Unizan Financial Corp. Reports Second Quarter 2005 Financial Results

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Unizan Financial (MM)	NASDAQ:UNIZ	NASDAQ	Common Stock

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Unizan Financial Corp. Reports Second Quarter 2005 Financial Results CANTON, Ohio, July 22 /PRNewswire-FirstCall/ -- Unizan Financial Corp. (NASDAQ:UNIZ), today reported net income of $5.0 million for the quarter ended June 30 2005, or $0.23 per diluted share, a 10% increase compared with net income of $4.5 million, or $0.20 per diluted share, for the first quarter of 2005 and a 60% increase compared with net income of $3.1 million, or $0.14 per diluted share, for the quarter ended June 30, 2004. "Our second quarter results continue to reflect solid improvement in our net income during the first six months of 2005," said Roger L. Mann, Unizan Financial Corp. President and Chief Executive Officer. "I continue to be extremely pleased with the commitment demonstrated by our staff as we progress through the 2005 calendar year," concluded Mann. Net income for the six months ended June 30, 2005 was $9.5 million, or $0.43 per diluted share, compared to $5.5 million, or $0.25 per diluted share, for the same period in 2004. Net interest income -- Net interest income was $17.1 million for the three months ended June 30, 2005, up 1.8% from the previous quarter and down 8.6% from the same quarter last year. The net interest margin was 3.07% for the second quarter of 2005 compared to 3.02% for the first quarter of 2005 and 3.09% for the second quarter of 2004 while average earning assets during the second quarter of 2005 declined 0.9% from the prior quarter and 8.1% from the year ago quarter. Provision for loan losses -- The provision for loan losses was $1.4 million for the three months ended June 30, 2005, compared to $1.3 million in the previous quarter and $3.0 million in the second quarter of 2004. The decrease compared to the year ago quarter was due to both a decrease in net charge-offs as well as a greater decline in loan balances. Net charge-offs were $2.0 million for the second quarter of 2005 compared to $1.8 million in the previous quarter and $2.6 million in the year ago quarter while loan balances decreased by $39.5 million in the second quarter of 2005 compared to $51.2 million in the first quarter of 2005 and $12.9 million in the year ago quarter. The decrease in net charge-offs from the second quarter of 2004 was attributed primarily to elimination of aircraft charge-offs which totaled $548 thousand in the 2004 quarter and were isolated to two borrowers as compared to no net charge-offs in the second quarter of 2005. Other income -- Other income, excluding net securities gains, was $7.1 million for the second quarter of 2005 compared with $7.0 million for both the first quarter of 2005 and second quarter of 2004. Customer service fees, representing service charges on deposits and fees for other banking services, increased by $134 thousand, or 8.5%, from the first quarter of 2005 and decreased by $135 thousand, or 7.3%, from the second quarter of 2004. The increase compared to the prior quarter was mainly attributed to pricing changes for insufficient funds transactions. The decrease from the second quarter of 2004 was mainly attributed to changes in consumer behavior, particularly with respect to increased utilization of electronic and other means for payment transactions, as well as increases in earnings credits due to higher short term interest rates which offset business account service charges. Gains on sales of loans totaled $1.1 million, compared with $1.2 million in the first quarter of 2005 and $686 thousand in the second quarter of 2004. During the second quarter of 2005, gains from the sale of the guaranteed portion of Small Business Administration (SBA) and other government guaranteed loans were $944 thousand, compared with $1.2 million of gains in the first quarter of 2005 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 limitations placed by the SBA 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 2005 were $125 thousand compared with $25 thousand of gains in the first quarter of 2005 and $206 thousand of gains in the second quarter of 2004. The increase from the prior quarter resulted primarily from declines in mortgage rates as well as the seasonality of