UNIZ Unizan Financial (MM)

Unizan Financial Corp. Reports Fourth Quarter and Year End 2004 Financial Results CANTON, Ohio, Feb. 18 /PRNewswire-FirstCall/ -- Unizan Financial Corp. (NASDAQ:UNIZ), today reported net income of $3.3 million for the quarter ended December 31, 2004, or $0.15 per diluted share, compared with net income of $2.9 million or $0.13 per diluted share reported for the quarter ended September 30, 2004 and $2.6 million, or $0.12 per diluted share, for the quarter ended December 31, 2003. As previously announced, the fourth quarter 2004 results include a $2.2 million, or $0.10 per diluted share, after-tax charge to recognize an other-than-temporary impairment in value of certain investment securities. The fourth quarter 2004 results also include $160 thousand after-tax, or $0.01 per diluted share, of merger-related severance and other charges compared to an after-tax severance charge of $2.0 million, or $0.09 per diluted share, in the 2003 period. The third quarter 2004 results included an after-tax gain of $317 thousand, or $0.01 per diluted share, on the sale of the Company's Wooster Financial Center and $309 thousand after- tax, or $0.01 per diluted share, of merger-related severance costs and professional fees. Net income for the year-ended December 31, 2004 was $11.7 million or $0.53 per diluted share compared to $23.2 million or $1.05 per diluted share for 2003. In addition to the fourth quarter 2004 charge discussed above, 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 additional expenses of $2.7 million pre-tax, or $1.8 million after-tax, for merger- related professional fees and severance costs. Net interest income - Net interest income was $17.2 million for the three months ended December 31, 2004, up 6.9% from the previous quarter and down 7.4% from the same quarter last year. Net interest income has declined from a year ago due to a 4.7% lower level of average earning assets as well as a decline in the net interest margin. Additionally, the yield on earning assets and the cost of funds have been impacted by a change in the mix and duration of outstanding assets and liabilities. The net interest margin was 2.97% for the fourth quarter of 2004 compared to 2.75% for the third quarter of 2004 and 3.04% for the fourth 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 between UNB Corp. and BancFirst Ohio Corp. in March of 2002. During the third quarter of 2004, $1.4 million of amortization was recognized compared with $436 thousand in the fourth quarter of 2004 and $548 thousand in the fourth quarter of 2003. This amortization reduced the Company's net interest margin by 0.23% in the third quarter of 2004 as compared to .07% in the fourth quarter of 2004 and .09% in the fourth quarter of 2003. Provision for loan losses - The provision for loan losses was $1.4 million for the three months ended December 31, 2004, compared to $3.8 million in the previous quarter and $1.5 million in the fourth quarter of 2003. Net charge- offs for the three months ended December 31, 2004, were $1.5 million compared to $2.3 million for the third quarter of 2004 and $1.5 million for the fourth quarter of 2003. The decrease in net charge-offs from the third quarter of 2004 was mainly attributed to decreases in commercial, commercial real estate and government guaranteed loan charge-offs. Other income - Other income, excluding net gains and losses on securities, was $6.8 million for the fourth quarter of 2004 compared with $7.3 million for the third quarter of 2004 and $6.6 million for fourth quarter of 2003. Results for the third quarter of 2004 included a $488 thousand pre-tax gain on the sale of the Wooster Financial Center. Gains on sales of loans totaled $1.1 million, compared with $1.0 million in both the third quarter of 2004 and fourth quarter of 2003. During the fourth quarter of 2004, gains from the sale of the guaranteed portion of Small Business Administration (SBA) and other government guaranteed loans were $1.0 million, compared with $898 thousand of gains in the third quarter of 2004 and $810 thousand of gains in the fourth quarter of 