##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2006



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File No. 1-14473



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LOGO

Sky Financial Group, Inc.

(Exact Name of Registrant as Specified in its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Ohio                                                           |  | 34-1372535                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification Number)



|                                             |  |           
|-------------------------------------------- |  | ----------
|221 South Church Street, Bowling Green, Ohio |  | 43402     
|(Address of Principal Executive Offices)     |  | (Zip Code)

(419) 327-6300

(Registrants Telephone Number)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer ̈Non-accelerated
filer ̈

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

The number of shares outstanding of the
Registrants common stock, without par value, was 109,006,540 at October 20, 2006.



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##### Table of Contents

SKY FINANCIAL GROUP, INC.

INDEX



|                              |  |                                                                                                                             |  |           
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ----------
|                              |  |                                                                                                                             |  | PageNumber
|PART I. FINANCIAL INFORMATION |  |                                                                                                                            
|                              |  |                                                                                                                            
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                            |  |           
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Balance SheetsSeptember 30, 2006 and December 31, 2005                                               |  | 3         
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Statements of IncomeThree and nine months ended September 30, 2006 and 2005                          |  | 4         
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Statements of Changes in Shareholders EquityThree and nine months ended September 30, 2006 and 2005 |  | 5         
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Statements of Cash FlowsNine months ended September 30, 2006 and 2005                                |  | 6         
|                              |  |                                                                                                                            
|                              |  | Notes to Condensed Consolidated Financial Information                                                                       |  | 7         
|                              |  |                                                                                                                            
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 22        
|                              |  |                                                                                                                            
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                  |  | 36        
|                              |  |                                                                                                                            
|Item 4.                       |  | Controls and Procedures                                                                                                     |  | 37        
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                            
|                              |  |                                                                                                                            
|Item 1.                       |  | Legal Proceedings                                                                                                           |  | 38        
|                              |  |                                                                                                                            
|Item 1A.                      |  | Risk Factors                                                                                                                |  | 39        
|                              |  |                                                                                                                            
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                 |  | 39        
|                              |  |                                                                                                                            
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                             |  | 39        
|                              |  |                                                                                                                            
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                         |  | 39        
|                              |  |                                                                                                                            
|Item 5.                       |  | Other Information                                                                                                           |  | 39        
|                              |  |                                                                                                                            
|Item 6.                       |  | Exhibits                                                                                                                    |  | 39        
|                              | 
|SIGNATURES                    |  | 40                                                                                                                         
|                              | 
|EXHIBIT INDEX                 |  | 41                                                                                                                         



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements



|SKY | FINANCIAL GROUP, INC.
|--- | ---------------------



|Condensed | Consolidated Balance Sheets (Unaudited)
|--------- | ---------------------------------------



|                                                                                                          |  |                   |            |   |                  |   |            |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|(Dollars and shares in thousands)                                                                         |  | September 30,2006 |            |   | December 31,2005 |  
|Assets                                                                                                    |  |                   |            |   |                  |   |            |  
|Cash and due from banks                                                                                   |  | $                 | 272,903    |   |                  | $ | 318,114    |  
|Interest-earning deposits with financial institutions                                                     |  |                   | 12,980     |   |                  |   | 15,037     |  
|Loans held for sale                                                                                       |  |                   | 16,515     |   |                  |   | 24,184     |  
|Securities available for sale                                                                             |  |                   | 3,221,525  |   |                  |   | 3,097,472  |  
|                                                                                                          |  |                  
|Total loans                                                                                               |  |                   | 11,305,636 |   |                  |   | 11,149,222 |  
|Less allowance for loan and lease losses                                                                  |  |                   | (144,310   | ) |                  |   | (144,461   | )
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Net loans                                                                                                 |  |                   | 11,161,326 |   |                  |   | 11,004,761 |  
|                                                                                                          |  |                  
|Premises and equipment, net                                                                               |  |                   | 166,865    |   |                  |   | 166,797    |  
|Goodwill                                                                                                  |  |                   | 524,239    |   |                  |   | 521,862    |  
|Core deposits and other intangibles, net                                                                  |  |                   | 56,067     |   |                  |   | 67,077     |  
|Accrued interest receivable and other assets                                                              |  |                   | 488,211    |   |                  |   | 467,987    |  
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Total assets                                                                                              |  | $                 | 15,920,631 |   |                  | $ | 15,683,291 |  
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Liabilities                                                                                               |  |                   |            |   |                  |   |            |  
|Deposits                                                                                                  |  |                   |            |   |                  |   |            |  
|Non-interest bearing deposits                                                                             |  | $                 | 1,665,760  |   |                  | $ | 1,734,113  |  
|Interest-bearing deposits                                                                                 |  |                   | 9,730,664  |   |                  |   | 9,021,563  |  
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Total deposits                                                                                            |  |                   | 11,396,424 |   |                  |   | 10,755,676 |  
|Securities sold under repurchase agreements and federal funds purchased                                   |  |                   | 904,827    |   |                  |   | 1,053,244  |  
|Debt and Federal Home Loan Bank advances                                                                  |  |                   | 1,444,600  |   |                  |   | 1,940,989  |  
|Junior subordinated debentures owed to unconsolidated subsidiary trusts                                   |  |                   | 337,040    |   |                  |   | 184,799    |  
|Accrued interest payable and other liabilities                                                            |  |                   | 192,785    |   |                  |   | 194,706    |  
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Total liabilities                                                                                         |  |                   | 14,275,676 |   |                  |   | 14,129,414 |  
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Shareholders Equity                                                                                      |  |                   |            |   |                  |   |            |  
|Serial preferred stock, $10.00 par value; 10,000 shares authorized; none issued                           |  |                   |           |   |                  |   |           |  
|Common stock, no par value; 350,000 shares authorized; 110,697 and 110,207 shares issued in 2006 and 2005 |  |                   | 1,232,860  |   |                  |   | 1,221,571  |  
|Retained earnings                                                                                         |  |                   | 506,637    |   |                  |   | 430,710    |  
|Treasury stock; 1,749 and 1,899 shares in 2006 and 2005                                                   |  |                   | (47,279    | ) |                  |   | (51,418    | )
|Accumulated other comprehensive loss                                                                      |  |                   | (47,263    | ) |                  |   | (46,986    | )
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Total shareholders equity                                                                                |  |                   | 1,644,955  |   |                  |   | 1,553,877  |  
|                                                                                                          |  |                   |            |   |                  |   |            |  
|Total liabilities and shareholders equity                                                                |  | $                 | 15,920,631 |   |                  | $ | 15,683,291 |  
|                                                                                                          |  |                   |            |   |                  |   |            |  

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.



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##### Table of Contents

SKY FINANCIAL GROUP, INC.

Condensed Consolidated Statements of Income (Unaudited)



|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|------------------------------------------------------- | ---- | ------------------------------- | ------- | ------------------------------ | ---- | ------- |  | ---- | ------- | - |  | - | -------
|(Dollars and shares in thousands,except per share
data) |      | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                        | 2006 |                                 | 2005    |                                | 2006 |         |  | 2005
|Interest Income                                         |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Loans, including fees                                   |      | $                               | 216,532 |                                | $    | 176,937 |  | $    | 620,582 |   |  | $ | 505,059
|Securities                                              |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Taxable                                                 |      |                                 | 37,219  |                                |      | 35,215  |  |      | 109,710 |   |  |   | 101,258
|Non-taxable                                             |      |                                 | 77      |                                |      | 62      |  |      | 200     |   |  |   | 177    
|Federal funds sold and other                            |      |                                 | 306     |                                |      | 144     |  |      | 832     |   |  |   | 487    
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Total interest income                                   |      |                                 | 254,134 |                                |      | 212,358 |  |      | 731,324 |   |  |   | 606,981
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Interest Expense                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Deposits                                                |      |                                 | 85,927  |                                |      | 55,242  |  |      | 226,967 |   |  |   | 148,212
|Borrowed funds                                          |      |                                 | 36,228  |                                |      | 26,697  |  |      | 106,322 |   |  |   | 76,343 
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Total interest expense                                  |      |                                 | 122,155 |                                |      | 81,939  |  |      | 333,289 |   |  |   | 224,555
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Net Interest Income                                     |      |                                 | 131,979 |                                |      | 130,419 |  |      | 398,035 |   |  |   | 382,426
|Provision for Credit Losses                             |      |                                 | 9,445   |                                |      | 8,725   |  |      | 26,075  |   |  |   | 45,442 
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Net interest income after provision for credit losses   |      |                                 | 122,534 |                                |      | 121,694 |  |      | 371,960 |   |  |   | 336,984
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Non-Interest Income                                     |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Brokerage and insurance commissions                     |      |                                 | 15,156  |                                |      | 13,896  |  |      | 50,828  |   |  |   | 44,654 
|Service charges and fees on deposit accounts            |      |                                 | 16,701  |                                |      | 14,786  |  |      | 45,226  |   |  |   | 40,991 
|Trust services income                                   |      |                                 | 5,835   |                                |      | 5,598   |  |      | 17,728  |   |  |   | 16,407 
|Mortgage banking income                                 |      |                                 | 6,240   |                                |      | 7,681   |  |      | 18,321  |   |  |   | 19,360 
|Net securities gains (losses)                           |      |                                 | 18      |                                |      | 147     |  |      | (67     | ) |  |   | 2,109  
|Derivative gains (losses) on swaps                      |      |                                 | 3,570   |                                |      |         |  |      | (6,360  | ) |  |   |        
|Net cash settlements on swaps                           |      |                                 | 159     |                                |      |         |  |      | (40     | ) |  |   |        
|Other income                                            |      |                                 | 13,254  |                                |      | 10,082  |  |      | 37,911  |   |  |   | 31,657 
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Total non-interest income                               |      |                                 | 60,933  |                                |      | 52,190  |  |      | 163,547 |   |  |   | 155,178
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Non-Interest Expense                                    |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Salaries and employee benefits                          |      |                                 | 57,593  |                                |      | 53,120  |  |      | 173,212 |   |  |   | 161,304
|Occupancy and equipment expense                         |      |                                 | 17,364  |                                |      | 16,754  |  |      | 52,141  |   |  |   | 51,193 
|Merger, integration and restructuring expense           |      |                                 | 941     |                                |      | 122     |  |      | 1,485   |   |  |   | 1,153  
|Amortization expense                                    |      |                                 | 3,728   |                                |      | 3,814   |  |      | 11,413  |   |  |   | 10,978 
|Other operating expense                                 |      |                                 | 22,238  |                                |      | 23,630  |  |      | 71,712  |   |  |   | 74,305 
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Total non-interest expense                              |      |                                 | 101,864 |                                |      | 97,440  |  |      | 309,963 |   |  |   | 298,933
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Income Before Income Taxes                              |      |                                 | 81,603  |                                |      | 76,444  |  |      | 225,544 |   |  |   | 193,229
|Income Taxes                                            |      |                                 | 27,034  |                                |      | 26,099  |  |      | 75,262  |   |  |   | 64,379 
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Net Income                                              |      | $                               | 54,569  |                                | $    | 50,345  |  | $    | 150,282 |   |  | $ | 128,850
|                                                        |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Earnings per Common Share                               |      |                                 |         |                                |      |         |  |      |         |   |  |   |        
|Basic                                                   |      | $                               | 0.50    |                                | $    | 0.47    |  | $    | 1.39    |   |  | $ | 1.21   
|Diluted                                                 |      |                                 | 0.50    |                                |      | 0.46    |  |      | 1.37    |   |  |   | 1.20   

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.