mortgage origination activity. There were no net security gains in the second quarter of 2005 or the first quarter of 2005 compared to $181 thousand in the second quarter of 2004. The net gains in the second quarter of 2004 resulted primarily from the sale of the Company's $40 million trust preferred securities portfolio which reduced its credit exposure. Other expense -- Other expense was $15.5 million for the three months ended June 30, 2005, down $604 thousand, or 3.7%, from the previous quarter and down $3.0 million, or 16.1%, from the same quarter a year ago. These decreases were primarily attributed to salaries and benefits expense which declined $371 thousand as compared to the previous quarter and $2.9 million as compared to the prior year quarter. The decrease from the prior year quarter was partially due to the recognition in the 2004 period of $1.4 million in salary expense related to the settlement of certain stock options and $425 thousand for merger related severance accruals. In addition, salaries and benefits expense in general have declined as a result of lower staffing levels. Total full time equivalent employees have declined from 695 at June 30, 2004 to 627 at December 31, 2004 and 615 at June 30, 2005. Other expense also included accounting, legal and other professional fees totaling $1.6 million, $1.3 million and $873 thousand for the quarters ended June 30, 2005, March 31, 2005 and June 30, 2004, respectively. Such costs for the June 2005 and March 2005 quarters were primarily attributed to filling staffing vacancies, outsourcing certain functions that were previously performed internally, and activities associated with reviewing, implementing and maintaining controls in accordance with provisions of Section 404 of the Sarbanes-Oxley Act of 2002. The June 2004 quarter included $398 thousand of merger related legal and professional fees as compared to minimal amounts in the 2005 quarters. Provision for income taxes -- The effective tax rate for the three months ended June 30, 2005 was 30.1% compared to 28.4% in the previous quarter and the same quarter last year. The increase in the effective tax rate was a result of tax exempt income representing a relatively smaller portion of pre- tax earnings in 2005 as compared to 2004. Balance sheet -- Total assets at June 30, 2005 were $2.49 billion compared to $2.57 billion at the end of 2004 and $2.68 billion a year ago. Assets declined 3.3% from year end 2004 and 7.0% from June 30, 2004. Compared to a year ago, loans decreased by $177.3 million, or 9.0%, which continues to be primarily attributed to the closing of the aircraft lending centers, less emphasis being placed on indirect consumer lending, competitive factors involving rate and structure and a reduction in lending staff in areas where there is significant market overlap with Huntington Bancshares Incorporated ("Huntington" -- see Pending Merger below). Total deposits decreased by $11.7 million, or 0.6%, from the end of 2004 and by $38.2 million, or 2.0%, from a year ago while total borrowings have declined by $78.1 million from year end 2004 and by $167.2 million from a year ago. Asset quality -- At June 30, 2005, non-performing loans were $30.7 million, or 1.72% of total loans, compared to $30.2 million, or 1.61% of total loans, at December 31, 2004 and $27.8 million, or 1.42% of total loans, at June 30, 2004. Delinquent loans to total loans declined to 1.32% at June 30, 2005 compared to 1.60% at December 31, 2004 and 1.45% at June 30, 2004. Non-performing loans, excluding the portion of the loans guaranteed by the government, were $24.2 million at June 30, 2005 compared to $22.8 million at December 31, 2004 and $21.7 million at June 30, 2004. The $1.4 million increase in non-performing loans from year end 2004 was mainly due to a $1.6 million increase in non-performing commercial loans while the $2.5 million increase in non-performing loans from June 30, 2004 was mainly due to a $2.4 million increase in non-performing aircraft loans. Pending Merger As previously announced, the Company has extended its agreement to merge with Huntington to January 27, 2006. As previously announced, Huntington has entered into formal supervisory agreements with its banking regulators, the Federal Reserve Board and Office of the Comptroller of the Currency. On March 1, 2005, Huntington announced that it intends to resubmit its applications for regulatory approval of the merger with Unizan Financial Corp. once the regulatory written agreements have been terminated. No assurances, however, can be provided as to the ultimate timing or outcome of these matters. About Unizan Unizan Financial Corp., a $2.5 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/. Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) 6/30/05 3/31/05 ASSETS Federal funds sold and interest bearing deposits with banks $6,040 $13,149 Securities, net 424,481 419,750 Federal Home Loan Bank stock, at cost 37,016 36,572 Loans originated and held for sale 3,988 2,066 Loans: Commercial, financial and agricultural 225,747 236,062 Aircraft 83,342 93,527 Commercial real estate 597,409 610,945 Residential real estate 431,219 437,819 Consumer 442,003 442,783 Total Loans less unearned income 1,779,720 1,821,136 Less allowance for loan losses 25,273 25,868 Net loans 1,754,447 1,795,268 Total earning assets 2,251,245 2,292,673 Cash and cash equivalents 55,965 45,347 Premises and equipment, net 21,818 22,111 Goodwill 91,971 91,971 Other intangible assets 14,190 14,823 Accrued interest receivable and other assets 78,221 76,884 Total Assets $2,488,137 $2,517,941 LIABILITIES Deposits: Non-interest bearing deposits $213,026 $209,872 Demand - interest bearing 196,842 202,651 Savings 527,784 528,266 Certificates and other time deposits 891,351 884,518 Total deposits 1,829,003 1,825,307 Total borrowings 316,261 353,791 Accrued taxes, expenses and other liabilities 25,698 25,973 Total Liabilities 2,170,962 2,205,071 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 220,537 220,669 Retained earnings 78,423 76,405 Stock held by deferred compensation plan, 123,732;127,063; 128,400; 122,209; and 119,274 shares at cost, respectively (2,189) (2,243) Treasury stock, 3,687; 24,587; 43,956; 64,059; and 327,256 shares at cost, respectively (92) (646) Accumulated other comprehensive loss (1,627) (3,438) Total Shareholders' Equity 317,175 312,870 Total Liabilities and Shareholders' Equity $2,488,137 $2,517,941 Unizan Financial Corp. CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) 12/31/04 9/30/04 6/30/04 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, 123,732;127,063; 128,400; 122,209; and 119,274 shares at cost, respectively (2,279) (2,112) (2,039) Treasury stock, 3,687; 24,587; 43,956; 64,059; and 327,256 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. COMPARATIVE STATEMENTS OF INCOME (In thousands except share and per share data) Three months ended 6/30/05 3/31/05 Interest income: Interest on federal funds sold and interest bearing deposits with banks $95 $71 Interest and dividends on securities 4,202 3,868 Interest and fees on loans and loans held for sale 27,478 26,889 Total interest income 31,775 30,828 Interest expense: Interest on deposits 10,762 9,920 Interest on borrowings 3,946 4,135 Total interest expense 14,708 14,055 Net interest income 17,067 16,773 Provision for loan losses 1,429 1,295 Net interest income after provision for loan losses 15,638 15,478 Other income: Trust, financial planning, brokerage and insurance sales 2,332 2,247 Customer service fees 1,713 1,579 Gains on sale of loans 1,069 1,187 Security gains/(losses), net - - Other operating income 1,950 1,991 Total other income 7,064 7,004 Other expense: Salaries, wages, pension and benefits 7,617 7,988 Occupancy expense 831 908 Furniture and equipment expense 486 503 Taxes other than income taxes 687 679 Intangible amortization expense 634 650 Other operating expense 5,288 5,419 Total other expense 15,543 16,147 Income before income taxes 7,159 6,335 Provision for income taxes 2,156 1,802 Net Income $5,003 $4,533 Earnings per share: Basic $0.23 $0.21 Diluted $0.23 $0.20 Dividends per share $0.135 $0.135 Weighted average number of shares: Basic 22,104,216 22,088,798 Diluted 22,225,063 22,200,120 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. Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except share and per share data) Three months ended 12/31/04 9/30/04 6/30/04 Interest income: Interest on federal funds sold and interest bearing deposits with banks $33 $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 31,227 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 17,239 16,120 18,673 Provision for loan losses 1,425 3,750 2,950 Net interest income after provision for loan losses 15,814 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 4,254 3,908 4,373 Provision for income taxes 972 1,029 1,242 Net Income $3,282 $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. Unizan Financial Corp. COMPARATIVE STATEMENTS OF INCOME (In thousands except share and per share data) Year to Date 6/30/2005 6/30/2004 Interest income: Interest on federal funds sold and interest bearing deposits with banks $166 $21 Interest and dividends on securities 8,070 8,866 Interest and fees on loans and loans held for sale 54,367 55,247 Total interest income 62,603 64,134 Interest expense: Interest on deposits 20,682 17,966 Interest on borrowings 8,081 8,703 Total interest expense 28,763 26,669 Net interest income 33,840 37,465 Provision for loan losses 2,724 3,950 Net interest income after provision for loan losses 31,116 33,515 Other income: Trust, financial planning, brokerage and insurance sales 4,579 4,003 Customer service fees 3,292 3,692 Gains on sale of loans 2,256 1,931 Security gains, net - 252 Other operating income 3,941 4,320 Total other income 14,068 14,198 Other expense: Salaries, wages, pension and benefits 15,605 23,268 Occupancy expense 1,739 1,662 Furniture and equipment expense 989 1,106 Taxes other than income taxes 1,366 1,240 Intangible amortization expense 1,284 1,636 Other operating expense 10,707 11,036 Total other expense 31,690 39,948 Income before income taxes 13,494 7,765 Provision for income taxes 3,958 2,222 Net Income $9,536 $5,543 Earnings per share: Basic $0.43 $0.25 Diluted $0.43 $0.25 Dividends per share $0.270 $0.270 Weighted average number of shares: Basic 22,096,549 21,752,270 Diluted 22,212,560 21,980,896 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. Unizan Financial Corp. Average Balance Sheet and Related Yields Three Months Ended June 30, 2005 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $16,094 $95 2.37 % Securities 455,670 4,473 3.94 Total loans (2) 1,797,618 27,490 6.13 Total interest-earning assets (3) 2,269,382 32,058 5.67 Nonearning assets: Cash and due from banks 50,686 Other nonearning assets 202,896 Allowance for loan losses (25,528) Total assets $2,497,436 Interest bearing liabilities: Demand deposits $198,356 $356 0.72 % Savings deposits 529,377 2,931 2.22 Time deposits 883,203 7,475 3.39 Total deposits 1,610,936 10,762 2.68 Subordinated note 20,619 521 10.13 Other borrowings 315,438 3,425 4.36 Total borrowings 336,057 3,946 4.71 Total interest bearing liabilities 1,946,993 14,708 3.03 Noninterest bearing liabilities: Demand deposits 211,818 Other liabilities 22,238 Shareholders' equity 316,386 Total liabilities and equity $2,497,435 Net interest income and interest rate spread (3) $17,350 2.64 % Net interest margin (4) 3.07 % (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) 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, 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 Total deposits 1,671,291 8,816 2.12 Subordinated note 20,619 504 9.83 Other borrowings 466,646 3,862 3.33 Total borrowings 487,265 4,366 3.60 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 2.77 % Net interest margin (4) 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) 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, 2005 Average Income/ (dollars in thousands) Balance Expense Rate (1) Interest-earning assets Interest bearing deposits and federal funds sold $15,088 $166 2.22 % Securities 451,013 8,611 3.85 Total loans (2) 1,814,064 54,392 6.05 Total interest-earning assets (3) 2,280,165 63,169 5.59 Nonearning assets: Cash and due from banks 49,794 Other nonearning assets 203,972 Allowance for loan losses (25,840) Total assets $2,508,091 Interest bearing liabilities: Demand deposits $203,597 $692 0.69 % Savings deposits 524,741 5,436 2.09 Time deposits 877,133 14,554 3.35 Total deposits 1,605,471 20,682 2.60 Subordinated note 20,619 1,010 9.88 Other borrowings 328,023 7,071 4.35 Total borrowings 348,642 8,081 4.67 Total interest bearing liabilities 1,954,113 28,763 2.97 Noninterest bearing liabilities: Demand deposits 214,500 Other liabilities 23,789 Shareholders' equity 315,689 Total liabilities and equity $2,508,091 Net interest income and interest rate spread (3) $34,406 2.62 % Net interest margin (4) 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) 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 Total