2003. Gains from the sale of residential mortgage loans in the fourth quarter of 2004 were $113 thousand compared with $110 thousand of gains recognized in the third quarter of 2004 and $196 thousand of gains in the fourth quarter of 2003. With the rise in interest rates and fewer customers who can benefit from refinancing, fees associated with the mortgage related business have declined as refinancing activity has slowed. Net securities losses of $3.3 million were recognized in the fourth quarter of 2004 compared to net losses of $60 thousand in the prior quarter and $502 thousand in the fourth quarter of 2003. As noted earlier, the fourth quarter 2004 results include a $3.4 million pre-tax other-than-temporary impairment charge associated with adjustable rate perpetual preferred stock issued by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Losses in the fourth quarter of 2003 related to sales of equity securities and a write-down of a corporate obligation. Other expense - Other expense was $15.0 million for the three months ended December 31, 2004, down $635 thousand, or 4.0%, from the previous quarter and down $3.9 million, or 20.8%, from the same quarter last year. The decrease from the prior quarter was primarily attributed to a $1.7 million decrease in salaries and benefits due to declines in staffing levels and lower benefits and severance costs. Total full time equivalent employees have decreased from 735 at December 31, 2003 to 650 at September 30, 2004 and 627 at December 31, 2004. This decrease in salaries and benefits was partially offset by a $1.4 million increase in other expenses which related to higher professional fees incurred in connection with activities associated with Section 404 of the Sarbanes-Oxley Act as well as filling staffing vacancies. The decrease from the year ago quarter primarily related to a $4.2 million decrease in salaries and benefits which was mainly attributed to the prior year period including a $2.2 million pre-tax severance charge. Salaries and benefits expense in general also declined as a result of lower staffing levels. Provision for income taxes - The effective tax rate for the three months ended December 31, 2004 was 22.9% compared to 26.3% in the previous quarter and 39.7% in the same quarter last year. The Company's effective tax rates for the third and fourth quarter of 2004 were primarily impacted by tax-exempt income being a larger portion of pre-tax income which had the effect of reducing the effective tax rate as compared to the fourth quarter of 2003. Also, the higher effective tax rate in the 2003 period resulted from the non tax deductible nature of a large portion of the severance charge recognized in such period. Balance sheet - Total assets at December 31, 2004 were $2.57 billion compared to $2.59 billion at the end of the third quarter 2004 and $2.73 billion a year ago. Assets remained relatively unchanged from the prior quarter and declined 5.7% compared to year end 2003. Compared to the prior year, securities declined by 9.9% while loans decreased by 4.8%. During 2004, growth in commercial loans was more than offset by declines in all other loan categories. These declines were attributed to the closing of the aircraft lending centers, competitive factors involving rate and structure and fewer lending officers originating new loans due to turnover of relationship managers in areas where there is significant market overlap with Huntington Bancshares Incorporated ("Huntington" - see Pending Merger below). Total deposits decreased by $135.1 million, or 6.8%, compared to the prior year. A total of $15.4 million of this decline was due to the sale of the Wooster Financial Center during the third quarter of 2004. Of the deposits sold, $10.3 million were certificates of deposit with the remaining distributed between demand and savings accounts. During 2004, interest bearing demand deposits declined by 20.6%, savings deposits, including money market accounts, declined by 0.8% and certificate of deposits declined by 10.3% while non-interest bearing deposits increased 11.9%. 