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##### Table of Contents

SKY FINANCIAL GROUP, INC.

(Unaudited)

Condensed Consolidated Statements of Changes in Shareholders Equity



|                                                       |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  
|------------------------------------------------------ | ---- | ------------------------------- | --------- | ---- | ------------------------------ | - | --------- | - |  | ---- | --------- | - |  | - | --------- | -
|(Dollars in thousands,except per share
data)           |      | Three Months EndedSeptember 30, |           |      | Nine Months EndedSeptember 30, |  
|                                                       | 2006 |                                 |           | 2005 |                                |   | 2006      |   |  | 2005 |          
|Balance at beginning of period                         |      | $                               | 1,574,513 |      |                                | $ | 1,497,199 |   |  | $    | 1,553,877 |   |  | $ | 1,470,955 |  
|                                                       |      |                                 |           |     
|Comprehensive income                                   |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  
|Net income                                             |      |                                 | 54,569    |      |                                |   | 50,345    |   |  |      | 150,282   |   |  |   | 128,850   |  
|Other comprehensive income (loss)                      |      |                                 | 36,962    |      |                                |   | (15,264   | ) |  |      | (277      | ) |  |   | (24,816   | )
|                                                       |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  
|Total comprehensive income                             |      |                                 | 91,531    |      |                                |   | 35,081    |   |  |      | 150,005   |   |  |   | 104,034   |  
|                                                       |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  
|Common cash dividends                                  |      |                                 | (25,047   | )    |                                |   | (23,647   | ) |  |      | (75,079   | ) |  |   | (70,143   | )
|Shares issued for stock option exercises               |      |                                 | 2,626     |      |                                |   | 3,084     |   |  |      | 8,004     |   |  |   | 10,625    |  
|Stock based compensation expense                       |      |                                 | 1,339     |      |                                |   | 1,356     |   |  |      | 5,647     |   |  |   | 4,073     |  
|Treasury shares repurchased                            |      |                                 |          |      |                                |   |          |   |  |      |          |   |  |   | (52,407   | )
|Common shares issued to acquire Peter B. Burke Agency  |      |                                 |          |      |                                |   |          |   |  |      | 1,777     |   |  |   |          |  
|Common shares issued to acquire Belmont Bancorp        |      |                                 |          |      |                                |   | 80        |   |  |      |          |   |  |   | 49,689    |  
|Common shares issued to acquire Benefits Design Agency |      |                                 |           |      |                                |   | 3,902     |   |  |      |           |   |  |   | 3,902     |  
|Common shares issued to acquire EOB, Inc.              |      |                                 |          |      |                                |   |          |   |  |      |          |   |  |   | 336       |  
|Other items                                            |      |                                 | (7        | )    |                                |   | (1        | ) |  |      | 724       |   |  |   | (4,010    | )
|                                                       |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  
|Balance at end of period                               |      | $                               | 1,644,955 |      |                                | $ | 1,517,054 |   |  | $    | 1,644,955 |   |  | $ | 1,517,054 |  
|                                                       |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  
|Common cash dividend per share                         |      | $                               | .23       |      |                                | $ | .22       |   |  | $    | .69       |   |  | $ | .66       |  
|                                                       |      |                                 |           |      |                                |   |           |   |  |      |           |   |  |   |           |  

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.



5



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##### Table of Contents

SKY FINANCIAL GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                               |  |                                |          |   |      |   |          |  
|------------------------------------------------------------------------------ |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                               |  | Nine Months EndedSeptember 30, |         
|(Dollars in thousands,except share
data)                                       |  | 2006                           |          |   | 2005 |  
|Operating Activities                                                           |  |                                |          |   |      |   |          |  
|Net income                                                                     |  | $                              | 150,282  |   |      | $ | 128,850  |  
|Adjustments to reconcile net income to net cash from operating activities:     |  |                                |          |   |      |   |          |  
|Depreciation, amortization and accretion                                       |  |                                | 22,319   |   |      |   | 21,083   |  
|Stock-based compensation                                                       |  |                                | 5,647    |   |      |   | 4,073    |  
|Net gains on sales of assets                                                   |  |                                | (7,761   | ) |      |   | (12,899  | )
|Provision for credit losses                                                    |  |                                | 26,075   |   |      |   | 45,442   |  
|Derivative losses on swaps                                                     |  |                                | 5,923    |   |      |   |         |  
|Proceeds from sales of loans held for sale                                     |  |                                | 704,069  |   |      |   | 870,256  |  
|Disbursements on originations of loans held for sale                           |  |                                | (689,086 | ) |      |   | (871,614 | )
|Net change in other assets and liabilities                                     |  |                                | (30,206  | ) |      |   | 34,994   |  
|                                                                               |  |                                |          |   |      |   |          |  
|Net cash provided from operations                                              |  |                                | 187,262  |   |      |   | 220,185  |  
|                                                                               |  |                                |          |   |      |   |          |  
|Investing Activities                                                           |  |                                |          |   |      |   |          |  
|Net decrease in interest bearing deposits in other banks                       |  |                                | 2,057    |   |      |   | 18,723   |  
|Net decrease in federal funds sold                                             |  |                                |          |   |      |   | 13,480   |  
|Securities available for sale:                                                 |  |                                |          |   |      |   |          |  
|Proceeds from maturities and payments                                          |  |                                | 402,648  |   |      |   | 467,945  |  
|Proceeds from sales                                                            |  |                                | 21,087   |   |      |   | 114,786  |  
|Purchases                                                                      |  |                                | (549,027 | ) |      |   | (488,431 | )
|Proceeds from sales of non-mortgage loans                                      |  |                                | 289,218  |   |      |   | 174,630  |  
|Net increase in loans                                                          |  |                                | (482,496 | ) |      |   | (379,706 | )
|Purchases of premises and equipment                                            |  |                                | (16,688  | ) |      |   | (24,161  | )
|Proceeds from sales of premises and equipment                                  |  |                                | 1,085    |   |      |   | 5,256    |  
|Proceeds from sales of other real estate                                       |  |                                | 11,616   |   |      |   | 16,790   |  
|Net cash received from breakage of derivative instruments                      |  |                                | 373      |   |      |   |         |  
|Net cash paid for acquisitions                                                 |  |                                | (172     | ) |      |   | (5,961   | )
|                                                                               |  |                                |          |   |      |   |          |  
|Net cash used for investing activities                                         |  |                                | (320,299 | ) |      |   | (86,649  | )
|                                                                               |  |                                |          |   |      |   |          |  
|Financing Activities                                                           |  |                                |          |   |      |   |          |  
|Net increase in deposit accounts                                               |  |                                | 642,262  |   |      |   | 276,880  |  
|Net decrease in federal funds and repurchase agreements                        |  |                                | (147,978 | ) |      |   | (260,551 | )
|Net increase (decrease) in short-term FHLB advances                            |  |                                | (325,000 | ) |      |   | 75,000   |  
|Proceeds from issuance of debt and long-term FHLB advances                     |  |                                | 224,619  |   |      |   | 128,775  |  
|Repayment of debt and long-term FHLB advances                                  |  |                                | (239,918 | ) |      |   | (187,876 | )
|Cash dividends and cash paid for fractional shares                             |  |                                | (74,940  | ) |      |   | (69,995  | )
|Tax benefits from tax deductions in excess of the compensation cost recognized |  |                                | 777      |   |      |   | 1,881    |  
|Proceeds from issuance of common stock                                         |  |                                | 8,004    |   |      |   | 10,623   |  
|Treasury stock repurchases                                                     |  |                                |         |   |      |   | (52,407  | )
|Other items                                                                    |  |                                |         |   |      |   | 816      |  
|                                                                               |  |                                |          |   |      |   |          |  
|Net cash provided from (used for) financing activities                         |  |                                | 87,826   |   |      |   | (76,854  | )
|                                                                               |  |                                |          |   |      |   |          |  
|Net increase (decrease) in cash and due from banks                             |  |                                | (45,211  | ) |      |   | 56,682   |  
|Cash and due from banks at beginning of period                                 |  |                                | 318,114  |   |      |   | 232,407  |  
|                                                                               |  |                                |          |   |      |   |          |  
|Cash and due from banks at end of period                                       |  | $                              | 272,903  |   |      | $ | 289,089  |  
|                                                                               |  |                                |          |   |      |   |          |  
|Supplemental Disclosures                                                       |  |                                |          |   |      |   |          |  
|                                                                               |  |                               
|Interest paid                                                                  |  | $                              | 322,869  |   |      | $ | 220,823  |  
|Income taxes paid                                                              |  |                                | 83,012   |   |      |   | 49,729   |  
|Non-cash transactions                                                          |  |                                |          |   |      |   |          |  
|Common shares issued to acquire Peter B. Burke Agency                          |  |                                | 1,777    |   |      |   |         |  
|Common shares issued to acquire Belmont Bancorp                                |  |                                |         |   |      |   | 49,689   |  
|Common shares issued to acquire Benefits Design Agency                         |  |                                |          |   |      |   | 3,902    |  
|Common shares issued to acquire EOB, Inc.                                      |  |                                |         |   |      |   | 336      |  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.



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SKY FINANCIAL GROUP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars and shares in thousands, except per share data)

1.
Accounting Policies

Sky Financial Group, Inc. (Sky Financial) is a financial holding company headquartered in Bowling Green, Ohio, that owns and
operates Sky Bank which is primarily engaged in the commercial and consumer banking business in Ohio, southern Michigan, western Pennsylvania, northern West Virginia and central Indiana. Sky Financial also operates businesses relating to insurance,
trust and other related financial services.

The accounting and reporting policies followed by Sky Financial conform in all material respects to accounting
principles generally accepted in the United States of America (US GAAP) and to general practices within the financial services industry. The preparation of financial statements in conformity with US GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for credit losses
and fair values of financial instruments and mortgage servicing rights are particularly subject to change.

These condensed consolidated unaudited interim
financial statements are prepared without an audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of Sky Financial at
September 30, 2006, and its results of operations and cash flows for the periods presented. In accordance with US GAAP for interim financial information, these statements do not include certain information and footnote disclosures required
for complete annual financial statements. Sky Financials Annual Report for the year ended December 31, 2005, contains consolidated financial statements and related notes which should be read in conjunction with the accompanying condensed
consolidated financial statements. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year.

Accounting for Derivative Transactions

During the second quarter 2006, Sky Financial identified immaterial
accounting errors related to certain derivative transactions. Sky Financial evaluated the impact of these errors and concluded that the impact was not material to prior annual and quarterly periods. Accordingly, an adjustment was recorded in the
second quarter to correct the cumulative impact of these errors. See Note 13 for additional information.

Accounting for Stock-Based Compensation

During the fourth quarter of 2005, Sky Financial adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment (FAS
123(R)). Sky adopted FAS 123(R) using the modified retrospective method for interim periods and retrospectively adjusted the first three quarters of 2005 using the pro forma expense originally disclosed. See Note 2 for further discussion of stock
based compensation.

New Accounting Pronouncements

In
February 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments: an amendment of FASB Statements No. 133 and 140 (FAS
155). FAS 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to
the requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative
requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends Statement 140 to eliminate the



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prohibition on a qualifying special purpose entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. FAS 155 is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. Sky
Financial does not expect the adoption of FAS 155 to have a material effect on the results of operations or the statement of condition.

