UNIZ Unizan Financial (MM)

Unizan Financial Corp. Reports Second Quarter 2004 Financial Results CANTON, Ohio, July 27 /PRNewswire-FirstCall/ -- Unizan Financial Corp. (NASDAQ:UNIZ), today announced its second quarter financial results. Net income for the second quarter of 2004 was $3.1 million, or $0.14 per diluted share. This compares with net income of $6.8 million, or $0.30 per diluted share, for the second quarter of 2003, and net income of $2.4 million, or $0.11 per diluted share for the first quarter of 2004. During the second quarter, Unizan recognized salary expense of $1.4 million pre-tax, or $928 thousand after-tax, in relation to the exercise of certain stock options and an additional expense of $823 thousand pre-tax, or $577 thousand after- tax, for merger-related professional fees and severance accrual. The salary charge and merger-related expenses impacted net income by $0.07 per diluted share for the second quarter of 2004. Net income for the six months ended June 30, 2004 was $5.5 million or $0.25 per diluted share compared to $13.8 million or $0.62 per diluted share for the same period in 2003. During 2004, Unizan recognized salary expense of $5.1 million pre-tax, or $3.3 million after-tax, in relation to the exercise of certain stock options and an additional expense of $2.0 million pre-tax, or $1.5 million after-tax, for merger-related professional fees and severance accrual. The salary charge and merger-related expenses impacted net income by $0.22 per diluted share for the first six months of 2004. On January 27, 2004, Huntington Bancshares Incorporated (NASDAQ:HBAN) and Canton, Ohio-based Unizan Financial Corp. announced the signing of a definitive agreement to merge the two organizations. Unizan shareholders approved the merger on May 25, 2004. As reported on June 16, 2004, the Federal Reserve Board has informed Huntington that it has extended its review period to coordinate further with the staff of the Securities and Exchange Commission regarding the SEC's ongoing formal investigation of Huntington and to complete its review of the Community Reinvestment Act aspects of the merger. Huntington and Unizan are ready to close the merger, subject to the receipt of all necessary regulatory approvals. Net interest income -- Net interest income was $18.7 million for the three months ended June 30, 2004, down 0.6% from the previous quarter and down 6.7% from the same quarter last year. The net interest margin was 3.09% for the second quarter of 2004 compared to 3.08% for the first quarter of 2004 and 3.19% for the second quarter of 2003. Provision for loan losses -- The provision for loan losses was $3.0 million for the three months ended June 30, 2004, compared to $1.0 million in both the previous quarter and in the second quarter of 2003. This increase was mainly due to an increase in net charge-offs for the three months ended June 30, 2004 to $2.6 million compared to $1.0 million for the first quarter of 2004 and $1.4 million for the same period in 2003. The increase in net charge-offs was attributed to an increase in commercial, commercial real estate and aircraft charge-offs. The charge-offs within aircraft were isolated to two borrowers and $550 thousand of the charge-offs within commercial real estate were related to a single borrower. Other income -- Other income, excluding net securities gains, was $7.0 million for the second quarter of 2004 compared with $7.2 million for the same period in 2003 and $6.9 million for the first quarter of 2004. Customer service fees, representing service charges on deposits and fees for other banking services increased by $140 thousand, or 8.2%, from the second quarter of 2003 and increased by $4 thousand, or 0.2%, from the first quarter of 2004. The increase from the second quarter of 2003 was mainly attributed to increased activity and charges within demand deposit accounts. Gains on sales of loans totaled $686 thousand, compared with $2.2 million in the second quarter of 2003 and $1.2 million in the first quarter of 2004. During the second quarter of 2004, gains from the sale of the guaranteed portion of its Small Business Administration (SBA) and other government guaranteed loans were $480 thousand, compared with $791 thousand of gains in the second quarter of 2003 and $797 thousand of gains in the first quarter of 2004. Second quarter 2004 gains from the sale of the guaranteed portion of SBA loans was impacted by the temporary suspension and limitation placed on the 7(a) loan program during the first quarter of 2004. Gains from the sale of residential mortgage loans in the second quarter of 2004 were $206 thousand