UNIZ Unizan Financial (MM)

Unizan Financial Corp. Announces Negotiations to Extend the Huntington Merger Agreement and Reports Third Quarter 2004 Financial Results CANTON, Ohio, Nov. 3 /PRNewswire-FirstCall/ -- Unizan Financial Corp. (NASDAQ:UNIZ), today announced that it is negotiating an extension of its pending merger agreement with Huntington Bancshares Incorporated (NASDAQ:HBAN). Huntington today announced that it intends to withdraw its current application with the Federal Reserve Bank (FRB) to acquire Unizan and to resubmit the application for regulatory approval of the merger pending the successful resolution of the regulatory concerns as outlined in Huntington's press release (which can be found on the Company's Web site at http://www.huntington.com/ ). UNIZAN REPORTS THIRD QUARTER 2004 FINANCIAL RESULTS Unizan Financial Corp. also announced its third quarter financial results. Net income for the third quarter of 2004 was $2.9 million, or $0.13 per diluted share. This compares with net income of $6.8 million, or $0.31 per diluted share, for the third quarter of 2003, and net income of $3.1 million, or $0.14 per diluted share for the second quarter of 2004. During the third quarter of 2004, Unizan recognized a pre-tax gain of $488 thousand on the sale of its Wooster Financial Center. Also during the quarter, Unizan recognized $476 thousand of pre-tax merger-related professional fees and certain severance and benefit expenses. As part of its evaluation of the adequacy of its allowance for loan losses, Unizan recognized a provision expense of $3.8 million during the third quarter of 2004. Net income for the nine months ended September 30, 2004 was $8.4 million or $0.38 per diluted share compared to $20.7 million or $0.93 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 $2.5 million pre-tax, or $1.8 million after-tax, for merger-related professional fees and severance accrual. The salary charge and merger-related expenses impacted net income by $0.23 per diluted share for the first nine months of 2004. Net interest income - Net interest income was $16.1 million for the three months ended September 30, 2004, down 13.7% from the previous quarter and down 4.1% from the same quarter last year. Net interest income has declined due to a lower level of outstanding earning assets compared with prior periods. Additionally, the yields have been impacted by a change in the mix and duration of outstanding assets and liabilities. The net interest margin was 2.75% for the third quarter of 2004 compared to 3.09% for the second quarter of 2004 and 2.73% for the third quarter of 2003. Net interest income was negatively impacted during the third quarter of 2004 by faster than projected amortization of the purchase accounting adjustments associated with the mark- to-market of UNB Corp.'s loan portfolio at the time of the merger of equals between UNB Corp. and BancFirst Ohio Corp. in March of 2002. During the third quarter of 2004, $1.2 million of amortization was recognized compared with $616 thousand expected based on the projected life of the portfolio. Provision for loan losses - The provision for loan losses was $3.8 million for the three months ended September 30, 2004, compared to $3.0 million in the previous quarter and $1.0 million in the third quarter of 2003. Net charge- offs for the three months ended September 30, 2004, were $2.3 million compared to $2.6 million for the second quarter of 2004 and $1.3 million for the same period in 2003. The increase in net charge-offs from the third quarter of 2003 was mainly attributed to an increase in commercial real estate, government guaranteed and residential real estate charge-offs. Other income - Other income, excluding net securities activity, was $7.3 million for the third quarter of 2004 compared with $8.0 million for the same period in 2003 and $7.0 million for the second quarter of 2004. Gains on sales of loans totaled $1.0 million, compared with $1.8 million in the third quarter of 2003 and $686 thousand in the second quarter of 2004. During the third