In March 2006, the
FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets: an amendment of FASB Statement No. 140 (FAS 140 and FAS 156). FAS 140 establishes, among other things, the accounting for
all separately recognized servicing assets and servicing liabilities. This Statement amends FAS 140 to require that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. This
Statement permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. Under this Statement, an entity can elect subsequent fair value measurement to account for its
separately recognized servicing assets and servicing liabilities. Adoption of this Statement is required as of the beginning of the first fiscal year that begins after September 15, 2006. Upon adoption, Sky Financial will apply the requirements
for recognition and initial measurement of servicing assets and servicing liabilities prospectively to all transactions. Sky Financial will adopt FAS 156 for the fiscal year beginning January 1, 2007 and currently has not determined if it will
adopt FAS 156 using the fair value election.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that Sky Financial recognize in the financial statements, the impact of a
tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of our 2007 fiscal year, with the cumulative effect of the
change in accounting principle recorded as an adjustment to opening retained earnings. Sky Financial is currently evaluating the impact of adopting FIN 48 on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 enhances existing guidance for measuring assets and liabilities using fair
value. Prior to the issuance of FAS 157, guidance for applying fair value was incorporated in several accounting pronouncements. FAS 157 provides a single definition of fair value, together with a framework for measuring it, and requires additional
disclosure about the use of fair value to measure assets and liabilities. FAS 157 also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under FAS 157, fair value measurements are disclosed by level within that hierarchy. While FAS 157 does not add any new fair value measurements, it does change current practice. Changes to practice include:
(1) a requirement for an entity to include its own credit standing in the measurement of its liabilities; (2) a modification of the transaction price presumption; (3) a prohibition on the use of block discounts when valuing large
blocks of securities for broker-dealers and investment companies; and (4) a requirement to adjust the value of restricted stock for the effect of the restriction even if the restriction lapses within one year. FAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Sky Financial has not determined the impact of adopting FAS 157 on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans (an amendment of FASB Statements No. 87, 88, 106, and 132R)(FAS 158), requires an employer to: (a) Recognize in its statement of financial position an asset for a plans overfunded status or a liability for a
plans underfunded status; (b) measure a plans assets and its obligations that determine its funded status as of the end of the employers fiscal year (with limited exceptions); and (c) recognize changes in the funded
status of a defined benefit postretirement plan in the year in which the changes occur. Those changes will be reported in comprehensive income of a business entity and in changes in net assets of a not-for-profit organization. The requirement by FAS
158 to recognize the funded status of a benefit plan and the disclosure requirements of FAS 158 are effective as of the end of the fiscal year ending after December 15, 2006 for entities with publicly traded equity securities. The requirement
to measure plan assets and benefit obligations as of the date of the employers fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. Sky Financial does not expect the adoption of FAS
158 to have a material effect on the financial position of the company at December 31, 2006.



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2. Stock Based Compensation

Sky Financial adopted FAS 123(R) in the fourth quarter of 2005 using the modified retrospective method for interim periods and retrospectively adjusted the first three quarters of 2005 for stock option expense using the pro forma expense
originally disclosed. The compensation cost for the stock option expense recognized in 2006 was calculated by using the 2006 grants based on the grant dates fair value, estimated in accordance with the provisions of FAS No. 123(R). The
2006 stock option expense for all grants issued prior to the adoption of FAS 123(R) was based on the grant dates fair value estimated in accordance with the original provisions of FAS No. 123. The compensation cost for the stock option
expense recognized in 2005 was calculated for all grants based on the grant dates fair value, estimated in accordance with the original provisions of FAS No. 123.

The following table illustrates the total stock compensation expense recorded in salaries and employee benefits expense for the three and nine months ended September 30, 2006 and 2005:



|                         |  |                                 |       |                                |   |       |  |      |       |  |   |      
|------------------------ |  | ------------------------------- | ----- | ------------------------------ | - | ----- |  | ---- | ----- |  | - | -----
|                         |  | Three months endedSeptember 30, |       | Nine months endedSeptember 30,
|                         |  | 2006                            |       | 2005                           |   | 2006  |  | 2005
|Stock option expense     |  | $                               | 739   |                                | $ | 1,042 |  | $    | 3,454 |  | $ | 3,258
|Restricted stock expense |  |                                 | 600   |                                |   | 314   |  |      | 2,193 |  |   | 815  
|                         |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Total expense            |  | $                               | 1,339 |                                | $ | 1,356 |  | $    | 5,647 |  | $ | 4,073
|                         |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Tax benefit              |  | $                               | 468   |                                | $ | 474   |  | $    | 1,976 |  | $ | 1,425
|                         |  |                                 |       |                                |   |       |  |      |       |  |   |      

In accordance with Sky Financials stock option and restricted shares plans, employee participants that are
55 or older are eligible to retire, which has the effect of immediately vesting all non-vested options and restricted shares. Prior to the adoption of FAS 123(R), Sky Financials accounting policy was to recognize compensation cost over the
contractual vesting period with no acceleration based on retirement age. Compensation cost for all awards granted prior to the adoption of FAS 123(R) will continue to be recognized over the contractual vesting period and any remaining unrecognized
compensation cost will be accelerated when an employee actually retires. Compensation cost for awards granted or modified after the adoption of FAS 123(R) will be recognized over a period to the date employee first becomes eligible for retirement.
In accordance with this change in policy, stock option expense for the three months ended September 30, 2006 and 2005 included expense of $112 and $101, respectively, and for the nine months ended September 30, 2006 and 2005 included
expense of $335 and $302, respectively, for stock options that were granted to retirement eligible participants prior to the adoption of FAS 123(R) that are continuing to be expensed over the contractual terms of the option.

3. Critical Accounting Policies

The accounting and reporting
policies of Sky Financial are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the financial services industry. Accounting and reporting policies for the
allowance for credit losses and mortgage servicing rights are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by management could result in
material changes in Sky Financials financial position or results of operations. Note 1 (Summary of Significant Accounting Policies), note 4 (Loans and Allowance for Credit Losses) and note 20 (Mortgage Banking Activities), of the 2005 Annual
Report and Form 10-K, provide detail with regard to Sky Financials accounting for the allowance for loan losses and for mortgage servicing rights. There have been no significant changes in the application of accounting policies since
December 31, 2005.



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4. Mergers, Acquisitions and Divestitures

Community Banking

Wells River

On August 9, 2006, Sky Financial announced the execution of a definitive agreement to acquire Wells River Bancorp, Inc. (Wells River) and its
wholly-owned subsidiary, Perpetual Savings Bank, a $74.7 million bank that operates three full-service branches in Columbiana County. Sky anticipates the closing of this transaction will occur in the fourth quarter of 2006.

Under the terms of the agreement, shareholders of Wells River will receive cash and shares of Sky Financial Group. The Wells River shareholders will receive cash
consideration of $8,530.16 per Wells River share and Sky Financial common stock of 229.58 per Wells River share. Sky Financial expects to issue approximately 180 shares of Sky Financial common stock and pay $6,600 in cash.

The transaction is valued at $11,000. Sky Financial anticipates that the transaction will be completed in the fourth quarter of 2006, pending regulatory approvals, the
approval of the shareholders of Wells River and completion of other customary closing conditions. Sky Financial anticipates that Perpetual Savings Bank will be combined with Sky Bank, its commercial banking affiliate, by the end of 2006.

Union Federal

On October 17, 2006, Sky Financial completed
its acquisition of Union Federal Bank of Indianapolis and its parent company, Waterfield Mortgage Company, Inc., Ft. Wayne, Indiana. Sky Financial purchased Waterfields retail and commercial banking business conducted primarily through Union
Federal Bank, which added approximately $2.2 billion in assets. The aggregate purchase price was approximately $342,000 including direct acquisition costs of approximately $20,500. Waterfield shareholders will be entitled to receive $80.07 in cash
plus 4.38 shares of Sky Financial common stock for each Waterfield share. The acquisition of Union Federal Bank expands Sky Financials Indiana presence into the growing Indianapolis market with the addition of 42 branches in this area.

Falls Bank

On November 29, 2005, Sky Financial
completed its acquisition of Falls Bank, an $80 million bank that operates two full-service branches in the Akron, Ohio market. The aggregate purchase price was approximately $12,273, including direct acquisition costs of $36. The acquisition of
Falls Bank expanded Sky Financials community banking business further into the Akron market. Falls Bank shareholders received 350 shares of Sky Financial common stock and cash of $2,348. The total purchase price for Falls Bank has been
allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values. Such allocations have not been finalized and as such, the allocation of the purchase consideration included in the accompanying
Consolidated Balance Sheet at September 30, 2006, is preliminary.

Belmont Bancorp

On June 1, 2005, Sky Financial completed its acquisition of Belmont Bancorp (Belmont), a $297 million bank holding company headquartered in St. Clairsville, Ohio,
and its wholly-owned subsidiary, Belmont National Bank. The aggregate purchase price was approximately $68,450, including direct acquisition costs of $37. Belmonts offices located in Belmont, Harrison and Tuscarawas counties in Ohio, and Ohio
County in West Virginia expanded Sky Financials community banking business further into these markets. Belmont Bancorp shareholders received approximately 1,765 shares of Sky Financial common stock and cash of $18,705. The total purchase price
for Belmont has been allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values.

The following
pro forma consolidated results of operations have been prepared as if the acquisitions of Belmont Bancorp and Falls Bank occurred at the beginning of 2005.



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|                                   |  |                    |         |                    |   |        
|---------------------------------- |  | ------------------ | ------- | ------------------ | - | -------
|                                   |  | Three Months Ended |         | Nine Months Ended 
|                                   |  | September 30, 2005 |         | September 30, 2005
|Net interest income                |  | $                  | 130,889 |                    | $ | 387,495
|Net income                         |  |                    | 50,340  |                    |   | 127,981
|Earnings per common share Basic   |  |                    | 0.47    |                    |   | 1.19   
|Earnings per common share Diluted |  |                    | 0.46    |                    |   | 1.17   

The pro forma results for Belmont include approximately $800 of merger costs recorded by Belmont in the second
quarter of 2005.

This pro forma information is not necessarily indicative of the results that actually would have been obtained if the operations had been
combined as of the beginning of the periods presented and is not intended to be a projection of future results.

Financial Service Affiliate Acquisitions

After the close of business on September 30, 2006, Sky Financial acquired Lindig Benefits
Consultants located in Worthington, Ohio for 44 shares of Sky Financial common stock and $104 in cash.

On January 3, 2006, Sky Financial acquired the
Peter B. Burke Insurance Agency in Pittsburgh, Pennsylvania for 64 shares of Sky Financial common stock and $185 in cash.

On October 4, 2005, Sky
Financial acquired Becker-McDowell Agency, Inc. and Steiner Insurance Agency, Inc., both located in Wooster, Ohio. Becker-McDowell was acquired for 222 shares of Sky Financial common stock and $580 in cash. Steiner Insurance Agency was acquired for
111 shares of Sky Financial common stock and $288 in cash.

On August 1, 2005, Sky completed the acquisition of B.K.M.s Benefit Design Agency of
Ohio, Inc., located in Findlay, Ohio for 137 shares of Sky Financial common stock and $661 in cash.

All of the purchases completed in 2005 and 2006 were
recorded under the purchase method of accounting and the results of operations of the acquired businesses are included in Sky Financials operations from the effective dates of the acquisitions. Disclosure of pro forma results of the
acquisitions of the financial services affiliates are immaterial to Sky Financials condensed consolidated financial statements.



