##### 





REPORT
OFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM


HUNTINGTONBANCSHARESINCORPORATED



















Share-Based Payment, Accounting for Servicing of Financial
Assets, Employers
Accounting for Defined Benefit Pension and Other Postretirement
Plans,


Internal Control 
Integrated Framework











82



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##### 



CONSOLIDATEDBALANCESHEETS


HUNTINGTONBANCSHARESINCORPORATED




|                                                                        |                                                                                                                                                                      |                                            |            |            |            |   |            |            |            | 
|----------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                                                        |                                                                                                                                                                      | December 31,                               |           
|                                                                        |                                                                                                                                                                     
|(in thousands, except number of shares)                                 |                                                                                                                                                                      | 2006                                       |            |            | 2005       |  
|                                                                       
|Assets                                                                  |                                                                                                                                                                      |                                            |            |            |            |   |            |           
|Cash and due from banks                                                 |                                                                                                                                                                      | $                                          | 1,080,163  |            |            | $ | 966,445    |           
|Federal funds sold and securities purchased under resale
    agreements |                                                                                                                                                                      |                                            | 440,584    |            |            |   | 74,331     |           
|Interest bearing deposits in banks                                      |                                                                                                                                                                      |                                            | 74,168     |            |            |   | 22,391     |           
|Trading account securities                                              |                                                                                                                                                                      |                                            | 36,056     |            |            |   | 8,619      |           
|Loans held for sale                                                     |                                                                                                                                                                      |                                            | 270,422    |            |            |   | 294,344    |           
|Investment securities                                                   |                                                                                                                                                                      |                                            | 4,362,924  |            |            |   | 4,526,520  |           
|Loans and leases:                                                       |                                                                                                                                                                      |                                            |            |            |            |   |            |           
|                                                                        |                                                                                                                                                                      | Commercial and industrial loans and leases |            |            | 7,849,912  |   |            |            | 6,809,208  | 
|                                                                        |                                                                                                                                                                      | Commercial real estate loans               |            |            | 4,504,540  |   |            |            | 4,036,171  | 
|                                                                        |                                                                                                                                                                      | Automobile loans                           |            |            | 2,125,821  |   |            |            | 1,985,304  | 
|                                                                        |                                                                                                                                                                      | Automobile leases                          |            |            | 1,769,424  |   |            |            | 2,289,015  | 
|                                                                        |                                                                                                                                                                      | Home equity loans                          |            |            | 4,926,900  |   |            |            | 4,762,743  | 
|                                                                        |                                                                                                                                                                      | Residential mortgage loans                 |            |            | 4,548,918  |   |            |            | 4,193,139  | 
|                                                                        |                                                                                                                                                                      | Other consumer loans                       |            |            | 427,910    |   |            |            | 396,586    | 
|                                                                       
|Loans and leases                                                        |                                                                                                                                                                      |                                            | 26,153,425 |            |            |   | 24,472,166 |           
|Allowance for loan and lease losses                                     |                                                                                                                                                                      |                                            | (272,068   | )          |            |   | (268,347   | )         
|                                                                       
|Net loans and leases                                                    |                                                                                                                                                                      |                                            | 25,881,357 |            |            |   | 24,203,819 |           
|                                                                       
|Bank owned life insurance                                               |                                                                                                                                                                      |                                            | 1,089,028  |            |            |   | 1,001,542  |           
|Premises and equipment                                                  |                                                                                                                                                                      |                                            | 372,772    |            |            |   | 360,677    |           
|Automobile operating lease assets                                       |                                                                                                                                                                      |                                            | 28,331     |            |            |   | 189,003    |           
|Goodwill                                                                |                                                                                                                                                                      |                                            | 570,876    |            |            |   | 212,530    |           
|Other intangible assets                                                 |                                                                                                                                                                      |                                            | 59,487     |            |            |   | 4,956      |           
|Accrued income and other assets                                         |                                                                                                                                                                      |                                            | 1,062,851  |            |            |   | 899,628    |           
|                                                                       
|Total assets                                                            |                                                                                                                                                                      | $                                          | 35,329,019 |            |            | $ | 32,764,805 |           
|                                                                       
|Liabilities and shareholders equity                                    |                                                                                                                                                                      |                                            |            |            |            |   |            |           
|Liabilities                                                             |                                                                                                                                                                      |                                            |            |            |            |   |            |           
|                                                                        | Deposits in domestic offices                                                                                                                                         |                                            |            |            |            |   |            |            |           
|                                                                        |                                                                                                                                                                      | Demand deposits  non-interest bearing     |            | $          | 3,615,745  |   |            | $          | 3,390,044  | 
|                                                                        |                                                                                                                                                                      | Interest bearing                           |            |            | 20,640,368 |   |            |            | 18,548,943 | 
|                                                                        | Deposits in foreign offices                                                                                                                                          |                                            |            | 791,657    |            |   |            | 470,688    |           
|                                                                       
|                                                                        | Deposits                                                                                                                                                             |                                            |            | 25,047,770 |            |   |            | 22,409,675 |           
|                                                                        | Short-term borrowings                                                                                                                                                |                                            |            | 1,676,189  |            |   |            | 1,889,260  |           
|                                                                        | Federal Home Loan Bank advances                                                                                                                                      |                                            |            | 996,821    |            |   |            | 1,155,647  |           
|                                                                        | Other long-term debt                                                                                                                                                 |                                            |            | 2,229,140  |            |   |            | 2,418,419  |           
|                                                                        | Subordinated notes                                                                                                                                                   |                                            |            | 1,286,657  |            |   |            | 1,023,371  |           
|                                                                        | Deferred income tax liability                                                                                                                                        |                                            |            | 443,921    |            |   |            | 743,655    |           
|                                                                        | Allowance for unfunded loan commitments and letters of credit                                                                                                        |                                            |            | 40,161     |            |   |            | 36,957     |           
|                                                                        | Accrued expenses and other liabilities                                                                                                                               |                                            |            | 594,034    |            |   |            | 530,320    |           
|                                                                       
|Total liabilities                                                       |                                                                                                                                                                      |                                            | 32,314,693 |            |            |   | 30,207,304 |           
|                                                                       
|Shareholders equity                                                    |                                                                                                                                                                      |                                            |            |            |            |   |            |           
|                                                                        | Preferred stock  authorized 6,617,808 shares;
    none outstanding                                                                                                  |                                            |            |           |            |   |            |           |           
|                                                                        | Common stock  without par value; authorized
    500,000,000 shares;
    issued 257,866,255 shares; outstanding 235,474,366 and
    224,106,172 shares, respectively |                                            |            | 2,560,569  |            |   |            | 2,491,326  |           
|                                                                        | Less 22,391,889 and 33,760,083 treasury shares, respectively                                                                                                         |                                            |            | (506,946   | )          |   |            | (693,576   | )         
|                                                                        | Accumulated other comprehensive loss                                                                                                                                 |                                            |            | (55,066    | )          |   |            | (22,093    | )         
|                                                                        | Retained earnings                                                                                                                                                    |                                            |            | 1,015,769  |            |   |            | 781,844    |           
|                                                                       
|Total shareholders equity                                              |                                                                                                                                                                      |                                            | 3,014,326  |            |            |   | 2,557,501  |           
|                                                                       
|Total liabilities and shareholders equity                              |                                                                                                                                                                      | $                                          | 35,329,019 |            |            | $ | 32,764,805 |           
|                                                                       

See Notes to Consolidated Financial Statements.


83



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##### 



CONSOLIDATEDSTATEMENTS OFINCOME


HUNTINGTONBANCSHARESINCORPORATED




|                                                      |                                             |                         |           |         |           |   |           |         |           |   |           |         |           | 
|----------------------------------------------------- | ------------------------------------------- | ----------------------- | --------- | ------- | --------- | - | --------- | ------- | --------- | - | --------- | ------- | --------- | 
|                                                      |                                             | Year Ended December 31, |          
|                                                      |                                            
|(in thousands, except per share amounts)              |                                             | 2006                    |           |         | 2005      |   |           | 2004    |          
|                                                     
|Interest and fee income                               |                                             |                         |           |         |           |   |           |         |           |   |           |        
|                                                      | Loans and leases                            |                         |           |         |           |   |           |         |           |   |           |         |          
|                                                      |                                             | Taxable                 |           | $       | 1,775,445 |   |           | $       | 1,428,371 |   |           | $       | 1,132,599 | 
|                                                      |                                             | Tax-exempt              |           |         | 2,154     |   |           |         | 1,466     |   |           |         | 1,474     | 
|                                                      | Investment securities                       |                         |           |         |           |   |           |         |           |   |           |         |          
|                                                      |                                             | Taxable                 |           |         | 231,294   |   |           |         | 157,716   |   |           |         | 171,852   | 
|                                                      |                                             | Tax-exempt              |           |         | 23,901    |   |           |         | 19,865    |   |           |         | 17,884    | 
|                                                      | Other                                       |                         |           | 37,725  |           |   |           | 34,347  |           |   |           | 23,506  |          
|                                                     
|Total interest income                                 |                                             |                         | 2,070,519 |         |           |   | 1,641,765 |         |           |   | 1,347,315 |        
|                                                     
|Interest expense                                      |                                             |                         |           |         |           |   |           |         |           |   |           |        
|                                                      | Deposits                                    |                         |           | 717,167 |           |   |           | 446,919 |           |   |           | 257,099 |          
|                                                      | Short-term borrowings                       |                         |           | 72,222  |           |   |           | 34,334  |           |   |           | 13,053  |          
|                                                      | Federal Home Loan Bank advances             |                         |           | 60,016  |           |   |           | 34,647  |           |   |           | 33,253  |          
|                                                      | Subordinated notes and other long-term debt |                         |           | 201,937 |           |   |           | 163,454 |           |   |           | 132,536 |          
|                                                     
|Total interest expense                                |                                             |                         | 1,051,342 |         |           |   | 679,354   |         |           |   | 435,941   |        
|                                                     
|Net interest income                                   |                                             |                         | 1,019,177 |         |           |   | 962,411   |         |           |   | 911,374   |        
|Provision for credit losses                           |                                             |                         | 65,191    |         |           |   | 81,299    |         |           |   | 55,062    |        
|                                                     
|Net interest income after provision for credit losses |                                             |                         | 953,986   |         |           |   | 881,112   |         |           |   | 856,312   |        
|                                                     
|                                                      | Service charges on deposit accounts         |                         |           | 185,713 |           |   |           | 167,834 |           |   |           | 171,115 |          
|                                                      | Trust services                              |                         |           | 89,955  |           |   |           | 77,405  |           |   |           | 67,410  |          
|                                                      | Brokerage and insurance income              |                         |           | 58,835  |           |   |           | 53,619  |           |   |           | 54,799  |          
|                                                      | Other service charges and fees              |                         |           | 51,354  |           |   |           | 44,348  |           |   |           | 41,574  |          
|                                                      | Bank owned life insurance income            |                         |           | 43,775  |           |   |           | 40,736  |           |   |           | 42,297  |          
|                                                      | Automobile operating lease income           |                         |           | 43,115  |           |   |           | 133,015 |           |   |           | 285,431 |          
|                                                      | Mortgage banking income                     |                         |           | 41,491  |           |   |           | 28,333  |           |   |           | 26,786  |          
|                                                      | Gains on sales of automobile loans          |                         |           | 3,095   |           |   |           | 1,211   |           |   |           | 14,206  |          
|                                                      | Securities gains (losses), net              |                         |           | (73,191 | )         |   |           | (8,055  | )         |   |           | 15,763  |          
|                                                      | Other income                                |                         |           | 116,927 |           |   |           | 93,836  |           |   |           | 99,217  |          
|                                                     
|Total non-interest income                             |                                             |                         | 561,069   |         |           |   | 632,282   |         |           |   | 818,598   |        
|                                                     
|                                                      | Personnel costs                             |                         |           | 541,228 |           |   |           | 481,658 |           |   |           | 485,806 |          
|                                                      | Outside data processing and other services  |                         |           | 78,779  |           |   |           | 74,638  |           |   |           | 72,115  |          
|                                                      | Net occupancy                               |                         |           | 71,281  |           |   |           | 71,092  |           |   |           | 75,941  |          
|                                                      | Equipment                                   |                         |           | 69,912  |           |   |           | 63,124  |           |   |           | 63,342  |          
|                                                      | Marketing                                   |                         |           | 31,728  |           |   |           | 26,279  |           |   |           | 24,600  |          
|                                                      | Automobile operating lease expense          |                         |           | 31,286  |           |   |           | 103,850 |           |   |           | 235,080 |          
|                                                      | Professional services                       |                         |           | 27,053  |           |   |           | 34,569  |           |   |           | 36,876  |          
|                                                      | Telecommunications                          |                         |           | 19,252  |           |   |           | 18,648  |           |   |           | 19,787  |          
|                                                      | Printing and supplies                       |                         |           | 13,864  |           |   |           | 12,573  |           |   |           | 12,463  |          
|                                                      | Amortization of intangibles                 |                         |           | 9,962   |           |   |           | 829     |           |   |           | 817     |          
|                                                      | Restructuring reserve releases              |                         |           |        |           |   |           |        |           |   |           | (1,151  | )        
|                                                      | Other expense                               |                         |           | 106,649 |           |   |           | 82,560  |           |   |           | 96,568  |          
|                                                     
|Total non-interest expense                            |                                             |                         | 1,000,994 |         |           |   | 969,820   |         |           |   | 1,122,244 |        
|                                                     
|Income before income taxes                            |                                             |                         | 514,061   |         |           |   | 543,574   |         |           |   | 552,666   |        
|Provision for income taxes                            |                                             |                         | 52,840    |         |           |   | 131,483   |         |           |   | 153,741   |        
|                                                     
|Net income                                            |                                             | $                       | 461,221   |         |           | $ | 412,091   |         |           | $ | 398,925   |        
|                                                     
|Average common shares  basic                         |                                             |                         | 236,699   |         |           |   | 230,142   |         |           |   | 229,913   |        
|Average common shares  diluted                       |                                             |                         | 239,920   |         |           |   | 233,475   |         |           |   | 233,856   |        
|                                                     
|Per common share                                      |                                             |                         |           |         |           |   |           |         |           |   |           |        
|Net income  basic                                    |                                             | $                       | 1.95      |         |           | $ | 1.79      |         |           | $ | 1.74      |        
|Net income  diluted                                  |                                             |                         | 1.92      |         |           |   | 1.77      |         |           |   | 1.71      |        
|Cash dividends declared                               |                                             |                         | 1.000     |         |           |   | 0.845     |         |           |   | 0.750     |        
|                                                     

See Notes to Consolidated Financial Statements.


84



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##### 



CONSOLIDATEDSTATEMENTS OFCHANGES
INSHAREHOLDERSEQUITY


HUNTINGTONBANCSHARESINCORPORATED




|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          |         | 
|--------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | ------------ | ------------- | - | -------------- | -------- |  | ----------- | ------- |  |  | ------ | --------- | ------ | ------ |  | ------- | ------------- | - | - | -------- | -------- | - | ----- | ------- | ------- | - | - | --------- | -------- | - | - | --------- | -------- | ------- | 
|                            |                                                                                                                              
|                            |                                                                                                                               |                            |   | Common Stock |               |   | Treasury Stock |          |  | Accumulated |         |  | 
|                            |                                                                                                                               | Preferred Stock            |   |              |               |   |                | Other    |  |             |        
|                            |                                                                                                                               |                            |   |              | Comprehensive |   |                | Retained |  |             |        
|(in thousands)              |                                                                                                                               | Shares                     |   |              | Amount        |   |                | Shares   |  |             | Amount  |  |  | Shares |           |        | Amount |  |         | Income (Loss) |   |   | Earnings |          |   | Total |        
|                           
|Balance  January 1, 2004   |                                                                                                                               |                            |  |              |               | $ |               |          |  |             | 257,866 |  |  | $      | 2,483,542 |        |        |  | (28,858 | )             |   | $ | (548,576 | )        |   | $     | 2,678   |         |   | $ | 337,358   |          |   | $ | 2,275,002 |         
|                            | Comprehensive Income:                                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          |        
|                            | Net income                                                                                                                    |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | 398,925  |   |   |           | 398,925  |        
|                            | Unrealized net losses on investment securities arising during
    the period, net of reclassification for net realized gains  |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | (22,112 | ) |   |           |          |   |   |           | (22,112  | )      
|                            | Unrealized gains on cash flow hedging derivatives                                                                             |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | 9,694   |   |   |           |          |   |   |           | 9,694    |        
|                            | Minimum pension liability adjustment                                                                                          |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | (1,163  | ) |   |           |          |   |   |           | (1,163   | )      
|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |        
|                            |                                                                                                                               | Total comprehensive income |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          | 385,344 | 
|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |        
|                            | Cash dividends declared
    ($0.75 per share)                                                                                 |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | (172,687 | ) |   |           | (172,687 | )      
|                            | Stock options exercised                                                                                                       |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | 678    |        |  |         | 2,432         |   |   |          | 46,561   |   |       |         |         |   |   |           |          |   |   |           | 47,239   |        
|                            | Other                                                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | (16    | )      |  |         | 165           |   |   |          | 2,756    |   |       |         |         |   |   |           |          |   |   |           | 2,740    |        
|                           
|Balance  December 31, 2004 |                                                                                                                               |                            |  |              |               |   |               |          |  |             | 257,866 |  |  |        | 2,484,204 |        |        |  | (26,261 | )             |   |   | (499,259 | )        |   |       | (10,903 | )       |   |   | 563,596   |          |   |   | 2,537,638 |         
|                           
|                            | Comprehensive Income:                                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          |        
|                            | Net income                                                                                                                    |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | 412,091  |   |   |           | 412,091  |        
|                            | Unrealized net losses on investment securities arising during
    the period, net of reclassification for net realized losses |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | (21,333 | ) |   |           |          |   |   |           | (21,333  | )      
|                            | Unrealized gains on cash flow hedging derivatives                                                                             |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | 10,954  |   |   |           |          |   |   |           | 10,954   |        
|                            | Minimum pension liability adjustment                                                                                          |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | (811    | ) |   |           |          |   |   |           | (811     | )      
|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |        
|                            |                                                                                                                               | Total comprehensive income |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          | 400,901 | 
|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |        
|                            | Cash dividends declared
    ($0.845 per share)                                                                                |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | (193,843 | ) |   |           | (193,843 | )      
|                            | Stock options exercised                                                                                                       |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | 2,999  |        |  |         | 1,866         |   |   |          | 36,195   |   |       |         |         |   |   |           |          |   |   |           | 39,194   |        
|                            | Treasury shares purchased                                                                                                     |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         | (9,591        | ) |   |          | (231,656 | ) |       |         |         |   |   |           |          |   |   |           | (231,656 | )      
|                            | Other                                                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | 4,123  |        |  |         | 226           |   |   |          | 1,144    |   |       |         |         |   |   |           |          |   |   |           | 5,267    |        
|                           
|Balance  December 31, 2005 |                                                                                                                               |                            |  |              |               |   |               |          |  |             | 257,866 |  |  |        | 2,491,326 |        |        |  | (33,760 | )             |   |   | (693,576 | )        |   |       | (22,093 | )       |   |   | 781,844   |          |   |   | 2,557,501 |         
|                           
|                            | Comprehensive Income:                                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          |        
|                            | Net income                                                                                                                    |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | 461,221  |   |   |           | 461,221  |        
|                            | Unrealized net gains on investment securities arising during
    the period, net of reclassification for net realized losses  |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | 48,270  |   |   |           |          |   |   |           | 48,270   |        
|                            | Unrealized gains on cash flow hedging derivatives                                                                             |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | 1,802   |   |   |           |          |   |   |           | 1,802    |        
|                            | Minimum pension liability adjustment                                                                                          |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | 269     |   |   |           |          |   |   |           | 269      |        
|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |        
|                            |                                                                                                                               | Total comprehensive income |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           |          | 511,562 | 
|                            |                                                                                                                               |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |        
|                            | Cumulative effect of change in accounting principle for
    servicing financial assets, net of tax of $6,521                  |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | 12,110   |   |   |           | 12,110   |        
|                            | Cumulative effect of change in accounting for funded status
    of pension plans, net of tax of $44,716                       |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         | (83,314 | ) |   |           |          |   |   |           | (83,314  | )      
|                            | Cash dividends declared
    ($1.00 per share)                                                                                 |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           | (239,406 | ) |   |           | (239,406 | )      
|                            | Shares issued pursuant to acquisition                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | 53,366 |        |  |         | 25,350        |   |   |          | 522,390  |   |       |         |         |   |   |           |          |   |   |           | 575,756  |        
|                            | Recognition of the fair value of share-based compensation                                                                     |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | 18,574 |        |  |         |               |   |   |          |          |   |       |         |         |   |   |           |          |   |   |           | 18,574   |        
|                            | Treasury shares purchased                                                                                                     |                            |   |              |               |   |                |          |  |             |         |  |  |        |           |        |        |  |         | (15,981       | ) |   |          | (378,835 | ) |       |         |         |   |   |           |          |   |   |           | (378,835 | )      
|                            | Stock options exercised                                                                                                       |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | (3,007 | )      |  |         | 2,013         |   |   |          | 43,836   |   |       |         |         |   |   |           |          |   |   |           | 40,829   |        
|                            | Other                                                                                                                         |                            |   |              |               |   |                |          |  |             |         |  |  |        |           | 310    |        |  |         | (14           | ) |   |          | (761     | ) |       |         |         |   |   |           |          |   |   |           | (451     | )      
|                           
|Balance  December 31, 2006 |                                                                                                                               |                            |  |              |               | $ |               |          |  |             | 257,866 |  |  | $      | 2,560,569 |        |        |  | (22,392 | )             |   | $ | (506,946 | )        |   | $     | (55,066 | )       |   | $ | 1,015,769 |          |   | $ | 3,014,326 |         
|                           

See Notes to Consolidated Financial Statements.