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 deposits and is consistent with the Company's overall strategy to change the deposit mix. Asset quality - At December 3, 2004, non-performing loans to total loans increased to 1.61% from 1.53% at September 30, 2004 and 1.32% at December 31, 2003. Non-performing loans at December 31, 2004 were $30.2 million compared to $29.2 million at September 30, 2004 and $25.9 million at December 31, 2003. Non-performing loans, excluding the portion of the loans guaranteed by the government, at December 31, 2004 were $22.9 million compared to $22.2 million at September 30, 2004 and $19.4 million at December 31, 2003. The $705 thousand or 3.2% increase in non-performing loans since September 30, 2004, is primarily attributed to a $376 thousand increase in non-performing aircraft loans and an $833 thousand increase in non-performing commercial real estate loans, offset in part by a $443 thousand decline in net non-performing government guaranteed loans. The $3.5 million increase in non-performing loans from December 31, 2003 was mainly due to a $2.6 million increase in non- performing aircraft loans and a $2.3 million increase in non-performing commercial real estate loans, offset in part by a $1.5 million decline in non- performing residential real estate loans. Pending Merger As previously announced, the Company has extended its agreement to merge with Huntington to January 27, 2006. As reported, Huntington continues to have ongoing discussions with the staff of the Securities and Exchange Commission ("SEC") regarding resolution of its previously announced formal investigation into certain financial accounting matters relating to fiscal years 2002 and earlier and certain related disclosure matters. Also, Huntington expects to enter into formal supervisory agreements with its banking regulators, the Federal Reserve Board and Office of the Comptroller of the Currency, providing for a comprehensive action plan designed to address its financial reporting and accounting policies, procedures and controls, and its corporate governance practices. Huntington remains in active dialogue with banking regulators concerning these and related matters and is working diligently to resolve them in a full and comprehensive manner. Pending the successful resolution of these matters, Huntington would resubmit its applications for regulatory approval of the merger with Unizan Financial Corp. Internal Control Over Financial Reporting The Company's management identified and reported to the Audit Committee the following control deficiencies, which, individually or in the aggregate, may constitute a material weakness in the Company's internal control over financial reporting as of December 31, 2004. - Inadequate general computer controls related to 1) application and infrastructure change controls; and 2) security around user access rights to certain application systems. - Lack of sufficient documentation over the year end closing process combined with key employee turnover and lower staffing levels resulting from the pending merger with Huntington. Management, with the oversight of the Audit Committee, has been aggressively addressing all of these issues and is committed to effectively remediating known weaknesses as expeditiously as possible. Although the Company's remediation efforts are well underway and expected to be completed in the first quarter of 2005, the Company's weaknesses will not be considered remediated until new internal controls are operational for a period of time and are tested, and management and its independent registered public accounting firm conclude that these controls are operating effectively. Due to the nature of and the time necessary to effectively remediate and test each of the weaknesses identified to date, the Company expects to conclude that some of the weaknesses identified to date had not been effectively remediated as of December 31, 2004. As a result, Management may not be able to issue a positive opinion on the Company's internal controls in the Company's 2004 Annual Report on Form 10-K. Management believes its assertions regarding the