quarter of 2004, gains from the sale of the guaranteed portion of Small Business Administration (SBA) and other government guaranteed loans were $898 thousand, compared with $909 thousand of gains in the third quarter of 2003 and $480 thousand of gains in the second quarter of 2004. Second quarter 2004 gains from the sale of the guaranteed portion of SBA loans were impacted by the temporary suspension and limitation placed on the SBA 7(a) loan program during the first quarter of 2004. In April 2004, legislation establishing temporary provisions to extend SBA programs was enacted. On October 1, 2004, the SBA issued a policy announcing the expiration of certain temporary provisions established in April regarding its programs. The key changes include a reduction in the maximum guarantee limit to $1.0 million from $1.5 million along with slightly higher borrower and lender fees. Gains from the sale of residential mortgage loans in the third quarter of 2004 were $110 thousand compared with $887 thousand of gains recognized in the third quarter of 2003 and $206 thousand of gains in the second quarter of 2004. With the recent rise in rates and fewer customers who can benefit from refinancing, fees associated with the mortgage related business have declined as refinancing activity slowed. Net security activity in the third quarter of 2004 resulted in a loss of $60 thousand compared to gains of $181 thousand in the prior quarter and $1.8 million in the third quarter of 2003. Other expense - Other expense was $15.7 million for the three months ended September 30, 2004, down $2.9 million or 15.4% from the previous quarter and essentially equal to the same quarter last year. The principal reason for the decrease in other expense compared to the second quarter of 2004 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 the recognition of $823 thousand of expense for merger-related professional fees and severance accrual during the second quarter. Provision for income taxes - The effective tax rate for the three months ended September 30, 2004 was 26.3% compared to 28.4% in the previous quarter and 31.3% in the same quarter last year. The Company's effective tax rates for the second and third quarter of 2004 were impacted by tax-exempt income being a larger portion of pre-tax income which had the effect of reducing the effective tax rate from the third quarter of 2003. Balance sheet - Total assets at September 30, 2004 were $2.59 billion compared to $2.75 billion a year ago and $2.68 billion at the end of the second quarter 2004. Assets declined 3.1% compared to the prior quarter and 5.6% compared to the prior year. Compared to the prior year, securities declined by 17.5% while loans decreased by 1.7%. For the period of September 30, 2003 to September 30, 2004, residential real estate and home equity loans showed modest increases that were more than offset by declines in commercial real estate, commercial and aircraft loans. For the period of June 30, 2004 to September 30, 2004, total loans declined by 11.9% on an annualized basis. The decline in the third quarter of 2004 was across all loan portfolios. The decline in aircraft was mainly due to the closing of the aircraft lending centers. No new originations of aircraft loans are expected. The decline in commercial real estate and commercial loans is the result of fewer lending officers originating new loans. The modest decline in consumer and residential real estate lending is primarily attributable to focused efforts on existing client retention and limited new client campaigns due to the delay and uncertainty regarding the pending merger. Total deposits decreased by $192,257 or 9.6% compared to the prior year. A total of $15.4 million of this decline was due to the sale of the Wooster Financial Center. Of the deposits sold, $10.3 million were certificates of deposits with the remaining distributed between demand and savings. From September 30, 2003 to September 30, 2004, interest bearing demand deposits declined by 18.6%, savings deposits, including money market