85



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##### 



CONSOLIDATEDSTATEMENTS OFCASHFLOWS


HUNTINGTONBANCSHARESINCORPORATED




|                                                     |                                                                                       |                                                                |           |            |            |   |            |            |            |   |            |            |            |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------- | --------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | -
|                                                     |                                                                                       | Year Ended December 31,                                        |          
|                                                     |                                                                                      
|(in thousands of dollars)                            |                                                                                       | 2006                                                           |           |            | 2005       |   |            | 2004       |           
|                                                     |                                                                                      
|Operating activities                                 |                                                                                       |                                                                |           |            |            |   |            |            |            |   |            |           
|                                                     | Net income                                                                            |                                                                | $         | 461,221    |            |   | $          | 412,091    |            |   | $          | 398,925    |           
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                |           |            |            |   |            |            |            |   |            |            |           
|                                                     |                                                                                       | Provision for credit losses                                    |           |            | 65,191     |   |            |            | 81,299     |   |            |            | 55,062     |  
|                                                     |                                                                                       | Depreciation and amortization                                  |           |            | 111,649    |   |            |            | 172,977    |   |            |            | 306,113    |  
|                                                     |                                                                                       | Decrease in accrued income taxes                               |           |            | (69,411    | ) |            |            | (66,593    | ) |            |            | (22,125    | )
|                                                     |                                                                                       | Deferred income tax (benefit) provision                        |           |            | (288,047   | ) |            |            | (32,110    | ) |            |            | 140,962    |  
|                                                     |                                                                                       | Decrease (increase) in trading account securities              |           |            | 24,784     |   |            |            | 275,765    |   |            |            | (302,041   | )
|                                                     |                                                                                       | Pension contribution                                           |           |            | (29,800    | ) |            |            | (63,600    | ) |            |            | (44,667    | )
|                                                     |                                                                                       | Originations of loans held for sale                            |           |            | (2,537,999 | ) |            |            | (2,572,346 | ) |            |            | (1,858,262 | )
|                                                     |                                                                                       | Principal payments on and proceeds from loans held for sale    |           |            | 2,532,908  |   |            |            | 2,501,471  |   |            |            | 1,861,272  |  
|                                                     |                                                                                       | Losses (gains) on investment securities                        |           |            | 73,191     |   |            |            | 8,055      |   |            |            | (15,763    | )
|                                                     |                                                                                       | Other, net                                                     |           |            | (119,228   | ) |            |            | (42,310    | ) |            |            | (8,740     | )
|                                                    
|Net cash provided by operating activities            |                                                                                       |                                                                | 224,459   |            |            |   | 674,699    |            |            |   | 528,216    |           
|                                                    
|Investing activities                                 |                                                                                       |                                                                |           |            |            |   |            |            |            |   |            |           
|                                                     | (Increase) decrease in interest bearing deposits in banks                             |                                                                |           | (48,681    | )          |   |            | 7          |            |   |            | 11,229     |           
|                                                     | Net cash received in acquisitions                                                     |                                                                |           | 60,772     |            |   |            |           |            |   |            |           |           
|                                                     | Proceeds from:                                                                        |                                                                |           |            |            |   |            |            |            |   |            |            |           
|                                                     |                                                                                       | Maturities and calls of investment securities                  |           |            | 604,286    |   |            |            | 463,001    |   |            |            | 881,305    |  
|                                                     |                                                                                       | Sales of investment securities                                 |           |            | 2,829,529  |   |            |            | 1,995,764  |   |            |            | 2,386,479  |  
|                                                     | Purchases of investment securities                                                    |                                                                |           | (3,015,922 | )          |   |            | (2,832,258 | )          |   |            | (2,438,158 | )         
|                                                     | Proceeds from sales of loans                                                          |                                                                |           | 245,635    |            |   |            |           |            |   |            | 1,534,395  |           
|                                                     | Net loan and lease originations, excluding sales                                      |                                                                |           | (338,022   | )          |   |            | (1,012,345 | )          |   |            | (4,216,309 | )         
|                                                     | Proceeds from sale of operating lease assets                                          |                                                                |           | 128,666    |            |   |            | 280,746    |            |   |            | 451,264    |           
|                                                     | Purchases of premises and equipment                                                   |                                                                |           | (47,207    | )          |   |            | (57,288    | )          |   |            | (56,531    | )         
|                                                     | Other, net                                                                            |                                                                |           | (7,760     | )          |   |            | 20,415     |            |   |            | 2,910      |           
|                                                    
|Net cash provided by (used for) investing activities |                                                                                       |                                                                | 411,296   |            |            |   | (1,141,958 | )          |            |   | (1,443,416 | )         
|                                                    
|Financing activities                                 |                                                                                       |                                                                |           |            |            |   |            |            |            |   |            |           
|                                                     | Increase in deposits                                                                  |                                                                |           | 936,766    |            |   |            | 1,655,736  |            |   |            | 2,273,046  |           
|                                                     | (Decrease) increase in short-term borrowings                                          |                                                                |           | (292,211   | )          |   |            | 682,027    |            |   |            | (245,071   | )         
|                                                     | Proceeds from issuance of subordinated notes                                          |                                                                |           | 250,000    |            |   |            |           |            |   |            | 148,830    |           
|                                                     | Maturity/redemption of subordinated notes                                             |                                                                |           | (4,080     | )          |   |            |           |            |   |            | (100,000   | )         
|                                                     | Proceeds from Federal Home Loan Bank advances                                         |                                                                |           | 2,517,210  |            |   |            | 809,589    |            |   |            | 1,088      |           
|                                                     | Maturity of Federal Home Loan Bank advances                                           |                                                                |           | (2,771,417 | )          |   |            | (925,030   | )          |   |            | (3,000     | )         
|                                                     | Proceeds from issuance of long-term debt                                              |                                                                |           | 935,000    |            |   |            |           |            |   |            | 925,000    |           
|                                                     | Maturity of long-term debt                                                            |                                                                |           | (1,158,942 | )          |   |            | (1,719,403 | )          |   |            | (1,455,000 | )         
|                                                     | Purchase of minority interest in consolidated subsidiaries                            |                                                                |           |           |            |   |            | (107,154   | )          |   |            |           |           
|                                                     | Dividends paid on common stock                                                        |                                                                |           | (231,117   | )          |   |            | (200,628   | )          |   |            | (168,075   | )         
|                                                     | Repurchases of common stock                                                           |                                                                |           | (378,835   | )          |   |            | (231,656   | )          |   |            |           |           
|                                                     | Other, net                                                                            |                                                                |           | 41,842     |            |   |            | 39,194     |            |   |            | 47,239     |           
|                                                    
|Net cash (used for) provided by financing activities |                                                                                       |                                                                | (155,784  | )          |            |   | 2,675      |            |            |   | 1,424,057  |           
|                                                    
|Change in cash and cash equivalents                  |                                                                                       |                                                                | 479,971   |            |            |   | (464,584   | )          |            |   | 508,857    |           
|Cash and cash equivalents at beginning of year       |                                                                                       |                                                                | 1,040,776 |            |            |   | 1,505,360  |            |            |   | 996,503    |           
|                                                    
|Cash and cash equivalents at end of year             |                                                                                       | $                                                              | 1,520,747 |            |            | $ | 1,040,776  |            |            | $ | 1,505,360  |           
|                                                    
|Supplemental disclosures:                            |                                                                                       |                                                                |           |            |            |   |            |            |            |   |            |           
|                                                     | Income taxes paid                                                                     |                                                                | $         | 410,298    |            |   | $          | 230,186    |            |   | $          | 34,904     |           
|                                                     | Interest paid                                                                         |                                                                |           | 1,024,635  |            |   |            | 640,679    |            |   |            | 422,060    |           
|                                                     | Non-cash activities                                                                   |                                                                |           |            |            |   |            |            |            |   |            |            |           
|                                                     |                                                                                       | Mortgage loans exchanged for mortgage-backed securities        |           |            |           |   |            |            | 15,058     |   |            |            | 115,929    |  
|                                                     |                                                                                       | Common stock dividends accrued, paid in subsequent quarter     |           |            | 37,166     |   |            |            | 28,877     |   |            |            | 35,662     |  
|                                                     |                                                                                       | Common stock and stock options issued for purchase acquisition |           |            | 575,756    |   |            |            |           |   |            |            |           |  

See Notes to Consolidated Financial Statements.


86



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##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




1. SIGNIFICANT ACCOUNTING
POLICIES




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Nature of
    Operations  Huntington Bancshares
    Incorporated (Huntington) is a multi-state diversified financial
    holding company organized under Maryland law in 1966 and
    headquartered in Columbus, Ohio. Through its subsidiaries,
    Huntington is engaged in providing full-service commercial and
    consumer banking services, mortgage banking services, automobile
    financing, equipment leasing, investment management, trust
    services, and discount brokerage services, as well as reinsuring
    private mortgage, credit life and disability insurance, and
    other insurance and financial products and services.
    Huntingtons banking offices are located in Ohio, Michigan,
    West Virginia, Indiana, and Kentucky. Certain activities are
    also conducted in other states including Arizona, Florida,
    Georgia, Maryland, Nevada, New Jersey, North Carolina,
    Pennsylvania, South Carolina, Tennessee, and Vermont. Huntington
    also has a limited purpose foreign office in the Cayman Islands
    and another in Hong Kong.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| | Basis of
    Presentation  The consolidated financial
    statements include the accounts of Huntington and its
    majority-owned subsidiaries and are presented in accordance with
    accounting principles generally accepted in the United States
    (GAAP). All significant intercompany transactions and balances
    have been eliminated in consolidation. Companies in which
    Huntington holds more than a 50% voting equity interest or are a
    variable interest entity (VIE) in which Huntington absorbs
    the majority of expected losses are consolidated. VIEs in which
    Huntington does not absorb the majority of expected losses are
    not consolidated. For consolidated entities where Huntington
    holds less than a 100% interest, Huntington recognizes a
    minority interest liability (included in accrued expenses and
    other liabilities) for the equity held by others and minority
    interest expense (included in other non-interest expenses) for
    the portion of the entitys earnings attributable to
    minority interests. Investments in companies that are not
    consolidated are accounted for using the equity method when
    Huntington has the ability to exert significant influence. Those
    investments in non-marketable securities for which Huntington
    does not have the ability to exert significant influence are
    generally accounted for using the cost method and are
    periodically evaluated for impairment. Investments in private
    investment partnerships are carried at fair value. Investments
    in private investment partnerships and investments that are
    accounted for under the equity method or the cost method are
    included in accrued income and other assets and
    Huntingtons proportional interest in the investments
    earnings are included in other non-interest income.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Huntington evaluates VIEs in which it holds a beneficial
    interest for consolidation. VIEs, as defined by the Financial
    Accounting Standards Board (FASB) Interpretation
    (FIN) No. 46 (Revised 2003), Consolidation of
    Variable Interest Entities(FIN 46R), are legal
    entities with insubstantial equity, whose equity investors lack
    the ability to make decisions about the entitys
    activities, or whose equity investors do not have the right to
    receive the residual returns of the entity if they occur.
|
| | The preparation of financial statements in conformity with GAAP
    requires Management to make estimates and assumptions that
    affect amounts reported in the financial statements. Actual
    results could differ from those estimates. See Mortgage
    Banking Activities for more information about a
    reclassification of certain trading activities associated with
    mortgage servicing rights. Certain other prior period amounts
    have been reclassified to conform to the current years
    presentation.           



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Securities 
    Securities purchased with the intention of recognizing
    short-term profits are classified as trading account securities
    and reported at fair value. The unrealized gains or losses on
    trading account securities are recorded in other non-interest
    income. All other securities are classified as investment
    securities. Investment securities include securities designated
    as available for sale and non-marketable equity securities.
    Unrealized gains or losses on investment securities designated
    as available for sale are reported as a separate component of
    accumulated other comprehensive income/loss in the consolidated
    statement of shareholders equity. Declines in the value of
    debt and marketable equity securities that are considered
    other-than-temporary are recorded in non-interest income as
    securities losses.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Securities transactions are recognized on the trade date (the
    date the order to buy or sell is executed). The amortized cost
    of specific securities sold is used to compute realized gains
    and losses. Interest and dividends on securities, including
    amortization of premiums and accretion of discounts using the
    effective interest method over the period to maturity, are
    included in interest income.                                                                                                                                        
|
| | Non-marketable equity securities include stock acquired for
    regulatory purposes, such as Federal Home Loan Bank stock
    and Federal Reserve Bank stock. These securities are generally
    accounted for at cost and are included in investment securities.                                                                                                                                                                                                                                                                                                           
|
| | Investments are reviewed quarterly for indicators of
    other-than-temporary impairment. This determination requires
    significant judgment. In making this judgment, Management
    evaluates, among other factors, the duration and extent to which
    the fair value of an investment is less than its cost and intent
    and ability to hold the investment. Investments with an
    indicator of impairment are further evaluated to determine the
    likelihood of a significant adverse effect on the fair value and
    amount of the impairment as necessary.

87



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NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Loans and
    Leases  Loans and direct financing leases
    for which Huntington has the intent and ability to hold for the
    foreseeable future, or until maturity or payoff, are classified
    in the balance sheet as loans and leases. Loans and leases are
    carried at the principal amount outstanding, net of unamortized
    deferred loan origination fees and costs and net of unearned
    income. Direct financing leases are reported at the aggregate of
    lease payments receivable and estimated residual values, net of
    unearned and deferred income. Interest income is accrued as
    earned using the interest method based on unpaid principal
    balances. Huntington defers the fees it receives from the
    origination of loans and leases, as well as the direct costs of
    those activities, and amortizes these fees and costs on a
    level-yield basis over the estimated lives of the related loans.
    Management evaluates direct financing leases individually for
    impairment.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Loans that Huntington has the intent and ability to sell or
    securitize are classified as held for sale. Loans held for sale
    are carried at the lower of aggregate cost or fair value. Fair
    value is determined based on prevailing market prices for loans
    with similar characteristics. Subsequent declines in fair value
    are recognized either as a charge-off or as non-interest income,
    depending on the length of time the loan has been recorded as
    held for sale. When a decision is made to sell a loan that was
    not originated or initially acquired with the intent to sell,
    the loan is reclassified into held for sale. Such
    reclassifications may occur, and have occurred in the past
    several years, due to a change in strategy in managing the
    balance sheet. See Note 5 for further information on recent
    securitization activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Automobile loans and leases include loans secured by automobiles
    and leases of automobiles that qualify for the direct financing
    method of accounting. Substantially all of the direct financing
    leases that qualify for that accounting method do so because the
    present value of the lease payments and the guaranteed residual
    value are at least 90% of the cost of the vehicle. Huntington
    records the residual values of its leases based on estimated
    future market values of the automobiles as published in the
    Automotive Lease Guide (ALG), an authoritative industry source.
    Beginning in October 2000, Huntington purchased residual value
    insurance for its entire automobile lease portfolio to mitigate
    the risk of declines in residual values. Residual value
    insurance provides for the recovery of the vehicle residual
    value specified by the ALG at the inception of the lease. As a
    result, the risk associated with market driven declines in used
    car values is mitigated. Currently, Huntington has three
    distinct residual value insurance policies in place to address
    the residual risk in the portfolio. One residual value insurance
    policy covers all vehicles leased between October 1, 2000
    and April 30, 2002, and has an associated total payment cap
    of $50 million. Any losses above the cap result in
    additional depreciation expense. A second policy covers all
    originations from May 2002 through June 2005, and does not have
    a cap. A third policy, similar in structure to the referenced
    second policy, is in effect until July 1, 2007, and has
    covered all originations since June 30, 2005. Leases
    covered by the last two policies qualify for the direct
    financing method of accounting. Leases covered by the first
    policy are accounted for using the operating lease method of
    accounting and are recorded as operating lease assets in
    Huntingtons consolidated balance sheet.
|
| | Residual values on leased automobiles and equipment are
    evaluated quarterly for impairment. Impairment of the residual
    values of direct financing leases is recognized by writing the
    leases down to fair value with a charge to other non-interest
    expense. Residual value losses arise if the fair value at the
    end of the lease term is less than the residual value embedded
    in the original lease contract. For leased automobiles, residual
    value insurance covers the difference between the recorded
    residual value and the fair value of the automobile at the end
    of the lease term as evidenced by ALG Black Book valuations.
    This insurance, however, does not cover residual losses that
    occur when the automobile is sold for a value below ALG Black
    Book value at the time of sale, which may arise when the
    automobile has excess wear and tear and/or excess mileage, not
    reimbursed by the lessee. In any event, the insurance provides a
    minimum level of coverage of residual value such that the net
    present value of the minimum lease payments plus the portion of
    the residual value that is guaranteed exceeds 90 percent of
    the fair value of the automobile at the inception of the lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | For leased equipment, the residual component of a direct
    financing lease represents the estimated fair value of the
    leased equipment at the end of the lease term. Huntington relies
    on industry data, historical experience, and independent
    appraisals to establish these residual value estimates.
    Additional information regarding product life cycle, product
    upgrades, as well as insight into competing products are
    obtained through relationships with industry contacts and are
    factored into residual value estimates where applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Commercial and industrial loans and commercial real estate loans
    are generally placed on non-accrual status and stop accruing
    interest when principal or interest payments are 90 days or
    more past due or the borrowers creditworthiness is in
    doubt. A loan may remain in accruing status when it is
    sufficiently collateralized, which means the collateral covers
    the full repayment of principal and interest, and is in the
    process of active collection.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Commercial and industrial and commercial real estate loans are
    evaluated periodically for impairment in accordance with the
    provisions of Statement No. 114, Accounting by Creditors
    for Impairment of a Loan,as amended. This Statement
    requires an                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

88



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NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




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| | allowance to be established as a component of the allowance for
    loan and lease losses when it is probable that all amounts due
    pursuant to the contractual terms of the loan or lease will not
    be collected and the recorded investment in the loan or lease
    exceeds its fair value. Fair value is measured using either the
    present value of expected future cash flows discounted at the
    loans or leases effective interest rate, the
    observable market price of the loan or lease, or the fair value
    of the collateral if the loan or lease is collateral dependent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Consumer loans and leases, excluding residential mortgage and
    home equity loans, are subject to mandatory charge-off at a
    specified delinquency date and are not classified as
    non-performing prior to being charged off. These loans and
    leases are generally charged off in full no later than when the
    loan or lease becomes 120 days past due. Residential
    mortgage loans are placed on non-accrual status when principal
    payments are 180 days past due or interest payments are
    210 days past due. A charge-off on a residential mortgage
    loan is recorded when the loan has been foreclosed and the loan
    balance exceeds the fair value of the collateral. The fair value
    of the collateral is then recorded as real estate owned and is
    reflected in other assets in the consolidated balance sheet.
    (See Note 4 for further information.)A home equity
    charge-off occurs when it is determined that there is not
    sufficient equity in the loan to cover Huntingtons
    position. A write down in value occurs as determined by
    Huntingtons internal processes, with subsequent losses
    incurred upon final disposition. In the event the first mortgage
    is purchased to protect Huntingtons interests, the
    charge-off process is the same as residential mortgage loans
    described above.
|
| | Huntington uses the cost recovery method of accounting for cash
    received on non-performing loans and leases. Under this method,
    cash receipts are applied entirely against principal until the
    loan or lease has been collected in full, after which time any
    additional cash receipts are recognized as interest income.
    When, in managements judgment, the borrowers ability
    to make periodic interest and principal payments resumes and
    collectibility is no longer in doubt, the loan or lease is
    returned to accrual status. When interest accruals are
    suspended, accrued interest income is reversed with current year
    accruals charged to earnings and prior year amounts generally
    charged off as a credit loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



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| | Sold
    Loans  Loans that are sold are accounted
    for in accordance with Statement No. 140, Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities. For loan sales with servicing retained, an
    asset is also recorded for the right to service the loans sold,
    based on the fair value of the servicing rights.



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| | Gains and losses on the loans sold and servicing rights
    associated with loan sales are determined when the related loans
    are sold to the trust or third party. Fair values of the
    servicing rights are based on the present value of expected
    future cash flows from servicing the underlying loans, net of
    adequate compensation to service the loans. The present value of
    expected future cash flows is determined using assumptions for
    market interest rates, ancillary fees, and prepayment rates.
    Management also uses these assumptions to assess automobile loan
    servicing rights for impairment periodically. The servicing
    rights are recorded in other assets in the consolidated balance
    sheets. Servicing revenues on mortgage and automobile loans are
    included in mortgage banking income and other non-interest
    income, respectively.



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| | Allowance for Credit
    Losses  The allowance for credit losses
    (ACL) reflects Managements judgment as to the level
    of the ACL considered appropriate to absorb probable inherent
    credit losses. This judgment is based on the size and current
    risk characteristics of the portfolio, a review of individual
    loans and leases, historical and anticipated loss experience,
    and a review of individual relationships where applicable.
    External influences such as general economic conditions,
    economic conditions in the relevant geographic areas and
    specific industries, regulatory guidelines, and other factors
    are also assessed in determining the level of the allowance.