compared with $1.4 million of gains recognized in the second quarter of 2003 and $448 thousand of gains in the first quarter of 2004. With the recent rise in rates, fees associated with the mortgage related business have declined as refinancing activity slowed. Net security gains in the second quarter of 2004 were $181 thousand compared to $71 thousand in the prior quarter and $454 thousand in the second quarter of 2003. The gains in the first and second quarter of 2004 related to the sale of the Company's $40 million trust preferred securities portfolio in order to reduce its credit exposure. Other expense -- Other expense was $18.5 million for the three months ended June 30, 2004, down 13.4% from the previous quarter and up 10.3% from the same quarter last year. The principal reason for the increase in other expense compared to the second quarter last year was the recognition of $1.4 million in salary expense related to the settlement of options in cash or with shares held less than six months and due to the recognition of $823 thousand of expense for merger-related professional fees and severance accrual. Provision for income taxes -- The effective tax rate for the three months ended June 30, 2004 was 28.4% compared to 28.9% in the previous quarter and 31.2% in the same quarter last year. Balance sheet -- Total assets at June 30, 2004 were relatively stable at $2.7 billion compared to the same period last year and first quarter 2004. Assets declined a modest 3.1% compared to the prior quarter and 2.8% compared to the prior year. Compared to the prior year, securities declined by 19.4% while loans increased by 1.6%. For the period of June 30, 2003 to June 30, 2004, commercial real estate, residential real estate and consumer loans showed modest increases that were partially offset by declines in commercial and aircraft loans. For the period of March 31, 2004 to June 30, 2004, total loans declined by 2.1% on an annualized basis. The decline in the second quarter of 2004 was in commercial real estate, residential real estate and aircraft loans which were partially offset by increases in commercial and consumer loans. The decline in aircraft was mainly due to the announcement that following the close of the merger the origination of aircraft loans will be discontinued. No new originations of aircraft loans are expected. Total deposits decreased by 9.6% compared to the prior year. From June 30, 2003 to June 30, 2004, interest bearing demand deposits declined by 19.4%, savings deposits, including money market accounts, declined by 4.4% and certificate of deposits declined by 12.7% while non-interest bearing deposits increased 7.5%. During the first half of 2003, the Bank executed a deposit gathering strategy utilizing introductory rates within the interest bearing demand and money market deposit products. A portion of the funds gathered were rate sensitive and have shifted to other higher yielding alternatives. Also, the decline in certificate of deposits is consistent with management's overall strategy to change the deposit mix. Asset quality -- Non-performing loans to total loans increased to 1.42% at June 30, 2004 from 1.21% at June 30, 2003 and declined from 1.45% at March 31, 2004. Non-performing loans at June 30, 2004 were $27.8 million compared to $23.4 million at June 30, 2003 and $28.6 million at March 31, 2004. Non-performing loans, excluding the portion of the loans guaranteed by the government, at June 30, 2004 were $21.7 million compared to $17.2 million at June 30, 2003 and $21.7 million at March 31, 2004. The 18.6% increase in non- performing loans from June 30, 2003 was mainly due to a $2.0 million increase in non-performing commercial real estate loans and a $1.7 million increase in non-performing commercial loans. The 3.0% decrease from March 31, 2004 was due primarily to a $1.7 million decrease in non-performing aircraft loans and a $1.4 million decrease in non-performing SBA guaranteed loans. These declines were partially offset by an increase of $1.9 million in commercial loans and a $850 thousand increase in non-performing residential real estate loans. About Unizan Unizan Financial Corp., a $2.7 billion holding company, is a financial services organization headquartered in Canton, Ohio. The company operates 43 full-service retail financial centers in five metropolitan markets in Ohio - Canton, Columbus, Dayton, Newark and Zanesville. Through Unizan Financial Corp.'s subsidiaries, Unizan Bank, National Association; Unizan Financial Services Group, National Association; Unizan Banc Financial Services, Inc.; and Unizan Financial Advisors, Inc., the company offers