accounts, declined by 1.0% and certificate of deposits declined by 13.8% while non-interest bearing deposits increased 1.0%. During the first half of 2003, Unizan 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. The decline in certificate of deposits was partially due to the maturity of $60.2 million of brokered certificates of deposits and is consistent with management's overall strategy to change the deposit mix. Asset quality - Non-performing loans to total loans increased to 1.53% at September 30, 2004 from 1.29% at September 30, 2003 and increased from 1.42% at June 30, 2004. Non-performing loans at September 30, 2004 were $29.2 million compared to $24.9 million at September 30, 2003 and $27.8 million at June 30, 2004. Non-performing loans, excluding the portion of the loans guaranteed by the government, at September 30, 2004 were $22.2 million compared to $18.2 million at September 30, 2003 and $21.7 million at June 30, 2004. The $4.0 million increase in non-performing loans from September 30, 2003 was mainly due to a $2.3 million increase in non-performing aircraft loans and a $1.3 million increase in non-performing commercial real estate loans. The $446 thousand or 2.1% increase in non-performing loans since June 30, 2004, is primarily attributed to a $2.2 million increase to non-performing aircraft loans, a net $569 thousand increase in non-performing government guaranteed loans, offset by a $1.5 million decline in non-performing commercial loans, and a $986 thousand decrease in non-performing residential real estate loans. About Unizan Unizan Financial Corp., a $2.6 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 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 $32 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 huntington.com; through its technologically advanced, 24-hour telephone bank; and through its network of approximately 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 an office located in the Cayman Islands and an office located in Hong Kong. Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except per share data) 09/30/04 06/30/04 03/31/04 ASSETS Federal funds sold and interest bearing deposits with banks $8,408 $5,446 $5,080 Securities, net 404,104 408,021 487,316 Federal Home Loan Bank stock, at cost 35,788 35,410 35,061 Loans originated and held for sale 2,353 2,118 4,744 Loans: Commercial, financial and agricultural 266,262 269,219 258,677 Aircraft 117,497 126,824 134,889 Commercial real estate 610,061 646,900 662,289 Residential real estate 441,338 446,738 449,057 Consumer 465,591 469,236 464,323 Total Loans less unearned income 1,900,749 1,958,917 1,969,235 Less allowance for loan losses 26,387 24,922 24,611 Net loans 1,874,362 1,933,995 1,944,624 Total earning assets 2,351,402 2,409,912 2,501,436 Cash and cash equivalents 61,072 81,111 71,924 Premises and equipment, net 22,787 23,891 24,641 Goodwill 91,971 91,971 91,971 Other intangible assets 16,157 17,025 17,836 Accrued interest receivable and other assets 76,500 77,546 77,987 Total Assets $2,593,502 $2,676,534 $2,761,184 LIABILITIES Deposits: Non-interest bearing deposits $213,621 $221,027 $214,844 Demand - interest bearing 229,938 242,709 257,012 Savings 517,295 494,598 531,437 Certificates and other time deposits 856,914 908,903 942,850 Total deposits 1,817,768 1,867,237 1,946,143 Total borrowings 439,400 483,485 483,093 Accrued taxes, expenses and other liabilities 26,148 23,786 25,262 Total Liabilities 2,283,316 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 22,123 Paid-in capital 221,141 223,200 228,806 Retained earnings 74,560 74,654 74,461 Stock held by deferred compensation plan, 122,209; 119,274; 118,616; 118,616 and 115,808 shares at cost, respectively (2,112) (2,039) (2,016) Treasury stock, 64,059; 327,256; 368,389; 440,276 and 474,665 (1,647) (9,282) (14,392) shares at cost, respectively Accumulated other comprehensive loss (3,879) (6,630) (2,296) Total Shareholders' Equity 310,186 302,026 306,686 Total Liabilities and Shareholders' Equity $2,593,502 $2,676,534 $2,761,184 Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except per share data) 12/31/03 9/30/03 ASSETS Federal funds sold and interest bearing deposits with banks $1,942 $4,517 Securities, net 474,636 489,758 Federal Home Loan Bank stock, at cost 34,716 34,369 Loans originated and held for sale 2,679 8,138 Loans: Commercial, financial and agricultural 261,167 272,129 Aircraft 133,277 136,388 Commercial real estate 658,699 634,344 Residential real estate 450,398 425,030 Consumer 464,943 465,324 Total Loans less unearned income 1,968,484 1,933,215 Less allowance for loan losses 24,611 24,612 Net loans 1,943,873 1,908,603 Total earning assets 2,482,457 2,469,997 Cash and cash equivalents 56,558 86,869 Premises and equipment, net 25,353 26,049 Goodwill 91,971 91,971 Other intangible assets 18,661 19,500 Accrued interest receivable and other assets 76,860 76,402 Total Assets $2,727,249 $2,746,176 LIABILITIES Deposits: Non-interest bearing deposits $206,501 $211,404 Demand - interest bearing 276,037 282,391 Savings 531,134 522,703 Certificates and other time deposits 962,120 993,797 Total deposits 1,975,792 2,010,295 Total borrowings 421,885 406,436 Accrued taxes, expenses and other liabilities 26,749 26,920 Total Liabilities 2,424,426 2,443,651 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 223,613 223,863 Retained earnings 74,993 75,355 Stock held by deferred compensation plan, 122,209; 119,274; 118,616; 118,616 and 115,808 shares at cost, respectively (2,016) (1,966) Treasury stock, 64,059; 327,256; 368,389; 440,276 and 474,665 (11,515) (12,126) shares at cost, respectively Accumulated other comprehensive loss (4,375) (4,724) Total Shareholders' Equity 302,823 302,525 Total Liabilities and Shareholders' Equity $2,727,249 $2,746,176 Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except per share data) Three months ended 09/30/04 06/30/04 03/31/04 Interest income: Interest on federal funds sold and interest bearing deposits with banks $21 $13 $8 Interest and dividends on securities 3,040 4,269 4,597 Interest and fees on loans and loans held for sale 26,693 27,573 27,674 Total interest income 29,754 31,855 32,279 Interest expense: Interest on deposits 9,058 8,816 9,150 Interest on borrowings 4,576 4,366 4,337 Total interest expense 13,634 13,182 13,487 Net interest income 16,120 18,673 18,792 Provision for loan losses 3,750 2,950 1,000 Net interest income after provision for loan losses 12,370 15,723 17,792 Other income: Trust, financial planning, brokerage and insurance sales 1,793 2,050 1,953 Customer service fees 1,854 1,848 1,844 Gains on sale of loans 1,008 686 1,245 Security gains/(losses), net (60) 181 71 Other operating income 2,626 2,419 1,901 Total other income 7,221 7,184 7,014 Other expense: Salaries, wages, pension and benefits 8,211 10,494 12,774 Occupancy expense 875 795 867 Furniture and equipment expense 520 572 534 Taxes other than income taxes 557 610 630 Intangible amortization expense 868 811 825 Other operating expense 4,652 5,252 5,784 Total other expense 15,683 18,534 21,414 Income before income taxes 3,908 4,373 3,392 Provision for income taxes 1,029 1,242 980 Net Income $2,879 $3,131 $2,412 Earnings per share: Basic $0.13 $0.14 $0.11 Diluted $0.13 $0.14 $0.11 Dividends per share $0.135 $0.135 $0.135 Weighted average number of shares: Basic 21,910,942 21,771,251 21,733,289 Diluted 22,052,059 21,989,444 21,972,349 Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except per share data) Three months ended 12/31/03 9/30/03 Interest income: Interest on federal funds sold and interest bearing deposits with banks $8 $11 Interest and dividends on securities 4,127 4,290 Interest and fees on loans and loans held for sale 28,401 28,238 Total interest income 32,536 32,539 Interest expense: Interest on deposits 9,764 10,576 Interest on borrowings 4,164 5,148 Total interest expense 13,928 15,724 Net interest income 18,608 16,815 Provision for loan losses 1,492 1,026 Net interest income after provision for loan losses 17,116 15,789 Other income: Trust, financial planning, brokerage and insurance sales 