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| | The determination of the allowance requires significant
    estimates, including the timing and amounts of expected future
    cash flows on impaired loans and leases, consideration of
    current economic conditions, and historical loss experience
    pertaining to pools of homogeneous loans and leases, all of
    which may be susceptible to change. The allowance is increased
    through a provision that is charged to earnings, based on
    Managements quarterly evaluation of the factors previously
    mentioned, and is reduced by charge-offs, net of recoveries, and
    the allowance associated with securitized or sold loans.
|
| | The ACL consists of two components, the transaction reserve,
    which includes a specific reserve in accordance with Statement
    No. 114, and the economic reserve. Loan and lease losses
    related to the transaction reserve are recognized and measured
    pursuant to Statement No. 5, Accounting for
    Contingencies, and Statement No. 114, while losses
    related to the economic reserve are recognized and measured
    pursuant to Statement No. 5. The two components are more
    fully described below.                                                                                                                             
|
| | The transaction reserve component of the ACL includes both
    (a) an estimate of loss based on pools of commercial and
    consumer loans and leases with similar characteristics and
    (b) an estimate of loss based on an impairment review of
    each loan greater than $500,000 that is considered to be
    impaired. For commercial loans, the estimate of loss based on
    pools of loans and leases with similar characteristics is made
    through the use of a standardized loan grading system that is
    applied on an                                                                                                                  

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NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




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| | individual loan level and updated on a continuous basis. The
    reserve factors applied to these portfolios were developed based
    on internal credit migration models that track historical
    movements of loans between loan ratings over time and a
    combination of long-term average loss experience of our own
    portfolio and external industry data. In the case of more
    homogeneous portfolios, such as consumer loans and leases, the
    determination of the transaction reserve is based on reserve
    factors that include the use of forecasting models to measure
    inherent loss in these portfolios. Models and analyses are
    updated frequently to capture the recent behavioral
    characteristics of the subject portfolios, as well as any
    changes in loss mitigation or credit origination strategies.
    Adjustments to the reserve factors are made as needed based on
    observed results of the portfolio analytics.
|
| | The economic reserve incorporates our determination of the
    impact of risks associated with the general economic environment
    on the portfolio. The economic reserve is designed to address
    economic uncertainties and is determined based on economic
    indices as well as a variety of other economic factors that are
    correlated to the historical performance of the loan portfolio.
    Currently, two national and two regionally focused indices are
    utilized. The two national indices are: (1) the Real
    Consumer Spending, and (2) Consumer Confidence. The two
    regionally focused indices are: (1) the Institute for
    Supply Management Manufacturing, and (2) Non-agriculture
    Job Creation. Because of this more quantitative approach to
    recognizing risks in the general economy, the economic reserve
    may fluctuate from
    period-to-period,
    subject to a minimum level specified by policy.              



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| | Other Real Estate
    Owned  Other real estate owned (OREO) is
    comprised principally of commercial and residential real estate
    properties obtained in partial or total satisfaction of loan
    obligations. In 2006, OREO also included government insured
    loans in foreclosure. OREO obtained in satisfaction of a loan is
    recorded at the estimated fair value less anticipated selling
    costs based upon the propertys appraised value at the date
    of transfer, with any difference between the fair value of the
    property and the carrying value of the loan charged to the
    allowance for loan losses. Subsequent changes in value are
    reported as adjustments to the carrying amount, not to exceed
    the initial carrying value of the assets at the time of
    transfer. Changes in value subsequent to transfer are recorded
    in non-interest expense. Gains or losses not previously
    recognized resulting from the sale of OREO are recognized in
    non-interest expense on the date of sale.
| 
| | Resell and Repurchase
    Agreements  Securities purchased under
    agreements to resell and securities sold under agreements to
    repurchase are generally treated as collateralized financing
    transactions and are recorded at the amounts at which the
    securities were acquired or sold plus accrued interest. The fair
    value of collateral either received from or provided to a third
    party is continually monitored and additional collateral is
    obtained or is requested to be returned to Huntington as deemed
    appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| | Goodwill and Other
    Intangible Assets  Under the purchase
    method of accounting, the net assets of entities acquired by
    Huntington are recorded at their estimated fair value at the
    date of acquisition. The excess cost of the acquisition over the
    fair value of net assets acquired is recorded as goodwill. Other
    intangible assets are amortized either on an accelerated or
    straight-line basis over their estimated useful lives. Goodwill
    and other intangible assets are evaluated for impairment on an
    annual basis at
    September 30th
    of each year or whenever events or changes in circumstances
    indicate that the carrying value may not be recoverable.                                                                                                                                                                                                                                                                                                                                    
| 
| | Mortgage Banking
    Activities  Huntington recognizes the
    rights to service mortgage loans as separate assets, which are
    included in other assets in the consolidated balance sheets,
    only when purchased or when servicing is contractually separated
    from the underlying mortgage loans by sale or securitization of
    the loans with servicing rights retained. Servicing rights are
    initially recorded at fair value. All mortgage servicing rights
    are subsequently carried at fair value, and are included in
    other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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| | To determine the fair value of MSRs, Huntington uses a static
    discounted cash flow methodology incorporating current market
    interest rates. A static model does not attempt to forecast or
    predict the future direction of interest rates; rather it
    estimates the amount and timing of future servicing cash flows
    using current market interest rates. The current mortgage
    interest rate influences the prepayment rate; and therefore, the
    timing and magnitude of the cash flows associated with the
    servicing asset, while the discount rate determines the present
    value of those cash flows. Expected mortgage loan prepayment
    assumptions are derived from a third party model. Management
    believes these prepayment assumptions are consistent with
    assumptions used by other market participants valuing similar
    MSRs.
|
| | Huntington hedges the value of MSRs using derivative
    instruments. Huntington values its derivative instruments using
    observable market prices, when available. In the absence of
    observable market prices, Huntington uses discounted cash flow
    models to estimate the fair value of its derivatives. The
    interest rates used in these cash flow models are based on
    forward yield curves. Changes in fair value of these derivatives
    are reported as a component of mortgage banking income. In 2006,                                                                                                                                                                                                                                                                                                                                                   

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NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




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| | Huntington reclassified trading gains/losses associated with
    MSRs from other non-interest income to mortgage banking income.
    Prior periods have been reclassified to conform to this
    presentation.



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| | Premises and
    Equipment  Premises and equipment are
    stated at cost, less accumulated depreciation and amortization.
    Depreciation is computed principally by the straight-line method
    over the estimated useful lives of the related assets. Buildings
    and building improvements are depreciated over an average of 30
    to 40 years and 10 to 20 years, respectively. Land
    improvements and furniture and fixtures are depreciated over
    10 years, while equipment is depreciated over a range of
    three to seven years. Leasehold improvements are amortized over
    the lesser of the assets useful life or the term of the
    related leases, including any renewal periods for which renewal
    is reasonably assured. Maintenance and repairs are charged to
    expense as incurred, while improvements that extend the useful
    life of an asset are capitalized and depreciated over the
    remaining useful life.
| 
| | Operating Lease
    Assets  Operating lease assets consist of
    automobiles leased to consumers. These assets are reported at
    cost, including net deferred origination fees or costs, less
    accumulated depreciation. Net deferred origination fees or costs
    include the referral payments Huntington makes to automobile
    dealers, which are deferred and amortized on a straight-line
    basis over the life of the lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



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| | Rental income is accrued on a straight line basis over the lease
    term. Net deferred origination fees or costs are amortized over
    the life of the lease to operating lease income. Depreciation
    expense is recorded on a straight-line basis over the term of
    the lease. Leased assets are depreciated to the estimated
    residual value at the end of the lease term. Depreciation
    expense is included in operating lease expense in the
    non-interest expense section of the consolidated statements of
    income. On a quarterly basis, residual values of operating
    leases are evaluated individually for impairment under Statement
    No. 144, Accounting for the Impairment or Disposal of
    Long-Lived Assets. Under that Statement, when aggregate
    future cash flows from the operating lease, including the
    expected realizable fair value of the leased asset at the end of
    the lease, are less than the book value of the lease, an
    immediate impairment write-down is recognized. Otherwise,
    reductions in the expected residual value result in additional
    depreciation of the leased asset over the remaining term of the
    lease. Upon disposition, a gain or loss is recorded for any
    difference between the net book value of the lease and the
    proceeds from the disposition of the asset, including any
    insurance proceeds.
|
| | Also, on a quarterly basis, Management evaluates the amount of
    residual value losses that it anticipates will result from the
    estimated fair value of leased assets being less than the
    residual value inherent in the lease. When estimating fair
    value, Management takes into consideration policy caps that
    exist in one of its residual value insurance policies and
    whether it expects aggregate claims under such policies to
    exceed the cap. Residual value losses exceeding any insurance
    policy cap are reflected in higher depreciation expense over the
    remaining life of the affected automobile lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Credit losses, included in operating lease expense, occur when a
    lease is terminated early because the lessee cannot make the
    required lease payments. These credit-generated terminations
    result in Huntington taking possession of the automobile earlier
    than expected. When this occurs, the market value of the
    automobile may be less than Huntingtons book value,
    resulting in a loss upon sale. Rental income payments accrued,
    but not received, are written off when they reach 120 days
    past due and at that time, the asset is evaluated for impairment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Starting in 2004, Huntington also began purchasing equipment for
    lease to customers under operating lease arrangements. These
    operating lease arrangements required the lessee to make a fixed
    monthly rental payment over a specified lease term, typically
    from 36 to 84 months. The equipment, net of accumulated
    depreciation, are reported in other assets in the consolidated
    balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



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| | Bank Owned Life
    Insurance  Huntingtons bank owned
    life insurance policies are carried at their cash surrender
    value. Huntington recognizes tax-free income from the periodic
    increases in the cash surrender value of these policies and from
    death benefits.                                                                                                                                                                           
| 
| | Derivative Financial
    Instruments  A variety of derivative
    financial instruments, principally interest rate swaps, are used
    in asset and liability management activities to protect against
    the risk of adverse price or interest rate movements. These
    instruments provide flexibility in adjusting the Companys
    sensitivity to changes in interest rates without exposure to
    loss of principal and higher funding requirements.



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| | Huntington also uses derivatives, principally loan sale
    commitments, in the hedging of its mortgage loan interest rate
    lock commitments and its mortgage loans held for sale. Mortgage
    loan sale commitments and the related interest rate lock

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NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




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| | commitments are carried at fair value on the consolidated
    balance sheet with changes in fair value reflected in mortgage
    banking revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Derivative financial instruments, primarily interest rate swaps,
    are accounted for in accordance with Statement No. 133,
    Accounting for Derivative Instruments and Hedging Activities(Statement No. 133), as amended. This Statement
    requires every derivative instrument to be recorded in the
    consolidated balance sheet as either an asset or a liability (in
    other assets or other liabilities, respectively) measured at its
    fair value, with changes to that fair value being recorded
    through earnings unless specific criteria are met to account for
    the derivative using hedge accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | For those derivatives which hedge accounting is applied,
    Huntington formally documents the hedging relationship and the
    risk management objective and strategy for undertaking the
    hedge. This documentation identifies the hedging instrument, the
    hedged item or transaction, the nature of the risk being hedged,
    and, unless the hedge meets all of the criteria to assume there
    is no ineffectiveness, the method that will be used to assess
    the effectiveness of the hedging instrument and how
    ineffectiveness will be measured. The methods utilized to assess
    retrospective hedge effectiveness, as well as the frequency of
    testing, vary based on the type of item being hedged and the
    designated hedge period. For specifically designated fair value
    hedges of certain fixed-rate debt, Huntington utilizes the
    short-cut method when all the criteria of paragraph 68 of
    Statement No. 133 are met. For other fair value hedges of
    fixed-rate debt including certificates of deposit, Huntington
    utilizes the dollar offset or the regression method to evaluate
    hedge effectiveness on a quarterly basis. For fair value hedges
    of portfolio loans and mortgage loans held for sale, the
    regression method is used to evaluate effectiveness on a daily
    basis. For cash flow hedges, the dollar offset method is applied
    on a quarterly basis. For hedging relationships that are
    designated as fair value hedges, changes in the fair value of
    the derivative are, to the extent that the hedging relationship
    is effective, recorded through earnings and offset against
    changes in the fair value of the hedged item. For cash flow
    hedges, changes in the fair value of the derivative are, to the
    extent that the hedging relationship is effective, recorded as
    other comprehensive income and subsequently recognized in
    earnings at the same time that the hedged item is recognized in
    earnings. Any portion of a hedge that is ineffective is
    recognized immediately as other non-interest income. When a cash
    flow hedge is discontinued because the originally forecasted
    transaction is not probable of occurring, any net gain or loss
    in accumulated other comprehensive income is recognized
    immediately as other non-interest income.
|
| | Like other financial instruments, derivatives contain an element
    of credit risk, which is the possibility that Huntington will
    incur a loss because a counter-party fails to meet its
    contractual obligations. Notional values of interest rate swaps
    and other off-balance sheet financial instruments significantly
    exceed the credit risk associated with these instruments and
    represent contractual balances on which calculations of amounts
    to be exchanged are based. Credit exposure is limited to the sum
    of the aggregate fair value of positions that have become
    favorable to Huntington, including any accrued interest
    receivable due from counterparties. Potential credit losses are
    minimized through careful evaluation of counterparty credit
    standing, selection of counterparties from a limited group of
    high quality institutions, collateral agreements, and other
    contract provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



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| | Advertising
    Costs  Advertising costs are expensed as
    incurred as a marketing expense, a component of non-interest
    expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| 
| | Income
    Taxes  Income taxes are accounted for
    under the asset and liability method. Accordingly, deferred tax
    assets and liabilities are recognized for the future book and
    tax consequences attributable to temporary differences between
    the financial statement carrying amounts of existing assets and
    liabilities and their respective tax bases. Deferred tax assets
    and liabilities are determined using enacted tax rates expected
    to apply in the year in which those temporary differences are
    expected to be recovered or settled. The effect on deferred tax
    assets and liabilities of a change in tax rates is recognized in
    income at the time of enactment of such change in tax rates. Any
    interest due for payment of income taxes is included in the
    provision for income taxes.
| 
| | Treasury
    Stock  Acquisitions of treasury stock are
    recorded at cost. The reissuance of shares in treasury for
    acquisitions, stock option exercises, or for other corporate
    purposes, is recorded at weighted-average cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| | Share-Based
    Compensation  On January 1, 2006,
    Huntington adopted the fair value recognition provisions of FASB
    Statement No. 123 (revised 2004), Share-Based Payment(Statement No. 123R) relating to its share-based
    compensation plans. Prior to January 1, 2006, Huntington
    had accounted for share-based compensation plans under the
    intrinsic value method promulgated by Accounting Principles
    Board (APB) Opinion 25, Accounting for Stock Issued
    to Employees(APB 25), and related interpretations. In
    accordance with APB 25, compensation expense for employee
    stock options was generally not recognized for options granted
    that had an exercise price equal to the market value of the
    underlying common stock on the date of grant.                                                    

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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| | Under the modified prospective method of Statement
    No. 123R, compensation expense is recognized during the
    year ended December 31, 2006, for all unvested stock
    options, based on the grant date fair value estimated in
    accordance with the original provisions of Statement
    No. 123, Accounting for Stock-Based Compensation(Statement No. 123)and for all share-based
    payments granted after January 1, 2006, based on the grant
    date fair value estimated in accordance with the provisions of
    Statement No. 123R. Share-based compensation expense is
    recorded in personnel costs in the consolidated statements of
    income. Huntingtons financial results for the prior
    periods have not been restated.



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| | Segment
    Results  Accounting policies for the lines
    of business are the same as those used in the preparation of the
    consolidated financial statements with respect to activities
    specifically attributable to each business line. However, the
    preparation of business line results requires management to
    establish methodologies to allocate funding costs and benefits,
    expenses, and other financial elements to each line of business.
    Changes are made in these methodologies utilized for certain
    balance sheet and income statement allocations performed by
    Huntingtons management reporting system, as appropriate.
| 
| | Statement of Cash
    Flows  Cash and cash equivalents are
    defined as Cash and due from banks and Federal
    funds sold and securities purchased under resale
    agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

2. NEW ACCOUNTING STANDARDS


Standards adopted in
2006:




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| | FASB Statement
    No. 123 (revised 2004),Share-Based Payment(Statement
    No. 123R)  Statement No. 123R
    was issued in December 2004, requiring that the compensation
    cost relating to share-based payment transactions be recognized
    in the financial statements. That cost is measured based on the
    fair value of the equity or liability instruments issued.
    Huntington adopted Statement No. 123R, effective
    January 1, 2006. The impact of adoption to
    Huntingtons results of operations is presented in
    Note 19.                                                                                                                                                                                                                                                
| 
| | FASB Statement
    No. 154,Accounting Changes and Error
    Corrections  a replacement of APB
    Opinion No. 20 and FASB Statement No. 3(Statement
    No. 154)  In May 2005, the FASB issued
    Statement No. 154, which replaces APB Opinion No. 20,
    Accounting Changes, and Statement No. 3,
    Reporting Accounting Changes in Interim Financial
    Statements. Statement No. 154 changes the requirements
    for the accounting for and reporting of a change in accounting
    principle. Statement No. 154 is effective for accounting
    changes and corrections of errors made in fiscal years beginning
    after December 15, 2005. The impact of this new
    pronouncement was not material to Huntingtons financial
    condition, results of operations, or cash flows.      
| 
| | FASB Statement
    No. 155,Accounting for Certain Hybrid Financial
    Instruments  an amendment of FASB
    Statements No. 133 and 140(Statement
    No. 155)  On February 16, 2006,
    the FASB issued Statement No. 155, which amends Statement
    No. 133 to simplify the accounting for certain derivatives
    embedded in other financial instruments (hybrid financial
    instruments) by permitting these hybrid financial instruments to
    be carried at fair value. Statement No. 155 also
    establishes a requirement to evaluate interests in securitized
    financial assets, including collateralized mortgage obligations
    and mortgage-backed securities, to identify embedded derivatives
    that would need to be separately accounted for from the
    financial asset.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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| | In January 2007, the FASB issued Derivatives Implementation
    Group Issue No. B40 addressing application of Statement
    No. 155 to collateralized mortgage obligations and
    mortgage-backed securities. Based on the FASBs conclusions
    regarding the applicability of Statement No. 155 to
    collateralized mortgage obligations and mortgage-backed
    securities, Management does not believe that the implementation
    issue will have a significant impact to its financial position
    or its results of operations. Huntington adopted Statement
    No. 155 effective January 1, 2006, with no impact to
    reported financial results.



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | FASB Statement
    No. 156,Accounting for Servicing of Financial
    Assets  an amendment of FASB Statement
    No. 140(Statement
    No. 156)  In March 2006, the FASB
    issued Statement No. 156, an amendment of Statement
    No. 140. This Statement requires all separately recognized
    servicing rights be initially measured at fair value, if
    practicable. For each class of separately recognized servicing
    assets and liabilities, this statement permits Huntington to
    choose either to report servicing assets and liabilities at fair
    value or at amortized cost. Under the fair value approach,
    servicing assets and liabilities are recorded at fair value at
    each reporting date with changes in fair value recorded in
    earnings in the period in which the changes occur. Under the
    amortized cost method, servicing assets and liabilities are
    amortized in proportion to and over the period of estimated net
    servicing income or net servicing loss and are assessed for
    impairment based on fair value at each reporting date.
    Huntington elected to adopt the provisions of Statement
    No. 156 for mortgage servicing rights effective
    January 1, 2006, and has recorded mortgage servicing right
    assets using the fair value provision of the standard. The
    adoption of Statement No. 156 resulted in an
    $18.6 million increase in the carrying value of mortgage
    servicing right assets as of January 1, 2006. The

93



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | cumulative effect of this change
    was $12.1 million, net of taxes, which is reflected as an
    increase in retained earnings in the Consolidated Statements of
    Changes in Shareholders Equity. (See Note 5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| | FASB
    Statement No. 158,Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans
    an amendment of FASB Statements No. 87, 88, 106 and
    132R(Statement
    No. 158)
    In September 2006, the FASB issued Statement No. 158, as an
    amendment to FASB Statements No. 87, 88, 106 and 132R.
    Statement No. 158 requires an employer to recognize in its
    statement of financial position the funded status of its defined
    benefit plans and to recognize as a component of other
    comprehensive income, net of tax, any unrecognized transition
    obligations and assets, the actuarial gains and losses and prior
    service costs and credits that arise during the period. The
    recognition provisions of Statement No. 158 are to be
    applied prospectively and are effective for fiscal years ending
    after December 15, 2006. In addition, Statement
    No. 158 requires a fiscal year end measurement of plan
    assets and benefit obligations, eliminating the use of earlier
    measurement dates currently permissible. However, the new
    measurement date requirement will not be effective until fiscal
    years ended after December 15, 2008. Currently, Huntington
    utilizes a measurement date of September 30th. The adoption
    of Statement No. 158 as of December 31, 2006 resulted
    in a write-down of its pension asset by $125.1 million, and
    decreased accumulated other comprehensive income by
    $83.0 million, net of taxes (See Note 21).