its client base corporate and retail banking, Internet banking and wealth management products and services. Additionally, the company operates niche businesses in government guaranteed loan programs through its business lending centers in Cincinnati, Cleveland, Columbus and Dayton, Ohio; Detroit, Michigan; Mt. Arlington, New Jersey and Indianapolis, Indiana. For more information on Unizan Financial Corp. and its subsidiaries, visit the company on the Web at http://www.unizan.com/ . About Huntington Huntington Bancshares Incorporated is a $31 billion regional bank holding company headquartered in Columbus, Ohio. Through its affiliated companies, Huntington has more than 138 years of serving the financial needs of its customers. Huntington provides innovative retail and commercial financial products and services through more than 300 regional banking offices in Indiana, Kentucky, Michigan, Ohio and West Virginia. Huntington also offers retail and commercial financial services online at http://www.huntington.com/ ; through its technologically advanced, 24-hour telephone bank; and through its network of nearly 700 ATMs. Selected financial service activities are also conducted in other states including: Dealer Sales offices in Florida, Georgia, Tennessee, Pennsylvania and Arizona; Private Financial Group offices in Florida; and Mortgage Banking offices in Florida, Maryland and New Jersey. International banking services are made available through the headquarters office in Columbus and additional offices located in the Cayman Islands and Hong Kong. Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except per share data) 06/30/04 03/31/04 ASSETS Federal funds sold and interest bearing deposits with banks $5,446 $5,080 Securities, net 408,021 487,316 Federal Home Loan Bank stock, at cost 35,410 35,061 Loans originated and held for sale 2,118 4,744 Loans: Commercial, financial and agricultural 269,219 258,677 Aircraft 126,824 134,889 Commercial real estate 646,900 662,289 Residential real estate 446,738 449,057 Consumer 469,236 464,323 Total Loans less unearned income 1,958,917 1,969,235 Less allowance for loan losses 24,922 24,611 Net loans 1,933,995 1,944,624 Total earning assets 2,409,912 2,501,436 Cash and cash equivalents 81,111 71,924 Premises and equipment, net 23,891 24,641 Goodwill 91,971 91,971 Other intangible assets 17,025 17,836 Accrued interest receivable and other assets 77,546 77,987 Total Assets $2,676,534 $2,761,184 LIABILITIES Deposits: Non-interest bearing deposits $221,027 $214,844 Demand - interest bearing 242,709 257,012 Savings 494,598 531,437 Certificates and other time deposits 908,903 942,850 Total deposits 1,867,237 1,946,143 Total borrowings 483,485 483,093 Accrued taxes, expenses and other liabilities 23,786 25,262 Total Liabilities 2,374,508 2,454,498 SHAREHOLDERS' EQUITY Common stock ($1.00 stated value, 100,000,000 shares authorized; 22,123,069 shares issued) 22,123 22,123 Paid-in capital 223,200 228,806 Retained earnings 74,654 74,461 Stock held by deferred compensation plan, 119,274; 118,616; 118,616; 115,808 and 113,126 shares at cost, respectively (2,039) (2,016) Treasury stock, 327,256; 368,389; 440,276; 474,665 and 495,714 (9,282) (14,392) shares at cost, respectively Accumulated other comprehensive loss (6,630) (2,296) Total Shareholders' Equity 302,026 306,686 Total Liabilities and Shareholders' Equity $2,676,534 $2,761,184 Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except per share data) 12/31/03 9/30/03 6/30/03 ASSETS Federal funds sold and interest bearing deposits with banks $1,942 $4,517 $2,600 Securities, net 474,636 489,758 506,245 Federal Home Loan Bank stock, at cost 34,716 34,369 34,026 Loans originated and held for sale 2,679 8,138 17,364 Loans: Commercial, financial and agricultural 261,167 272,129 277,642 Aircraft 133,277 136,388 135,255 Commercial real estate 658,699 634,344 625,003 Residential real estate 450,398 425,030 439,862 Consumer 464,943 465,324 450,950 Total Loans less unearned income 1,968,484 1,933,215 1,928,712 Less allowance for loan losses 24,611 24,612 24,917 Net loans 1,943,873 1,908,603 1,903,795 Total earning assets 2,482,457 2,469,997 2,488,947 Cash and cash equivalents 56,558 86,869 75,522 Premises and equipment, net 25,353 26,049 26,747 Goodwill 91,971 91,971 91,971 Other intangible assets 18,661 19,500 20,344 Accrued interest receivable and other assets 76,860 76,402 75,575 Total Assets $2,727,249 $2,746,176 $2,754,189 LIABILITIES Deposits: Non-interest bearing deposits $206,501 $211,404 $205,674 Demand - interest bearing 276,037 282,391 301,009 Savings 531,134 522,703 517,154 Certificates and