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5. Securities

The unrealized gains and losses and estimated fair values at September 30, 2006 and December 31, 2005 are as follows:



|                                                |  |                     |           |                      |   |                       |  |   |         |  
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------- | -
|September 30, 2006                              |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|U.S. Treasury                                   |  | $                   | 201       |                      | $ | 1                     |  | $ |        |  
|U.S. government agencies and corporations       |  |                     | 176,973   |                      |   |                      |  |   | (3,586  | )
|Obligations of state and political subdivisions |  |                     | 24,063    |                      |   | 83                    |  |   | (11     | )
|Corporate and other securities                  |  |                     | 4,806     |                      |   | 6                     |  |   |        |  
|Mortgage-backed securities                      |  |                     | 2,831,679 |                      |   | 2,820                 |  |   | (67,311 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total debt securities available for sale        |  |                     | 3,037,722 |                      |   | 2,910                 |  |   | (70,908 | )
|Marketable equity securities available for sale |  |                     | 36,179    |                      |   | 713                   |  |   | (1,491  | )
|FHLB, FRB and Bankers Bank Stock (1)           |  |                     | 147,624   |                      |   |                      |  |   |        |  
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total securities                                |  | $                   | 3,221,525 |                      | $ | 3,623                 |  | $ | (72,399 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  



|                                                |  |                     |           |                      |   |                       |  |   |         |  
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------- | -
|December 31, 2005                               |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|U.S. Treasury                                   |  | $                   | 301       |                      | $ | 2                     |  | $ |        |  
|U.S. government agencies and corporations       |  |                     | 191,273   |                      |   | 13                    |  |   | (4,077  | )
|Obligations of state and political subdivisions |  |                     | 7,690     |                      |   | 83                    |  |   | (2      | )
|Corporate and other securities                  |  |                     | 24,111    |                      |   | 584                   |  |   | (35     | )
|Mortgage-backed securities                      |  |                     | 2,698,074 |                      |   | 766                   |  |   | (66,007 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total debt securities available for sale        |  |                     | 2,921,449 |                      |   | 1,448                 |  |   | (70,121 | )
|Marketable equity securities available for sale |  |                     | 31,459    |                      |   | 748                   |  |   | (1,128  | )
|FHLB, FRB and Bankers Bank Stock (1)           |  |                     | 144,564   |                      |   |                      |  |   |        |  
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total securities                                |  | $                   | 3,097,472 |                      | $ | 2,196                 |  | $ | (71,249 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  

---

|(1) | Certain securities such as FHLB, FRB, and Bankers Bank stock are carried at amortized cost.
|--- | --------------------------------------------------------------------------------------------

6. Loans



|The | loan portfolios are as follows:
|--- | -------------------------------



|                                       |  |                   |            |                  |   |           
|-------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ----------
|                                       |  | September 30,2006 |            | December 31,2005
|Real estate loans:                     |  |                   |            |                  |   |           
|Construction                           |  | $                 | 1,167,080  |                  | $ | 1,012,745 
|Residential mortgage                   |  |                   | 2,827,403  |                  |   | 2,916,248 
|Non-residential mortgage               |  |                   | 3,487,672  |                  |   | 3,488,684 
|Commercial, financial and agricultural |  |                   | 3,134,102  |                  |   | 3,024,337 
|Installment and credit card loans      |  |                   | 689,379    |                  |   | 707,208   
|                                       |  |                   |            |                  |   |           
|Total loans                            |  | $                 | 11,305,636 |                  | $ | 11,149,222
|                                       |  |                   |            |                  |   |           



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The following table presents the aggregate amounts of non-performing loans on the dates
indicated:



|                           |  |                   |         |                  |   |        
|-------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                           |  | September 30,2006 |         | December 31,2005
|Non-accrual loans          |  | $                 | 127,279 |                  | $ | 119,030
|Restructured loans         |  |                   | 43      |                  |   | 479    
|                           |  |                   |         |                  |   |        
|Total non-performing loans |  | $                 | 127,322 |                  | $ | 119,509
|                           |  |                   |         |                  |   |        

Non-accrual loans include $15,437 and $20,400 of loans at September 30, 2006 and December 31, 2005,
respectively, that are secured by surety bonds and the assignment of payment streams from pools of commercial leases for which payment is over 90 days past due. See Note 15 Commitments and Contingencies for additional discussion.

7. Borrowings

Sky Financials debt, Federal Home
Loan Bank (FHLB) advances and junior subordinated debentures owed to unconsolidated subsidiary trusts are comprised of the following:



|                                                                         |  |                   |             |                  |   |            
|------------------------------------------------------------------------ |  | ----------------- | ----------- | ---------------- | - | -----------
|                                                                         |  | September 30,2006 |             | December 31,2005
|Borrowings under FHLB lines of credit                                    |  | $                 | 1,279,242   |                  | $ | 1,775,583  
|Subordinated note, due April 2013 at 5.35%                               |  |                   | 50,000      |                  |   | 50,000     
|Subordinated note, due October 2012 at 6.125%                            |  |                   | 65,000      |                  |   | 65,000     
|Subordinated note, due January 2008 at 7.08%                             |  |                   | 50,000      |                  |   | 50,000     
|Junior subordinated debentures owed to unconsolidated subsidiary trusts: |  |                   |             |                  |   |            
|Due February 2027 at 9.88%                                               |  |                   | 25,773      |                  |   | 26,393     
|Due June 2027 at 10.20%                                                  |  |                   | 24,451      |                  |   | 24,245     
|Due May 2030 at 9.34%                                                    |  |                   | 61,856      |                  |   | 63,502     
|Due December 2031 at 9.00%                                               |  |                   | 33,090      |                  |   | 33,374     
|Due April 2033 at 5.32% (variable) Due October 2033 at 5.02% (variable)  |  |                   | 6,30230,928 |                  |   | 6,35730,928
|Due June 2036 at 6.41% (variable)                                        |  |                   | 77,320      |                  |   |           
|Due June 2036 at 6.90% (variable)                                        |  |                   | 77,320      |                  |   |           
|Capital lease obligation                                                 |  |                   | 300         |                  |   | 302        
|Other items                                                              |  |                   | 58          |                  |   | 104        
|                                                                         |  |                   |             |                  |   |            
|Total borrowings                                                         |  | $                 | 1,781,640   |                  | $ | 2,125,788  
|                                                                         |  |                   |             |                  |   |            

The amount of junior subordinated debentures owed to unconsolidated subsidiary trusts represent the par value
adjusted for any unamortized discount.



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8. Other Comprehensive Income (Loss)

Other comprehensive income (loss) consisted of the following:



|                                                                  |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ---- | - |  | - | ------- | -
|                                                                  |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                  |  | 2006                            |         |   | 2005                           |   |         | 2006 |  |   | 2005 |  
|Securities available for sale:                                    |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|Unrealized securities gains (losses) arising during period        |  | $                               | 60,515  |   |                                | $ | (23,592 | )    |  | $ | 210  |   |  | $ | (35,232 | )
|Reclassification adjustment for (gains) losses included in income |  |                                 | (18     | ) |                                |   | (147    | )    |  |   | 67   |   |  |   | (2,109  | )
|                                                                  |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|                                                                  |  |                                 | 60,497  |   |                                |   | (23,739 | )    |  |   | 277  |   |  |   | (37,341 | )
|                                                                  |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|Cash flow hedge derivatives                                       |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|Change in fair value of cash flow hedge derivatives               |  |                                 | (3,641  | ) |                                |   | 252     |      |  |   | (712 | ) |  |   | 127     |  
|                                                                  |  |                                 |         |  
|Minimum pension liability and other                               |  |                                 | 9       |   |                                |   |        |      |  |   | 9    |   |  |   | (1,009  | )
|                                                                  |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|Other comprehensive income (loss) before income taxes             |  |                                 | 56,865  |   |                                |   | (23,487 | )    |  |   | (426 | ) |  |   | (38,223 | )
|Tax effect                                                        |  |                                 | (19,903 | ) |                                |   | 8,223   |      |  |   | 149  |   |  |   | 13,407  |  
|                                                                  |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  
|Total other comprehensive income (loss)                           |  | $                               | 36,962  |   |                                | $ | (15,264 | )    |  | $ | (277 | ) |  | $ | (24,816 | )
|                                                                  |  |                                 |         |   |                                |   |         |      |  |   |      |   |  |   |         |  

9. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding less the weighted average unvested restricted shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of shares determined for the basic computation in addition to the dilutive effect of potential common shares issuable under stock options and the restricted shares. For the three months ended September 30, 2006
and 2005, 2,667 and 24 weighted average shares, respectively, under option were excluded from the diluted earnings per share calculation as they were anti-dilutive. For the nine months ended September 30, 2006 and 2005, 2,026 and 377 weighted
average shares, respectively, under option were excluded from the diluted earnings per share calculation as they were anti-dilutive.



|                                                     |  |                                 |         |                                |   |         |  |      |         |  |   |        
|---------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------ | - | ------- |  | ---- | ------- |  | - | -------
|                                                     |  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                     |  | 2006                            |         | 2005                           |   | 2006    |  | 2005
|Numerator:                                           |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Net income                                           |  | $                               | 54,569  |                                | $ | 50,345  |  | $    | 150,282 |  | $ | 128,850
|                                                     |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Denominator:                                         |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Weighted-average common shares outstanding (basic)   |  |                                 | 108,564 |                                |   | 107,236 |  |      | 108,455 |  |   | 106,443
|Effect of non-vested restricted shares               |  |                                 | 97      |                                |   | 15      |  |      | 82      |  |   | 11     
|Effect of stock options                              |  |                                 | 684     |                                |   | 1,180   |  |      | 768     |  |   | 1,166  
|                                                     |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Weighted-average common shares outstanding (diluted) |  |                                 | 109,345 |                                |   | 108,431 |  |      | 109,305 |  |   | 107,620
|                                                     |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Earnings per share:                                  |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Basic                                                |  | $                               | 0.50    |                                | $ | 0.47    |  | $    | 1.39    |  | $ | 1.21   
|Diluted                                              |  |                                 | 0.50    |                                |   | 0.46    |  |      | 1.37    |  |   | 1.20   



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10. Capital Resources

The Federal Reserve Board (FRB) has established risk-based capital guidelines that must be observed by financial holding companies and banks. Failure to meet specified minimum capital requirements can result in certain mandatory actions by
primary regulators of Sky Financial and its bank subsidiary that could have a material effect on Sky Financials financial condition or results of operations. Under capital adequacy guidelines, Sky Financial and its bank subsidiary must meet
specific quantitative measures of their assets, liabilities and certain off-balance sheet items as determined under regulatory accounting practices. Sky Financials and its banks capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and other factors. Management believes, as of September 30, 2006, that Sky Financial and its bank meet all capital adequacy requirements to which they are subject.

Sky Financial and its bank have been notified by their respective regulators that, as of the most recent regulatory examinations, each is regarded as well
capitalized under the regulatory framework for prompt corrective action. Such determinations have been made evaluating Sky Financial and its bank under Tier I, total capital, and leverage ratios. There are no conditions or events since these
notifications that management believes have changed any of the well capitalized categorizations of Sky Financial and its bank subsidiary.

During the
second quarter of 2006, Sky Financial issued $150,000 of trust preferred securities in advance of the fourth quarter acquisition of Union Federal Bank. The issuance of these securities increased Sky Financials tier 1 capital ratio at
September 30, 2006 compared to December 31, 2005. The capital ratios will decline in the fourth quarter with the completion of the Waterfield Mortgage Corporation acquisition. Sky Financial will continue to exceed all regulatory guidelines
for well capitalized institutions.



