.8	%
CRE		16			20			22			(6	)	-27.3	%		16			22			(6	)	-27.3	%
Residential mortgage		14			12			12			2		16.7	%		14			12			2		16.7	%

Total Non-accrual Loans		62			77			120			(58	)	-48.3	%		62			120			(58	)	-48.3	%
Renegotiated loans		—			—			—			—		NM			—			—			—		NM

Total Non-performing Loans (NPL)		62			77			120			(58	)	-48.3	%		62			120			(58	)	-48.3	%
Other real estate, net (OREO)		13			15			14			(1	)	-7.1	%		13			14			(1	)	-7.1	%

Total Non-performing Assets	$	75		$	92		$	134		$	(59	)	-44.0	%	$	75		$	134		$	(59	)	-44.0	%

Accruing loans past due 90 days or more	$	51		$	60		$	55		$	(4	)	-7.3	%	$	51		$	55		$	(4	)	-7.3	%

Allowance for Loan and Lease Losses (ALLL) (eop)	$	287		$	295		$	308		$	(21	)	-6.8	%	$	287		$	308		$	(21	)	-6.8	%

ALLL as a % of total loans and leases		1.32	%		1.39	%		1.61	%		-0.29	%				1.32	%		1.61	%		-0.29	%
ALLL as a % of NPLs		464.5	%		383.0	%		256.1	%		208.4	%				464.5	%		256.1	%		208.4	%
ALLL + OREO as a % of NPAs		400.0	%		337.0	%		240.3	%		159.7	%				400.0	%		240.3	%		159.7	%
NPLs as a % of total loans and leases		0.28	%		0.36	%		0.63	%		-0.35	%				0.28	%		0.63	%		-0.35	%
NPAs as a % of total loans and leases + OREO		0.34	%		0.43	%		0.70	%		-0.36	%				0.34	%		0.70	%		-0.36	%

SUPPLEMENTAL DATA
# employees - full-time equivalent		8,045			7,915			7,986			59		0.7	%		8,045			7,986			59		0.7	%

(1)	Operating basis, see page 50 for definition.

NM,	not a meaningful value.

eop,	end of period.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Quantitative and qualitative disclosures for the current period are found beginning on page 45 of this report, which includes changes in market risk exposures from disclosures presented in Huntington’s 2003 Form 10-K.

Item 4. Controls and Procedures

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

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

PART II. OTHER INFORMATION

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

Item 2. Changes in Securities and Use of Proceeds

(e)


Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs⁽¹⁾
April 1, 2004 to April 30, 2004	—	—	—	7,500,000
May 1, 2004 to May 31, 2004	—	—	—	7,500,000
June 1, 2004 to June 30, 2004	—	—	—	7,500,000
Total	—	—	—	7,500,000

⁽¹⁾

Information is as of the end of the Period. On January 16, 2003, the Registrant announced that its board of directors had authorized the repurchase from time to time of 8,000,000 shares of the Registrant’s common stock (the “2003 Repurchase Program”). The 2003 Repurchase Program did not have an expiration date. A total of 4,100,000 shares had been repurchased under the 2003 Repurchase Program in 2003. No shares were repurchased in the 2004 first quarter under the 2003 Repurchase Program or otherwise. On April 27, 2004, the Registrant announced that its board of directors had terminated the 2003 Repurchase Program and had authorized a new program for the repurchase in the open market or through privately negotiated transactions of 7,500,000 share of the Registrant’s common stock (the “2004 Repurchase Program”). The 2004 Repurchase Program does not have an expiration date. The Registrant also intends to repurchase approximately 2.5 million shares associated with the Unizan Financial Corp. merger, and the remaining 5,000,000 shares would be repurchased from time to time whenever market conditions or other factors deem that to be appropriate.

Item 4. Submission of Matters to a Vote of Security Holders

Huntington held its annual meeting of shareholders on April 27, 2004. At this meeting, the shareholders approved the following management proposals:


		For	Against	Abstain/ Withheld
1.	Election of directors to serve as Class II Directors until the 2007 Annual Meeting of Shareholders as follows:
	Karen A. Holbrook	194,112,217		4,488,001
	David P. Lauer	193,206,154		5,394,064
	Kathleen H. Ransier	191,772,564		6,827,653

2.	Election of directors to serve as Class III Directors until the 2005 Annual Meeting of Shareholders as follows:
	David L. Porteous	193,539,668		5,060,550

3.	Proposal to approve the Management Incentive Plan, as amended and restated.	138,274,325	17,081,492	3,785,422

4.	Proposal to approve the 2004 Stock and Long-Term Incentive Plan.	130,994,537	24,550,481	3,596,216

5.	Ratification of Deloitte & Touche LLP as independent auditors Huntington for the year 2004.	191,730,116	4,663,300	2,206,802

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

3(i)(a).

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

(i)(b).

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

(ii)(a).

Amended and Restated Bylaws as of July 16, 2002 – previously filed as Exhibit 3(ii) to Quarterly Report on form 10-Q for the quarter ended June 30, 2003, and incorporated herein by reference.

4.(a).

Instruments defining the Rights of Security Holders — reference is made to Articles Fifth, Eighth, and Tenth of Articles of Restatement of Charter, as amended and supplemented. Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.

(b).

Rights Plan, dated February 22, 1990, between Huntington Bancshares Incorporated and The Huntington National Bank (as successor to The Huntington Trust Company, National Association) — previously filed as Exhibit 1 to Registration Statement on Form 8-A, filed with the Securities and Exchange Commission on February 22, 1990, and incorporated herein by reference.

(c).

Amendment No. 1 to the Rights Agreement, dated August 16, 1995— previously filed as Exhibit 4(b) to Form 8-K, dated August 16, 1995, and incorporated herein by reference.

10(a).

Huntington Bancshares Incorporated Management Incentive Plan – as amended and restated effective for plan years beginning on or after January 1, 2004.

(b)

Huntington Bancshares Incorporated 2004 Stock and Long-Term Incentive Plan.

(c)

Executive Deferred Compensation Plan of Huntington Bancshares Incorporated – as amended and restated on February 18, 2004.

31.1

Sarbanes-Oxley Act 302 Certification – Chief Executive Officer

31.2

Sarbanes-Oxley Act 302 Certification – Chief Financial Officer

32.1

Sarbanes-Oxley Act 906 Certification - Chief Executive Officer.

32.2

Sarbanes-Oxley Act 906 Certification - Chief Financial Officer.

(b)

Reports on Form 8-K

A report on Form 8-K, dated April 15 2004, was filed under report item numbers 7 and 12, concerning Huntington’s results of operations for the first quarter ended March 31, 2004.

A report on Form 8-K, dated April 20, 2004, was filed under report item number 5, regarding Huntington’s decision to terminate its Employee Stock Incentive Plan after it determined that the shares reserved for issuance of future option grants under the Plan would not be necessary following the approval of its 2004 Stock and Long-Term Incentive Plan.

A report on Form 8-K, dated June 16, 2004, was filed under report items 5 and 7, announcing the delay in closing of the merger agreement between Huntington Bancshares Incorporated and Unizan Financial Corp.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Huntington Bancshares Incorporated

(Registrant)


Date: August 9, 2004				/s/ Thomas E. Hoaglin
				Thomas E. Hoaglin
				Chairman, Chief Executive Officer and
				President

Date: August 9, 2004				/s/ Donald R. Kimble
				Donald R. Kimble
				Chief Financial Officer and Controller