other time deposits 962,120 993,797 1,041,413 Total deposits 1,975,792 2,010,295 2,065,250 Total borrowings 421,885 406,436 363,646 Accrued taxes, expenses and other liabilities 26,749 26,920 26,098 Total Liabilities 2,424,426 2,443,651 2,454,994 SHAREHOLDERS' EQUITY Common stock ($1.00 stated value, 100,000,000 shares authorized; 22,123,069 shares issued) 22,123 22,123 22,123 Paid-in capital 223,613 223,863 221,509 Retained earnings 74,993 75,355 71,471 Stock held by deferred compensation plan, 119,274; 118,616; 118,616; 115,808 and 113,126 shares at cost, respectively (2,016) (1,966) (1,857) Treasury stock, 327,256; 368,389; 440,276; 474,665 and 495,714 (11,515) (12,126) (10,052) shares at cost, respectively Accumulated other comprehensive loss (4,375) (4,724) (3,999) Total Shareholders' Equity 302,823 302,525 299,195 Total Liabilities and Shareholders' Equity $2,727,249 $2,746,176 $2,754,189 Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except per share data) Three months ended 06/30/04 03/31/04 Interest income: Interest on federal funds sold and interest bearing deposits with banks $13 $8 Interest and dividends on securities 4,269 4,597 Interest and fees on loans and loans held for sale 27,573 27,674 Total interest income 31,855 32,279 Interest expense: Interest on deposits 8,816 9,150 Interest on borrowings 4,366 4,337 Total interest expense 13,182 13,487 Net interest income 18,673 18,792 Provision for loan losses 2,950 1,000 Net interest income after provision for loan losses 15,723 17,792 Other income: Trust, financial planning, brokerage and insurance sales 2,050 1,953 Customer service fees 1,848 1,844 Gains on sale of loans 686 1,245 Security gains/(losses), net 181 71 Other operating income 2,419 1,901 Total other income 7,184 7,014 Other expense: Salaries, wages, pension and benefits 10,494 12,774 Occupancy expense 795 867 Furniture and equipment expense 572 534 Taxes other than income taxes 610 630 Intangible amortization expense 811 825 Other operating expense 5,252 5,784 Total other expense 18,534 21,414 Income before income taxes 4,373 3,392 Provision for income taxes 1,242 980 Net Income $3,131 $2,412 Earnings per share: Basic $0.14 $0.11 Diluted $0.14 $0.11 Dividends per share $0.135 $0.135 Weighted average number of shares: Basic 21,771,251 21,733,289 Diluted 21,989,444 21,972,349 NOTE: Per share data is based on the weighted average number of shares outstanding adjusted for stock dividends or splits calculated under the treasury method using the average and end of period stock market price for basic and diluted shares, respectively. Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except per share data) Three months ended 12/31/03 9/30/03 6/30/03 Interest income: Interest on federal funds sold and interest bearing deposits with banks $8 $11 $145 Interest and dividends on securities 4,127 4,290 6,394 Interest and fees on loans and loans held for sale 28,401 28,238 29,906 Total interest income 32,536 32,539 36,445 Interest expense: Interest on deposits 9,764 10,576 11,621 Interest on borrowings 4,164 5,148 4,807 Total interest expense 13,928 15,724 16,428 Net interest income 18,608 16,815 20,017 Provision for loan losses 1,492 1,026 1,046 Net interest income after provision for loan losses 17,116 15,789 18,971 Other income: Trust, financial planning, brokerage and insurance sales 1,691 1,695 2,101 Customer service fees 2,107 1,996 1,708 Gains on sale of loans 993 1,796 2,206 Security gains/(losses), net (502) 1,821 454 Other operating income 1,834 2,535 1,215 Total other income 6,123 9,843 7,684 Other expense: Salaries, wages, pension and benefits 10,659 8,146 9,482 Occupancy expense 828 844 849 Furniture and equipment expense 562 586 609 Taxes other than income taxes 504 505 525 Intangible amortization expense 839 844 846 Other operating expense 5,598 4,744 4,489 Total other expense 18,990 15,669 16,800 Income before income taxes 4,249 9,963 9,855 Provision for income taxes 1,685 3,121 3,074 Net Income $2,564 $6,842 $6,781 Earnings per share: Basic $0.12 $0.32 $0.31 Diluted $0.12 $0.31 $0.30 Dividends per share $0.135 $0.135 $0.135 Weighted average number of shares: Basic 21,656,687 21,632,719 21,615,036 Diluted 21,940,831 22,134,304 22,459,500 NOTE: Per share data is based on the weighted average number of shares outstanding adjusted for stock dividends or splits calculated under the treasury method using the average and end of period stock market price for basic and diluted shares, respectively. Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except per share data) Six Months Ended 06/30/04 06/30/03 Interest income: Interest on federal funds sold and interest bearing deposits with banks $21 $154 Interest and dividends on securities 8,866 12,328 Interest and fees on loans and loans held for sale 55,247 61,303 Total interest income 64,134 73,785 Interest expense: Interest on deposits 17,966 22,672 Interest on borrowings 8,703 9,805 Total interest expense 26,669 32,477 Net interest income 37,465 41,308 Provision for loan losses 3,950 2,315 Net interest income after provision for loan losses 33,515 38,993 Other income: Trust, financial planning, brokerage and insurance sales 4,003 3,813 Customer service fees 3,692 3,261 Gains on sale of loans 1,931 4,336 Security gains, net 252 454 Other operating income 4,320 2,772 Total other income 14,198 14,636 Other expense: Salaries, wages, pension and benefits 23,268 18,414 Occupancy expense 1,662 1,760 Furniture and equipment expense 1,106 1,167 Taxes other than income taxes 1,240 1,042 Intangible amortization expense 1,636 1,704 Other operating expense 11,036 9,423 Total other expense 39,948 33,510 Income before income taxes 7,765 20,119 Provision for income taxes 2,222 6,302 Net Income $5,543 $13,817 Earnings per share: Basic $0.25 $0.64 Diluted $0.25 $0.62 Dividends per share $0.27 $0.27 Weighted average number of shares: Basic 21,752,270 21,722,609 Diluted 21,980,896 22,374,572 NOTE: Per share data is based on the weighted average number of shares outstanding adjusted for stock dividends or splits calculated under the treasury method using the average and end of period stock market price for basic and diluted shares, respectively. Unizan Financial Corp. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data) 2004 2004 EARNINGS 2nd Qtr 1st Qtr Net Interest Income FTE (1) $18,959 19,061 Provision for loan losses 2,950 1,000 Other income 7,003 6,943 Security gains/(losses), net 181 71 Other expenses 18,534 21,414 FTE adjustment (1) 286 269 Net income $3,131 2,412 Net income per share - diluted $0.14 0.11 PERFORMANCE RATIOS Return on average assets (ROA) 0.46% 0.36% Return on average common equity (ROE) 4.12% 3.17% Tangible return on average tangible assets 0.57% 0.45% Tangible return on avg. tangible common equity 7.49% 6.05% Net interest margin FTE 3.09% 3.08% Efficiency ratio (2) 59.60% 60.52% MARKET DATA Book value/common share $13.86 14.10 Tangible book value/common share 8.86 9.05 Period-end common share mkt value 26.10 24.91 Market as a % of book 188.3% 176.7% Cash dividends/common share $0.135 0.135 Common stock dividend payout ratio 93.80% 121.68% Average basic common shares 21,771,251 21,733,289 Average diluted common shares 21,989,444 21,972,349 Period end common shares 21,795,813 21,754,680 Common stock market capitalization $568,871 541,909 ASSET QUALITY Gross charge-offs $3,372 1,683 Net charge-offs 2,639 1,000 Delinquency Ratio 1.45% 1.67% Allowance for loan losses $24,922 24,611 Non-accrual loans 22,173 23,152 Past due 90 days or more & accruing 5,612 5,488 Other assets owned 3,850 1,793 Nonperforming assets (NPAs) 31,635 30,433 Restructured loans 2,496 2,530 Net charge-off ratio 0.54% 0.20% Allowance/loans 1.27% 1.25% NPL to loans 1.42% 1.45% NPA to loans + other assets 1.61% 1.54% Allowance to NPLs 89.70% 85.93% AVERAGE BALANCES Assets $2,713,206 2,728,886 Deposits 1,895,935 1,954,707 Loans 1,964,587 1,971,090 Earning assets 2,469,808 2,486,312 Shareholders' equity 305,902 306,128 ENDING BALANCES Assets $2,676,534 2,761,184 Deposits 1,867,237 1,946,143 Loans 1,958,917 1,969,235 Goodwill and other intangible assets 108,996 109,807 Earning assets 2,409,912 2,501,436 Total shareholders' equity 302,026 306,686 (1) - FTE defined as fully tax-equivalent (2) - Excludes amortization of intangibles and impairment of goodwill expenses. Second quarter 2004 excludes $1,427 pre-tax stock option expense and $823 pre-tax merger related professional fees and severance accrual. First quarter 2004 excludes $3,638 pre-tax stock option expense and $1,203 pre-tax merger related professional fees. Fourth quarter 2003 excludes $2,159 pre-tax expense related to a severance agreement. Second quarter 2003 excludes $1,232 pre-tax expense related to the termination of the defined benefit plan. Certain previously reported amounts may have been reclassified to conform to current reporting presentation. Unizan Financial Corp. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data) 2003 2003 2003 EARNINGS 4th Qtr 3rd Qtr 2nd Qtr Net Interest Income FTE (1) 18,909 17,103 20,305 Provision for loan losses 1,492 1,026 1,046 Other income 6,625 8,022 7,230 Security gains/(losses), net (502) 1,821 454 Other expenses 18,990 15,669 16,800 FTE adjustment (1) 301 288 288 Net income 2,564 6,842 6,781 Net income per share - diluted 0.12 0.31 0.30 PERFORMANCE RATIOS Return on average assets (ROA) 0.38% 0.99% 0.97% Return on average common equity (ROE) 3.35% 9.06% 9.00% Tangible return on average tangible assets 0.48% 1.12% 1.09% Tangible return on avg. tangible common equity 6.40% 15.61% 15.53% Net interest margin FTE 3.04% 2.73% 3.19% Efficiency ratio (2) 62.59% 54.98% 52.56% MARKET DATA Book value/common share 13.97 13.97 13.83 Tangible book value/common share 8.86 8.83 8.64 Period-end common share mkt value 20.25 19.95 17.57 Market as a % of book 145.0% 142.8% 127.0% Cash dividends/common share 0.135 0.135 0.135 Common stock dividend payout ratio 114.12% 43.22% 43.03% Average basic common shares 21,656,687 21,632,719 21,615,036 Average diluted common shares 21,940,831 22,134,304 22,459,500 Period end common shares 21,682,793 21,648,404 21,627,356 Common stock market capitalization 439,077 431,886 379,993 ASSET QUALITY Gross charge-offs 2,265 1,901 1,995 Net charge-offs 1,494 1,330 1,410 Delinquency Ratio 1.61% 1.65% 1.52% Allowance for loan losses 24,611 24,612 24,917 Non-accrual loans 20,566 19,888 19,526 Past due 90 days or more & accruing 5,333 5,032 3,899 Other assets owned 2,143 2,095 2,655 Nonperforming assets (NPAs) 28,042 27,015 26,080 Restructured loans 2,565 2,598 2,630 Net charge-off ratio 0.31% 0.27% 0.29% Allowance/loans 1.25% 1.27% 1.29% NPL to loans 1.32% 1.29% 1.21% NPA to loans + other assets 1.42% 1.40% 1.35% Allowance to NPLs 95.03% 98.76% 106.37% AVERAGE BALANCES Assets 2,706,490 2,732,860 2,802,727 Deposits 1,994,244 2,039,429 2,077,406 Loans 1,947,729 1,946,693 1,958,958 Earning assets 2,466,001 2,483,198 2,553,641 Shareholders' equity 303,902 299,681 302,065 ENDING BALANCES Assets 2,727,249 2,746,176 2,754,189 Deposits 1,975,792 2,010,295 2,065,250 Loans 1,968,484 1,933,215 1,928,712 Goodwill and other intangible assets 110,632 111,471 112,315 Earning assets 2,482,457 2,469,997 2,488,947 Total shareholders' equity 302,823 302,525 299,195 (1) - FTE defined as fully tax-equivalent (2) - Excludes amortization of intangibles and impairment of goodwill expenses. Second quarter 2004 excludes $1,427 pre-tax stock option expense and $823 pre-tax merger related professional fees and severance accrual. First quarter 2004 excludes $3,638 pre-tax stock option expense and $1,203 pre-tax merger related professional fees. Fourth quarter 2003 excludes $2,159 pre-tax expense related to a severance agreement. Second quarter 2003 excludes $1,232 pre-tax expense related to the termination of the defined benefit plan. Certain previously reported amounts may have been reclassified to conform to current reporting presentation. Unizan Financial Corp. Average Balance Sheet and Related Yields Three Months Ended June 30, 2004 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $6,070 $13 0.86 % Securities 499,151 4,541 3.66 Total loans (2) 1,964,587 27,587 5.65 Total interest-earning assets (3) 2,469,808 32,141 5.23 Nonearning assets: Cash and due from banks 59,132 Other nonearning assets 208,677 Allowance for loan losses (24,411) Total assets $2,713,206 Interest bearing liabilities: Demand deposits $246,903 $320 0.52 % Savings deposits 504,393 1,201 0.96 Time deposits 919,995 7,295 3.19 Subordinated note (4) 20,619 504 9.83 Company obligated mandatorily redeemable trust preferred (4) - - - Other borrowings 466,646 3,862 3.33 Total interest bearing liabilities 2,158,556 13,182 2.46 Noninterest bearing liabilities: Demand deposits 224,644 Other liabilities 24,104 Shareholders' equity 305,902 Total liabilities and equity $2,713,206 Net interest income and interest rate spread (3) $18,959 2.78 % Net interest margin (5) 3.09 % (1) Calculated on an annualized basis. (2) Loan fees are included in interest income on loans. (3) Interest income is computed on a fully tax equivalent (FTE) basis, using a tax rate of 35%. (4) As of December 31, 2003, based on new accounting guidance issued under FASB Interpretation No. 46, the amounts previously reported as "company obligated mandatorily redeemable trust preferred" have been recaptioned "subordinated note". The deconsolidation of the Trust increased the Company's balance sheet by $619, the difference representing the Company's common ownership in the Trust. (5) The net interest margin represents net interest income as a percentage of average interest-earning assets. Unizan Financial Corp. Average Balance Sheet and Related Yields Three Months Ended June 30, 2003 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $47,068 $145 1.24 % Securities 547,615 6,663 4.88 Total loans (2) 1,958,958 29,925 6.13 Total interest-earning assets (3) 2,553,641 