Standards not yet
adopted as of December 31, 2006:




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | FASB Interpretation
    No. 48 (FIN 48),Accounting for Uncertainty
    in Income Taxes  In July 2006, the FASB
    issued FIN 48, Accounting for Uncertainty in Income
    Taxes. This Interpretation of FASB Statement No. 109,
    Accounting for Income Taxes, contains guidance on the
    recognition and measurement of uncertain tax positions.
    Huntington will be required to recognize the impact of a tax
    position if it is more likely than not that it will be sustained
    upon examination, based upon the technical merits of the
    position. The effective date for application of this
    interpretation is for periods beginning after December 15,
    2006. The cumulative effect of applying the provisions of this
    Interpretation must be reported as an adjustment to the opening
    balance of retained earnings for that fiscal period. Management
    does not expect that the impact of this new pronouncement will
    be material to Huntingtons financial condition, results of
    operations, or cash flows.
| 
| | FASB Statement
    No. 157,Fair Value Measurements (Statement
    No. 157)  In September 2006, the FASB
    issued Statement No. 157. This Statement establishes a
    common definition for fair value to be applied to GAAP guidance
    requiring use of fair value, establishes a framework for
    measuring fair value, and expands disclosure about such fair
    value measurements. Statement No. 157 is effective for
    fiscal years beginning after November 15, 2007. Management
    is currently assessing the impact this Statement will have on
    its consolidated financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| | FASB Statement
    No. 159,The Fair Value Option for Financial
    Assets and Financial Liabilities (Statement
    No. 159)  In February 2007, the FASB
    issued Statement No. 159. This Statement permits entities
    to choose to measure financial instruments and certain other
    financial assets and financial liabilities at fair value. This
    Statement is effective for fiscal years beginning after
    November 15, 2007. The Company is currently assessing the
    impact this Statement will have on its consolidated financial
    position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|   |                      
|-- | ---------------------
|3. | INVESTMENT SECURITIES



|                                                |                            |                |           |            |             |   |        |              |  |   |            |      |   |   |           |           | 
|----------------------------------------------- | -------------------------- | -------------- | --------- | ---------- | ----------- | - | ------ | ------------ |  | - | ---------- | ---- | - | - | --------- | --------- | 
|                                                |                            |                |           | Unrealized |             |  
|                                                |                            |                |           |            |             |   |       
|(in thousands of dollars)                       |                            | Amortized Cost |           |            | Gross Gains |   |        | Gross Losses |  |   | Fair Value |     
|                                               
|2006                                            |                            |                |           |            |             |   |        |              |  |   |            |      |   |   |           |          
|U.S. Treasury                                   |                            | $              | 1,846     |            |             | $ | 15     |              |  | $ | (5         | )    |   | $ | 1,856     |          
|Federal Agencies                                |                            |                |           |            |             |   |        |              |  |   |            |      |   |   |           |          
|                                                | Mortgage-backed securities |                |           | 1,277,184  |             |   |        | 4,830        |  |   |            | (553 | ) |   |           | 1,281,461 | 
|                                                | Other agencies             |                |           | 149,917    |             |   |        | 102          |  |   |            | (70  | ) |   |           | 149,949   | 
|                                               
|Total Federal agencies                          |                            |                | 1,427,101 |            |             |   | 4,932  |              |  |   | (623       | )    |   |   | 1,431,410 |          
|Asset-backed securities                         |                            |                | 1,574,572 |            |             |   | 11,372 |              |  |   | (3,140     | )    |   |   | 1,582,804 |          
|Municipal securities                            |                            |                | 586,467   |            |             |   | 7,332  |              |  |   | (2,376     | )    |   |   | 591,423   |          
|Private label collaterized mortgage obligations |                            |                | 586,088   |            |             |   | 4,046  |              |  |   | (72        | )    |   |   | 590,062   |          
|Other securities                                |                            |                | 164,829   |            |             |   | 607    |              |  |   | (67        | )    |   |   | 165,369   |          
|                                               
|Total investment securities                     |                            | $              | 4,340,903 |            |             | $ | 28,304 |              |  | $ | (6,283     | )    |   | $ | 4,362,924 |          
|                                               

94



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




|                                                |                            |                |           |            |             |   |        |              |  |   |            |         |   |   |           |           | 
|----------------------------------------------- | -------------------------- | -------------- | --------- | ---------- | ----------- | - | ------ | ------------ |  | - | ---------- | ------- | - | - | --------- | --------- | 
|                                                |                            |                |           | Unrealized |             |  
|                                                |                            |                |           |            |             |   |       
|(in thousands of dollars)                       |                            | Amortized Cost |           |            | Gross Gains |   |        | Gross Losses |  |   | Fair Value |        
|                                               
|2005                                            |                            |                |           |            |             |   |        |              |  |   |            |         |   |   |           |          
|U.S. Treasury                                   |                            | $              | 24,199    |            |             | $ | 131    |              |  | $ | (655       | )       |   | $ | 23,675    |          
|Federal Agencies                                |                            |                |           |            |             |   |        |              |  |   |            |         |   |   |           |          
|                                                | Mortgage-backed securities |                |           | 1,309,598  |             |   |        | 680          |  |   |            | (31,256 | ) |   |           | 1,279,022 | 
|                                                | Other agencies             |                |           | 349,385    |             |   |        | 115          |  |   |            | (13,034 | ) |   |           | 336,466   | 
|                                               
|Total Federal agencies                          |                            |                | 1,658,983 |            |             |   | 795    |              |  |   | (44,290    | )       |   |   | 1,615,488 |          
|Asset-backed securities                         |                            |                | 1,788,694 |            |             |   | 4,990  |              |  |   | (4,904     | )       |   |   | 1,788,780 |          
|Municipal securities                            |                            |                | 544,781   |            |             |   | 5,003  |              |  |   | (4,934     | )       |   |   | 544,850   |          
|Private label collaterized mortgage obligations |                            |                | 402,959   |            |             |   | 171    |              |  |   | (9,561     | )       |   |   | 393,569   |          
|Other securities                                |                            |                | 159,522   |            |             |   | 751    |              |  |   | (115       | )       |   |   | 160,158   |          
|                                               
|Total investment securities                     |                            | $              | 4,579,138 |            |             | $ | 11,841 |              |  | $ | (64,459    | )       |   | $ | 4,526,520 |          
|                                               





|                                 |  |                |           |      |            |   |           |           |  |   |            |  |  |   |           | 
|-------------------------------- |  | -------------- | --------- | ---- | ---------- | - | --------- | --------- |  | - | ---------- |  |  | - | --------- | 
|                                 |  | 2006           |           | 2005
|                                 | 
|(in thousands of dollars)        |  | Amortized Cost |           |      | Fair Value |   |           | Amortized |  |   | Fair Value | 
|                                
|Under 1 year                     |  | $              | 7,490     |      |            | $ | 7,473     |           |  | $ | 1,765      |  |  | $ | 1,765     | 
|1-5 years                        |  |                | 203,728   |      |            |   | 203,867   |           |  |   | 394,254    |  |  |   | 382,549   | 
|6-10 years                       |  |                | 170,075   |      |            |   | 169,680   |           |  |   | 199,670    |  |  |   | 196,154   | 
|Over 10 years                    |  |                | 3,802,375 |      |            |   | 3,824,111 |           |  |   | 3,838,730  |  |  |   | 3,800,751 | 
|Non-marketable equity securities |  |                | 150,754   |      |            |   | 150,754   |           |  |   | 89,661     |  |  |   | 89,661    | 
|Marketable equity securities     |  |                | 6,481     |      |            |   | 7,039     |           |  |   | 55,058     |  |  |   | 55,640    | 
|                                
|Total investment securities      |  | $              | 4,340,903 |      |            | $ | 4,362,924 |           |  | $ | 4,579,138  |  |  | $ | 4,526,520 | 
|                                





|                                                |                            |                     |         |                |        |       |        |            |            |   |         |        |  |            |        |     |        |   |         |         |  |   |        |      |  
|----------------------------------------------- | -------------------------- | ------------------- | ------- | -------------- | ------ | ----- | ------ | ---------- | ---------- | - | ------- | ------ |  | ---------- | ------ | --- | ------ | - | ------- | ------- |  | - | ------ | ---- | -
|                                                |                            | Less than 12 Months |         | Over 12 Months |        | Total
|                                                |                            |                     |         |                |        |       |        |            |           
|                                                |                            |                     |         | Unrealized     |        |       |        |            | Unrealized |   |         |        |  | Unrealized |       
|(in thousands of dollars)                       |                            | Fair Value          |         |                | Losses |       |        | Fair Value |            |   | Losses  |        |  | Fair Value |        |     | Losses |  
|                                               
|U.S. Treasury                                   |                            | $                   | 99      |                |        | $     |       |            |            | $ | 146     |        |  | $          | (5     | )   |        | $ | 245     |         |  | $ | (5     | )   
|Federal agencies                                |                            |                     |         |                |        |       |        |            |            |   |         |        |  |            |        |     |        |   |         |         |  |   |        |     
|                                                | Mortgage-backed securities |                     |         | 131,122        |        |       |        | (522       | )          |   |         | 10,188 |  |            |        | (31 | )      |   |         | 141,310 |  |   |        | (553 | )
|                                                | Other agencies             |                     |         | 99,531         |        |       |        | (69        | )          |   |         | 697    |  |            |        | (1  | )      |   |         | 100,228 |  |   |        | (70  | )
|Total Federal agencies                          |                            |                     | 230,653 |                |        |       | (591   | )          |            |   | 10,885  |        |  |            | (32    | )   |        |   | 241,538 |         |  |   | (623   | )   
|                                               
|Asset-backed securities                         |                            |                     | 297,916 |                |        |       | (2,147 | )          |            |   | 59,925  |        |  |            | (993   | )   |        |   | 357,841 |         |  |   | (3,140 | )   
|Municipal securities                            |                            |                     | 141,355 |                |        |       | (764   | )          |            |   | 69,060  |        |  |            | (1,612 | )   |        |   | 210,415 |         |  |   | (2,376 | )   
|Private label collaterized mortgage obligations |                            |                     | 38,309  |                |        |       | (72    | )          |            |   |        |        |  |            |       |     |        |   | 38,309  |         |  |   | (72    | )   
|Other securities                                |                            |                     | 500     |                |        |       | (2     | )          |            |   | 4,697   |        |  |            | (65    | )   |        |   | 5,197   |         |  |   | (67    | )   
|                                               
|Total temporarily impaired securities           |                            | $                   | 708,832 |                |        | $     | (3,576 | )          |            | $ | 144,713 |        |  | $          | (2,707 | )   |        | $ | 853,545 |         |  | $ | (6,283 | )   
|                                               



95



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED










other-than-temporarily




|   |                 
|-- | ----------------
|4. | LOANS AND LEASES





|                                                                   |                                           |                 |           |           |      |   |           |           | 
|------------------------------------------------------------------ | ----------------------------------------- | --------------- | --------- | --------- | ---- | - | --------- | --------- | 
|                                                                   |                                           | At December 31,
|                                                                  
|(in thousands of dollars)                                          |                                           | 2006            |           |           | 2005 |  
|                                                                  
|Commercial and industrial                                          |                                           |                 |           |           |      |   |           |          
|                                                                   | Lease payments receivable                 |                 | $         | 624,656   |      |   | $         | 486,488   | 
|                                                                   | Estimated residual value of leased assets |                 |           | 44,893    |      |   |           | 39,570    | 
|                                                                  
|Gross investment in commercial lease financing receivables         |                                           |                 | 669,549   |           |      |   | 526,058   |          
|Deferred origination fees and costs                                |                                           |                 | 3,983     |           |      |   | 3,125     |          
|Unearned income                                                    |                                           |                 | (86,849   | )         |      |   | (58,476   | )        
|                                                                  
|Total net investment in commercial lease financing
    receivables |                                           | $               | 586,683   |           |      | $ | 470,707   |          
|                                                                  
|Consumer                                                           |                                           |                 |           |           |      |   |           |          
|                                                                   | Lease payments receivable                 |                 | $         | 857,127   |      |   | $         | 1,209,088 | 
|                                                                   | Estimated residual value of leased assets |                 |           | 1,068,766 |      |   |           | 1,296,303 | 
|                                                                  
|Gross investment in consumer lease financing receivables           |                                           |                 | 1,925,893 |           |      |   | 2,505,391 |          
|Deferred origination fees and costs                                |                                           |                 | (810      | )         |      |   | (565      | )        
|Unearned income                                                    |                                           |                 | (155,659  | )         |      |   | (215,811  | )        
|                                                                  
|Total net investment in consumer lease financing
    receivables   |                                           | $               | 1,769,424 |           |      | $ | 2,289,015 |          
|                                                                  



96



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




loan-to


Related Party
Transactions




|                           |                                                           |      |        |         |      |   |        |          |  
|-------------------------- | --------------------------------------------------------- | ---- | ------ | ------- | ---- | - | ------ | -------- | -
|(in thousands of dollars)  |                                                           | 2006 |        |         | 2005 |  
|                          
|Balance, beginning of year |                                                           | $    | 76,488 |         |      | $ | 89,177 |         
|                           | Loans made                                                |      |        | 105,337 |      |   |        | 219,728  |  
|                           | Repayments                                                |      |        | (91,639 | )    |   |        | (231,814 | )
|                           | Changes due to status of executive officers and directors |      |        | (33,680 | )    |   |        | (603     | )
|                          
|Balance, end of year       |                                                           | $    | 56,506 |         |      | $ | 76,488 |         
|                          

Non-Performing Assets
and Past Due Loans




|                                        |                           |                 |         |        |      |   |         |        | 
|--------------------------------------- | ------------------------- | --------------- | ------- | ------ | ---- | - | ------- | ------ | 
|                                        |                           | At December 31, |        
|                                        |                          
|(in thousands of dollars)               |                           | 2006            |         |        | 2005 |  
|                                       
|                                        | Commercial and industrial |                 | $       | 58,393 |      |   | $       | 55,273 | 
|                                        | Commercial real estate    |                 |         | 37,947 |      |   |         | 18,309 | 
|                                        | Residential mortgage      |                 |         | 32,527 |      |   |         | 17,613 | 
|                                        | Home equity               |                 |         | 15,266 |      |   |         | 10,720 | 
|                                       
|Total non-performing loans              |                           |                 | 144,133 |        |      |   | 101,915 |       
|Other real estate, net                  |                           |                 | 49,487  |        |      |   | 15,240  |       
|                                       
|Total non-performing assets             |                           | $               | 193,620 |        |      | $ | 117,155 |       
|                                       
|Accruing loans past due 90 days or more |                           | $               | 59,114  |        |      | $ | 56,138  |       
|                                       





|   |                                   
|-- | ----------------------------------
|5. | LOAN SALES AND
    SECURITIZATIONS

Automobile
loans






97



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                  |  |                         |        |   |      |   |         |      |  |   |         |  
|--------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                  |  | Year Ended December 31, |       
|                                  | 
|(in thousands of dollars)         |  | 2006                    |        |   | 2005 |   |         | 2004 | 
|                                 
|Carrying value, beginning of year |  | $                       | 10,805 |   |      | $ | 20,286  |      |  | $ | 17,662  |  
|New servicing assets              |  |                         | 4,748  |   |      |   | 2,113   |      |  |   | 16,249  |  
|Amortization                      |  |                         | (7,637 | ) |      |   | (11,528 | )    |  |   | (13,625 | )
|Impairment charges                |  |                         |       |   |      |   | (66     | )    |  |   |        |  
|                                 
|Carrying value, end of year       |  | $                       | 7,916  |   |      | $ | 10,805  |      |  | $ | 20,286  |  
|                                 
|Fair value, end of year           |  | $                       | 9,457  |   |      | $ | 11,658  |      |  | $ | 21,361  |  





Residential Mortgage
Loans










|                                                    |                                                   |      |         |         |  
|--------------------------------------------------- | ------------------------------------------------- | ---- | ------- | ------- | -
|                                                    |                                                  
|(in thousands of dollars)                           |                                                   | 2006 |        
|                                                   
|Carrying value, beginning of year                   |                                                   | $    | 91,259  |        
|Cumulative effect in change in accounting principle |                                                   |      | 18,631  |        
|                                                   
|Fair value, beginning of period                     |                                                   |      | 109,890 |        
|New servicing assets created                        |                                                   |      | 29,013  |        
|Servicing assets acquired                           |                                                   |      | 2,474   |        
|Change in fair value during the period due to:      |                                                   |      |         |        
|                                                    | Time
    decay(1)                                 |      |         | (4,086  | )
|                                                    | Payoffs(2)                                        |      |         | (11,058 | )
|                                                    | Changes in valuation inputs or
    assumptions(3) |      |         | 4,871   |  
|                                                   
|Fair value, end of year                             |                                                   | $    | 131,104 |        
|                                                   



|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents decrease in value due to passage of time, including
    the impact from both regularly scheduled loan principal payments
    and partial loan paydowns.
|   
|(2) | Represents decrease in value associated with loans that paid off
    during the period.                                                                           
|   
|(3) | Represents change in value resulting primarily from
    market-driven changes in interest rates.                                                                  

98



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








|                          |  |        |       |                 |        |   |         |        |  |   |         |  
|------------------------- |  | ------ | ----- | --------------- | ------ | - | ------- | ------ |  | - | ------- | -
|                          |  |        |       | Decline in fair |       
|                          |  |        |       | value due to    |       
|                          |  |        |       |                 |       
|                          |  |        |       | 10%             |        |   | 20%     |       
|                          |  |        |       | adverse         |        |   | adverse |       
|(in thousands of dollars) |  | Actual |       |                 | change |   |         | change | 
|                         
|Constant pre-payment rate |  |        | 12.84 | %               |        | $ | (5,984  | )      |  | $ | (11,529 | )
|Discount rate             |  |        | 9.41  |                 |        |   | (4,753  | )      |  |   | (9,182  | )







|                           |  |                          |  |      |  |   |         |   |  |   |         |  
|-------------------------- |  | ------------------------ |  | ---- |  | - | ------- | - |  | - | ------- | -
|                           |  | Year Ending December 31, | 
|                           | 
|(in thousands of dollars)  |  |                          |  | 2005 |  |   | 2004    |  
|                          
|Balance, beginning of year |  |                          |  |      |  | $ | (4,775  | ) |  | $ | (6,153  | )
|Impairment charges         |  |                          |  |      |  |   | (15,814 | ) |  |   | (18,110 | )
|Impairment recovery        |  |                          |  |      |  |   | 20,185  |   |  |   | 19,488  |  
|                          
|Balance, end of year       |  |                          |  |      |  | $ | (404    | ) |  | $ | (4,775  | )
|                          





|                          |  |      |        |  |      |   |        |      |  |   |        | 
|------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|(in thousands of dollars) |  | 2006 |        |  | 2005 |   |        | 2004 | 
|                         
|Servicing fees            |  | $    | 24,659 |  |      | $ | 22,181 |      |  | $ | 21,696 | 
|Late fees                 |  |      | 2,539  |  |      |   | 2,022  |      |  |   | 1,725  | 
|Ancillary fees            |  |      | 765    |  |      |   | 797    |      |  |   | 541    | 
|                         
|Total fee income          |  | $    | 27,963 |  |      | $ | 25,000 |      |  | $ | 23,962 | 
|                         

6. ALLOWANCES FOR CREDIT LOSSES
(ACL)




99



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                                                                            |                                                                   |                         |          |        |      |   |          |        |  |   |          |        | 
|------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ----------------------- | -------- | ------ | ---- | - | -------- | ------ |  | - | -------- | ------ | 
|                                                                                            |                                                                   | Year Ended December 31, |         
|                                                                                            |                                                                  
|(in thousands of dollars)                                                                   |                                                                   | 2006                    |          |        | 2005 |   |          | 2004   | 
|                                                                                            |                                                                  
|Allowance for loan and leases losses, beginning of year
    (ALLL)                          |                                                                   | $                       | 268,347  |        |      | $ | 271,211  |        |  | $ | 299,732  |       
|Acquired allowance for loan and lease losses                                                |                                                                   |                         | 23,785   |        |      |   |         |        |  |   |         |       
|Loan and lease losses                                                                       |                                                                   |                         | (119,692 | )      |      |   | (115,848 | )      |  |   | (126,115 | )     
|Recoveries of loans previously charged off                                                  |                                                                   |                         | 37,316   |        |      |   | 35,791   |        |  |   | 47,580   |       
|                                                                                           
|Net loan and lease losses                                                                   |                                                                   |                         | (82,376  | )      |      |   | (80,057  | )      |  |   | (78,535  | )     
|                                                                                           
|Provision for loan and lease losses                                                         |                                                                   |                         | 62,312   |        |      |   | 83,782   |        |  |   | 57,397   |       
|Economic reserve
    transfer(1)                                                            |                                                                   |                         |         |        |      |   | (6,253   | )      |  |   |         |       
|Allowance for assets sold and
    securitized(2)                                            |                                                                   |                         |         |        |      |   | (336     | )      |  |   | (7,383   | )     
|                                                                                           
|Allowance for loan and lease losses, end of year                                            |                                                                   | $                       | 272,068  |        |      | $ | 268,347  |        |  | $ | 271,211  |       
|                                                                                           
|Allowance for unfunded loan commitments and letters of
    credit, beginning of year (AULC) |                                                                   | $                       | 36,957   |        |      | $ | 33,187   |        |  | $ | 35,522   |       
|Acquired AULC                                                                               |                                                                   |                         |          |        |      |   |          |        |  |   | 325      |       
|Provision for unfunded loan commitments and letters of credit
    losses                    |                                                                   |                         | 2,879    |        |      |   | (2,483   | )      |  |   | (2,335   | )     
|Economic reserve
    transfer(1)                                                            |                                                                   |                         |         |        |      |   | 6,253    |        |  |   |         |       
|                                                                                           
|Allowance for unfunded loan commitments and letters of
    credit, end of year              |                                                                   | $                       | 40,161   |        |      | $ | 36,957   |        |  | $ | 33,187   |       
|                                                                                           
|Total allowances for credit losses (ACL)                                                    |                                                                   | $                       | 312,229  |        |      | $ | 305,304  |        |  | $ | 304,398  |       
|                                                                                           
|                                                                                           
|Recorded balance of impaired loans, at end of
    year(3):                                  |                                                                   |                         |          |        |      |   |          |        |  |   |          |       
|                                                                                            | With specific reserves assigned to the loan and lease balances    |                         | $        | 35,212 |      |   | $        | 41,525 |  |   | $        | 51,875 | 
|                                                                                            | With no specific reserves assigned to the loan and lease balances |                         |          | 25,662 |      |   |          | 14,032 |  |   |          | 29,296 | 
|                                                                                           
|Total                                                                                       |                                                                   | $                       | 60,874   |        |      | $ | 55,557   |        |  | $ | 81,171   |       
|                                                                                           
|Average balance of impaired loans for the
    year(3)                                       |                                                                   | $                       | 65,907   |        |      | $ | 29,441   |        |  | $ | 54,445   |       
|Allowance for loan and lease losses on impaired
    loans(3)                                |                                                                   |                         | 7,612    |        |      |   | 14,526   |        |  |   | 23,447   |       



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During 2005, the economic reserve associated with unfunded loan
    commitments was transferred from the ALLL to the AULC. This
    transfer had no impact on net income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(2) | In conjunction with the automobile loan sales and
    securitizations in 2006, 2005, and 2004, an allowance for loan
    and lease losses attributable to the associated loans sold was
    included as a component of the loans carrying value upon
    their sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | Includes impaired commercial and industrial loans and commercial
    real estate loans with outstanding balances greater than
    $500,000. A loan is impaired when it is probable that Huntington
    will be unable to collect all amounts due according to the
    contractual terms of the loan agreement. Impaired loans are
    included in non-performing assets. The amount of interest
    recognized in 2006, 2005 and 2004 on impaired loans while they
    were considered impaired was less than $0.1 million, less
    than $0.1 million, and $1.1 million, respectively. The
    recovery of the investment in impaired loans with no specific
    reserves generally is expected from the sale of collateral, net
    of costs to sell that collateral.