1,691 1,695 Customer service fees 2,107 1,996 Gains on sale of loans 993 1,796 Security gains/(losses), net (502) 1,821 Other operating income 1,834 2,535 Total other income 6,123 9,843 Other expense: Salaries, wages, pension and benefits 10,659 8,146 Occupancy expense 828 844 Furniture and equipment expense 562 586 Taxes other than income taxes 504 505 Intangible amortization expense 839 844 Other operating expense 5,598 4,744 Total other expense 18,990 15,669 Income before income taxes 4,249 9,963 Provision for income taxes 1,685 3,121 Net Income $2,564 $6,842 Earnings per share: Basic $0.12 $0.32 Diluted $0.12 $0.31 Dividends per share $0.135 $0.135 Weighted average number of shares: Basic 21,656,687 21,632,719 Diluted 21,940,831 22,134,304 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) Nine Months Ended 09/30/04 09/30/03 Interest income: Interest on federal funds sold and interest bearing deposits with banks $42 $165 Interest and dividends on securities 11,906 16,618 Interest and fees on loans and loans held for sale 81,940 89,541 Total interest income 93,888 106,324 Interest expense: Interest on deposits 27,024 33,248 Interest on borrowings 13,279 14,953 Total interest expense 40,303 48,201 Net interest income 53,585 58,123 Provision for loan losses 7,700 3,341 Net interest income after provision for loan losses 45,885 54,782 Other income: Trust, financial planning, brokerage and insurance sales 5,796 5,508 Customer service fees 5,546 5,257 Gains on sale of loans 2,939 6,132 Security gains, net 192 2,275 Other operating income 6,946 5,307 Total other income 21,419 24,479 Other expense: Salaries, wages, pension and benefits 31,479 26,560 Occupancy expense 2,537 2,604 Furniture and equipment expense 1,626 1,753 Taxes other than income taxes 1,797 1,547 Intangible amortization expense 2,504 2,548 Other operating expense 15,688 14,167 Total other expense 55,631 49,179 Income before income taxes 11,673 30,082 Provision for income taxes 3,251 9,423 Net Income $8,422 $20,659 Earnings per share: Basic $0.39 $0.95 Diluted $0.38 $0.93 Dividends per share $0.405 $0.405 Weighted average number of shares: Basic 21,805,547 21,692,316 Diluted 22,005,003 22,294,153 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 2004 EARNINGS 3rd Qtr 2nd Qtr 1st Qtr Net Interest Income FTE (1) $16,400 18,959 19,061 Provision for loan losses 3,750 2,950 1,000 Other income 7,281 7,003 6,943 Security gains/(losses), net (60) 181 71 Other expenses 15,683 18,534 21,414 FTE adjustment (1) 280 286 269 Net income $2,879 3,131 2,412 Net income per share - diluted $0.13 0.14 0.11 PERFORMANCE RATIOS Return on average assets (ROA) 0.44% 0.46% 0.36% Return on average common equity (ROE) 3.71% 4.12% 3.17% Tangible return on average tangible assets 0.55% 0.57% 0.45% Tangible return on avg. tangible common equity 6.85% 7.49% 6.05% Net interest margin FTE 2.75% 3.09% 3.08% Efficiency ratio (2) 62.03% 59.60% 60.52% MARKET DATA Book value/common share $14.06 13.86 14.10 Tangible book value/common share 9.16 8.86 9.05 Period-end common share mkt value 27.61 26.10 24.91 Market as a % of book 196.4% 188.3% 176.7% Cash dividends/common share $0.135 0.135 0.135 Common stock dividend payout ratio 103.27% 93.80% 121.68% Average basic common shares 21,910,942 21,771,251 21,733,289 Average diluted common shares 22,052,059 21,989,444 21,972,349 Period end common shares 22,059,010 21,795,813 21,754,680 Common stock market capitalization $609,049 568,871 541,909 ASSET QUALITY Gross charge-offs $2,952 3,372 1,683 Net charge-offs 2,285 2,639 1,000 Delinquency Ratio 1.60% 1.45% 1.67% Allowance for loan losses $26,387 24,922 24,611 Non-accrual loans 26,628 22,173 23,152 Past due 90 days or more & accruing 2,546 5,612 5,488 Other assets owned 2,254 3,850 1,793 Nonperforming assets (NPAs) 31,428 31,635 30,433 Restructured loans 2,461 2,496 2,530 Net charge-off ratio 0.47% 0.54% 0.20% Allowance/loans 1.39% 1.27% 1.25% NPL to loans 1.53% 1.42% 1.45% NPA to loans + other assets 1.65% 1.61% 1.54% Allowance to NPLs 90.45% 89.70% 85.93% AVERAGE BALANCES Assets $2,615,839 2,713,206 2,728,886 Deposits 1,845,818 1,895,935 1,954,707 Loans 1,935,094 1,964,587 1,971,090 Earning assets 2,376,178 2,469,808 2,486,312 Shareholders' equity 308,618 305,902 306,128 ENDING BALANCES Assets $2,593,502 2,676,534 2,761,184 Deposits 1,817,768 1,867,237 1,946,143 Loans 1,900,749 1,958,917 1,969,235 Goodwill and other intangible assets 108,128 108,996 109,807 Earning assets 2,351,402 2,409,912 2,501,436 Total shareholders' equity 310,186 302,026 306,686 Unizan Financial Corp. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data) 2003 2003 EARNINGS 4th Qtr 3rd Qtr Net Interest Income FTE (1) 18,909 17,103 Provision for loan losses 1,492 1,026 Other income 6,625 8,022 Security gains/(losses), net (502) 1,821 Other expenses 18,990 15,669 FTE adjustment (1) 301 288 Net income 2,564 6,842 Net income per share - diluted 0.12 0.31 PERFORMANCE RATIOS Return on average assets (ROA) 0.38% 0.99% Return on average common equity (ROE) 3.35% 9.06% Tangible return on average tangible assets 0.48% 1.12% Tangible return on avg. tangible common equity 6.40% 15.61% Net interest margin FTE 3.04% 2.73% Efficiency ratio (2) 62.59% 54.98% MARKET DATA Book value/common share 13.97 13.97 Tangible book value/common share 8.86 8.83 Period-end common share mkt value 20.25 19.95 Market as a % of book 145.0% 142.8% Cash dividends/common share 0.135 0.135 Common stock dividend payout ratio 114.12% 43.22% Average basic common shares 21,656,687 21,632,719 Average diluted common shares 21,940,831 22,134,304 Period end common shares 21,682,793 21,648,404 Common stock market capitalization 439,077 431,886 ASSET QUALITY Gross charge-offs 2,265 1,901 Net charge-offs 1,494 1,330 Delinquency Ratio 1.61% 1.65% Allowance for loan losses 24,611 24,612 Non-accrual loans 20,566 19,888 Past due 90 days or more & accruing 5,333 5,032 Other assets owned 2,143 2,095 Nonperforming assets (NPAs) 28,042 27,015 Restructured loans 2,565 2,598 Net charge-off ratio 0.31% 0.27% Allowance/loans 1.25% 1.27% NPL to loans 1.32% 1.29% NPA to loans + other assets 1.42% 1.40% Allowance to NPLs 95.03% 98.76% AVERAGE BALANCES Assets 2,706,490 2,732,860 Deposits 1,994,244 2,039,429 Loans 1,947,729 1,946,693 Earning assets 2,466,001 2,483,198 Shareholders' equity 303,902 299,681 ENDING BALANCES Assets 2,727,249 2,746,176 Deposits 1,975,792 2,010,295 Loans 1,968,484 1,933,215 Goodwill and other intangible assets 110,632 111,471 Earning assets 2,482,457 2,469,997 Total shareholders' equity 302,823 302,525 (1) - FTE defined as fully tax-equivalent (2) - Excludes amortization of intangibles and impairment of goodwill expenses. Third quarter 2004 excludes $488 pre-tax gain on sale of Wooster Financial Center and $476 pre-tax merger related professional fees and severance accrual. 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. 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 September 30, 2004 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $9,113 $21 0.92 % Securities 431,971 3,309 3.05 Total loans (2) 1,935,094 26,704 5.49 Total interest-earning assets (3) 2,376,178 30,034 5.03 Nonearning assets: Cash and due from banks 58,010 Other nonearning assets 206,434 Allowance for loan losses (24,783) Total assets $2,615,839 Interest bearing liabilities: Demand deposits $231,466 $308 0.53 % Savings deposits 505,279 1,561 1.23 Time deposits 886,615 7,189 3.23 Subordinated note (4) 20,619 505 9.74 Company obligated mandatorily redeemable trust preferred (4) - - - Other borrowings 418,646 4,071 3.87 Total interest bearing liabilities 2,062,625 13,634 2.63 Noninterest bearing liabilities: Demand deposits 222,458 Other liabilities 22,138 Shareholders' equity 308,618 Total liabilities and equity $2,615,839 Net interest income and interest rate spread (3) $16,400 2.40 % Net interest margin (5) 2.75 % Unizan Financial Corp. Average Balance Sheet and Related Yields Three Months Ended September 30, 2003 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $5,592 $11 0.78 % Securities 530,913 4,548 3.40 Total loans (2) 1,946,693 28,268 5.76 Total