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Sky Financials and Sky Banks capital ratios are presented in the following
table:



|                                       |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|-------------------------------------- |  | ------ | --------- | ----- | -------------------------------------------- | - | ------ | ------------------------------------------------------------------------ | --------- |  | --- | ------ |  | ----- | --------- |  | ---- | -
|                                       |  | Actual |           |       | Minimum RequiredFor CapitalAdequacy Purposes |   |        | Required to be Well CapitalizedUnder Prompt CorrectiveAction Regulations |          
|September 30, 2006                     |  | Amount |           | Ratio |                                              |   | Amount |                                                                          | Ratio     |  |     | Amount |  | Ratio |          
|Total capital to risk-weighted assets  |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,700,554 |       | 13.2                                         | % |        | $                                                                        | 1,029,997 |  | 8.0 | %      |  | $     | 1,287,496 |  | 10.0 | %
|Sky Bank                               |  |        | 1,470,233 |       | 11.7                                         |   |        |                                                                          | 1,006,944 |  | 8.0 |        |  |       | 1,258,680 |  | 10.0 |  
|                                       |  |        |           |       |                                              |  
|Tier 1 capital to risk-weighted assets |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,430,722 |       | 11.1                                         | % |        | $                                                                        | 514,998   |  | 4.0 | %      |  | $     | 772,498   |  | 6.0  | %
|Sky Bank                               |  |        | 1,256,001 |       | 10.0                                         |   |        |                                                                          | 503,472   |  | 4.0 |        |  |       | 755,208   |  | 6.0  |  
|                                       |  |        |           |       |                                              |  
|Tier 1 capital to average assets       |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,430,722 |       | 9.3                                          | % |        | $                                                                        | 613,159   |  | 4.0 | %      |  | $     | 766,448   |  | 5.0  | %
|Sky Bank                               |  |        | 1,256,001 |       | 8.3                                          |   |        |                                                                          | 607,890   |  | 4.0 |        |  |       | 759,862   |  | 5.0  |  



|                                       |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|-------------------------------------- |  | ------ | --------- | ----- | -------------------------------------------- | - | ------ | ------------------------------------------------------------------------ | --------- |  | --- | ------ |  | ----- | --------- |  | ---- | -
|                                       |  | Actual |           |       | Minimum RequiredFor CapitalAdequacy Purposes |   |        | Required to be Well CapitalizedUnder Prompt CorrectiveAction Regulations |          
|December 31, 2005                      |  | Amount |           | Ratio |                                              |   | Amount |                                                                          | Ratio     |  |     | Amount |  | Ratio |          
|Total capital to risk-weighted assets  |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,461,147 |       | 11.5                                         | % |        | $                                                                        | 1,013,831 |  | 8.0 | %      |  | $     | 1,267,289 |  | 10.0 | %
|Sky Bank                               |  |        | 1,376,814 |       | 11.2                                         |   |        |                                                                          | 987,953   |  | 8.0 |        |  |       | 1,234,942 |  | 10.0 |  
|                                       |  |        |           |       |                                              |  
|Tier 1 capital to risk-weighted assets |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,181,251 |       | 9.3                                          | % |        | $                                                                        | 506,916   |  | 4.0 | %      |  | $     | 760,374   |  | 6.0  | %
|Sky Bank                               |  |        | 1,160,318 |       | 9.4                                          |   |        |                                                                          | 493,977   |  | 4.0 |        |  |       | 740,965   |  | 6.0  |  
|                                       |  |        |           |       |                                              |  
|Tier 1 capital to average assets       |  |        |           |       |                                              |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,181,251 |       | 8.0                                          | % |        | $                                                                        | 593,486   |  | 4.0 | %      |  | $     | 741,857   |  | 5.0  | %
|Sky Bank                               |  |        | 1,160,318 |       | 7.9                                          |   |        |                                                                          | 587,832   |  | 4.0 |        |  |       | 734,790   |  | 5.0  |  

11. Goodwill and Intangible Assets

Goodwill at September 30, 2006 and December 31, 2005 was $524,239 and $521,862 respectively. Goodwill is reviewed annually for impairment. Sky Financial completed this review during the second quarter of
2006 and determined that goodwill was not impaired.

Net other intangible assets at September 30, 2006 and December 31, 2005 were $56,067 and
$67,077, respectively. These assets consist primarily of core deposit intangibles and customer relationship intangibles and are being amortized in accordance with Sky Financials accounting policies. Amortization expense on finitelived
intangible assets is expected to be $14,601, $13,450, $12,299, $10,000 and $8,390 in 2006, 2007, 2008, 2009, and 2010 respectively. These charges are exclusive of any changes in amortization due to future acquisitions.

12. Line of Business Reporting

Sky Financial manages and operates
two major lines of business: community banking and financial services. Community banking includes lending and related services to businesses and consumers, mortgage banking and deposit-gathering. Other financial services consist of non-banking
companies engaged in trust and wealth management, insurance and other financial-related services.



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The reported line of business results reflect the underlying core operating performance within the business units. Parent
and Other is comprised of the parent company and several smaller business units. It includes the net funding cost of the parent company and intercompany eliminations. Expenses for centrally provided services and support are allocated based
principally upon estimated usage of services. All merger, integration and restructuring charges company-wide are included in Parent and Other. Substantially all of Sky Financials assets are part of the community banking line of business.

Selected segment information for the three and nine months ended September 30, 2006 and 2005 is included in the following tables:



|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | -------------- |  | - | ------ | - |  | - | ----------
|Three months ended September 30, 2006      |  | CommunityBanking |            | FinancialServicesAffiliates |   | ParentAndOther |  |   | Total 
|Net interest income (expense)              |  | $                | 137,213    |                             | $ | 152            |  | $ | (5,386 | ) |  | $ | 131,979   
|Provision for credit losses                |  |                  | 9,445      |                             |   |               |  |   |       |   |  |   | 9,445     
|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|Net interest income (loss) after provision |  |                  | 127,768    |                             |   | 152            |  |   | (5,386 | ) |  |   | 122,534   
|Non-interest income                        |  |                  | 37,176     |                             |   | 19,570         |  |   | 4,187  |   |  |   | 60,933    
|Non-interest expense                       |  |                  | 83,054     |                             |   | 15,753         |  |   | 3,057  |   |  |   | 101,864   
|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|Income before income taxes                 |  |                  | 81,890     |                             |   | 3,969          |  |   | (4,256 | ) |  |   | 81,603    
|Income taxes                               |  |                  | 27,766     |                             |   | 1,751          |  |   | (2,483 | ) |  |   | 27,034    
|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|Net income                                 |  | $                | 54,124     |                             | $ | 2,218          |  | $ | (1,773 | ) |  | $ | 54,569    
|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|Goodwill at July 1, 2006                   |  | $                | 462,251    |                             | $ | 61,893         |  | $ |       |   |  | $ | 524,144   
|Net activity                               |  |                  | 85         |                             |   | 10             |  |   |       |   |  |   | 95        
|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|Goodwill at September 30, 2006             |  | $                | 462,336    |                             | $ | 61,903         |  | $ |       |   |  | $ | 524,239   
|                                           |  |                  |            |                             |   |                |  |   |        |   |  |   |           
|Average assets                             |  | $                | 15,605,813 |                             | $ | 103,114        |  | $ | 93,876 |   |  | $ | 15,802,803
|Depreciation and amortization              |  |                  | 7,971      |                             |   | 412            |  |   | 93     |   |  |   | 8,476     



|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|------------------------------------- |  | ---------------- | ---------- | --------------------------- | - | --------------- |  | - | ------- | - |  | - | ----------
|Three months ended September 30, 2005 |  | CommunityBanking |            | FinancialServicesAffiliates |   | ParentAnd Other |  |   | Total  
|Net interest income (expense)         |  | $                | 132,353    |                             | $ | 108             |  | $ | (2,042  | ) |  | $ | 130,419   
|Provision for credit losses           |  |                  | 8,725      |                             |   |                |  |   |        |   |  |   | 8,725     
|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net interest income after provision   |  |                  | 123,628    |                             |   | 108             |  |   | (2,042  | ) |  |   | 121,694   
|Non-interest income                   |  |                  | 34,184     |                             |   | 18,085          |  |   | (79     | ) |  |   | 52,190    
|Non-interest expense                  |  |                  | 82,377     |                             |   | 14,172          |  |   | 891     |   |  |   | 97,440    
|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Income before income taxes            |  |                  | 75,435     |                             |   | 4,021           |  |   | (3,012  | ) |  |   | 76,444    
|Income taxes                          |  |                  | 25,884     |                             |   | 1,742           |  |   | (1,527  | ) |  |   | 26,099    
|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net income                            |  | $                | 49,551     |                             | $ | 2,279           |  | $ | (1,485  | ) |  | $ | 50,345    
|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at July 1, 2005              |  | $                | 457,891    |                             | $ | 47,453          |  | $ |        |   |  | $ | 505,344   
|Net activity                          |  |                  | 4,860      |                             |   | 4,766           |  |   |        |   |  |   | 9,626     
|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at September 30, 2005        |  | $                | 462,751    |                             | $ | 52,219          |  | $ |        |   |  | $ | 514,970   
|                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Average assets                        |  | $                | 14,988,159 |                             | $ | 87,720          |  | $ | 121,625 |   |  | $ | 15,197,504
|Depreciation and amortization         |  |                  | 8,206      |                             |   | 152             |  |   | 344     |   |  |   | 8,702     



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|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | -------------- |  | - | ------- | - |  | - | ----------
|Nine months ended September 30, 2006       |  | CommunityBanking |            | FinancialServicesAffiliates |   | ParentAndOther |  |   | Total  
|Net interest income (expense)              |  | $                | 409,188    |                             | $ | 343            |  | $ | (11,496 | ) |  | $ | 398,035   
|Provision for credit losses                |  |                  | 26,075     |                             |   |               |  |   |        |   |  |   | 26,075    
|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|Net interest income (loss) after provision |  |                  | 383,113    |                             |   | 343            |  |   | (11,496 | ) |  |   | 371,960   
|Non-interest income                        |  |                  | 104,908    |                             |   | 64,119         |  |   | (5,480  | ) |  |   | 163,547   
|Non-interest expense                       |  |                  | 258,332    |                             |   | 48,799         |  |   | 2,832   |   |  |   | 309,963   
|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|Income before income taxes                 |  |                  | 229,689    |                             |   | 15,663         |  |   | (19,808 | ) |  |   | 225,544   
|Income taxes                               |  |                  | 77,119     |                             |   | 6,726          |  |   | (8,583  | ) |  |   | 75,262    
|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|Net income                                 |  | $                | 152,570    |                             | $ | 8,937          |  | $ | (11,225 | ) |  | $ | 150,282   
|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|Goodwill at January 1, 2006                |  | $                | 461,571    |                             | $ | 60,291         |  | $ |        |   |  | $ | 521,862   
|Net activity                               |  |                  | 765        |                             |   | 1,612          |  |   |        |   |  |   | 2,377     
|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|Goodwill at September 30, 2006             |  | $                | 462,336    |                             | $ | 61,903         |  | $ |        |   |  | $ | 524,239   
|                                           |  |                  |            |                             |   |                |  |   |         |   |  |   |           
|Average assets                             |  | $                | 15,518,118 |                             | $ | 103,358        |  | $ | 98,540  |   |  | $ | 15,720,016
|Depreciation and amortization              |  |                  | 24,007     |                             |   | 1,246          |  |   | 464     |   |  |   | 25,717    