7. PENDING ACQUISITION OF SKY
FINANCIAL GROUP, INC.






8. BUSINESS COMBINATIONS






100



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                                                        |                                        |               |          |         |  
|----------------------------------------------------------------------- | -------------------------------------- | ------------- | -------- | ------- | -
|(in thousands of dollars)                                               |                                        | March 1, 2006 |         
|                                                                       
|Purchase price                                                          |                                        | $             | 575,793  |        
|Carrying value of net assets acquired                                   |                                        |               | (194,996 | )      
|                                                                       
|Excess of purchase price over carrying value of net assets
    acquired |                                        |               | 380,797  |        
|Purchase accounting adjustments:                                        |                                        |               |          |        
|                                                                        | Loans and leases                       |               |          | 17,466  |  
|                                                                        | Premises and equipment                 |               |          | (202    | )
|                                                                        | Accrued income and other assets        |               |          | 257     |  
|                                                                        | Deposits                               |               |          | 748     |  
|                                                                        | Subordinated notes                     |               |          | 2,845   |  
|                                                                        | Deferred federal income tax liability  |               |          | 6,616   |  
|                                                                        | Accrued expenses and other liabilities |               |          | 8,577   |  
|                                                                       
|Goodwill and other intangible assets                                    |                                        |               | 417,104  |        
|Less other intangible assets:                                           |                                        |               |          |        
|                                                                        | Core deposit intangible                |               |          | (45,000 | )
|                                                                        | Other identifiable intangible assets   |               |          | (18,252 | )
|                                                                       
|Other intangible assets                                                 |                                        |               | (63,252  | )      
|                                                                       
|Goodwill                                                                |                                        | $             | 353,852  |        
|                                                                       





101



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##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                          |                                        |                                     |           |           |           |  
|------------------------- | -------------------------------------- | ----------------------------------- | --------- | --------- | --------- | -
|(in thousands of dollars) |                                        | March 1, 2006                       |          
|                         
|Assets                    |                                        |                                     |           |          
|                          | Cash and due from banks                |                                     | $         | 66,544    |          
|                          | Interest bearing deposits in banks     |                                     |           | 3,096     |          
|                          | Investment securities                  |                                     |           | 300,416   |          
|                          |                                        | Loans and leases                    |           |           | 1,666,604 |  
|                          |                                        | Allowance for loan and lease losses |           |           | (23,785   | )
|                         
|                          | Net loans and leases                   |                                     |           | 1,642,819 |          
|                         
|                          | Bank owned life insurance              |                                     |           | 48,521    |          
|                          | Premises and equipment                 |                                     |           | 21,603    |          
|                          | Goodwill                               |                                     |           | 353,852   |          
|                          | Other intangible assets                |                                     |           | 63,252    |          
|                          | Accrued income and other assets        |                                     |           | 22,012    |          
|                         
|Total assets              |                                        |                                     | 2,522,115 |          
|Liabilities               |                                        |                                     |           |          
|                          | Deposits                               |                                     |           | 1,696,124 |          
|                          | Short-term borrowings                  |                                     |           | 79,140    |          
|                          | Federal Home Loan Bank advances        |                                     |           | 102,950   |          
|                          | Subordinated notes                     |                                     |           | 23,464    |          
|                          | Deferred federal income tax liability  |                                     |           | 7,123     |          
|                          | Accrued expenses and other liabilities |                                     |           | 37,521    |          
|                         
|Total liabilities         |                                        |                                     | 1,946,322 |          
|                         
|Purchase price            |                                        | $                                   | 575,793   |          
|                         



|                                                      |                             |      |            |           |      |   |            |           |  
|----------------------------------------------------- | --------------------------- | ---- | ---------- | --------- | ---- | - | ---------- | --------- | -
|(in thousands, except per share amounts)              |                             | 2006 |            |           | 2005 |  
|                                                     
|                                                      | Net interest income         |      | $          | 1,030,789 |      |   | $          | 1,032,083 |  
|                                                      | Provision for credit losses |      |            | (66,301   | )    |   |            | (87,959   | )
|                                                     
|Net interest income after provision for credit losses |                             |      | 964,488    |           |      |   | 944,124    |          
|                                                     
|Non-interest income                                   |                             |      | 565,853    |           |      |   | 660,986    |          
|Non-interest expense                                  |                             |      | (1,012,840 | )         |      |   | (1,041,532 | )        
|                                                     
|Income before income taxes                            |                             |      | 517,501    |           |      |   | 563,578    |          
|Provision for income taxes                            |                             |      | (54,837    | )         |      |   | (137,173   | )        
|                                                     
|Net income                                            |                             | $    | 462,664    |           |      | $ | 426,405    |          
|                                                     
|Net income per common share                           |                             |      |            |           |      |   |            |          
|                                                      | Basic                       |      | $          | 1.92      |      |   | $          | 1.67      |  
|                                                      | Diluted                     |      |            | 1.90      |      |   |            | 1.65      |  
|Average common shares outstanding                     |                             |      |            |           |      |   |            |          
|                                                      | Basic                       |      |            | 240,924   |      |   |            | 255,417   |  
|                                                      | Diluted                     |      |            | 244,145   |      |   |            | 258,879   |  



102



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##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








9. GOODWILL AND OTHER INTANGIBLE
ASSETS




|                           |                                     |          |         |         |        |   |   |       |  |           |        |        |            |              |   |   |  |   |         |         | 
|-------------------------- | ----------------------------------- | -------- | ------- | ------- | ------ | - | - | ----- |  | --------- | ------ | ------ | ---------- | ------------ | - | - |  | - | ------- | ------- | 
|                           |                                     | Regional |         |         | Dealer |   |   |       |  | Treasury/ |        |        | Huntington |             
|(in thousands of dollars)  |                                     | Banking  |         |         | Sales  |   |   | PFCMG |  |           | Other  |        |            | Consolidated |  
|                          
|Balance, December 31, 2005 |                                     | $        | 199,971 |         |        | $ |  |       |  | $         | 12,559 |        |            | $            |  |   |  | $ | 212,530 |        
|                           | Goodwill acquired during the period |          |         | 335,884 |        |   |   |      |  |           |        | 22,462 |            |              |   |  |  |   |         | 358,346 | 
|                          
|Balance, December 31, 2006 |                                     | $        | 535,855 |         |        | $ |  |       |  | $         | 35,021 |        |            | $            |  |   |  | $ | 570,876 |        
|                          





|                              |                         |          |        |        |              |   |         |                |   |   |        |        | 
|----------------------------- | ----------------------- | -------- | ------ | ------ | ------------ | - | ------- | -------------- | - | - | ------ | ------ | 
|                              |                         | Gross    |        |        |              |   |        
|                              |                         | Carrying |        |        | Accumulated  |   |         | Net            |  
|(in thousands of dollars)     |                         | Amount   |        |        | Amortization |   |         | Carrying Value |  
|                             
|December 31, 2006             |                         |          |        |        |              |   |         |                |   |   |        |       
|                              | Leasehold purchased     |          | $      | 23,655 |              |   | $       | (19,631        | ) |   | $      | 4,024  | 
|                              | Core deposit intangible |          |        | 45,000 |              |   |         | (7,525         | ) |   |        | 37,475 | 
|                              | Borrower relationship   |          |        | 6,570  |              |   |         | (456           | ) |   |        | 6,114  | 
|                              | Trust customers         |          |        | 11,430 |              |   |         | (796           | ) |   |        | 10,634 | 
|                              | Other                   |          |        | 1,622  |              |   |         | (382           | ) |   |        | 1,240  | 
|                             
|Total other intangible assets |                         | $        | 88,277 |        |              | $ | (28,790 | )              |   | $ | 59,487 |       
|                             
|December 31, 2005             |                         |          |        |        |              |   |         |                |   |   |        |       
|                              | Leasehold purchased     |          | $      | 23,655 |              |   | $       | (18,816        | ) |   | $      | 4,839  | 
|                              | Trust customers         |          |        | 130    |              |   |         | (13            | ) |   |        | 117    | 
|                             
|Total other intangible assets |                         | $        | 23,785 |        |              | $ | (18,829 | )              |   | $ | 4,956  |       
|                             





|                          |      |              |   |        | 
|------------------------- | ---- | ------------ | - | ------ | 
|                          |      | Amortization |  
|(in thousands of dollars) |      | Expense      |  
|                         
|Fiscal year:              |      |              |   |       
|                          | 2007 |              | $ | 10,040 | 
|                          | 2008 |              |   | 8,856  | 
|                          | 2009 |              |   | 7,928  | 
|                          | 2010 |              |   | 7,106  | 
|                          | 2011 |              |   | 6,312  | 

103



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|    |                                      
|--- | -------------------------------------
|10. | AUTOMOBILE OPERATING LEASE
    ASSETS



|                                                                                                     |  |                 |         |   |      |   |          |  
|---------------------------------------------------------------------------------------------------- |  | --------------- | ------- | - | ---- | - | -------- | -
|                                                                                                     |  | At December 31, |        
|                                                                                                     | 
|(in thousands of dollars)                                                                            |  | 2006            |         |   | 2005 |  
|                                                                                                    
|Cost of operating lease assets (including residual values of
    $28,572 and $148,937, respectively) |  | $               | 90,940  |   |      | $ | 460,596  |  
|Deferred origination fees and costs                                                                  |  |                 | (23     | ) |      |   | (272     | )
|Accumulated depreciation                                                                             |  |                 | (62,586 | ) |      |   | (271,321 | )
|                                                                                                    
|Total                                                                                                |  | $               | 28,331  |   |      | $ | 189,003  |  
|                                                                                                    





|    |                       
|--- | ----------------------
|11. | PREMISES AND EQUIPMENT



|                                               |  |                 |          |   |      |   |          |  
|---------------------------------------------- |  | --------------- | -------- | - | ---- | - | -------- | -
|                                               |  | At December 31, |         
|                                               | 
|(in thousands of dollars)                      |  | 2006            |          |   | 2005 |  
|                                              
|Land and land improvements                     |  | $               | 79,273   |   |      | $ | 67,787   |  
|Buildings                                      |  |                 | 270,942  |   |      |   | 246,745  |  
|Leasehold improvements                         |  |                 | 154,097  |   |      |   | 149,466  |  
|Equipment                                      |  |                 | 491,428  |   |      |   | 477,192  |  
|                                              
|Total premises and equipment                   |  |                 | 995,740  |   |      |   | 941,190  |  
|Less accumulated depreciation and amortization |  |                 | (622,968 | ) |      |   | (580,513 | )
|                                              
|Net premises and equipment                     |  | $               | 372,772  |   |      | $ | 360,677  |  
|                                              



|                                                              |  |                         |        |  |      |   |        |      |  |   |        | 
|------------------------------------------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                                              |  | Year Ended December 31, |       
|                                                              | 
|(in thousands of dollars)                                     |  | 2006                    |        |  | 2005 |   |        | 2004 | 
|                                                             
|Total depreciation and amortization of premises and equipment |  | $                       | 52,333 |  |      | $ | 50,355 |      |  | $ | 50,097 | 
|Rental income credited to occupancy expense                   |  |                         | 11,602 |  |      |   | 11,010 |      |  |   | 13,081 | 



|    |                      
|--- | ---------------------
|12. | SHORT-TERM BORROWINGS



|                            |                                                |                 |           |           |      |   |           |         | 
|--------------------------- | ---------------------------------------------- | --------------- | --------- | --------- | ---- | - | --------- | ------- | 
|                            |                                                | At December 31, |          
|                            |                                               
|(in thousands of dollars)   |                                                | 2006            |           |           | 2005 |  
|                           
|                            | Federal funds purchased                        |                 | $         | 520,354   |      |   | $         | 931,097 | 
|                            | Securities sold under agreements to repurchase |                 |           | 1,111,959 |      |   |           | 888,985 | 
|                            | Commercial paper                               |                 |           | 2,677     |      |   |           | 2,480   | 
|                            | Other borrowings                               |                 |           | 41,199    |      |   |           | 66,698  | 
|                           
|Total short-term borrowings |                                                | $               | 1,676,189 |           |      | $ | 1,889,260 |        
|                           



104



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                          |  |                         |           |  |      |   |           |  
|----------------------------------------- |  | ----------------------- | --------- |  | ---- | - | --------- | -
|                                          |  | Year Ended December 31, |          
|                                          | 
|(in thousands of dollars)                 |  | 2006                    |           |  | 2005 |  
|                                         
|Average balance during the year           |  | $                       | 1,065,649 |  |      | $ | 1,125,159 |  
|Average interest rate during the year     |  |                         | 3.33%     |  |      |   | 2.17      | %
|Maximum month-end balance during the year |  | $                       | 1,213,673 |  |      | $ | 1,356,733 |  





|    |                                    
|--- | -----------------------------------
|13. | FEDERAL HOME LOAN BANK
    ADVANCES





|    |                   
|--- | ------------------
|14. | SUBORDINATED NOTES



|                              |                                                      |                 |           |         |      |   |           |         | 
|----------------------------- | ---------------------------------------------------- | --------------- | --------- | ------- | ---- | - | --------- | ------- | 
|                              |                                                      | At December 31, |          
|                              |                                                     
|(in thousands of dollars)     |                                                      | 2006            |           |         | 2005 |  
|                             
|Parent company:               |                                                      |                 |           |         |      |   |           |        
|                              | 6.06% junior subordinated debentures due
    2027(1) |                 | $         | 206,186 |      |   | $         | 206,186 | 
|                              | 5.99% junior subordinated debentures due
    2028(2) |                 |           | 103,093 |      |   |           | 103,093 | 
|                              | 9.88% junior subordinated debentures due 2029        |                 |           | 23,428  |      |   |           |        | 
|The Huntington National Bank: |                                                      |                 |           |         |      |   |           |        
|                              | 8.00% subordinated notes due 2010                    |                 |           | 152,303 |      |   |           | 158,620 | 
|                              | 4.90% subordinated notes due 2014                    |                 |           | 193,122 |      |   |           | 193,361 | 
|                              | 5.50% subordinated notes due 2016                    |                 |           | 248,908 |      |   |           |        | 
|                              | 6.60% subordinated notes due 2018                    |                 |           | 212,526 |      |   |           | 214,277 | 
|                              | 5.375% subordinated notes due 2019                   |                 |           | 147,091 |      |   |           | 147,834 | 
|                             
|Total subordinated notes      |                                                      | $               | 1,286,657 |         |      | $ | 1,023,371 |        
|                             



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | Variable effective rate at December 31, 2006, based on
    three month LIBOR + 0.70. 
|   
|(2) | Variable effective rate at December 31, 2006, based on
    three month LIBOR + 0.625.







105



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|    |                     
|--- | --------------------
|15. | OTHER LONG-TERM DEBT



|                           |                                                                        |                 |           |         |      |   |           |           | 
|-------------------------- | ---------------------------------------------------------------------- | --------------- | --------- | ------- | ---- | - | --------- | --------- | 
|                           |                                                                        | At December 31, |          
|                           |                                                                       
|(in thousands of dollars)  |                                                                        | 2006            |           |         | 2005 |  
|                          
|                           | The Huntington National Bank                                           |                 | $         | 808,112 |      |   | $         | 1,576,033 | 
|                           | 5.68% Securitization trust note payable due
    2012(1)                |                 |           | 408,745 |      |   |           | 792,386   | 
|                           | 6.02% Securitization trust note payable due
    2018(2)                |                 |           | 962,283 |      |   |           |          | 
|                           | 7.88% Class C preferred securities of REIT subsidiary, no
    maturity |                 |           | 50,000  |      |   |           | 50,000    | 
|                          
|Total other long-term debt |                                                                        | $               | 2,229,140 |         |      | $ | 2,418,419 |          
|                          



|    |                                                                                  
|--- | ---------------------------------------------------------------------------------
|(1) | Variable effective rate at December 31, 2006, based on one
    month LIBOR +0.33.
|   
|(2) | Variable effective rate at December 31, 2006, based on one
    month LIBOR +0.67.