deposits 1,708,647 17,966 2.11 Subordinated note 20,619 1,009 9.84 Other borrowings 444,820 7,694 3.48 Total borrowings 465,439 8,703 3.76 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 (4) 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) 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) 6/30/05 3/31/05 Non-performing loans: Commercial $3,284 $1,588 Commercial real estate 5,255 6,477 Government guaranteed 8,559 8,690 Aircraft 2,734 2,950 Residential real estate 9,214 8,931 Direct installment loans 30 28 Indirect installment loans 6 67 Home equity 1,646 1,418 Total non-performing loans 30,728 30,149 Less: Government guaranteed amount 6,483 6,739 Total non-performing loans excluding government guaranteed amount $24,245 $23,410 Total non-performing loans $30,728 $30,149 Other assets owned 2,133 1,604 Total non-performing assets 32,861 31,753 Less: Government guaranteed amount 6,829 7,085 Total non-performing assets excluding government guaranteed amount $26,032 $24,668 Restructured loans $5,302 $5,339 Ratio of: Non-performing loans to total loans 1.72% 1.65% Non-performing assets to total assets 1.32% 1.26% Non-performing assets to total loans + other assets 1.84% 1.74% Allowance to total loans 1.42% 1.42% Allowance to non-performing loans 82.25% 85.80% Ratio of (excluding government guaranteed amount): Non-performing loans to total loans 1.36% 1.29% Non-performing assets to total assets 1.05% 0.98% Non-performing assets to total loans + other assets 1.46% 1.35% Allowance to non-performing loans 104.24% 110.50% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES Average loans and leases: Commercial $149,892 $159,226 Commercial real estate 605,529 607,789 Government guaranteed 73,627 75,817 Aircraft 87,516 100,834 Residential real estate 436,273 439,089 Indirect installment loans 88,535 93,285 Home equity 325,013 322,376 Other consumer 31,233 32,277 Total average loans and leases $1,797,618 $1,830,693 Net charge-offs (recoveries): Commercial $88 $284 Commercial real estate 910 419 Government guaranteed 170 84 Aircraft - 17 Residential real estate 204 153 Indirect installment loans 271 542 Home equity 174 135 Other consumer 207 148 Total $2,024 $1,782 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.23% 0.71% Commercial real estate 0.60% 0.28% Government guaranteed 0.92% 0.44% Aircraft 0.00% 0.07% Residential real estate 0.19% 0.14% Indirect installment loans 1.22% 2.32% Home equity 0.21% 0.17% Other consumer 2.65% 1.83% Total 0.45% 0.39% Unizan Financial Corp. NONPERFORMING AND UNDERPERFORMING ASSETS (dollars in thousands) 12/31/04 9/30/04 6/30/04 Non-performing loans: Commercial $1,689 $1,683 $3,180 Commercial real estate 6,453 5,620 5,433 Government guaranteed 9,266 9,438 7,926 Aircraft 2,826 2,450 291 Residential real estate 8,375 8,577 9,563 Direct installment loans 111 63 45 Indirect installment loans 204 160 155 Home equity 1,226 1,183 1,192 Total non-performing loans 30,150 29,174 27,785 Less: Government guaranteed amount 7,294 7,023 6,080 Total non-performing loans excluding government guaranteed amount $22,856 $22,151 $21,705 Total non-performing loans $30,150 $29,174 $27,785 Other assets owned 2,612 2,254 3,850 Total non-performing assets 32,762 31,428 31,635 Less: Government guaranteed amount 7,976 7,759 6,816 Total non-performing assets excluding government guaranteed amount $24,786 $23,669 $24,819 Restructured loans $2,430 $2,461 $2,496 Ratio of: Non-performing loans to total loans 1.61% 1.53% 1.42% Non-performing assets to total assets 1.27% 1.21% 1.18% Non-performing assets to total loans + other assets 1.75% 1.65% 1.61% Allowance to total loans 1.41% 1.39% 1.27% Allowance to non-performing loans 87.42% 90.45% 89.70% Ratio of (excluding government guaranteed amount): Non-performing loans to total loans 1.22% 1.17% 1.11% Non-performing assets to total assets 0.96% 0.91% 0.93% Non-performing assets to total loans + other assets 1.32% 1.24% 1.26% Allowance to non-performing loans 115.31% 119.12% 114.82% NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES Average loans and leases: Commercial $187,149 $195,561 $198,914 Commercial real estate 607,848 636,693 653,138 Government guaranteed 72,949 64,643 61,280 Aircraft 111,681 121,690 132,578 Residential real estate 441,000 444,772 448,009 Indirect installment loans 101,154 108,903 116,422 Home equity 326,656 326,582 317,320 