36,733 5.77 Nonearning assets: Cash and due from banks 60,117 Other nonearning assets 214,109 Allowance for loan losses (25,140) Total assets $2,802,727 Interest bearing liabilities: Demand deposits $294,871 $780 1.06 % Savings deposits 512,861 1,591 1.24 Time deposits 1,075,683 9,250 3.45 Subordinated note (4) - - - Company obligated mandatorily redeemable trust preferred (4) 20,000 504 10.11 Other borrowings 365,709 4,303 4.72 Total interest bearing liabilities 2,269,124 16,428 2.90 Noninterest bearing liabilities: Demand deposits 193,991 Other liabilities 37,547 Shareholders' equity 302,065 Total liabilities and equity $2,802,727 Net interest income and interest rate spread (3) $20,305 2.87 % Net interest margin (5) 3.19 % (1) Calculated on an annualized basis. (2) Loan fees are included in interest income on loans. (3) Interest income is computed on a fully tax equivalent (FTE) basis, using a tax rate of 35%. (4) As of December 31, 2003, based on new accounting guidance issued under FASB Interpretation No. 46, the amounts previously reported as "company obligated mandatorily redeemable trust preferred" have been recaptioned "subordinated note". The deconsolidation of the Trust increased the Company's balance sheet by $619, the difference representing the Company's common ownership in the Trust. (5) The net interest margin represents net interest income as a percentage of average interest-earning assets. Unizan Financial Corp. Average Balance Sheet and Related Yields Six Months Ended June 30, 2004 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $5,233 $21 0.81 % Securities 504,989 9,394 3.74 Total loans (2) 1,967,838 55,274 5.65 Total interest-earning assets (3) 2,478,060 64,689 5.25 Nonearning assets: Cash and due from banks 58,242 Other nonearning assets 209,261 Allowance for loan losses (24,517) Total assets $2,721,046 Interest bearing liabilities: Demand deposits $252,599 $689 0.55 % Savings deposits 518,118 2,497 0.97 Time deposits 937,930 14,780 3.17 Subordinated note (4) 20,619 1,009 9.84 Company obligated mandatorily redeemable trust preferred (4) - - - Other borrowings 444,820 7,694 3.48 Total interest bearing liabilities 2,174,086 26,669 2.47 Noninterest bearing liabilities: Demand deposits 216,674 Other liabilities 24,271 Shareholders' equity 306,015 Total liabilities and equity $2,721,046 Net interest income and interest rate spread (3) $38,020 2.78 % Net interest margin (5) 3.09 % (1) Calculated on an annualized basis. (2) Loan fees are included in interest income on loans. (3) Interest income is computed on a fully tax equivalent (FTE) basis, using a tax rate of 35%. (4) As of December 31, 2003, based on new accounting guidance issued under FASB Interpretation No. 46, the amounts previously reported as "company obligated mandatorily redeemable trust preferred" have been recaptioned "subordinated note". The deconsolidation of the Trust increased the Company's balance sheet by $619, the difference representing the Company's common ownership in the Trust. (5) The net interest margin represents net interest income as a percentage of average interest-earning assets. Unizan Financial Corp. Average Balance Sheet and Related Yields Six Months Ended June 30, 2003 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $25,204 $154 1.23 % Securities 530,276 12,823 4.88 Total loans (2) 1,956,546 61,338 6.32 Total interest-earning assets (3) 2,512,026 74,315 5.97 Nonearning assets: Cash and due from banks 59,301 Other nonearning assets 214,074 Allowance for loan losses (25,210) Total assets $2,760,191 Interest bearing liabilities: Demand deposits $282,244 $1,333 0.95 % Savings deposits 469,402 2,623 1.13 Time deposits 1,060,125 18,716 3.56 Subordinated note (4) - - - Company obligated mandatorily redeemable trust preferred (4) 20,000 1,009 10.17 Other borrowings 400,533 8,796 4.43 Total interest bearing liabilities 2,232,304 32,477 2.93 Noninterest bearing liabilities: Demand deposits 188,155 Other liabilities 37,694 Shareholders' equity 302,038 Total liabilities and equity $2,760,191 Net interest income and interest rate spread (3) $41,838 3.03 % Net interest margin (5) 3.36 % (1) Calculated on an annualized basis. (2) Loan fees are included in interest income on loans. (3) Interest income is computed on a fully tax equivalent (FTE) basis, using a tax rate of 35%. (4) As of December 31, 2003, based on new accounting guidance issued under FASB Interpretation No. 46, the amounts previously reported as "company obligated mandatorily redeemable trust preferred" have been recaptioned "subordinated note". The deconsolidation of the Trust increased the Company's balance