106



---



##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




16. OTHER COMPREHENSIVE
INCOME




|                                                                                                                                     |                                                                                  |                         |         |          |      |   |         |         |   |   |         |         |  
|------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ----------------------- | ------- | -------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                                                     |                                                                                  | Year Ended December 31, |        
|                                                                                                                                     |                                                                                 
|(in thousands of dollars)                                                                                                            |                                                                                  | 2006                    |         |          | 2005 |   |         | 2004    |  
|                                                                                                                                    
|Unrealized losses on investment securities arising during the
    year:                                                              |                                                                                  |                         |         |          |      |   |         |         |   |   |         |        
|                                                                                                                                     | Unrealized net losses                                                            |                         | $       | 1,448    |      |   | $       | (41,014 | ) |   | $       | (18,555 | )
|                                                                                                                                     | Related tax benefit                                                              |                         |         | (752     | )    |   |         | 14,445  |   |   |         | 6,689   |  
|                                                                                                                                    
|Net                                                                                                                                  |                                                                                  |                         | 696     |          |      |   | (26,569 | )       |   |   | (11,866 | )      
|                                                                                                                                    
|Less: Reclassification of net realized losses (gains) from
    sales of investment securities during the year:                       |                                                                                  |                         |         |          |      |   |         |         |   |   |         |        
|                                                                                                                                     | Realized net losses (gains)                                                      |                         |         | 73,191   |      |   |         | 8,055   |   |   |         | (15,763 | )
|                                                                                                                                     | Related tax (benefit) expense                                                    |                         |         | (25,617  | )    |   |         | (2,819  | ) |   |         | 5,517   |  
|                                                                                                                                    
|Net                                                                                                                                  |                                                                                  |                         | 47,574  |          |      |   | 5,236   |         |   |   | (10,246 | )      
|                                                                                                                                    
|Total unrealized losses on investment securities arising during
    the year, net of reclassification of net realized losses (gains) |                                                                                  |                         | 48,270  |          |      |   | (21,333 | )       |   |   | (22,112 | )      
|                                                                                                                                    
|Unrealized gains on cash flow hedging derivatives arising during
    the year:                                                       |                                                                                  |                         |         |          |      |   |         |         |   |   |         |        
|                                                                                                                                     | Unrealized net gains                                                             |                         |         | 2,772    |      |   |         | 16,852  |   |   |         | 14,914  |  
|                                                                                                                                     | Related tax expense                                                              |                         |         | (970     | )    |   |         | (5,898  | ) |   |         | (5,220  | )
|                                                                                                                                    
|Net                                                                                                                                  |                                                                                  |                         | 1,802   |          |      |   | 10,954  |         |   |   | 9,694   |        
|                                                                                                                                    
|Defined benefit pension plans:                                                                                                       |                                                                                  |                         |         |          |      |   |         |         |   |   |         |        
|                                                                                                                                     | Cumulative effect of change in accounting for funded status of
    pension plans |                         |         | (128,175 | )    |   |         |        |   |   |         |        |  
|                                                                                                                                     | Minimum pension liability adjustment                                             |                         |         | 414      |      |   |         | (1,248  | ) |   |         | (1,789  | )
|                                                                                                                                     | Related tax benefit                                                              |                         |         | 44,716   |      |   |         | 437     |   |   |         | 626     |  
|                                                                                                                                    
|Net                                                                                                                                  |                                                                                  |                         | (83,045 | )        |      |   | (811    | )       |   |   | (1,163  | )      
|                                                                                                                                    
|Total other comprehensive loss                                                                                                       |                                                                                  | $                       | (32,973 | )        |      | $ | (11,190 | )       |   | $ | (13,581 | )      
|                                                                                                                                    



|                           |  |                       |         |                  |                   |   |        |                 |  |   |         |   |  |   |         |  
|-------------------------- |  | --------------------- | ------- | ---------------- | ----------------- | - | ------ | --------------- |  | - | ------- | - |  | - | ------- | -
|                           |  |                       |         | Unrealized gains |                   |   |        |                 | 
|                           |  | Unrealized gains      |         |                  | and losses on     |   |        |                 |  |  
|                           |  | and losses on         |         |                  | cash flow hedging |   |        | Defined benefit |  |   |        
|(in thousands of dollars)  |  | investment securities |         |                  | derivatives       |   |        | pension plans   |  |   | Total   |  
|                          
|Balance, January 1, 2004   |  | $                     | 9,429   |                  |                   | $ | (5,442 | )               |  | $ | (1,309  | ) |  | $ | 2,678   |  
|Current period change      |  |                       | (22,112 | )                |                   |   | 9,694  |                 |  |   | (1,163  | ) |  |   | (13,581 | )
|                          
|Balance, December 31, 2004 |  |                       | (12,683 | )                |                   |   | 4,252  |                 |  |   | (2,472  | ) |  |   | (10,903 | )
|Current period change      |  |                       | (21,333 | )                |                   |   | 10,954 |                 |  |   | (811    | ) |  |   | (11,190 | )
|                          
|Balance, December 31, 2005 |  |                       | (34,016 | )                |                   |   | 15,206 |                 |  |   | (3,283  | ) |  |   | (22,093 | )
|Current period change      |  |                       | 48,270  |                  |                   |   | 1,802  |                 |  |   | (83,045 | ) |  |   | (32,973 | )
|                          
|Balance, December 31, 2006 |  | $                     | 14,254  |                  |                   | $ | 17,008 |                 |  | $ | (86,328 | ) |  | $ | (55,066 | )
|                          

17. SHAREHOLDERS
EQUITY






107



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








|                                 |  |           |            |  |          |   |       | 
|-------------------------------- |  | --------- | ---------- |  | -------- | - | ----- | 
|                                 |  | Total     |            |  | Average  |  
|                                 |  | Number    |            |  | Price    |  
|                                 |  | of Shares |            |  | Paid Per |  
|Repurchase Programs              |  | Purchased |            |  | Share    |  
|                                
|The 2005 Repurchase Program      |  |           | 4,831,000  |  |          | $ | 23.46 | 
|The 2006 Repurchase Program      |  |           | 11,150,000 |  |          |   | 23.81 | 
|                                
|Total Shares Repurchased in 2006 |  |           | 15,981,000 |  |          | $ | 23.71 | 
|                                

18. EARNINGS PER SHARE




|                                          |         |                         |         |      |      |   |         |      |  |   |         |      | 
|----------------------------------------- | ------- | ----------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                          |         | Year ended December 31, |        
|                                          |        
|(in thousands, except per share amounts)  |         | 2006                    |         |      | 2005 |   |         | 2004 | 
|                                         
|Net income                                |         | $                       | 461,221 |      |      | $ | 412,091 |      |  | $ | 398,925 |     
|Average common shares outstanding         |         |                         | 236,699 |      |      |   | 230,142 |      |  |   | 229,913 |     
|Dilutive potential common shares          |         |                         | 3,221   |      |      |   | 3,333   |      |  |   | 3,943   |     
|                                         
|Diluted average common shares outstanding |         |                         | 239,920 |      |      |   | 233,475 |      |  |   | 233,856 |     
|                                         
|Earnings Per Share                        |         |                         |         |      |      |   |         |      |  |   |         |     
|                                          | Basic   |                         | $       | 1.95 |      |   | $       | 1.79 |  |   | $       | 1.74 | 
|                                          | Diluted |                         |         | 1.92 |      |   |         | 1.77 |  |   |         | 1.71 | 







|    |                         
|--- | ------------------------
|19. | SHARE-BASED COMPENSATION





108



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                        |         |                      |       |       |  
|--------------------------------------- | ------- | -------------------- | ----- | ----- | -
|                                        |         | Share-based          |      
|(in millions, except per share amounts) |         | compensation expense |      
|                                        |        
|Income before income taxes              |         | $                    | (18.6 | )    
|Net income                              |         |                      | (12.1 | )    
|Earnings per share                      |         |                      |       |      
|                                        | Basic   |                      | $     | (0.05 | )
|                                        | Diluted |                      |       | (0.05 | )





|                                                 |                                                  |      |      |      |      |   |      |      |   |   |      |      |  
|------------------------------------------------ | ------------------------------------------------ | ---- | ---- | ---- | ---- | - | ---- | ---- | - | - | ---- | ---- | -
|                                                 |                                                  | 2006 |      |      | 2005 |   |      | 2004 |  
|                                                 |                                                 
|Assumptions                                      |                                                  |      |      |      |      |   |      |      |   |   |      |     
|                                                 | Risk-free interest rate                          |      |      | 4.96 | %    |   |      | 4.07 | % |   |      | 3.78 | %
|                                                 | Expected dividend yield                          |      |      | 4.24 |      |   |      | 3.34 |   |   |      | 3.20 |  
|                                                 | Expected volatility of Huntingtons common stock |      |      | 22.2 |      |   |      | 26.3 |   |   |      | 30.9 |  
|                                                 | Expected option term (years)                     |      |      | 6.0  |      |   |      | 6.0  |   |   |      | 6.0  |  
|Weighted-average grant date fair value per share |                                                  | $    | 4.21 |      |      | $ | 5.28 |      |   | $ | 5.78 |     



|                                        |                               |              |       |       |      |   |       |       |  
|--------------------------------------- | ----------------------------- | ------------ | ----- | ----- | ---- | - | ----- | ----- | -
|                                        |                               | Year Ended   |      
|                                        |                               | December 31, |      
|                                        |                               |              |      
|(in millions, except per share amounts) |                               | 2005         |       |       | 2004 |  
|                                        |                              
|Pro forma results                       |                               |              |       |       |      |   |       |      
|                                        | Net income, as reported       |              | $     | 412.1 |      |   | $     | 398.9 |  
|                                        | Pro forma expense, net of tax |              |       | (11.9 | )    |   |       | (14.4 | )
|                                       
|Pro forma net income                    |                               | $            | 400.2 |       |      | $ | 384.5 |      
|                                       
|Net income per common share:            |                               |              |       |       |      |   |       |      
|                                        | Basic, as reported            |              | $     | 1.79  |      |   | $     | 1.74  |  
|                                        | Basic, pro forma              |              |       | 1.74  |      |   |       | 1.67  |  
|                                        | Diluted, as reported          |              |       | 1.77  |      |   |       | 1.71  |  
|                                        | Diluted, pro forma            |              |       | 1.71  |      |   |       | 1.64  |  

109



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                         |  |         |        |           |       |             |              |           |       |        
|---------------------------------------- |  | ------- | ------ | --------- | ----- | ----------- | ------------ | --------- | ----- | -------
|                                         |  |         |        |           |       | Weighted-   |              |          
|                                         |  |         |        | Weighted- |       | Average     |              |          
|                                         |  |         |        | Average   |       | Remaining   |              | Aggregate
|                                         |  |         |        | Exercise  |       | Contractual |              | Intrinsic
|(in thousands, except per share amounts) |  | Options |        |           | Price |             | Life (Years) |           | Value
|                                        
|Outstanding at January 1, 2006           |  |         | 21,004 |           |       | $21.11      |              |           |       |        
|Granted                                  |  |         | 1,486  |           |       | 23.38       |              |           |       |        
|Acquired(1)                              |  |         | 656    |           |       | 16.56       |              |           |       |        
|Exercised                                |  |         | (2,014 | )         |       | 18.34       |              |           |       |        
|Forfeited/expired                        |  |         | (559   | )         |       | 22.56       |              |           |       |        
|                                        
|Outstanding at December 31, 2006         |  |         | 20,573 |           |       | $21.36      |              | 4.8       |       | $59,930
|                                        
|Exercisable at December 31, 2006         |  |         | 14,639 |           |       | $20.72      |              | 4.5       |       | $53,279
|                                        



|    |                                                              
|--- | -------------------------------------------------------------
|(1) | Relates to option plans acquired from the merger with Unizan.







|                                         |  |         |        |            |           |            |       |            |           |   |       | 
|---------------------------------------- |  | ------- | ------ | ---------- | --------- | ---------- | ----- | ---------- | --------- | - | ----- | 
|                                         |  |         |        | Weighted-  |           |            |       | Weighted-  |          
|                                         |  |         |        | Average    |           |            |       | Average    |          
|                                         |  |         |        | Grant Date |           | Restricted |       | Grant Date |          
|                                         |  |         |        | Fair Value |           | Stock      |       | Fair Value |          
|(in thousands, except per share amounts) |  | Options |        |            | Per Share |            | Units |            | Per Share |  
|                                        
|Nonvested at January 1, 2006             |  |         | 7,956  |            |           | $5.53      |       |           |           | $ |      | 
|Granted                                  |  |         | 1,486  |            |           | 4.21       |       | 476        |           |   | 23.37 | 
|Acquired(1)                              |  |         | 19     |            |           | 4.61       |       |           |           |   |      | 
|Vested                                   |  |         | (3,025 | )          |           | 5.60       |       |           |           |   |      | 
|Forfeited                                |  |         | (502   | )          |           | 5.40       |       | (8)        |           |   | 23.34 | 
|                                        
|Nonvested at December 31, 2006           |  |         | 5,934  |            |           | $5.17      |       | 468        |           | $ | 23.37 | 
|                                        



|    |                                                              
|--- | -------------------------------------------------------------
|(1) | Relates to option plans acquired from the merger with Unizan.



110



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##### 



NOTES
TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                         |  |                     |  |              |  |                     |  |           |        |  |       |       
|---------------------------------------- |  | ------------------- |  | ------------ |  | ------------------- |  | --------- | ------ |  | ----- | ------
|                                         |  | Options Outstanding |  |              |  | Exercisable Options
|                                        
|                                         |  | Weighted-           |  |             
|                                         |  | Average             |  | Weighted-    |  |                     |  | Weighted-
|                                         |  | Remaining           |  | Average      |  |                     |  | Average  
|                                         |  | Contractual         |  | Exercise     |  |                     |  | Exercise 
|(in thousands, except per share amounts) |  | Shares              |  | Life (Years) |  | Price               |  | Shares    |        |  | Price
|                                        
|Range of Exercise Prices                 |  |                     |  |              |  |                     |  |           |        |  |       |       
|$9.91 to $15.00                          |  | 738                 |  | 4.7          |  | $14.21              |  |           | 738    |  |       | $14.21
|$15.01 to $20.00                         |  | 7,133               |  | 4.7          |  | 18.03               |  |           | 5,844  |  |       | 17.61 
|$20.01 to $25.00                         |  | 10,439              |  | 5.6          |  | 22.86               |  |           | 5,803  |  |       | 22.14 
|$25.01 to $28.35                         |  | 2,263               |  | 2.1          |  | 27.22               |  |           | 2,254  |  |       | 27.23 
|                                        
|Total                                    |  | 20,573              |  | 4.8          |  | $21.36              |  |           | 14,639 |  |       | $20.72
|                                        







|    |             
|--- | ------------
|20. | INCOME TAXES



|                                       |         |                 |          |          |      |   |         |         |   |   |         |         | 
|-------------------------------------- | ------- | --------------- | -------- | -------- | ---- | - | ------- | ------- | - | - | ------- | ------- | 
|                                       |         | At December 31, |         
|                                       |        
|(in thousands of dollars)              |         | 2006            |          |          | 2005 |   |         | 2004    |  
|                                       |        
|Current tax provision                  |         |                 |          |          |      |   |         |         |   |   |         |        
|                                       | Federal |                 | $        | 340,665  |      |   | $       | 163,383 |   |   | $       | 12,779  | 
|                                       | State   |                 |          | 222      |      |   |         | 210     |   |   |         |        | 
|                                      
|Total current tax provision            |         |                 | 340,887  |          |      |   | 163,593 |         |   |   | 12,779  |        
|                                      
|Deferred tax (benefit) provision       |         |                 |          |          |      |   |         |         |   |   |         |        
|                                       | Federal |                 |          | (288,475 | )    |   |         | (32,681 | ) |   |         | 140,962 | 
|                                       | State   |                 |          | 428      |      |   |         | 571     |   |   |         |        | 
|                                      
|Total deferred tax (benefit) provision |         |                 | (288,047 | )        |      |   | (32,110 | )       |   |   | 140,962 |        
|                                      
|Provision for income taxes             |         | $               | 52,840   |          |      | $ | 131,483 |         |   | $ | 153,741 |        
|                                      



111



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                                  |                                             |        |         |         |      |  |      |        |   |   |         |         |   |        |      |      |      |   |         |         |   |  |      |      |  
|------------------------------------------------- | ------------------------------------------- | ------ | ------- | ------- | ---- |  | ---- | ------ | - | - | ------- | ------- | - | ------ | ---- | ---- | ---- | - | ------- | ------- | - |  | ---- | ---- | -
|                                                  |                                             | 2006   |         |         | 2005 |  |      | 2004   |  
|                                                  |                                            
|(in thousands of dollars)                         |                                             | Amount |         |         | Rate |  |      | Amount |   |   | Rate    |         |   | Amount |      |      | Rate |  
|                                                  |                                            
|Income tax expense computed at the statutory rate |                                             | $      | 179,921 |         |      |  | 35.0 | %      |   | $ | 190,251 |         |   |        | 35.0 | %    |      | $ | 193,433 |         |   |  | 35.0 | %   
|Increases (decreases):                            |                                             |        |         |         |      |  |      |        |   |   |         |         |   |        |      |      |      |   |         |         |   |  |      |     
|                                                  | Tax-exempt interest income                  |        |         | (10,449 | )    |  |      | (2.0   | ) |   |         | (8,741  | ) |        |      | (1.6 | )    |   |         | (7,640  | ) |  |      | (1.4 | )
|                                                  | Tax-exempt bank owned life insurance income |        |         | (15,321 | )    |  |      | (3.0   | ) |   |         | (14,257 | ) |        |      | (2.6 | )    |   |         | (14,804 | ) |  |      | (2.7 | )
|                                                  | Asset securitization activities             |        |         | (10,157 | )    |  |      | (2.0   | ) |   |         | (6,651  | ) |        |      | (1.2 | )    |   |         | (6,278  | ) |  |      | (1.1 | )
|                                                  | Federal tax loss carryback                  |        |         | (33,086 | )    |  |      | (6.4   | ) |   |         | (28,705 | ) |        |      | (5.3 | )    |   |         |        |   |  |      |     |  
|                                                  | General business credits                    |        |         | (7,130  | )    |  |      | (1.4   | ) |   |         | (6,878  | ) |        |      | (1.3 | )    |   |         | (7,768  | ) |  |      | (1.4 | )
|                                                  | Repatriation of foreign earnings            |        |         |        |      |  |      |       |   |   |         | 5,741   |   |        |      | 1.1  |      |   |         |        |   |  |      |     |  
|                                                  | Resolution of federal income tax audit      |        |         | (52,604 | )    |  |      | (10.2  | ) |   |         |        |   |        |      |     |      |   |         |        |   |  |      |     |  
|                                                  | Other, net                                  |        |         | 1,666   |      |  |      | 0.3    |   |   |         | 723     |   |        |      | 0.1  |      |   |         | (3,202  | ) |  |      | (0.6 | )
|                                                 
|Provision for income taxes                        |                                             | $      | 52,840  |         |      |  | 10.3 | %      |   | $ | 131,483 |         |   |        | 24.2 | %    |      | $ | 153,741 |         |   |  | 27.8 | %   
|                                                 



|                                                      |                                     |                 |         |         |      |   |         |         | 
|----------------------------------------------------- | ----------------------------------- | --------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                                      |                                     | At December 31, |        
|                                                      |                                    
|(in thousands of dollars)                             |                                     | 2006            |         |         | 2005 |  
|                                                      |                                    
|Deferred tax assets:                                  |                                     |                 |         |         |      |   |         |        
|                                                      | Allowances for credit losses        |                 | $       | 132,085 |      |   | $       | 123,934 | 
|                                                      | Loss and other carry-forwards       |                 |         | 37,872  |      |   |         | 54,457  | 
|                                                      | Fair Value Adjustments              |                 |         |        |      |   |         | 14,082  | 
|                                                      | Pension and other employee benefits |                 |         | 9,645   |      |   |         |        | 
|                                                      | Other                               |                 |         | 87,241  |      |   |         | 74,020  | 
|                                                     
|Net deferred tax assets                               |                                     |                 | 266,843 |         |      |   | 266,493 |        
|                                                     
|Deferred tax liabilities:                             |                                     |                 |         |         |      |   |         |        
|                                                      | Lease financing                     |                 |         | 547,488 |      |   |         | 830,303 | 
|                                                      | Fair value adjustments              |                 |         | 2,807   |      |   |         |        | 
|                                                      | Pension and other employee benefits |                 |         |        |      |   |         | 41,409  | 
|                                                      | Mortgage servicing rights           |                 |         | 32,123  |      |   |         | 26,375  | 
|                                                      | Other                               |                 |         | 91,031  |      |   |         | 71,106  | 
|                                                     
|Total deferred tax liability                          |                                     |                 | 673,449 |         |      |   | 969,193 |        
|                                                     
|Net deferred tax liability before valuation allowance |                                     |                 | 406,606 |         |      |   | 702,700 |        
|                                                     
|Valuation Allowance                                   |                                     |                 | 37,315  |         |      |   | 40,955  |        
|                                                     
|Net deferred tax liability after valuation allowance  |                                     | $               | 443,921 |         |      | $ | 743,655 |        
|                                                     

true-up


21. BENEFIT PLANS




112



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED










|                                                                                                             |                                |                  |  |                 |          |  |  |      |   |  |      |      |   |  |  |      |  
|------------------------------------------------------------------------------------------------------------ | ------------------------------ | ---------------- |  | --------------- | -------- |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | -
|                                                                                                             |                                |                  |  | Post-Retirement |         
|                                                                                                             |                                | Pension Benefits |  |                 | Benefits | 
|                                                                                                             |                               
|                                                                                                             |                                | 2006             |  |                 | 2005     |  |  | 2006 |   |  | 2005 |     
|                                                                                                             |                               
|Weighted-average assumptions used to determine benefit
    obligations at December 31                       
|                                                                                                             | Discount rate                  |                  |  | 5.74            | %        |  |  | 5.43 | % |  |      | 5.74 | % |  |  | 5.43 | %
|                                                                                                             | Rate of compensation increase  |                  |  | 5.00            |          |  |  | 5.00 |   |  |      | N/A  |   |  |  | N/A  |  
|Weighted-average assumptions used to determine net periodic
    benefit cost for the years ended December 31
|                                                                                                             | Discount rate                  |                  |  | 5.43            | %        |  |  | 5.81 | % |  |      | 5.43 | % |  |  | 5.81 | %
|                                                                                                             | Expected return on plan assets |                  |  | 8.00            |          |  |  | 7.00 |   |  |      | N/A  |   |  |  | N/A  |  
|                                                                                                             | Rate of compensation increase  |                  |  | 5.00            |          |  |  | 5.00 |   |  |      | N/A  |   |  |  | N/A  |  







|                                                                                 |  |                  |         |                 |          |   |         |      |  |   |        |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | ---------------- | ------- | --------------- | -------- | - | ------- | ---- |  | - | ------ | - |  | - | ------- | -
|                                                                                 |  |                  |         | Post-Retirement |         
|                                                                                 |  | Pension Benefits |         |                 | Benefits |  
|                                                                                 | 
|(in thousands of dollars)                                                        |  | 2006             |         |                 | 2005     |   |         | 2006 |  |   | 2005   |  
|                                                                                 | 
|Projected benefit obligation at beginning of measurement year
    (September 30) |  | $                | 418,091 |                 |          | $ | 336,007 |      |  | $ | 43,616 |   |  | $ | 55,504  |  
|Changes due to:                                                                  |  |                  |         |                 |          |   |         |      |  |   |        |   |  |   |         |  
|Service cost                                                                     |  |                  | 17,262  |                 |          |   | 13,936  |      |  |   | 1,302  |   |  |   | 1,377   |  
|Interest cost                                                                    |  |                  | 22,157  |                 |          |   | 19,016  |      |  |   | 2,332  |   |  |   | 2,903   |  
|Benefits paid                                                                    |  |                  | (7,491  | )               |          |   | (6,897  | )    |  |   | (3,540 | ) |  |   | (3,738  | )
|Settlements                                                                      |  |                  | (11,523 | )               |          |   | (9,375  | )    |  |   |       |   |  |   |        |  
|Plan amendments                                                                  |  |                  |        |                 |          |   |        |      |  |   | 1,700  |   |  |   |        |  
|Actuarial assumptions and gains and losses                                       |  |                  | (12,792 | )               |          |   | 65,404  |      |  |   | 2,811  |   |  |   | (12,430 | )
|                                                                                
|Total changes                                                                    |  |                  | 7,613   |                 |          |   | 82,084  |      |  |   | 4,605  |   |  |   | (11,888 | )
|                                                                                
|Projected benefit obligation at end of measurement year
    (September 30)       |  | $                | 425,704 |                 |          | $ | 418,091 |      |  | $ | 48,221 |   |  | $ | 43,616  |  
|                                                                                