Company's internal controls over financial reporting will not preclude an unqualified opinion on the financial statements contained in the Company's 2004 Annual Report on Form 10-K and prepared in conformity with accounting principals generally accepted in the United States of America. About Unizan Unizan Financial Corp., a $2.6 billion holding company, is a financial services organization headquartered in Canton, Ohio. The company operates 42 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 $33 billion regional bank holding company headquartered in Columbus, Ohio. Through its affiliated companies, Huntington has more than 139 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. Forward-looking Statements This press release includes forward-looking statements that are subject to certain risks and uncertainties. Unizan Financial Corp.'s actual results, performance, or achievements may differ materially from those expressed or implied in the forward-looking statements. Risk or uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulation, and rapidly changing technology affecting financial services. Reference is made to Unizan Financial Corp.'s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2003, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except per share data) 12/31/04 09/30/04 06/30/04 ASSETS Federal funds sold and interest bearing deposits with banks $7,139 $8,408 $5,446 Securities, net 422,566 404,104 408,021 Federal Home Loan Bank stock, at cost 36,170 35,788 35,410 Loans originated and held for sale 1,256 2,353 2,118 Loans: Commercial, financial and agricultural 268,339 266,262 269,219 Aircraft 106,845 117,497 126,824 Commercial real estate 607,470 610,061 646,900 Residential real estate 439,866 441,338 446,738 Consumer 450,617 465,591 469,236 Total Loans less unearned income 1,873,137 1,900,749 1,958,917 Less allowance for loan losses 26,356 26,387 24,922 Net loans 1,846,781 1,874,362 1,933,995 Total earning assets 2,340,268 2,351,402 2,409,912 Cash and cash equivalents 52,057 61,072 81,111 Premises and equipment, net 22,226 22,787 23,891 Goodwill 91,971 91,971 91,971 Other intangible assets 15,473 16,157 17,025 Accrued interest receivable and other assets 77,195 76,500 77,546 Total Assets $2,572,834 $2,593,502 $2,676,534 LIABILITIES Deposits: Non-interest bearing deposits $231,004 $213,621 $221,027 Demand - interest bearing 219,249 229,938 242,709 Savings 526,972 517,295 494,598 Certificates and other time deposits 863,501 856,914 908,903 Total deposits 1,840,726 1,817,768 1,867,237 Total borrowings 394,373 439,400 483,485 Accrued taxes, expenses and other liabilities 25,810 26,148 23,786 Total Liabilities 2,260,909 2,283,316 2,374,508 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 220,741 221,141 223,200 Retained earnings 74,854 74,560 74,654 Stock held by deferred compensation plan, 124,824; 122,209; 119,274; 118,616 and 118,616 shares at cost, respectively (2,279) (2,112) (2,039) Treasury stock, 43,956; 64,059; 327,256; 368,389 and 440,276 shares at cost, respectively (1,137) (1,647) (9,282) Accumulated other comprehensive loss (2,377) (3,879) (6,630) Total Shareholders' Equity 311,925 310,186 302,026 Total Liabilities and Shareholders' Equity $2,572,834 $2,593,502 $2,676,534 Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except per share data) 03/31/04 12/31/03 ASSETS Federal funds sold and interest bearing deposits with banks $5,080 $1,942 Securities, net 487,316 474,636 Federal Home Loan Bank stock, at cost 35,061 34,716 Loans originated and held for sale 4,744 2,679 Loans: Commercial, financial and agricultural 258,677 261,167 Aircraft 134,889 133,277 Commercial real estate 662,289 658,699 Residential real estate 449,057 450,398 Consumer 464,323 464,943 Total Loans less unearned income 1,969,235 1,968,484 Less allowance for loan losses 24,611 24,611 Net loans 1,944,624 1,943,873 Total earning assets 2,501,436 2,482,457 Cash and cash equivalents 71,924 59,622 Premises and equipment, net 24,641 25,353 Goodwill 91,971 91,971 Other intangible assets 17,836 18,661 Accrued interest receivable and other assets 77,987 76,860 