|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | --------------- |  | - | ------- | - |  | - | ----------
|Nine months ended September 30, 2005       |  | CommunityBanking |            | FinancialServicesAffiliates |   | ParentAnd Other |  |   | Total  
|Net interest income (expense)              |  | $                | 387,688    |                             | $ | 293             |  | $ | (5,555  | ) |  | $ | 382,426   
|Provision for credit losses                |  |                  | 45,442     |                             |   |                |  |   |        |   |  |   | 45,442    
|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net interest income (loss) after provision |  |                  | 342,246    |                             |   | 293             |  |   | (5,555  | ) |  |   | 336,984   
|Non-interest income                        |  |                  | 97,267     |                             |   | 56,975          |  |   | 936     |   |  |   | 155,178   
|Non-interest expense                       |  |                  | 250,271    |                             |   | 42,940          |  |   | 5,722   |   |  |   | 298,933   
|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Income before income taxes                 |  |                  | 189,242    |                             |   | 14,328          |  |   | (10,341 | ) |  |   | 193,229   
|Income taxes                               |  |                  | 63,798     |                             |   | 6,000           |  |   | (5,419  | ) |  |   | 64,379    
|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net income                                 |  | $                | 125,444    |                             | $ | 8,328           |  | $ | (4,922  | ) |  | $ | 128,850   
|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at January 1, 2005                |  | $                | 428,502    |                             | $ | 46,756          |  | $ |        |   |  | $ | 475,258   
|Net activity                               |  |                  | 34,249     |                             |   | 5,463           |  |   |        |   |  |   | 39,712    
|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at September 30, 2005             |  | $                | 462,751    |                             | $ | 52,219          |  | $ |        |   |  | $ | 514,970   
|                                           |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Average assets                             |  | $                | 14,871,513 |                             | $ | 85,637          |  | $ | 116,924 |   |  | $ | 15,074,074
|Depreciation and amortization              |  |                  | 25,292     |                             |   | 525             |  |   | 1,069   |   |  |   | 26,886    

13. Derivative Instruments and Hedging Activities

Sky Financials hedging policies permit the use of interest rate swaps, caps and floors to manage interest rate risk or to hedge specified assets and liabilities.
Sky Financial uses derivative instruments, primarily interest rate swaps, to manage interest rate risk on certain liabilities by hedging the fair value of certain fixed-rate debt, which converts the debt to variable rates, and by hedging the cash
flow variability associated with certain variable rate debt by converting the debt to fixed rates.

The derivative instruments and hedging relationships
below, have been designated and qualify as either fair value or cash flow hedges. To qualify for hedge accounting under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended, the effectiveness of each hedging



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relationship is assessed both at hedge inception and at each reporting period thereafter. Also, at the end of each
reporting period, ineffectiveness in the hedging relationships is measured as the difference between the change in fair value of the derivative instruments and the change in fair value of either the hedged items (fair value hedges) or expected cash
flows (cash flow hedges). Ineffectiveness, if any, is recorded as derivative gains (losses) on swaps as a component of non-interest income.

Accounting Correction

During the second quarter 2006, Sky Financial identified and corrected immaterial accounting
errors related to certain derivative hedging relationships. The misstatements related to Sky Financials interpretation and application of the shortcut method of hedge accounting under Statement No. 133. Sky Financial
determined that these hedges did not qualify for hedge accounting using the shortcut method. As a result, changes in the market value of the derivatives should have been recorded through non-interest income with no corresponding offset
to the hedged item. Sky Financial evaluated the impact of these errors and concluded that the impact was not material to prior quarterly and annual periods. Accordingly, an adjustment was recorded in the second quarter of 2006 to correct the
cumulative impact of these errors.

The cumulative impact of these out-of-period adjustments resulted in a charge to non-interest income in the second
quarter of 2006 of $9,930 ($6,603 after tax), which is included in derivative gains (losses) on swaps in the Consolidated Statements of Income.

During the
third quarter of 2006, Sky Financial redesignated the affected derivatives related to the convertible advances from the Federal Home Loan Bank of Cincinnati as hedges using the long-haul method of hedge accounting. The swaps related to the junior
subordinated debentures owed to unconsolidated subsidiary trust were not redesignated as hedges and Sky Financial terminated the swaps. The breakage of these instruments with a total notional value of $108,600 during the third quarter resulted in a
gain of $3,228 ($2,098 after tax) recorded as derivative gains on swaps.

Fair Value Hedges - Interest Rate Swaps

Sky Financial uses interest rate swap agreements to hedge a portion of its fixed rate borrowings. The interest rate swaps effectively convert the fixed
rate of interest on $45,000 of advances from the Federal Home Loan Bank of Cincinnati (FHLB) and $140,000 of convertible advances from the FHLB to variable rates based on LIBOR plus a spread as defined in the agreements. Sky Financial also uses
interest rate swap agreements to hedge long-term fixed rate commercial loans. At September 30, 2006, Sky Financial had $18,278 of such agreements. The commercial loan swaps effectively convert the fixed rate of interest on these commercial
loans to a variable rate based on LIBOR plus a spread as defined in the agreements. The interest rate swaps involve no exchange of principal either at inception or maturity and have maturities and call options identical to the commercial loans. The
arrangements have been designated as fair value hedges and both the change in the fair value of the hedges and the hedged transactions are reflected in earnings. The hedging arrangements of the advances from the FHLB and the long-term fixed rate
commercial loans are considered highly effective and changes in the fair value of the interest rate swaps exactly offset the corresponding changes in the hedged items and, as a result, the changes in the fair value do not result in an impact on net
income. The swap arrangements of the convertible advances from the FHLB were redesignated as hedges at the beginning of the third quarter of 2006 and are being tested on a quarterly basis for effectiveness using the long-haul method of accounting.
The use of the long-haul method will result in a measure of ineffectiveness for these hedges that will be included in income. During the third quarter of 2006, Sky Financial recorded income of $527 related to the ineffectiveness of the swaps of the
convertible advances from the FHLB.

Cash Flow Hedges

In the first quarter of 2006, Sky Financial entered into two interest rate swaps that fix the rate on $150,000 of variable rate borrowings on junior subordinated debentures owed to unconsolidated subsidiary trusts. As
part of its financing of the fourth quarter acquisition of Union Federal Bank, Sky Financial borrowed $150,000 under junior subordinated debentures in the second quarter. Under the terms of the arrangement, Sky Financial pays a fixed rate of
interest and receives a variable rate based on LIBOR. The swaps are tested for effectiveness at inception and on a quarterly basis using the long-haul method. The effective portion of the change in the swaps fair value will be recorded in
other comprehensive income, net of tax.



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Interest Rate Caps

During 2002, Sky Financial entered into two interest rate cap arrangements, and paid $1,456 to hedge its interest risk on $48,600 of federal funds purchased. The interest rate caps are designed to offset the impact of
changes in the federal fund purchased rate above the weighted average stated rate of 5.90%, and, as such, are considered to be highly effective. Any changes in the intrinsic values are recorded in other comprehensive income. The changes in the time
values of the interest rate caps, which are excluded from the assessment of hedge effectiveness, increased interest expense by $164 in both the first nine months of 2006 and 2005. No deferred gains or losses in accumulated other comprehensive income
at September 30, 2006 are expected to be reclassified to income from continuing operations in 2006.

The following table presents the
contract/notional and fair value amounts of all derivative transactions at September 30, 2006 and December 31, 2005:



|                                     |  |                 |         |            |   |        |  
|------------------------------------ |  | --------------- | ------- | ---------- | - | ------ | -
|                                     |  | Notional Amount |         | Fair Value |  
|At September 30, 2006                |  |                 |         |            |   |        |  
|Designated hedging instruments       |  |                 |         |            |   |        |  
|Fair value hedges                    |  | $               | 203,278 |            | $ | (4,244 | )
|Cash flow hedges                     |  |                 | 150,000 |            |   | (559   | )
|Interest rate caps                   |  |                 | 48,600  |            |   | 98     |  
|                                     |  |                 |         |            |   |        |  
|Total derivative hedging instruments |  | $               | 401,878 |            | $ | (4,705 | )
|                                     |  |                 |         |            |   |        |  
|At December 31, 2005                 |  |                 |         |            |   |        |  
|Designated hedging instruments       |  |                 |         |            |   |        |  
|Fair value hedges                    |  | $               | 362,415 |            | $ | (2,981 | )
|Interest rate caps                   |  |                 | 48,600  |            |   | 168    |  
|                                     |  |                 |         |            |   |        |  
|Total derivative hedging instruments |  | $               | 411,015 |            | $ | (2,813 | )
|                                     |  |                 |         |            |   |        |  

Interest Rate Swaps on Behalf of Clients

Sky Financial has entered into several commercial loan swaps in order to provide commercial loan clients the ability to swap from variable to fixed interest rates. Under
these agreements, Sky Financial enters into a variable rate loan agreement with a client in addition to a swap agreement. This swap agreement effectively swaps the clients variable rate loan into a fixed rate loan. Sky Financial then enters
into a corresponding swap agreement with a third party in order to swap its exposure on the variable to fixed rate swap on the commercial loan. At September 30, 2006 and December 31, 2005, Sky Financial had $107,052 and $65,138,
respectively, of notional amount of such agreements. As the interest rate swaps with the clients and third parties are not designated as hedges under FAS No. 133, the instruments are marked to market in earnings. As the interest rate swaps are
structured to offset each other, there was no net impact to earnings in the first nine months of 2006 and 2005 related to these swaps.



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##### Table of Contents

14. Merger, Integration and Restructuring Expense

The following is a summary of activity in the merger, integration and restructuring liability for the nine months ended September 30, 2006:



|                                    |  |                                 |      |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   |        |  
|----------------------------------- |  | ------------------------------- | ---- | - | --------------- | - | ---- | ------------------------- |  | - | --------------------------- | - |  | ----- | ---- | - |  | - | ------ | -
|                                    |  | EmployeeSeveranceandTermination |      |   | ConversionCosts |   |      | Lease/ContractTermination |  |   | ProfessionalFees/OtherCosts |   |  | Total |     
|Balance as of January 1, 2006       |  | $                               | 947  |   |                 | $ | 42   |                           |  | $ | 1,188                       |   |  | $     | 132  |   |  | $ | 2,309  |  
|                                    |  |                                 |      |   |                
|Accruals charged to expense         |  |                                 | 58   |   |                 |   | 930  |                           |  |   |                             |   |  |       | 497  |   |  |   | 1,485  |  
|Accruals from purchase accounting   |  |                                 | 27   |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   | 27     |  
|                                    |  |                                 |      |   |                
|Cash payments and other adjustments |  |                                 | (701 | ) |                 |   | (949 | )                         |  |   | (441                        | ) |  |       | (627 | ) |  |   | (2,718 | )
|                                    |  |                                 |      |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   |        |  
|Balance as of September 30, 2006    |  | $                               | 331  |   |                 | $ | 23   |                           |  | $ | 747                         |   |  | $     | 2    |   |  | $ | 1,103  |  
|                                    |  |                                 |      |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   |        |  

During the first nine months of 2006, Sky Financial recorded $1,485 ($965 after tax) of merger, integration and
restructuring expense, of which $941 ($611 after tax) was recorded in the third quarter related to the fourth quarter 2006 acquisition of Union Federal Bank, $364 ($237 after tax) was recorded in the second quarter related to Union Federal and $180
($117 after tax) was recorded in the first quarter related to Union Federal and additional costs related to the fourth quarter 2005 acquisition of Falls Bank.