113



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








|                                                                              |  |                  |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ---------------- | ------- | - | ---- | - | ------- | -
|                                                                              |  | Pension Benefits |        
|                                                                              | 
|(in thousands of dollars)                                                     |  | 2006             |         |   | 2005 |  
|                                                                              | 
|Fair value of plan assets at beginning of measurement year
    (September 30) |  | $                | 440,787 |   |      | $ | 353,222 |  
|Changes due to:                                                               |  |                  |         |   |      |   |         |  
|Actual return on plan assets                                                  |  |                  | 30,232  |   |      |   | 40,798  |  
|Employer contributions                                                        |  |                  | 29,800  |   |      |   | 63,600  |  
|Settlements                                                                   |  |                  | (12,313 | ) |      |   | (9,936  | )
|Benefits paid                                                                 |  |                  | (7,491  | ) |      |   | (6,897  | )
|                                                                             
|Total changes                                                                 |  |                  | 40,228  |   |      |   | 87,565  |  
|                                                                             
|Fair value of plan assets at end of measurement year
    (September 30)       |  | $                | 481,015 |   |      | $ | 440,787 |  
|                                                                             





|                                   |  |                  |         |   |                          |   |         |      |  |   |         |   |  |      |       |   |      |   |       |   |  |   |       | 
|---------------------------------- |  | ---------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | ---- | ----- | - | ---- | - | ----- | - |  | - | ----- | 
|                                   |  | Pension Benefits |         |   | Post-Retirement Benefits |  
|                                   | 
|(in thousands of dollars)          |  | 2006             |         |   | 2005                     |   |         | 2004 |  |   | 2006    |   |  | 2005 |       |   | 2004 |  
|                                   | 
|Service cost                       |  | $                | 17,552  |   |                          | $ | 14,186  |      |  | $ | 12,159  |   |  | $    | 1,302 |   |      | $ | 1,378 |   |  | $ | 1,302 | 
|Interest cost                      |  |                  | 22,157  |   |                          |   | 19,016  |      |  |   | 17,482  |   |  |      | 2,332 |   |      |   | 2,903 |   |  |   | 3,209 | 
|Expected return on plan assets     |  |                  | (33,577 | ) |                          |   | (25,979 | )    |  |   | (21,530 | ) |  |      |      |   |      |   |      |   |  |   |      | 
|Amortization of transition asset   |  |                  | (1      | ) |                          |   | (4      | )    |  |   | 1       |   |  |      | 1,104 |   |      |   | 1,104 |   |  |   | 1,104 | 
|Amortization of prior service cost |  |                  | 1       |   |                          |   | 1       |      |  |   | 1       |   |  |      | 489   |   |      |   | 379   |   |  |   | 583   | 
|Amortization of gain               |  |                  |        |   |                          |   |        |      |  |   |        |   |  |      | (722  | ) |      |   | (126  | ) |  |   |      | 
|Settlements                        |  |                  | 3,565   |   |                          |   | 3,642   |      |  |   | 3,151   |   |  |      |      |   |      |   |      |   |  |   |      | 
|Recognized net actuarial loss      |  |                  | 17,509  |   |                          |   | 10,689  |      |  |   | 7,936   |   |  |      |      |   |      |   |      |   |  |   |      | 
|                                  
|Benefit cost                       |  | $                | 27,206  |   |                          | $ | 21,551  |      |  | $ | 19,200  |   |  | $    | 4,505 |   |      | $ | 5,638 |   |  | $ | 6,198 | 
|                                  





10-year


114



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##### 



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED






|                                         |  |            |         |  |      |  |     |         |  |   |         |  |  |  |     |  
|---------------------------------------- |  | ---------- | ------- |  | ---- |  | --- | ------- |  | - | ------- |  |  |  | --- | -
|                                         |  | Fair Value |        
|                                         |  |            |        
|                                         |  | 2006       |         |  | 2005 | 
|                                         | 
|(in thousands of dollars)                |  | Balance    |         |  | %    |  |     | Balance |  |   | %       | 
|                                         | 
|Huntington funds  money market          |  | $          | 820     |  |      |  |    | %       |  | $ | 164     |  |  |  |    | %
|Huntington funds  equity funds          |  |            | 331,022 |  |      |  | 69  |         |  |   | 300,080 |  |  |  | 68  |  
|Huntington funds  fixed income funds    |  |            | 133,641 |  |      |  | 28  |         |  |   | 125,971 |  |  |  | 29  |  
|Huntington common stock                  |  |            | 15,532  |  |      |  | 3   |         |  |   | 14,572  |  |  |  | 3   |  
|                                        
|Fair value of plan assets (September 30) |  | $          | 481,015 |  |      |  | 100 | %       |  | $ | 440,787 |  |  |  | 100 | %
|                                        







|                          |                   |          |   |         |                 |  |       
|------------------------- | ----------------- | -------- | - | ------- | --------------- |  | ------
|                          |                   | Pension  |   |         | Post-Retirement
|(in thousands of dollars) |                   | Benefits |   |         | Benefits       
|                         
|Fiscal Year:              |                   |          |   |         |                 | 
|                          | 2007              |          | $ | 22,412  |                 |  | $4,134
|                          | 2008              |          |   | 23,105  |                 |  | 4,201 
|                          | 2009              |          |   | 23,876  |                 |  | 4,275 
|                          | 2010              |          |   | 24,864  |                 |  | 4,356 
|                          | 2011              |          |   | 26,526  |                 |  | 4,439 
|                          | 2012 through 2016 |          |   | 144,273 |                 |  | 21,926









115



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








|                                       |                            |                   |             |            |             |  |             |                   |  |  |             |            | 
|-------------------------------------- | -------------------------- | ----------------- | ----------- | ---------- | ----------- |  | ----------- | ----------------- |  |  | ----------- | ---------- | 
|                                       |                            | Before            |             |            |             |  | After       |                  
|                                       |                            | Adoption of       |             |            |             |  | Adoption of |                  
|(in thousands of dollars)              |                            | Statement No. 158 |             |            | Adjustments |  |             | Statement No. 158 | 
|                                       |                           
|Accrued income and other assets        |                            |                   | $ 1,187,932 |            |             |  | $(125,081)  |                   |  |  | $ 1,062,851 |           
|                                       | Total assets               |                   |             | 35,454,100 |             |  |             | (125,081)         |  |  |             | 35,329,019 | 
|Accrued expenses and other liabilities |                            |                   | 591,354     |            |             |  | 2,680       |                   |  |  | 594,034     |           
|Deferred federal income tax liability  |                            |                   | 488,637     |            |             |  | (44,716)    |                   |  |  | 443,921     |           
|                                       | Total liabilities          |                   |             | 32,356,729 |             |  |             | (42,036)          |  |  |             | 32,314,693 | 
|Accumulated other comprehensive income |                            |                   | 27,979      |            |             |  | (83,045)    |                   |  |  | (55,066)    |           
|                                       | Total shareholders equity |                   |             | 3,097,371  |             |  |             | (83,045)          |  |  |             | 3,014,326  | 



|                                       |  |                   |         | 
|-------------------------------------- |  | ----------------- | ------- | 
|(in thousands of dollars)              |  | December 31, 2006 |        
|                                       | 
|Accrued income and other assets        |  |                   | $55,311 | 
|Accrued expenses and other liabilities |  |                   | 75,230  | 



|                              |  |                   |           | 
|----------------------------- |  | ----------------- | --------- | 
|(in thousands of dollars)     |  | December 31, 2006 |          
|                              | 
|Net actuarial loss            |  |                   | $(78,209) | 
|Prior service cost            |  |                   | (3,808)   | 
|Transition liability          |  |                   | (4,311)   | 
|                             
|Defined benefit pension plans |  |                   | $(86,328) | 
|                             



|                                                             |  |          |         |  |                 |   |         |  
|------------------------------------------------------------ |  | -------- | ------- |  | --------------- | - | ------- | -
|                                                             |  | Pension  |         |  | Post-Retirement |  
|(in thousands of dollars)                                    |  | Benefits |         |  | Benefits        |  
|                                                             | 
|Projected benefit obligation less (greater) than plan assets |  | $        | 22,696  |  |                 | $ | (43,616 | )
|Unrecognized net actuarial loss (gain)                       |  |          | 153,308 |  |                 |   | (11,586 | )
|Unrecognized prior service cost                              |  |          | 1,788   |  |                 |   | 3,476   |  
|Unrecognized transition liability, net of amortization       |  |          | 6       |  |                 |   | 7,728   |  
|                                                            
|Prepaid (accrued) benefit costs, at measurement date         |  |          | 177,798 |  |                 |   | (43,998 | )
|Contribution made after measurement date                     |  |          |        |  |                 |   | 1,018   |  
|                                                            
|Prepaid (accrued) benefit costs                              |  | $        | 177,798 |  |                 | $ | (42,980 | )
|                                                            



116



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




22. FAIR VALUE OF FINANCIAL
INSTRUMENTS




|                          |                                       |          |   |             |            |  |          |             |   |  |            |             |   |  |   |             |  
|------------------------- | ------------------------------------- | -------- | - | ----------- | ---------- |  | -------- | ----------- | - |  | ---------- | ----------- | - |  | - | ----------- | -
|                          |                                       | 2006     |   |             | 2005       | 
|                          |                                      
|                          |                                       | Carrying |   |             |            |  | Carrying |             |   | 
|(in thousands of dollars) |                                       | Amount   |   |             | Fair Value |  |          | Amount      |   |  | Fair Value |            
|                         
|Financial Assets:         |                                       |          |   |             |            |  |          |             |   |  |            |             |   |  |   |            
|                          | Cash and short-term assets            |          | $ | 1,594,915   |            |  | $        | 1,594,915   |   |  | $          | 1,063,167   |   |  | $ | 1,063,167   |  
|                          | Trading account securities            |          |   | 36,056      |            |  |          | 36,056      |   |  |            | 8,619       |   |  |   | 8,619       |  
|                          | Mortgages held for sale               |          |   | 270,422     |            |  |          | 270,422     |   |  |            | 294,344     |   |  |   | 294,344     |  
|                          | Investment securities                 |          |   | 4,362,924   |            |  |          | 4,362,924   |   |  |            | 4,526,520   |   |  |   | 4,526,520   |  
|                          | Net loans and direct financing leases |          |   | 25,811,357  |            |  |          | 25,945,357  |   |  |            | 24,203,819  |   |  |   | 24,222,819  |  
|                          | Derivatives                           |          |   | 44,793      |            |  |          | 44,793      |   |  |            | 30,274      |   |  |   | 30,274      |  
|Financial Liabilities:    |                                       |          |   |             |            |  |          |             |   |  |            |             |   |  |   |            
|                          | Deposits                              |          |   | (25,047,770 | )          |  |          | (23,754,770 | ) |  |            | (22,409,675 | ) |  |   | (21,338,675 | )
|                          | Short-term borrowings                 |          |   | (1,676,189  | )          |  |          | (1,676,189  | ) |  |            | (1,889,260  | ) |  |   | (1,889,260  | )
|                          | Federal Home Loan Bank advances       |          |   | (996,821    | )          |  |          | (996,821    | ) |  |            | (1,155,647  | ) |  |   | (1,155,647  | )
|                          | Subordinated notes                    |          |   | (2,229,140  | )          |  |          | (2,229,140  | ) |  |            | (1,023,371  | ) |  |   | (1,023,371  | )
|                          | Other long term debt                  |          |   | (1,286,657  | )          |  |          | (1,351,657  | ) |  |            | (2,418,419  | ) |  |   | (2,479,419  | )
|                          | Derivatives                           |          |   | (27,041     | )          |  |          | (27,041     | ) |  |            | (27,427     | ) |  |   | (27,427     | )









|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Loans held for
    sale  valued using outstanding commitments
    from investors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| | Investment
    securities  based on quoted market prices,
    where available. If quoted market prices are not available, fair
    values are based on quoted market prices of comparable
    instruments. Retained interests in securitized assets are valued
    using a discounted cash flow analysis. The carrying amount and
    fair value of securities exclude the fair value of
    asset/liability management interest rate contracts designated as
    hedges of securities available for sale.                                                                                                                  
| 
| | Loans and direct
    financing leases  variable-rate loans that
    reprice frequently are based on carrying amounts, as adjusted
    for estimated credit losses. The fair values for other loans and
    leases are estimated using discounted cash flow analyses and
    employ interest rates currently being offered for loans and
    leases with similar terms. The rates take into account the
    position of the yield curve, as well as an adjustment for
    prepayment risk, operating costs, and profit. This value is also
    reduced by an estimate of probable losses in the loan and lease
    portfolio.
| 
| | Deposits 
    demand deposits, savings accounts, and money market deposits
    are, by definition, equal to the amount payable on demand. The
    fair values of fixed-rate time deposits are estimated by
    discounting cash flows using interest rates currently being
    offered on certificates with similar maturities.                                                                                                                                                                                                                                                                                             

117



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HUNTINGTONBANCSHARESINCORPORATED






|  |                                                                                                                                                                                                                                                                                            
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Debt 
    fixed-rate, long-term debt is based upon quoted market prices
    or, in the absence of quoted market prices, discounted cash
    flows using rates for similar debt with the same maturities. The
    carrying amount of variable-rate obligations approximates fair
    value.

23. DERIVATIVE FINANCIAL
INSTRUMENTS


Derivatives used in
Asset and Liability Management Activities




|                                          |                                 |            |           |         |           |   |         |         |  |   |           |         | 
|----------------------------------------- | ------------------------------- | ---------- | --------- | ------- | --------- | - | ------- | ------- |  | - | --------- | ------- | 
|                                          |                                 | Fair Value |           |         | Cash Flow |   |         |        
|(in thousands of dollars)                 |                                 | Hedges     |           |         | Hedges    |   |         | Total   | 
|                                         
|Instruments associated with:              |                                 |            |           |         |           |   |         |         |  |   |           |        
|                                          | Deposits                        |            | $         | 635,000 |           |   | $       | 315,000 |  |   | $         | 950,000 | 
|                                          | Federal Home Loan Bank advances |            |           |        |           |   |         | 325,000 |  |   |           | 325,000 | 
|                                          | Subordinated notes              |            |           | 750,000 |           |   |         |        |  |   |           | 750,000 | 
|                                          | Other long-term debt            |            |           | 50,000  |           |   |         |        |  |   |           | 50,000  | 
|                                         
|Total notional value at December 31, 2006 |                                 | $          | 1,435,000 |         |           | $ | 640,000 |         |  | $ | 2,075,000 |        
|                                         



|                                 |                          |          |           |         |          |     |       |                       |        |         |   |  |      |      |   |  |      |      |  
|-------------------------------- | ------------------------ | -------- | --------- | ------- | -------- | --- | ----- | --------------------- | ------ | ------- | - |  | ---- | ---- | - |  | ---- | ---- | -
|                                 |                          |          |           |         |          |     |       | Weighted-Average Rate |       
|                                 |                          |          |           | Average |          |     |       |                      
|                                 |                          | Notional |           |         | Maturity |     | Fair  |                       |        |         |  
|(in thousands of dollars)        |                          | Value    |           |         | (years)  |     | Value |                       |        | Receive |   |  | Pay  |     
|                                
|Liability conversion swaps       |                          |          |           |         |          |     |       |                       |        |         |   |  |      |      |   |  |      |     
|                                 | Receive fixed  generic  |          | $         | 800,000 |          |     | 9.7   |                       | $      | 4,008   |   |  |      | 5.31 | % |  |      | 5.59 | %
|                                 | Receive fixed  callable |          |           | 635,000 |          |     | 6.4   |                       |        | (13,459 | ) |  |      | 4.54 |   |  |      | 5.27 |  
|                                 | Pay fixed  generic      |          |           | 640,000 |          |     | 2.6   |                       |        | (191    | ) |  |      | 5.36 |   |  |      | 4.91 |  
|                                
|Total liability conversion swaps |                          | $        | 2,075,000 |         |          | 6.5 |       | $                     | (9,642 | )       |   |  | 5.09 | %    |   |  | 5.28 | %   
|                                



|                               |  |          |         |         |          |     |       |   |       |                  |  |  |     |  
|------------------------------ |  | -------- | ------- | ------- | -------- | --- | ----- | - | ----- | ---------------- |  |  | --- | -
|                               |  |          |         | Average |          |     |       |  
|                               |  | Notional |         |         | Maturity |     | Fair  |   |       | Weighted-Average | 
|(in thousands of dollars)      |  | Value    |         |         | (years)  |     | Value |   |       | Strike Rate      | 
|                              
|Interest rate caps  purchased |  | $        | 500,000 |         |          | 2.1 |       | $ | 1,668 |                  |  |  | 5.5 | %
|                              







118



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##### 



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








Derivatives Used in
Mortgage Banking Activities




|                             |                               |                 |        |       |      |   |        |        |  
|---------------------------- | ----------------------------- | --------------- | ------ | ----- | ---- | - | ------ | ------ | -
|                             |                               | At December 31, |       
|                             |                              
|(in thousands of dollars)    |                               | 2006            |        |       | 2005 |  
|                            
|Derivative assets:           |                               |                 |        |       |      |   |        |       
|                             | Interest rate lock agreements |                 | $      | 236   |      |   | $      | 669    |  
|                             | Forward trades and options    |                 |        | 1,176 |      |   |        | 172    |  
|                            
|Total derivative assets      |                               |                 | 1,412  |       |      |   | 841    |       
|                            
|Derivative liabilities:      |                               |                 |        |       |      |   |        |       
|                             | Interest rate lock agreements |                 |        | (838  | )    |   |        | (328   | )
|                             | Forward trades and options    |                 |        | (699  | )    |   |        | (1,947 | )
|                            
|Total derivative liabilities |                               |                 | (1,537 | )     |      |   | (2,275 | )     
|                            
|Net derivative liability     |                               | $               | (125   | )     |      | $ | (1,434 | )     
|                            

Derivatives Used in
Trading Activities










119



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##### 



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED




24. COMMITMENTS AND CONTINGENT
LIABILITIES


Commitments to Extend
Credit




|                                       |                              |                 |       |       |      |  |       |       | 
|-------------------------------------- | ---------------------------- | --------------- | ----- | ----- | ---- |  | ----- | ----- | 
|                                       |                              | At December 31, |      
|                                       |                             
|(in millions of dollars)               |                              | 2006            |       |       | 2005 | 
|                                      
|Contract amount represents credit risk |                              |                 |       |       |      |  |       |      
|                                       | Commitments to extend credit |                 |       |       |      |  |       |       | 
|                                       | Commercial                   |                 | $     | 4,416 |      |  | $     | 3,316 | 
|                                       | Consumer                     |                 |       | 3,374 |      |  |       | 3,046 | 
|                                       | Commercial real estate       |                 |       | 1,645 |      |  |       | 1,567 | 
|Standby letters of credit              |                              |                 | 1,156 |       |      |  | 1,079 |      
|Commercial letters of credit           |                              |                 | 54    |       |      |  | 47    |      







Commitments to Sell
Loans






Litigation




Commitments Under
Capital and Operating Lease Obligations




120



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TOCONSOLIDATEDFINANCIALSTATEMENTS


HUNTINGTONBANCSHARESINCORPORATED








|    |                         
|--- | ------------------------
|25. | OTHER REGULATORY MATTERS









|                                   |        |        |   |       |               |  |   |                 |   |  |      |       |   |      |   |       |      |  |   |       |   |  |   |       |  
|---------------------------------- | ------ | ------ | - | ----- | ------------- |  | - | --------------- | - |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                   |        | Tier 1 |   |       | Total Capital |  |   | Tier 1 Leverage |  
|                                   |       
|(in millions of dollars)           |        | 2006   |   |       | 2005          |  |   | 2006            |   |  | 2005 |       |   | 2006 |   |       | 2005 | 
|                                  
|Huntington Bancshares Incorporated |        |        |   |       |               |  |   |                 |   |  |      |       |   |      |   |       |      |  |   |       |   |  |   |      
|                                   | Amount |        | $ | 2,784 |               |  | $ | 2,701           |   |  | $    | 3,986 |   |      | $ | 3,678 |      |  | $ | 2,784 |   |  | $ | 2,701 |  
|                                   | Ratio  |        |   | 8.93  | %             |  |   | 9.13            | % |  |      | 12.79 | % |      |   | 12.42 | %    |  |   | 8.00  | % |  |   | 8.34  | %
|The Huntington National Bank       |        |        |   |       |               |  |   |                 |   |  |      |       |   |      |   |       |      |  |   |       |   |  |   |      
|                                   | Amount |        | $ | 1,990 |               |  | $ | 1,902           |   |  | $    | 3,214 |   |      | $ | 3,087 |      |  | $ | 1,990 |   |  | $ | 1,902 |  
|                                   | Ratio  |        |   | 6.47  | %             |  |   | 6.82            | % |  |      | 10.44 | % |      |   | 10.56 | %    |  |   | 5.81  | % |  |   | 6.21  | %