interest-earning assets (3) 2,483,198 32,827 5.24 Nonearning assets: Cash and due from banks 62,423 Other nonearning assets 211,902 Allowance for loan losses (24,663) Total assets $2,732,860 Interest bearing liabilities: Demand deposits $289,340 $598 0.82 % Savings deposits 529,680 1,420 1.06 Time deposits 1,017,192 8,558 3.34 Subordinated note (4) - - - Company obligated mandatorily redeemable trust preferred (4) 20,000 505 10.02 Other borrowings 343,660 4,643 5.36 Total interest bearing liabilities 2,199,872 15,724 2.84 Noninterest bearing liabilities: Demand deposits 203,217 Other liabilities 30,090 Shareholders' equity 299,681 Total liabilities and equity $2,732,860 Net interest income and interest rate spread (3) $17,103 2.40 % Net interest margin (5) 2.73 % Unizan Financial Corp. Average Balance Sheet and Related Yields Nine Months Ended September 30, 2004 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $6,535 $42 0.86 % Securities 480,472 12,703 3.53 Total loans (2) 1,956,844 81,978 5.60 Total interest-earning assets (3) 2,443,851 94,723 5.18 Nonearning assets: Cash and due from banks 58,164 Other nonearning assets 208,312 Allowance for loan losses (24,607) Total assets $2,685,720 Interest bearing liabilities: Demand deposits $245,507 $997 0.54 % Savings deposits 513,807 4,058 1.05 Time deposits 920,700 21,969 3.19 Subordinated note (4) 20,619 1,514 9.81 Company obligated mandatorily redeemable trust preferred (4) - - - Other borrowings 436,032 11,765 3.60 Total interest bearing liabilities 2,136,665 40,303 2.52 Noninterest bearing liabilities: Demand deposits 218,612 Other liabilities 23,554 Shareholders' equity 306,889 Total liabilities and equity $2,685,720 Net interest income and interest rate spread (3) $54,420 2.66 % Net interest margin (5) 2.97 % Unizan Financial Corp. Average Balance Sheet and Related Yields Nine Months Ended September 30, 2003 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $19,778 $165 1.12 % Securities 530,491 17,371 4.38 Total loans (2) 1,953,226 89,606 6.13 Total interest-earning assets (3) 2,503,495 107,142 5.72 Nonearning assets: Cash and due from banks 59,170 Other nonearning assets 213,549 Allowance for loan losses (25,025) Total assets $2,751,189 Interest bearing liabilities: Demand deposits $284,634 $1,931 0.91 % Savings deposits 489,716 4,043 1.10 Time deposits 1,045,657 27,274 3.49 Subordinated note (4) - - - Company obligated mandatorily redeemable trust preferred (4) 20,000 1,514 10.12 Other borrowings 381,575 13,439 4.71 Total interest bearing liabilities 2,221,582 48,201 2.90 Noninterest bearing liabilities: Demand deposits 193,231 Other liabilities 35,132 Shareholders' equity 301,244 Total liabilities and equity $2,751,189 Net interest income and interest rate spread (3) $58,941 2.82 % Net interest margin (5) 3.15 % (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) 09/30/04 06/30/04 03/31/04 Non-performing loans: Commercial $1,683 $3,180 $1,294 Commercial real estate 5,620 5,433 5,713 Government guaranteed 9,438 7,926 9,334 Aircraft 2,450 291 2,003 Residential real estate 8,577 9,563 8,713 Direct installment loans 63 45 161 Indirect installment loans 160 155 212 Home equity 1,183 1,192 1,210 Total non-performing loans $29,174 $27,785 $28,640 Less: Government guaranteed amount 7,023 6,080 6,965 Total non-performing loans excluding government guaranteed amount $22,151 $21,705 $21,675 Total non-performing loans $29,174 $27,785 $28,640 Other assets owned 2,254 3,850 1,793 Total non-performing assets $31,428 $31,635 $30,433 Less: Government guaranteed amount 7,759 6,816 7,541 Total non-performing assets excluding government guaranteed amount $23,669 $24,819 $22,892 Restructured loans $2,461 $2,496 $2,530 Ratio of: Non-performing loans to total loans 1.53% 1.42% 1.45% Non-performing assets to total assets 1.21% 1.18% 1.10% Non-performing assets to total loans + other assets 1.65% 1.61% 1.54% Allowance to total loans 1.39% 1.27% 1.25% Allowance to non-performing loans 90.45% 89.70% 85.93% Ratio of (excluding government guaranteed amount): Non-performing loans