The $1,153 ($749 after tax) of merger, integration and restructuring expense recorded in the first nine months of 2005 related to $122 ($79 after tax) of expense recorded in the third quarter of 2005 related to the pending acquisition of
Falls Bank and additional Belmont acquisition costs and $1,031 ($670 after tax) of expense recorded in the second quarter of 2005 related to the acquisition of Belmont.

Sky Financial expects to pay a majority of the remainder of the accrued costs over the next one to two years.

15. Commitments and Contingencies

Between August 2000 and December
2001, Sky Bank and two of its predecessor banks provided financing to a commercial borrower and its affiliated entities for the purchase of six separate portfolios of commercial lease pools, and a warehouse line of credit to finance lease pools.
These loans are secured by assignments of the payment streams from the underlying leases, surety bonds or insurance policies, and a limited guarantee from the sole member of the commercial borrower.

Upon default of these commercial loans, Sky Bank (and its predecessors) made demand for payment from Illinois Union Insurance Company (IU), RLI Insurance
Company (RLI), and Royal Indemnity Company (Royal) under the relevant surety bonds and insurance policies. IU, RLI, and Royal (collectively, the Sureties) have failed to make the payments required under the surety
bonds and insurance policies. As a result, in the spring of 2002, Sky and its predecessors filed suit against each of the Sureties seeking to enforce Sky Banks rights under the surety bonds and insurance policies issued by the Sureties in
connection with the commercial lease pools. Skys complaints claim breach of contract, bad faith and allege that the Sureties are liable for the payments due to Sky under the terms of the bonds and are estopped from asserting fraud as a defense
to paying any claims under the bonds. In October, 2002, the suits were consolidated for pretrial purposes with more than 35 other lawsuits involving similar claims in the United States District Court for the Northern District of Ohio, Eastern
Division, under the Federal Multi-district Litigation (MDL) Rules.

The key defense of the Sureties in denying Sky Banks claims under the
surety bonds is that they were fraudulently induced by the originator of the commercial leases to issue the surety bonds in the first instance. The Sureties have also asserted related defenses that the underlying equipment leases are invalid,
usurious, or otherwise unenforceable.



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Sky Bank believes that none of these defenses can defeat Sky Banks claims under the surety bonds, which, in the
view of Sky Bank, provide for absolute and unconditional guarantees of payment. Moreover, Sky Bank believes that the Sureties are responsible to Sky Bank, as the Obligee or Named Insured under the bonds, for the underwriting of the lessees and
leases, including all issues of fraud, and that the Sureties waived any defense of fraud to claims under the bonds.

On December 21, 2005, Sky sold
and assigned to a third party, without recourse, all of its rights and interests in three loans secured by commercial lease pools and surety bonds issued by Royal. On March 31, 2006, Sky and IU settled in full its litigation pertaining to two
loans secured by pools of leases and insurance policies issued by IU. The aggregate principal balance of the three loans sold to a third party and the two loans which were settled was $14.2 million, and the aggregate proceeds received by Sky in the
sale and the settlement was $14.9 million.

With respect to the remaining pool and the warehouse line of credit secured by surety bonds issued by RLI,
which has a remaining principal balance of $15.4 million, Sky has amended its complaint and expects to proceed with pretrial discovery and motion practice in the MDL court in anticipation of trial.

Sky Financial has reviewed the relevant matters of fact and law with its special counsel and believes that it has substantial and meritorious claims against the
remaining Surety. Sky Financial has and will continue to vigorously assert all the rights and remedies available to it to obtain payment under the bonds. While the ultimate outcome of this matter cannot be determined at this time, Sky Financial
management does not believe that the outcome of these pending legal proceedings will materially affect the consolidated financial position or results of operations of Sky Financial.

A schedule of significant commitments at September 30, 2006 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 3,569,109
|Standby letters of credit    |  |   | 296,084  
|Letters of credit            |  |   | 2,465    

On March 31, 2004, Sky Financial completed the sale of its dental financing affiliate, Sky Financial
Solutions. The Sky Financial Solutions sales agreement contains a contingency based upon future charge-offs between Sky Financial and the acquirer that may result in an adjustment to increase or decrease the sales price in future periods. Based on
historical experience and expected future performance, management does not believe that this provision will have a significant impact on future earnings, cash flows, or financial position.

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in
thousands, except per share data)

Completed Acquisition

On October 17, 2006, Sky Financial completed its acquisition of Union Federal Bank of Indianapolis and its parent company, Waterfield Mortgage Company, Inc., Ft. Wayne, Indiana. Sky Financial purchased Waterfields retail and
commercial banking business conducted primarily through Union Federal Bank, which added approximately $2.2 billion in assets. The aggregate purchase price was approximately $342,000 including direct acquisition costs of approximately $20,500.
Shareholders of Waterfield received $80.07 in cash plus 4.38 shares of Sky Financial common stock for each Waterfield share. The acquisition of Union Federal Bank expands Sky Financials Indiana presence into the growing Indianapolis market
with the addition of 42 branches in this area. In addition, Sky Financial expects the addition of Union Federal Bank operations to be neutral to Sky Financials EPS results of operations for the fourth quarter, excluding expected one-time
acquisition charges of approximately $.05 to $.06 per diluted share.



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##### Table of Contents

Three Months Ended September 30, 2006 and 2005

Overview

Net income for the third quarter of 2006 was $54,569 or $0.50 per diluted share, up from $50,345 or $0.46
per diluted share in the third quarter of 2005. Sky Financials results for the third quarter 2006 included gains of $3,228 ($2,098 after tax) or $0.02 per diluted share related to gains on the breakage of certain derivative instruments.

For the third quarter of 2006, net interest income increased $1,560 over the third quarter 2005, mainly due to the growth in interest-earning assets
attributable to organic growth and acquisitions. A 10 basis point decline in the net interest margin that was due to a difficult interest rate environment mostly offset the higher interest-earning assets. The provision for credit losses increased
$720, primarily the result of an increase in total loans and higher charge-offs during the quarter. The third quarter of 2006 charge-offs and provision were in-line with Sky Financials expectations. Non-interest income increased $8,743 in the
third quarter of 2006 over the third quarter 2005 as a result of gains on the breakage of certain derivative instruments and the growth in fee based businesses. The major components of this increase in non-interest income included a $1,915 increase
in service charges and fees on deposit accounts, a $1,260 increase in brokerage and insurance commissions and a $3,172 increase in other income. Non-interest expenses increased in the third quarter of 2006 by $4,424 primarily as a result of higher
employee costs, occupancy expenses and merger, integration and restructuring expenses.

Business Line Results

Sky Financials two major lines of business include community banking and financial services. Community banking includes lending and related services to businesses
and consumers, mortgage banking and deposit-gathering. Financial services consists of non-banking companies engaged in trust and wealth management, insurance and other financial-related services. Sky Financials business line results for the
third quarter ended September 30, 2006 and 2005 are summarized in the table below.



|                              |  |                   |        |   |      |   |        |  
|----------------------------- |  | ----------------- | ------ | - | ---- | - | ------ | -
|                              |  | Net Income (Loss) |       
|Quarter Ended September 30,   |  | 2006              |        |   | 2005 |  
|Community Banking             |  | $                 | 54,124 |   |      | $ | 49,551 |  
|Financial Services Affiliates |  |                   | 2,218  |   |      |   | 2,279  |  
|Parent and Other              |  |                   | (1,773 | ) |      |   | (1,485 | )
|                              |  |                   |        |   |      |   |        |  
|Consolidated Total            |  | $                 | 54,569 |   |      | $ | 50,345 |  
|                              |  |                   |        |   |      |   |        |  

The higher community banking net income in the third quarter of 2006 as compared to the same period of the
previous year is mainly due to higher net interest income and non-interest income due to the impact of acquisitions and organic growth. Higher average earning assets contributed to a 3.7% increase in net interest income. The increase in net interest
income from higher average earning assets was partially offset by a decreased net interest margin as a result of a difficult interest rate environment. In addition, these increases were partially offset by a higher provision for credit losses in
2006 than in the previous year as well as higher non-interest expenses. The higher non-interest income over 2005 was mainly due to increases in service charges and fees on deposit accounts. These increases were partially offset by lower mortgage
banking income. Non-interest expenses increased 0.8% over the third quarter of 2005, primarily due to higher salaries and employee benefits expense. This increase was primarily the result of a higher number of full-time equivalent employees due to
the acquisitions in 2005 and the addition of seven new financial centers over the past twelve months, mostly offset by continued focus on controlling operating expenses and a state franchise tax benefit. The efficiency ratio, defined as non-interest
expense divided by the sum of fully taxable equivalent net interest income plus non-interest income, for the community banking segment was 47.42% for the third quarter of 2006 compared to 49.21% in the third quarter of 2005. The 2006 community
banking results reflect a ROE of 13.55% and a ROA of 1.38% compared to 13.05% and 1.31%, respectively, in the third quarter of 2005.

The financial service
affiliates net income decreased slightly as compared to 2005 primarily the result of higher expenses related to salaries and employee benefits, mostly offset by higher brokerage and insurance commissions and trust services income.



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##### Table of Contents

Parent and other include the net funding costs of the parent company and intercompany billings to other affiliates for
shared services. The decrease in parent and other results of operations from the prior year third quarter relate primarily to the higher interest expenses retained by the parent and higher employee expenses during the quarter, mostly offset by the
gains on the breakage of the derivative instruments during the quarter. The higher interest costs retained by the parent relates primarily to the advanced issuance of $150,000 of trust preferred securities to fund the Union Federal Bank acquisition
in the fourth quarter of 2006.

Net Interest Income

Net interest income for the third quarter of 2006 was $131,979, an increase of $1,560 or 1.2% from $130,419 in the third quarter of 2005. Net interest income, the difference between interest income earned on interest-earning assets and
interest expense incurred on interest-bearing liabilities, is the most significant component of Sky Financials earnings. Net interest income is affected by changes in the volumes, rates and composition of interest-earning assets and
interest-bearing liabilities. Average earning assets increased 4.0% from the third quarter last year from a combination of organic growth and acquisitions. Average loans for the quarter increased 4.4% over 2005s volume during the same quarter,
with organic growth contributing 4.0% in addition to the acquisitions. Sky Financials net interest margin for the three months ended September 30, 2006 and 2005 was 3.65% and 3.75%, respectively. The decrease in the net interest margin
performance was primarily the result of funding costs increasing greater than earning asset yields. In 2006, funding costs have risen due to rising rates, a migration in deposits to higher cost products and the advanced issuance of trust preferred
securities to fund the Union Federal Bank acquisition.