Other consumer 34,756 36,250 36,926 Total average loans and leases $1,883,193 $1,935,094 $1,964,587 Net charge-offs (recoveries): Commercial $48 $175 $425 Commercial real estate 348 772 712 Government guaranteed 281 353 141 Aircraft 64 (47) 548 Residential real estate 211 236 (21) Indirect installment loans 807 416 384 Home equity 228 164 196 Other consumer 469 216 254 Total $2,456 $2,285 $2,639 Net charge-offs (recoveries) to average loans and leases (annualized): Commercial 0.10% 0.36% 0.85% Commercial real estate 0.23% 0.49% 0.44% Government guaranteed 1.54% 2.18% 0.92% Aircraft 0.23% -0.15% 1.65% Residential real estate 0.19% 0.21% -0.02% Indirect installment loans 3.19% 1.53% 1.32% Home equity 0.28% 0.20% 0.25% Other consumer 5.40% 2.38% 2.75% Total 0.52% 0.47% 0.54% Unizan Financial Corp. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data) 2005 2005 EARNINGS 2nd Qtr 1st Qtr Net Interest Income FTE (1) $17,350 17,056 Provision for loan losses 1,429 1,295 Other income 7,064 7,004 Security gains/(losses), net - - Other expenses 15,543 16,147 FTE adjustment (1) 283 283 Net income $5,003 4,533 Net income per share - diluted $0.23 0.20 PERFORMANCE RATIOS Return on average assets (ROA) 0.80% 0.73% Return on average common equity (ROE) 6.34% 5.84% Tangible return on average tangible assets (1) 0.91% 0.83% Tangible return on avg. tangible common equity (1) 10.35% 9.67% Net interest margin FTE (2) 3.07% 3.02% Efficiency ratio (3) 61.07% 64.41% MARKET DATA Book value/common share $14.34 14.16 Tangible book value/common share 9.54 9.33 Period-end common share mkt value 26.79 26.00 Market as a % of book 186.8% 183.6% Cash dividends/common share $0.135 0.135 Common stock dividend payout ratio 59.7% 65.8% Average basic common shares 22,104,216 22,088,798 Average diluted common shares 22,225,063 22,200,120 Period end common shares 22,119,382 22,098,482 Common stock market capitalization $592,578 574,561 ASSET QUALITY Gross charge-offs $3,164 2,558 Net charge-offs 2,024 1,782 Delinquency Ratio 1.32% 1.38% Allowance for loan losses $25,273 25,868 Non-accrual loans 30,341 29,423 Past due 90 days or more & accruing 387 726 Other assets owned 2,133 1,604 Nonperforming assets (NPAs) 32,861 31,753 Restructured loans 5,302 5,339 Net charge-off ratio 0.45% 0.39% Allowance/loans 1.42% 1.42% NPL to loans 1.72% 1.65% NPA to loans + other assets 1.84% 1.74% Allowance to NPLs 82.25% 85.80% AVERAGE BALANCES Assets $2,497,436 2,518,865 Deposits 1,822,754 1,817,157 Loans 1,797,618 1,830,693 Earning assets 2,269,382 2,291,068 Shareholders' equity 316,386 314,984 ENDING BALANCES Assets $2,488,137 2,517,941 Deposits 1,829,003 1,825,307 Loans 1,783,708 1,823,202 Goodwill and other intangible assets 106,161 106,794 Earning assets 2,251,245 2,292,673 Total shareholders' equity 317,175 312,870 (1) - Net income adjusted for amortization of intangibles, after tax, divided by average total assets or average total equity, as applicable, reduced by average goodwill and other intangibles. (2) - FTE defined as fully tax-equivalent (3) - Excludes amortization of intangibles. 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. 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 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 (1) 0.60% 0.55% 0.57% Tangible return on avg. tangible common equity (1) 7.20% 6.85% 7.49% Net interest margin FTE (2) 2.97% 2.75% 3.09% Efficiency ratio (3) 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 91.0% 103.3% 93.8% 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 $3,822 2,952 3,372 Net charge-offs 2,456 2,285 2,639 Delinquency Ratio 1.60% 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 0.52% 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 1,874,393 1,903,102 1,961,035 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) - Net income adjusted for amortization of intangibles, after tax, divided by average total assets or average total equity, as applicable, reduced by average goodwill and other intangibles. (2) - FTE defined as fully tax-equivalent (3) - Excludes amortization of intangibles. 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. Certain previously reported amounts may have been reclassified to conform to current reporting presentation. 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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UNIZ Unizan Financial (MM)