sheet by $619, the difference representing the Company's common ownership in the Trust. (5) The net interest margin represents net interest income as a percentage of average interest-earning assets. Unizan Financial Corp. NONPERFORMING AND UNDERPERFORMING ASSETS (dollars in thousands) 06/30/04 03/31/04 12/31/03 9/30/03 6/30/03 Non-performing loans: Commercial $3,180 $1,294 $1,292 $1,348 $1,515 Commercial real estate 5,433 5,713 4,112 4,294 3,422 Government guaranteed 7,926 9,334 8,939 8,573 7,821 Aircraft 291 2,003 247 134 59 Residential real estate 9,563 8,713 9,838 8,911 9,298 Direct installment loans 45 161 37 118 68 Indirect installment loans 155 212 212 331 164 Home equity 1,192 1,210 1,222 1,211 1,078 Total non-performing loans $27,785 $28,640 $25,899 $24,920 $23,425 Less: Government guaranteed amount 6,080 6,965 6,537 6,765 6,227 Total non-performing loans excluding government guaranteed amount $21,705 $21,675 $19,362 $18,155 $17,198 Total non-performing loans $27,785 $28,640 $25,899 $24,920 $23,425 Other assets owned 3,850 1,793 2,143 2,095 2,655 Total non-performing assets $31,635 $30,433 $28,042 $27,015 $26,080 Less: Government guaranteed amount 6,816 7,541 6,969 7,314 6,789 Total non-performing assets excluding government guaranteed amount $24,819 $22,892 $21,073 $19,701 $19,291 Restructured loans $2,496 $2,530 $2,565 $2,598 $2,630 Ratio of: Non-performing loans to total loans 1.42% 1.45% 1.32% 1.29% 1.21% Non-performing assets to total assets 1.18% 1.10% 1.03% 0.98% 0.95% Non-performing assets to total loans + other assets 1.61% 1.54% 1.42% 1.40% 1.35% Allowance to total loans 1.27% 1.25% 1.25% 1.27% 1.29% Allowance to non-performing loans 89.70% 85.93% 95.03% 98.76% 106.37% Ratio of (excluding government guaranteed amount): Non-performing loans to total loans 1.11% 1.10% 0.98% 0.94% 0.89% Non-performing assets to total assets 0.93% 0.83% 0.77% 0.72% 0.70% Non-performing assets to total loans + other assets 1.26% 1.16% 1.07% 1.02% 1.00% Allowance to non-performing loans 114.82% 113.55% 127.11% 135.57% 144.88% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES 06/30/04 03/31/04 Average loans and leases: Commercial $198,914 $188,992 Commercial real estate 653,138 664,241 Government guaranteed 61,280 61,676 Aircraft 132,578 133,725 Residential real estate 448,009 453,362 Indirect installment loans 116,422 123,426 Home equity 317,320 307,116 Other consumer 36,926 38,552 Total average loans and leases $1,964,587 $1,971,090 Net charge-offs (recoveries): Commercial $425 $(17) Commercial real estate 712 261 Government guaranteed 141 255 Aircraft 548 - Residential real estate (21) (50) Indirect installment loans 384 371 Home equity 196 11 Other consumer 254 169 Total $2,639 $1,000 06/30/04 03/31/04 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.85% -0.04% Commercial real estate 0.44% 0.16% Government guaranteed 0.92% 1.65% Aircraft 1.65% 0.00% Residential real estate -0.02% -0.04% Indirect installment loans 1.32% 1.20% Home equity 0.25% 0.01% Other consumer 2.75% 1.75% Total 0.54% 0.20% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES 12/31/03 9/30/03 6/30/03 Average loans and leases: Commercial $193,154 $216,557 $211,014 Commercial real estate 648,784 622,248 629,637 Government guaranteed 62,591 58,665 53,636 Aircraft 133,267 135,368 132,604 Residential real estate 439,369 443,603 469,754 Indirect installment loans 130,478 140,271 149,215 Home equity 298,712 283,578 261,613 Other consumer 41,374 46,403 51,485 Total average loans and leases $1,947,729 $1,946,693 $1,958,958 Net charge-offs (recoveries): Commercial $57 $43 $20 Commercial real estate 101 266 - Government guaranteed 102 48 102 Aircraft (124) - 7 Residential real estate 38 26 117 Indirect installment loans 716 620 935 Home equity 286 33 17 Other consumer 318 294 212 Total $1,494 $1,330 $1,410 12/31/03 9/30/03 6/30/03 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.12% 0.08% 0.04% Commercial real estate 0.06% 0.17% 0.00% Government guaranteed 0.65% 0.33% 0.76% Aircraft -0.37% 0.00% 0.02% Residential real estate 0.03% 0.02% 0.10% Indirect installment loans 2.20% 1.77% 2.51% Home equity 0.38% 0.05% 0.03% Other consumer 3.07% 2.53% 1.65% Total 0.31% 0.27% 0.29% DATASOURCE: Unizan Financial Corp. CONTACT: Investors, Roger L. Mann, President and Chief Executive Officer, +1-330-438-1118, or +1-866-235-7203, or E-mail, , or Media, Sandy K. Upperman, Vice President, Corporate Communications, +1-330-438-4858, or E-mail, , both of Unizan Financial Corp. Web site: http://www.unizan.com/ Company News On-Call: http://www.prnewswire.com/comp/127633.html

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