to total loans 1.17% 1.11% 1.10% Non-performing assets to total assets 0.91% 0.93% 0.83% Non-performing assets to total loans + other assets 1.24% 1.26% 1.16% Allowance to non-performing loans 119.12% 114.82% 113.55% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES 09/30/04 06/30/04 03/31/04 Average loans and leases: Commercial $195,561 $198,914 $188,992 Commercial real estate 636,693 653,138 664,241 Government guaranteed 64,643 61,280 61,676 Aircraft 121,690 132,578 133,725 Residential real estate 444,772 448,009 453,362 Indirect installment loans 108,903 116,422 123,426 Home equity 326,582 317,320 307,116 Other consumer 36,250 36,926 38,552 Total average loans and leases $1,935,094 $1,964,587 $1,971,090 Net charge-offs (recoveries): Commercial $175 $425 $(17) Commercial real estate 772 712 261 Government guaranteed 353 141 255 Aircraft (47) 548 - Residential real estate 236 (21) (50) Indirect installment loans 416 384 371 Home equity 164 196 11 Other consumer 216 254 169 Total $2,285 $2,639 $1,000 09/30/04 06/30/04 03/31/04 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.36% 0.85% -0.04% Commercial real estate 0.49% 0.44% 0.16% Government guaranteed 2.18% 0.92% 1.65% Aircraft -0.15% 1.65% 0.00% Residential real estate 0.21% -0.02% -0.04% Indirect installment loans 1.53% 1.32% 1.20% Home equity 0.20% 0.25% 0.01% Other consumer 2.38% 2.75% 1.75% Total 0.47% 0.54% 0.20% Unizan Financial Corp. NONPERFORMING AND UNDERPERFORMING ASSETS (dollars in thousands) 12/31/03 9/30/03 Non-performing loans: Commercial $1,292 $1,348 Commercial real estate 4,112 4,294 Government guaranteed 8,939 8,573 Aircraft 247 134 Residential real estate 9,838 8,911 Direct installment loans 37 118 Indirect installment loans 212 331 Home equity 1,222 1,211 Total non-performing loans $25,899 $24,920 Less: Government guaranteed amount 6,537 6,765 Total non-performing loans excluding government guaranteed amount $19,362 $18,155 Total non-performing loans $25,899 $24,920 Other assets owned 2,143 2,095 Total non-performing assets $28,042 $27,015 Less: Government guaranteed amount 6,969 7,314 Total non-performing assets excluding government guaranteed amount $21,073 $19,701 Restructured loans $2,565 $2,598 Ratio of: Non-performing loans to total loans 1.32% 1.29% Non-performing assets to total assets 1.03% 0.98% Non-performing assets to total loans + other assets 1.42% 1.40% Allowance to total loans 1.25% 1.27% Allowance to non-performing loans 95.03% 98.76% Ratio of (excluding government guaranteed amount): Non-performing loans to total loans 0.98% 0.94% Non-performing assets to total assets 0.77% 0.72% Non-performing assets to total loans + other assets 1.07% 1.02% Allowance to non-performing loans 127.11% 135.57% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES 12/31/03 9/30/03 Average loans and leases: Commercial $193,154 $216,557 Commercial real estate 648,784 622,248 Government guaranteed 62,591 58,665 Aircraft 133,267 135,368 Residential real estate 439,369 443,603 Indirect installment loans 130,478 140,271 Home equity 298,712 283,578 Other consumer 41,374 46,403 Total average loans and leases $1,947,729 $1,946,693 Net charge-offs (recoveries): Commercial $57 $43 Commercial real estate 101 266 Government guaranteed 102 48 Aircraft (124) - Residential real estate 38 26 Indirect installment loans 716 620 Home equity 286 33 Other consumer 318 294 Total $1,494 $1,330 12/31/03 9/30/03 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.12% 0.08% Commercial real estate 0.06% 0.17% Government guaranteed 0.65% 0.33% Aircraft -0.37% 0.00% Residential real estate 0.03% 0.02% Indirect installment loans 2.20% 1.77% Home equity 0.38% 0.05% Other consumer 3.07% 2.53% Total 0.31% 0.27% DATASOURCE: Unizan Financial Corp. CONTACT: Investors, Roger L. Mann, President and Chief Executive Officer, +1-330-438-1118, or +1-866-235-7203, or , or Media, Sandy K. Upperman, Vice President, Corporate Communications, +1-330-438-4858, or , 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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