Total Assets $2,761,184 $2,730,313 LIABILITIES Deposits: Non-interest bearing deposits $214,844 $206,501 Demand - interest bearing 257,012 276,037 Savings 531,437 531,134 Certificates and other time deposits 942,850 962,120 Total deposits 1,946,143 1,975,792 Total borrowings 483,093 421,885 Accrued taxes, expenses and other liabilities 25,262 29,813 Total Liabilities 2,454,498 2,427,490 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 224,722 223,613 Retained earnings 74,461 74,993 Stock held by deferred compensation plan, 124,824; 122,209; 119,274; 118,616 and 118,616 shares at cost, respectively (2,016) (2,016) Treasury stock, 43,956; 64,059; 327,256; 368,389 and 440,276 shares at cost, respectively (10,308) (11,515) Accumulated other comprehensive loss (2,296) (4,375) Total Shareholders' Equity 306,686 302,823 Total Liabilities and Shareholders' Equity $2,761,184 $2,730,313 Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except per share data) Three months ended 12/31/04 09/30/04 06/30/04 Interest income: Interest on federal funds sold and interest bearing deposits with banks $25 $21 $13 Interest and dividends on securities 3,742 3,040 4,269 Interest and fees on loans and loans held for sale 27,452 26,693 27,573 Total interest income $31,219 $29,754 $31,855 Interest expense: Interest on deposits 9,392 9,058 8,816 Interest on borrowings 4,596 4,576 4,366 Total interest expense 13,988 13,634 13,182 Net interest income $17,231 $16,120 $18,673 Provision for loan losses 1,425 3,750 2,950 Net interest income after provision for loan losses $15,806 $12,370 $15,723 Other income: Trust, financial planning, brokerage and insurance sales 2,065 1,793 2,050 Customer service fees 1,784 1,854 1,848 Gains on sale of loans 1,117 1,008 686 Security gains/(losses), net (3,348) (60) 181 Other operating income 1,870 2,626 2,419 Total other income 3,488 7,221 7,184 Other expense: Salaries, wages, pension and benefits 6,489 8,211 10,494 Occupancy expense 802 875 795 Furniture and equipment expense 533 520 572 Taxes other than income taxes 510 557 610 Intangible amortization expense 684 868 811 Other operating expense 6,030 4,652 5,252 Total other expense 15,048 15,683 18,534 Income before income taxes $4,246 $3,908 $4,373 Provision for income taxes 972 1,029 1,242 Net Income $3,274 $2,879 $3,131 Earnings per share: Basic $0.15 $0.13 $0.14 Diluted $0.15 $0.13 $0.14 Dividends per share $0.135 $0.135 $0.135 Weighted average number of shares: Basic 22,066,952 21,910,942 21,771,251 Diluted 22,211,146 22,052,059 21,989,444 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 03/31/04 12/31/03 Interest income: Interest on federal funds sold and interest bearing deposits with banks $8 $8 Interest and dividends on securities 4,597 4,127 Interest and fees on loans and loans held for sale 27,674 28,401 Total interest income $32,279 $32,536 Interest expense: Interest on deposits 9,150 9,764 Interest on borrowings 4,337 4,164 Total interest expense 13,487 13,928 Net interest income $18,792 $18,608 Provision for loan losses 1,000 1,492 Net interest income after provision for loan losses $17,792 $17,116 Other income: Trust, financial planning, brokerage and insurance sales 1,953 1,691 Customer service fees 1,844 2,107 Gains on sale of loans 1,245 993 Security gains/(losses), net 71 (502) Other operating income 1,901 1,834 Total other income 7,014 6,123 Other expense: Salaries, wages, pension and benefits 12,774 10,659 Occupancy expense 867 828 Furniture and equipment expense 534 562 Taxes other than income taxes 630 504 Intangible amortization expense 825 839 Other operating expense 5,784 5,598 Total other expense 21,414 18,990 Income before income taxes $3,392 $4,249 Provision for income taxes 980 1,685 Net Income $2,412 $2,564 Earnings per share: Basic $0.11 $0.12 Diluted $0.11 $0.12 Dividends per share $0.135 $0.135 Weighted average number of shares: Basic 21,733,289 21,656,687 Diluted 21,972,349 21,940,831 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) For the full year ending 12/31/2004 12/31/2003 Interest income: Interest on federal funds sold and interest bearing