121



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##### 



|                                       |                                 
|-------------------------------------- | --------------------------------
|NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS | HUNTINGTONBANCSHARESINCORPORATED



26. PARENT COMPANY FINANCIAL
STATEMENTS




|                                           |                                                            |              |           |           |      |   |           |           | 
|------------------------------------------ | ---------------------------------------------------------- | ------------ | --------- | --------- | ---- | - | --------- | --------- | 
|Balance Sheets                             |                                                            | December 31, |          
|                                           |                                                           
|(in thousands of dollars)                  |                                                            | 2006         |           |           | 2005 |  
|                                           |                                                           
|ASSETS                                     |                                                            |              |           |           |      |   |           |          
|                                           | Cash and cash equivalents                                  |              | $         | 412,724   |      |   | $         | 227,115   | 
|                                           | Due from The Huntington National Bank                      |              |           | 31,481    |      |   |           | 250,771   | 
|                                           | Due from non-bank subsidiaries                             |              |           | 277,245   |      |   |           | 205,208   | 
|                                           | Investment in The Huntington National Bank                 |              |           | 2,035,175 |      |   |           | 1,660,905 | 
|                                           | Investment in non-bank subsidiaries                        |              |           | 725,875   |      |   |           | 584,259   | 
|                                           | Accrued interest receivable and other assets               |              |           | 45,592    |      |   |           | 128,303   | 
|                                          
|Total assets                               |                                                            | $            | 3,528,092 |           |      | $ | 3,056,561 |          
|                                          
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                            |              |           |           |      |   |           |          
|                                           | Short-term borrowings                                      |              | $         | 3,252     |      |   | $         | 3,034     | 
|                                           | Long-term borrowings                                       |              |           | 329,898   |      |   |           | 309,279   | 
|                                           | Dividends payable, accrued expenses, and other liabilities |              |           | 180,616   |      |   |           | 186,747   | 
|                                          
|Total liabilities                          |                                                            |              | 513,766   |           |      |   | 499,060   |          
|                                          
|Shareholders equity                       |                                                            |              | 3,014,326 |           |      |   | 2,557,501 |          
|                                          
|Total liabilities and shareholders equity |                                                            | $            | 3,528,092 |           |      | $ | 3,056,561 |          
|                                          

|                                                                                      |                                   |                              |         |       |          |   |         |        |         |   |         |        |         |  
|------------------------------------------------------------------------------------- | --------------------------------- | ---------------------------- | ------- | ----- | -------- | - | ------- | ------ | ------- | - | ------- | ------ | ------- | -
|Statements of Income                                                                  |                                   | Year Ended December 31,      |        
|                                                                                      |                                  
|(in thousands of dollars)                                                             |                                   | 2006                         |         |       | 2005     |   |         | 2004   |        
|                                                                                      |                                  
|Income                                                                                |                                   |                              |         |       |          |   |         |        |         |   |         |       
|                                                                                      | Dividends from                    |                              |         |       |          |   |         |        |         |   |         |        |        
|                                                                                      |                                   | The Huntington National Bank |         | $     | 575,000  |   |         | $      | 180,000 |   |         | $      | 400,000 |  
|                                                                                      |                                   | Non-bank subsidiaries        |         |       | 47,476   |   |         |        | 3,800   |   |         |        | 8,202   |  
|                                                                                      | Interest from                     |                              |         |       |          |   |         |        |         |   |         |        |        
|                                                                                      |                                   | The Huntington National Bank |         |       | 13,167   |   |         |        | 35,253  |   |         |        | 13,417  |  
|                                                                                      |                                   | Non-bank subsidiaries        |         |       | 10,880   |   |         |        | 8,770   |   |         |        | 7,638   |  
|                                                                                      | Management fees from subsidiaries |                              |         | 9,539 |          |   |         | 30,539 |         |   |         | 34,603 |        
|                                                                                      | Other                             |                              |         | 23    |          |   |         | 406    |         |   |         | (810   | )      
|                                                                                     
|Total income                                                                          |                                   |                              | 656,085 |       |          |   | 258,768 |        |         |   | 463,050 |       
|                                                                                     
|Expense                                                                               |                                   |                              |         |       |          |   |         |        |         |   |         |       
|                                                                                      |                                   | Personnel costs              |         |       | 31,427   |   |         |        | 25,060  |   |         |        | 32,227  |  
|                                                                                      |                                   | Interest on borrowings       |         |       | 17,856   |   |         |        | 22,772  |   |         |        | 4,317   |  
|                                                                                      |                                   | Other                        |         |       | 20,040   |   |         |        | 24,741  |   |         |        | 36,738  |  
|                                                                                     
|Total expense                                                                         |                                   |                              | 69,323  |       |          |   | 72,573  |        |         |   | 73,282  |       
|                                                                                     
|Income before income taxes and equity in undistributed net
    income of subsidiaries |                                   |                              | 586,762 |       |          |   | 186,195 |        |         |   | 389,768 |       
|Income taxes                                                                          |                                   |                              | (20,922 | )     |          |   | (2,499  | )      |         |   | (4,223  | )     
|                                                                                     
|Income before equity in undistributed net income of subsidiaries                      |                                   |                              | 607,684 |       |          |   | 188,694 |        |         |   | 393,991 |       
|Increase (decrease) in undistributed net income of:                                   |                                   |                              |         |       |          |   |         |        |         |   |         |       
|                                                                                      |                                   | The Huntington National Bank |         |       | (142,672 | ) |         |        | 208,061 |   |         |        | (9,073  | )
|                                                                                      |                                   | Non-bank subsidiaries        |         |       | (3,791   | ) |         |        | 15,336  |   |         |        | 14,007  |  
|                                                                                     
|Net income                                                                            |                                   | $                            | 461,221 |       |          | $ | 412,091 |        |         | $ | 398,925 |       
|                                                                                     

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|                                       |                                 
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|NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS | HUNTINGTONBANCSHARESINCORPORATED

|                                                    |               |                                                                                       |                                                    |        |          |         |          |        |          |          |          |        |          |         |  
|--------------------------------------------------- | ------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------- | ------ | -------- | ------- | -------- | ------ | -------- | -------- | -------- | ------ | -------- | ------- | -
|Statements of Cash Flows                            |               | Year Ended December 31,                                                               |                                                   
|                                                    |              
|(in thousands of dollars)                           |               | 2006                                                                                  |                                                    |        | 2005     |         |          | 2004   |         
|                                                    |              
|Operating activities                                |               |                                                                                       |                                                    |        |          |         |          |        |          |          |          |       
|                                                    |               | Net income                                                                            |                                                    | $      | 461,221  |         |          | $      | 412,091  |          |          | $      | 398,925  |        
|                                                    |               | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                    |        |          |         |          |        |          |          |          |        |          |        
|                                                    |               |                                                                                       | Equity in undistributed net income of subsidiaries |        |          | 146,463 |          |        |          | (223,397 | )        |        |          | (4,934  | )
|                                                    |               |                                                                                       | Depreciation and amortization                      |        |          | 2,150   |          |        |          | 2,674    |          |        |          | 2,690   |  
|                                                    |               |                                                                                       | Change in other, net                               |        |          | 170,367 |          |        |          | (49,557  | )        |        |          | (13,609 | )
|                                                   
|Net cash provided by operating activities           |               |                                                                                       | 780,201                                            |        |          |         | 141,811  |        |          |          | 383,072  |       
|                                                   
|Investing activities                                |               |                                                                                       |                                                    |        |          |         |          |        |          |          |          |       
|                                                    |               | Repayments from subsidiaries                                                          |                                                    |        | 370,049  |         |          |        | 154,152  |          |          |        | 117,314  |        
|                                                    |               | Advances to subsidiaries                                                              |                                                    |        | (397,216 | )       |          |        | (206,765 | )        |          |        | (80,197  | )      
|                                                    |               | Proceeds from sale of securities available for sale                                   |                                                    |        |         |         |          |        |         |          |          |        |         |        
|                                                   
|Net cash provided by (used in) investing activities |               |                                                                                       | (27,167                                            | )      |          |         | (52,613  | )      |          |          | 37,117   |       
|                                                   
|Financing activities                                |               |                                                                                       |                                                    |        |          |         |          |        |          |          |          |       
|                                                    |               | Proceeds from issuance of long-term borrowings                                        |                                                    |        | 250,200  |         |          |        |         |          |          |        |         |        
|                                                    |               | Payment of borrowings                                                                 |                                                    |        | (249,515 | )       |          |        | (99,437  | )        |          |        | (101,541 | )      
|                                                    |               | Dividends paid on common stock                                                        |                                                    |        | (231,117 | )       |          |        | (200,628 | )        |          |        | (168,075 | )      
|                                                    |               | Acquisition of treasury stock                                                         |                                                    |        | (378,835 | )       |          |        | (231,656 | )        |          |        |         |        
|                                                    |               | Proceeds from issuance of common stock                                                |                                                    |        | 41,842   |         |          |        | 39,194   |          |          |        | 47,239   |        
|                                                   
|Net cash used for financing activities              |               |                                                                                       | (567,425                                           | )      |          |         | (492,527 | )      |          |          | (222,377 | )     
|                                                   
|Change in cash and cash equivalents                 |               |                                                                                       | 185,609                                            |        |          |         | (403,329 | )      |          |          | 197,812  |       
|Cash and cash equivalents at beginning of year      |               |                                                                                       | 227,115                                            |        |          |         | 630,444  |        |          |          | 432,632  |       
|                                                   
|Cash and cash equivalents at end of year            |               | $                                                                                     | 412,724                                            |        |          | $       | 227,115  |        |          | $        | 630,444  |       
|                                                   
|                                                   
|Supplemental disclosure:                            |               |                                                                                       |                                                    |        |          |         |          |        |          |          |          |       
|                                                    | Interest paid |                                                                                       | $                                                  | 17,856 |          |         | $        | 22,754 |          |          | $        | 18,495 |         

27. SEGMENT REPORTING






Regional Banking:


Dealer Sales:


123



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##### 



|                                       |                                 
|-------------------------------------- | --------------------------------
|NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS | HUNTINGTONBANCSHARESINCORPORATED



Private Financial and Capital Markets Group (PFCMG):


Treasury/ Other:


Use of Operating
Earnings to Measure Segment Performance




124



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|                                       |                                 
|-------------------------------------- | --------------------------------
|NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS | HUNTINGTONBANCSHARESINCORPORATED



|                                               |  |          |          |   |        |   |          |       |  |           |          |   |            |              |         |   |  |   |            |  
|---------------------------------------------- |  | -------- | -------- | - | ------ | - | -------- | ----- |  | --------- | -------- | - | ---------- | ------------ | ------- | - |  | - | ---------- | -
|                                               |  | Regional |          |   | Dealer |   |          |       |  | Treasury/ |          |   | Huntington |             
|INCOME STATEMENTS(in thousands of dollars)     |  | Banking  |          |   | Sales  |   |          | PFCMG |  |           | Other    |   |            | Consolidated |        
|                                              
|2006                                           |  |          |          |   |        |   |          |       |  |           |          |   |            |              |         |   |  |   |            |  
|Net interest income                            |  | $        | 883,536  |   |        | $ | 134,931  |       |  | $         | 73,342   |   |            | $            | (72,632 | ) |  | $ | 1,019,177  |  
|Provision for credit losses                    |  |          | (45,320  | ) |        |   | (14,206  | )     |  |           | (5,665   | ) |            |              |        |   |  |   | (65,191    | )
|Non-interest income                            |  |          | 351,485  |   |        |   | 83,867   |       |  |           | 156,500  |   |            |              | (30,783 | ) |  |   | 561,069    |  
|Non-interest expense                           |  |          | (651,935 | ) |        |   | (112,448 | )     |  |           | (142,396 | ) |            |              | (94,215 | ) |  |   | (1,000,994 | )
|Income taxes                                   |  |          | (188,218 | ) |        |   | (32,250  | )     |  |           | (28,624  | ) |            |              | 196,252 |   |  |   | (52,840    | )
|                                              
|Operating earnings and net income as reported  |  | $        | 349,548  |   |        | $ | 59,894   |       |  | $         | 53,157   |   |            | $            | (1,378  | ) |  | $ | 461,221    |  
|                                              
|2005                                           |  |          |          |   |        |   |          |       |  |           |          |   |            |              |         |   |  |   |            |  
|Net interest income                            |  | $        | 779,413  |   |        | $ | 145,526  |       |  | $         | 73,410   |   |            | $            | (35,938 | ) |  | $ | 962,411    |  
|Provision for credit losses                    |  |          | (51,246  | ) |        |   | (25,922  | )     |  |           | (4,131   | ) |            |              |        |   |  |   | (81,299    | )
|Non-interest income                            |  |          | 310,437  |   |        |   | 169,876  |       |  |           | 135,150  |   |            |              | 16,819  |   |  |   | 632,282    |  
|Non-interest expense                           |  |          | (588,713 | ) |        |   | (187,504 | )     |  |           | (131,195 | ) |            |              | (62,408 | ) |  |   | (969,820   | )
|Income taxes                                   |  |          | (157,462 | ) |        |   | (35,691  | )     |  |           | (25,632  | ) |            |              | 87,302  |   |  |   | (131,483   | )
|                                              
|Operating earnings and net income as reported  |  | $        | 292,429  |   |        | $ | 66,285   |       |  | $         | 47,602   |   |            | $            | 5,775   |   |  | $ | 412,091    |  
|                                              
|2004                                           |  |          |          |   |        |   |          |       |  |           |          |   |            |              |         |   |  |   |            |  
|Net interest income                            |  | $        | 677,953  |   |        | $ | 149,743  |       |  | $         | 62,091   |   |            | $            | 21,587  |   |  | $ | 911,374    |  
|Provision for credit losses                    |  |          | (7,714   | ) |        |   | (44,697  | )     |  |           | (2,651   | ) |            |              |        |   |  |   | (55,062    | )
|Non-interest income                            |  |          | 307,649  |   |        |   | 320,223  |       |  |           | 134,037  |   |            |              | 42,483  |   |  |   | 804,392    |  
|Non-interest expense                           |  |          | (593,328 | ) |        |   | (325,935 | )     |  |           | (124,441 | ) |            |              | (79,691 | ) |  |   | (1,123,395 | )
|Income taxes                                   |  |          | (134,597 | ) |        |   | (34,766  | )     |  |           | (24,162  | ) |            |              | 45,159  |   |  |   | (148,366   | )
|                                              
|Operating earnings                             |  |          | 249,963  |   |        |   | 64,568   |       |  |           | 44,874   |   |            |              | 29,538  |   |  |   | 388,943    |  
|Restructuring releases, net of taxes           |  |          |         |   |        |   |         |       |  |           |         |   |            |              | 748     |   |  |   | 748        |  
|Gain on sale of automobile loans, net of taxes |  |          |         |   |        |   | 8,598    |       |  |           |         |   |            |              | 636     |   |  |   | 9,234      |  
|                                              
|Net income                                     |  | $        | 249,963  |   |        | $ | 73,166   |       |  | $         | 44,874   |   |            | $            | 30,922  |   |  | $ | 398,925    |  
|                                              

|                                       |  |                 |        |  |                 |   |        |      |  |   |        |  |  |   |        | 
|-------------------------------------- |  | --------------- | ------ |  | --------------- | - | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                       |  | Assets          |        |  | Deposits        |  
|                                       |  | At December 31, |        |  | At December 31, |  
|                                       |  |                 |        |  |                 |  
|BALANCE SHEETS(in millions of dollars) |  | 2006            |        |  | 2005            |   |        | 2006 |  |   | 2005   | 
|                                      
|Regional Banking                       |  | $               | 20,933 |  |                 | $ | 18,850 |      |  | $ | 20,231 |  |  | $ | 17,957 | 
|Dealer Sales                           |  |                 | 5,003  |  |                 |   | 5,613  |      |  |   | 59     |  |  |   | 65     | 
|PFCMG                                  |  |                 | 2,153  |  |                 |   | 2,010  |      |  |   | 1,162  |  |  |   | 1,180  | 
|Treasury/Other                         |  |                 | 7,240  |  |                 |   | 6,292  |      |  |   | 3,596  |  |  |   | 3,208  | 
|                                      
|Total                                  |  | $               | 35,329 |  |                 | $ | 32,765 |      |  | $ | 25,048 |  |  | $ | 22,410 | 
|                                      

125



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|-------------------------------------- | --------------------------------
|NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS | HUNTINGTONBANCSHARESINCORPORATED

28. QUARTERLY RESULTS OF
OPERATIONS (UNAUDITED)




|                                                 |                  |        |          |          |       |   |          |          |   |   |          |          |   |   |          |          |  
|------------------------------------------------ | ---------------- | ------ | -------- | -------- | ----- | - | -------- | -------- | - | - | -------- | -------- | - | - | -------- | -------- | -
|                                                 |                  | 2006   |         
|                                                 |                 
|(in thousands, of dollars except per share data) |                  | Fourth |          |          | Third |   |          | Second   |   |   | First    |         
|                                                 |                 
|                                                 | Interest income  |        | $        | 544,841  |       |   | $        | 538,988  |   |   | $        | 521,903  |   |   | $        | 464,787  |  
|                                                 | Interest expense |        |          | (286,852 | )     |   |          | (283,675 | ) |   |          | (259,708 | ) |   |          | (221,107 | )
|                                                
|Net interest income                              |                  |        | 257,989  |          |       |   | 255,313  |          |   |   | 262,195  |          |   |   | 243,680  |         
|                                                
|Provision for credit losses                      |                  |        | (15,744  | )        |       |   | (14,162  | )        |   |   | (15,745  | )        |   |   | (19,540  | )       
|Non-interest income                              |                  |        | 140,606  |          |       |   | 97,910   |          |   |   | 163,019  |          |   |   | 159,534  |         
|Non-interest expense                             |                  |        | (267,790 | )        |       |   | (242,430 | )        |   |   | (252,359 | )        |   |   | (238,415 | )       
|                                                
|Income before income taxes                       |                  |        | 115,061  |          |       |   | 96,631   |          |   |   | 157,110  |          |   |   | 145,259  |         
|(Provision) benefit for income taxes             |                  |        | (27,346  | )        |       |   | 60,815   |          |   |   | (45,506  | )        |   |   | (40,803  | )       
|                                                
|Net income                                       |                  | $      | 87,715   |          |       | $ | 157,446  |          |   | $ | 111,604  |          |   | $ | 104,456  |         
|                                                
|Net income per common share  Basic              |                  | $      | 0.37     |          |       | $ | 0.66     |          |   | $ | 0.46     |          |   | $ | 0.45     |         
|Net income per common share  Diluted            |                  |        | 0.37     |          |       |   | 0.65     |          |   |   | 0.46     |          |   |   | 0.45     |         

|                                                 |                  |        |          |          |       |   |          |          |   |   |          |          |   |   |          |          |  
|------------------------------------------------ | ---------------- | ------ | -------- | -------- | ----- | - | -------- | -------- | - | - | -------- | -------- | - | - | -------- | -------- | -
|                                                 |                  | 2005   |         
|                                                 |                 
|(in thousands of dollars, except per share data) |                  | Fourth |          |          | Third |   |          | Second   |   |   | First    |         
|                                                 |                 
|                                                 | Interest income  |        | $        | 442,476  |       |   | $        | 420,858  |   |   | $        | 402,326  |   |   | $        | 376,105  |  
|                                                 | Interest expense |        |          | (198,800 | )     |   |          | (179,221 | ) |   |          | (160,426 | ) |   |          | (140,907 | )
|                                                
|Net interest income                              |                  |        | 243,676  |          |       |   | 241,637  |          |   |   | 241,900  |          |   |   | 235,198  |         
|                                                
|Provision for credit losses                      |                  |        | (30,831  | )        |       |   | (17,699  | )        |   |   | (12,895  | )        |   |   | (19,874  | )       
|Non-interest income                              |                  |        | 147,322  |          |       |   | 160,740  |          |   |   | 156,170  |          |   |   | 168,050  |         
|Non-interest expense                             |                  |        | (230,355 | )        |       |   | (233,052 | )        |   |   | (248,136 | )        |   |   | (258,277 | )       
|                                                
|Income before income taxes                       |                  |        | 129,812  |          |       |   | 151,626  |          |   |   | 137,039  |          |   |   | 125,097  |         
|Provision for income taxes                       |                  |        | (29,239  | )        |       |   | (43,052  | )        |   |   | (30,614  | )        |   |   | (28,578  | )       
|                                                
|Net income                                       |                  | $      | 100,573  |          |       | $ | 108,574  |          |   | $ | 106,425  |          |   | $ | 96,519   |         
|                                                
|Net income per common share  Basic              |                  | $      | 0.44     |          |       | $ | 0.47     |          |   | $ | 0.46     |          |   | $ | 0.42     |         
|Net income per common share  Diluted            |                  |        | 0.44     |          |       |   | 0.47     |          |   |   | 0.45     |          |   |   | 0.41     |         

126