deposits with banks $67 $173 Interest and dividends on securities 15,648 20,745 Interest and fees on loans and loans held for sale 109,392 117,942 Total interest income 125,107 138,860 Interest expense: Interest on deposits 36,416 43,012 Interest on borrowings 17,875 19,117 Total interest expense 54,291 62,129 Net interest income 70,816 76,731 Provision for loan losses 9,125 4,833 Net interest income after provision for loan losses 61,691 71,898 Other income: Trust, financial planning, brokerage and insurance sales 7,861 7,199 Customer service fees 7,330 7,364 Gains on sale of loans 4,056 7,125 Security gains, net (3,156) 1,773 Other operating income 8,816 7,141 Total other income 24,907 30,602 Other expense: Salaries, wages, pension and benefits 37,968 37,219 Occupancy expense 3,339 3,432 Furniture and equipment expense 2,159 2,315 Taxes other than income taxes 2,307 2,051 Intangible amortization expense 3,188 3,387 Other operating expense 21,718 19,765 Total other expense 70,679 68,169 Income before income taxes 15,919 34,331 Provision for income taxes 4,223 11,108 Net Income $11,696 $23,223 Earnings per share: Basic $0.53 $1.07 Diluted $0.53 $1.05 Dividends per share $0.540 $0.540 Weighted average number of shares: Basic 21,871,255 21,683,336 Diluted 22,056,961 22,205,750 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 4th Qtr 3rd Qtr 2nd Qtr Net Interest Income FTE (1) $17,510 16,400 18,959 Provision for loan losses 1,425 3,750 2,950 Other income 6,836 7,281 7,003 Security gains/(losses), net (3,348) (60) 181 Other expenses 15,048 15,683 18,534 FTE adjustment (1) 279 280 286 Net income $3,274 2,879 3,131 Net income per share - diluted $0.15 0.13 0.14 PERFORMANCE RATIOS Return on average assets (ROA) 0.50% 0.44% 0.46% Return on average common equity (ROE) 4.16% 3.71% 4.12% Tangible return on average tangible assets 0.60% 0.55% 0.57% Tangible return on avg. tangible common equity 7.20% 6.85% 7.49% Net interest margin FTE 2.97% 2.75% 3.09% Efficiency ratio (2) 58.86% 62.03% 59.60% MARKET DATA Book value/common share $14.17 14.06 13.86 Tangible book value/common share 9.29 9.16 8.86 Period-end common share mkt value 26.35 27.61 26.10 Market as a % of book 186.0% 196.4% 188.3% Cash dividends/common share $0.135 0.135 0.135 Common stock dividend payout ratio 91.02% 103.27% 93.80% Average basic common shares 22,066,952 21,910,942 21,771,251 Average diluted common shares 22,211,146 22,052,059 21,989,444 Period end common shares 22,017,113 22,059,010 21,795,813 Common stock market capitalization $580,151 609,049 568,871 ASSET QUALITY Gross charge-offs $2,139 2,952 3,372 Net charge-offs 1,456 2,285 2,639 Delinquency Ratio 1.59% 1.60% 1.45% Allowance for loan losses $26,356 26,387 24,922 Non-accrual loans 28,294 26,628 22,173 Past due 90 days or more & accruing 1,856 2,546 5,612 Other assets owned 2,612 2,254 3,850 Nonperforming assets (NPAs) 32,762 31,428 31,635 Restructured loans 2,430 2,461 2,496 Net charge-off ratio 0.31% 0.47% 0.54% Allowance/loans 1.41% 1.39% 1.27% NPL to loans 1.61% 1.53% 1.42% NPA to loans + other assets 1.75% 1.65% 1.61% Allowance to NPLs 87.42% 90.45% 89.70% AVERAGE BALANCES Assets $2,579,517 2,615,839 2,713,206 Deposits 1,820,310 1,845,818 1,895,935 Loans 1,883,193 1,935,094 1,964,587 Earning assets 2,349,292 2,376,178 2,469,808 Shareholders' equity 313,231 308,618 305,902 ENDING BALANCES Assets $2,572,834 2,593,502 2,676,534 Deposits 1,840,726 1,817,768 1,867,237 Loans 1,873,137 1,900,749 1,958,917 Goodwill and other intangible assets 107,444 108,128 108,996 Earning assets 2,340,268 2,351,402 2,409,912 Total shareholders' equity 311,925 310,186 302,026 (1) - FTE defined as fully tax-equivalent (2) - Excludes amortization of intangibles and impairment of goodwill expenses. Fourth quarter 2004 excludes $246 pre-tax merger related professional fees and severance accrual. 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. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data) 2004 2003 EARNINGS 1st Qtr 4th Qtr Net Interest Income FTE (1) $19,061 18,909 Provision for loan losses 1,000 1,492 Other income 6,943 6,625 Security gains/(losses), net 71 (502) Other expenses 21,414 18,990 FTE adjustment (1) 269 301 Net income $2,412 2,564 Net income per share - diluted $0.11 0.12 PERFORMANCE RATIOS Return on average assets (ROA) 0.36% 0.38% Return on average common equity (ROE) 3.17% 3.35% Tangible return on average tangible assets 0.45% 0.48% Tangible return on avg. tangible common equity 6.05% 6.40% Net interest margin FTE 3.08% 3.04% Efficiency ratio (2) 60.52% 62.59% MARKET DATA Book value/common share $14.10 13.97 Tangible book value/common share 9.05 8.86 Period-end common share mkt value 24.91 20.25 Market as a % of book 176.7% 145.0% Cash dividends/common share $0.135 0.135 Common stock dividend payout ratio 121.68% 114.12% Average basic common shares 21,733,289 21,656,687 Average diluted common shares 21,972,349 21,940,831 Period end common shares 21,754,680 21,682,793 Common stock market capitalization $541,909 439,077 ASSET QUALITY Gross charge-offs $1,683 2,265 Net charge-offs 1,000 1,494 Delinquency Ratio 1.67% 1.61% Allowance for loan losses $24,611 24,611 Non-accrual loans 23,152 20,566 Past due 90 days or more & accruing 5,488 5,333 Other assets owned 1,793 2,143 Nonperforming assets (NPAs) 30,433 28,042 Restructured loans 2,530 2,565 Net charge-off ratio 0.20% 0.31% Allowance/loans 1.25% 1.25% NPL to loans 1.45% 1.32% NPA to loans + other assets 1.54% 1.42% Allowance to NPLs 85.93% 95.03% AVERAGE BALANCES Assets $2,728,886 2,706,490 Deposits 1,954,707 1,994,244 Loans 1,971,090 1,947,729 Earning assets 2,486,312 2,466,001 Shareholders' equity 306,128 303,902 ENDING BALANCES Assets $2,761,184 2,730,313 Deposits 1,946,143 1,975,792 Loans 1,969,235 1,968,484 Goodwill and other intangible assets 109,807 110,632 Earning assets 2,501,436 2,482,457 Total shareholders' equity 306,686 302,823 (1) - FTE defined as fully tax-equivalent (2) - Excludes amortization of intangibles and impairment of goodwill expenses. Fourth quarter 2004 excludes $246 pre-tax merger related professional fees and severance accrual. 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 December 31, 2004 2003 Average Income/ Average Income/ (dollars in thousands) Balance Expense Rate (1) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $7,148 $25 1.39% $4,181 $8 0.76% Securities 458,951 4,008 3.47% 514,091 4,429 3.42% Total loans (2) 1,883,193 27,466 5.80% 1,947,729 28,400 5.78% Total interest- earning assets (3) 2,349,292 31,499 5.33% 2,466,001 32,837 5.28% Nonearning assets: Cash and due from banks 51,368 54,263 Other nonearning assets 205,181 210,799 Allowance for loan losses (26,324) (24,573) Total assets $2,579,517 $2,706,490 Interest bearing liabilities: Demand deposits $222,749 $303 0.54% $276,328 $493 0.71% Savings deposits 519,130 2,114 1.62% 531,950 1,364 1.02% Time deposits 849,500 6,977 3.27% 978,859 7,907 3.20% Subordinated note (4) 20,619 505 9.74% 20,000 505 10.02% Company obligated mandatorily redeemable trust preferred (4) - - Other borrowings 399,759 4,090 4.07% 361,556 3,659 4.02% Total interest bearing liabilities 2,011,757 13,989 2.77% 2,168,693 13,928 2.55% Noninterest bearing liabilities: Demand deposits 228,931 207,107 Other liabilities 25,598 26,788 Shareholders' equity 313,231 303,902 Total liabilities and equity $2,579,517 $2,706,490 Net interest income and interest rate spread (3) $17,510 2.56% $18,909 2.73% Net interest margin (5) 2.97% 3.04% (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 Twelve Months Ended December 31, 2004 2003 Average Income/ Average Income/ (dollars in thousands) Balance Expense Rate (1) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $6,689 $67 1.00% $15,848 $173 1.09% Securities 475,063 16,711 3.52% 526,357 21,800 4.14% Total loans (2) 1,938,331 109,461 5.65% 1,951,840 118,006 6.05% Total interest- earning assets (3) 2,420,083 126,239 5.22% 2,494,045 139,979 5.61% Nonearning assets: Cash and due from banks 56,461 57,932 Other nonearning assets 207,520 213,013 Allowance for loan losses (25,039) (24,911) Total assets $2,659,025 $2,740,079 Interest bearing liabilities: Demand deposits $240,247 $1,299 0.54% $282,540 $2,424 0.86% Savings deposits 515,145 6,172 1.20% 500,362 5,407 1.08% Time deposits 902,803 28,945 3.21% 1,028,820 35,181 3.42% Subordinated note (4) 20,619 2,019 9.79% 20,000 2,019 10.10% Company obligated mandatorily redeemable trust preferred (4) - - Other borrowings 426,914 15,855 3.71% 376,685 17,098 4.54% Total interest bearing liabilities 2,105,728 54,290 2.58% 2,208,407 62,129 2.81% Noninterest bearing liabilities: Demand deposits 220,746 196,729 Other liabilities 24,068 33,029 Shareholders' equity 308,483 301,914 Total liabilities and equity $2,659,025 $2,740,079 Net interest income and interest rate spread (3) $71,949 2.64% $77,850 2.80% Net interest margin (5) 2.97% 3.12% (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) 12/31/04 09/30/04 06/30/04 03/31/04 12/31/03 Non-performing loans: Commercial $1,689 $1,683 $3,180 $1,294 $1,292 Commercial real estate 6,453 5,620 5,433 5,713 4,112 Government guaranteed 9,266 9,438 7,926 9,334 8,939 Aircraft 2,826 2,450 291 2,003 247 Residential real estate 8,375 8,577 9,563 8,713 9,838 Direct installment loans 111 63 45 161 37 Indirect installment loans 204 160 155 212 212 Home equity 1,226 1,183 1,192 1,210 1,222 Total non-performing loans 30,150 29,174 27,785 28,640 25,899 Less: Government guaranteed amount 7,294 7,023 6,080 6,965 6,537 Total non-performing loans excluding government guaranteed amount $22,856 $22,151 $21,705 $21,675 $19,362 Total non-performing loans $30,150 $29,174 $27,785 $28,640 $25,899 Other assets owned 2,612 2,254 3,850 1,793 2,143 Total non-performing assets 32,762 31,428 31,635 30,433 28,042 Less: Government guaranteed amount 7,976 7,759 6,816 7,541 6,969 Total non-performing assets excluding government guaranteed amount $24,786 $23,669 $24,819 $22,892 $21,073 Restructured loans $2,430 $2,461 $2,496 $2,530 $2,565 Ratio of: Non-performing loans to total loans 1.61% 1.53% 1.42% 1.45% 1.32% Non-performing assets to total assets 1.27% 1.21% 1.18% 1.10% 1.03% Non-performing assets to total loans + other assets 1.75% 1.65% 1.61% 1.54% 1.42% Allowance to total loans 1.41% 1.39% 1.27% 1.25% 1.25% Allowance to non-performing loans 87.42% 90.45% 89.70% 85.93% 95.03% Ratio of (excluding government guaranteed amount): Non-performing loans to total loans 1.22% 1.17% 1.11% 1.10% 0.98% Non-performing assets to total assets 0.96% 0.91% 0.93% 0.83% 0.77% Non-performing assets to total loans + other assets 1.32% 1.24% 1.26% 1.16% 1.07% Allowance to non-performing loans 115.31% 119.12% 114.82% 113.55% 127.11% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES 12/31/04 09/30/04 06/30/04 03/31/04 12/31/03 Average loans and leases: Commercial $187,149 $195,561 $198,914 $188,992 $193,154 Commercial real estate 607,848 636,693 653,138 664,241 648,784 Government guaranteed 72,949 64,643 61,280 61,676 62,591 Aircraft 111,681 121,690 132,578 133,725 133,267 Residential real estate 441,000 444,772 448,009 453,362 439,369 Indirect installment loans 101,154 108,903 116,422 123,426 130,478 Home equity 326,656 326,582 317,320 307,116 298,712 Other consumer 34,756 36,250 36,926 38,552 41,374 Total average loans and leases $1,883,193 $1,935,094 $1,964,587 $1,971,090 $1,947,729 Net charge-offs (recoveries): Commercial $65 $175 $425 $(17) $57 Commercial real estate 87 772 712 261 101 Government guaranteed 26 353 141 255 102 Aircraft 64 (47) 548 - (124) Residential real estate 261 236 (21) (50) 38 Indirect installment loans 436 416 384 371 716 Home equity 217 164 196 11 286 Other consumer 300 216 254 169 318 Total $1,456 $2,285 $2,639 $1,000 $1,494 12/31/04 09/30/04 06/30/04 03/31/04 12/31/03 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.14% 0.36% 0.85% -0.04% 0.12% Commercial real estate 0.06% 0.49% 0.44% 0.16% 0.06% Government guaranteed 0.14% 2.18% 0.92% 1.65% 0.65% Aircraft 0.23% -0.15% 1.65% 0.00% -0.37% Residential real estate 0.24% 0.21% -0.02% -0.04% 0.03% Indirect installment loans 1.72% 1.53% 1.32% 1.20% 2.20% Home equity 0.27% 0.20% 0.25% 0.01% 0.38% Other consumer 3.45% 2.38% 2.75% 1.75% 3.07% Total 0.31% 0.47% 0.54% 0.20% 0.31% 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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