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##### Table of Contents

The following table reflects the components of Sky Financials net interest income for the three months ended
September 30, 2006 and 2005. Rates are computed on a tax equivalent basis and non-accrual loans have been included in the average balances. Certain amounts from prior year have been reclassified to conform to current year presentation.



|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|-------------------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | ---------------------- | ------------------------------------- | ------- |  | ---- | -------------- |  | ---------------------- | ---------- | ---- | - | ------- |  | ---- | -
|                                                                                             |  | Three Months Ended September 30, 2006 |            |                        | Three Months Ended September 30, 2005 |        
|                                                                                             |  | AverageBalance                        |            | InterestIncome/Expense |                                       | Rate    |  |      | AverageBalance |  | InterestIncome/Expense |            | Rate |  
|                                                                                             |  | (Dollars in thousands)                |           
|Assets                                                                                       |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-earning assets:                                                                     |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing deposits in banks                                                           |  | $                                     | 12,951     |                        | $                                     | 169     |  | 5.18 | %              |  | $                      | 30,680     |      | $ | 137     |  | 1.77 | %
|Federal funds sold                                                                           |  |                                       | 533        |                        |                                       | 7       |  | 5.17 |                |  |                        | 1,033      |      |   | 8       |  | 3.07 |  
|Securities                                                                                   |  |                                       | 3,152,411  |                        |                                       | 37,337  |  | 4.70 |                |  |                        | 3,042,872  |      |   | 33,950  |  | 4.43 |  
|Loans and loans held for sale                                                                |  |                                       | 11,281,393 |                        |                                       | 217,387 |  | 7.64 |                |  |                        | 10,819,022 |      |   | 179,128 |  | 6.57 |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-earning assets                                                                |  |                                       | 14,447,288 |                        |                                       | 254,900 |  | 7.00 |                |  |                        | 13,893,607 |      |   | 213,223 |  | 6.09 |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-earning assets                                                                   |  |                                       | 1,355,515  |                        |                                       |         |  |      |                |  |                        | 1,303,897  |      |   |         |  |      |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total assets                                                                                 |  | $                                     | 15,802,803 |                        |                                       |         |  |      |                |  | $                      | 15,197,504 |      |   |         |  |      |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Liabilities and Shareholders Equity                                                         |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing liabilities:                                                                |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Demand deposits                                                                              |  | $                                     | 387,747    |                        |                                       | 2,209   |  | 2.26 |                |  | $                      | 396,486    |      |   | 1,478   |  | 1.48 |  
|Savings deposits                                                                             |  |                                       | 3,327,138  |                        |                                       | 18,370  |  | 2.19 |                |  |                        | 3,655,539  |      |   | 12,294  |  | 1.33 |  
|Time deposits                                                                                |  |                                       | 5,858,778  |                        |                                       | 65,348  |  | 4.43 |                |  |                        | 5,031,123  |      |   | 41,470  |  | 3.27 |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing deposits                                                              |  |                                       | 9,573,663  |                        |                                       | 85,927  |  | 3.56 |                |  |                        | 9,083,148  |      |   | 55,242  |  | 2.41 |  
|Short-term borrowings                                                                        |  |                                       | 869,381    |                        |                                       | 10,140  |  | 4.63 |                |  |                        | 794,554    |      |   | 6,488   |  | 3.24 |  
|Junior Subordinated Debentures                                                               |  |                                       | 338,275    |                        |                                       | 6,616   |  | 7.76 |                |  |                        | 189,509    |      |   | 3,138   |  | 6.57 |  
|Debt and FHLB advances                                                                       |  |                                       | 1,581,996  |                        |                                       | 19,472  |  | 4.88 |                |  |                        | 1,791,472  |      |   | 17,071  |  | 3.78 |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing liabilities                                                           |  |                                       | 12,363,315 |                        |                                       | 122,155 |  | 3.92 |                |  |                        | 11,858,683 |      |   | 81,939  |  | 2.74 |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-bearing liabilities                                                              |  |                                       | 1,833,996  |                        |                                       |         |  |      |                |  |                        | 1,826,040  |      |   |         |  |      |  
|Shareholders equity                                                                         |  |                                       | 1,605,492  |                        |                                       |         |  |      |                |  |                        | 1,512,781  |      |   |         |  |      |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total liabilities and equity                                                                 |  | $                                     | 15,802,803 |                        |                                       |         |  |      |                |  | $                      | 15,197,504 |      |   |         |  |      |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest income (tax equivalent basis)                                                   |  |                                       |            |                        | $                                     | 132,745 |  |      |                |  |                        |            |      | $ | 131,284 |  |      |  
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest rate spread (tax equivalent basis)                                              |  |                                       |            |                        |                                       |         |  | 3.08 | %              |  |                        |            |      |   |         |  | 3.35 | %
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest margin, (interest income, taxable equivalent basis, to interest earning assets) |  |                                       |            |                        |                                       |         |  | 3.65 | %              |  |                        |            |      |   |         |  | 3.75 | %
|                                                                                             |  |                                       |            |                        |                                       |         |  |      |                |  |                        |            |      |   |         |  |      |  



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Provision for Credit Losses

The provision for credit losses represents the charge to income necessary to adjust the allowance for loan losses and the allowance for unfunded loan commitments and letters of credit to an amount that represents managements
assessment of the estimated probable credit losses inherent in Sky Financials loan portfolio which have been incurred at each balance sheet date. The provision for credit losses increased $720 or 8.3% to $9,445 in the third quarter of 2006
compared to $8,725 in the third quarter of 2005. Net charge-offs were $9,890 or 0.35% (annualized) of average loans during the three months ended September 30, 2006, compared to $7,997 or 0.29% (annualized) for the same period in 2005. The
third quarter of 2006 provision and charge-offs were indicative of Sky Financials historical trend and in-line with expectation for the full year.



|                                                                  |  |                   |   |  |                  |   |  |                   |  
|----------------------------------------------------------------- |  | ----------------- | - |  | ---------------- | - |  | ----------------- | -
|                                                                  |  | September 30,2006 |   |  | December 31,2005 |   |  | September 30,2005 |  
|Allowance for loan losses as a percentage of loans                |  | 1.28              | % |  | 1.30             | % |  | 1.41              | %
|Allowance for loan losses as a percentage of non-performing loans |  | 113.34            | % |  | 120.88           | % |  | 121.11            | %

See section titled Non-Performing Assets of managements discussion and analysis regarding
$15,437 of non-performing loans backed by sureties.

Non-Interest Income

Non-interest income for the third quarter of 2006 was $60,933, an increase of $8,743 or 16.8% from $52,190 for the third quarter of 2005. The change in non-interest income reflects a gain on the breakage of certain
derivative instruments, discussed further below, in addition to the growth from acquisitions and the emphasis of Sky Financial on expanding its profitable fee-based businesses.

Non-interest income growth was most significant in service charges and fees on deposit accounts which recorded revenues of $16,701 during the third quarter of 2006, an increase of $1,915 or 13.0% from the same period
in 2005. The increased revenue was primarily the result of higher volumes in deposit accounts, continued growth in transaction accounts and fee increases on certain types of accounts. For the third quarter of 2006, brokerage and insurance
commissions were up $1,260 or 9.1% from the same period in 2005 due to acquisitions in late 2005 and early 2006. Trust services income for the third quarter of 2006 was $5,835, up $237 or 4.2% over the third quarter of 2005, primarily from organic
growth. The assets under trust management have grown to $5.0 billion at September 30, 2006 from $4.7 billion at September 30, 2005. Other income increased $3,172 or 31.5% over the third quarter of 2005 due to a $1.2 million gain on the
early extinguishment of debt, higher debit card fees and higher gains on the sales of loans.

During the third quarter of 2006, Sky Financial terminated
the interest rate swaps related to the junior subordinated debentures owed to unconsolidated subsidiary trust as these swaps were not being accounted for as hedges. The breakage of these instruments with a total notional value of $108,600 during the
third quarter resulted in a gain of $3,228 ($2,098 after tax) recorded as derivative gains on swaps.

Mortgage banking income was $6,240 during the third
quarter of 2006, a decrease of $1,441 or 18.8%. This decrease was mainly due to lower origination and sales revenue and lower recapture of impairment, partially offset by lower amortization compared to the third quarter of 2005. The components of
mortgage banking income for the third quarter of 2006 and 2005 are as follows:



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|                                |  |                   |        |   |                   |   |        |  
|------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------ | -
|                                |  | September 30,2006 |        |   | September 30,2005 |  
|Origination and sales revenue   |  | $                 | 4,794  |   |                   | $ | 6,449  |  
|Mortgage loan servicing income  |  |                   | 3,872  |   |                   |   | 3,841  |  
|Amortization expense            |  |                   | (2,421 | ) |                   |   | (3,684 | )
|Impairment (charges) recoveries |  |                   | (5     | ) |                   |   | 1,075  |  
|                                |  |                   |        |   |                   |   |        |  
|Total                           |  | $                 | 6,240  |   |                   | $ | 7,681  |  
|                                |  |                   |        |   |                   |   |        |  

Non-Interest Expense

Non-interest expense for the third quarter of 2006 was $101,864, an increase of $4,424 or 4.5%, from $97,440 reported for the same quarter of 2005. Salary and other employee costs were $57,593, up $4,473 or 8.4% as compared to the third
quarter of 2005 mainly due to increases in employee compensation, higher costs of group health benefits and an increase of approximately 23 full-time equivalent employees compared to the third quarter of 2005. The increased number of employees is
mainly due to additional employees from the acquisitions of Falls Bank in the fourth quarter 2005 and two insurance agencies in the fourth quarter of 2005. Occupancy and equipment costs were $17,364, up $610 or 3.6% compared to the same period of
2005, mainly due to the addition of seven new financial centers over the last twelve months. Other operating expenses were $22,238, down $1,392 or 5.9% as compared to the third quarter of 2005, mainly due to a $2,355 state franchise tax benefit
recorded in the third quarter of 2006. Amortization expense decreased $86 or 2.3% from the third quarter of 2005. Merger, integration and restructuring charges of $941 were recognized in the third quarter of 2006 related to the fourth quarter 2006
acquisition of Union Federal Bank. Charges of $122 were recognized in the third quarter of 2005 related to the acquisition of Falls Bank in the fourth quarter of 2005. The efficiency ratio was 52.59% for the third quarter of 2006, down from 53.11%
for the same quarter last year. The efficiency ratio is defined as non-interest expense divided by the sum of fully taxable equivalent net interest income plus non-interest income.

Sky Financial adopted FAS 123(R) in the fourth quarter of 2005 using the modified retrospective method for interim periods and retrospectively adjusted the first three quarters of 2005 for stock option expense using
the pro forma expense originally disclosed.

Nine Months Ended September 30, 2006 and 2005

Overview

Net income for the first nine months of 2006 was $150,282 or
$1.37 per diluted share, up from $128,850 or $1.20 per diluted share in the first nine months of 2005. Sky Financials results for the first nine months of 2006 benefited from lower credit losses, which totaled $26,075 compared to $45,442 in
the first nine months of 2005. The first nine months of 2006 also benefited from strong performance from fee-based businesses, partially offset by net losses on derivative instruments and disciplined net interest margin management, although a
difficult interest rate environment in the third quarter compressed net interest spreads. .

For the first nine months of 2006, net interest income
increased $15,609 over the first nine months of 2005, mainly due to the growth in assets attributable to organic growth and acquisitions as the net interest margin was 3.72% in the nine months of 2006 and 2005. The provision for credit losses
decreased $19,367, primarily due to higher net charge-offs in the first nine months of 2005. The higher net charge-offs in 2005 were primarily from two large commercial credits and the sale of a group of non-performing consumer loans. Non-interest
income increased $8,369 in the first nine months of 2006 from the first nine months of 2005 as a result of increases from acquisitions throughout 2005 and into the first quarter of 2006 and the growth of fee-based businesses. Partially offsetting
these increases were net derivative losses which included revised accounting recorded in the second quarter and a decrease in mortgage banking income. The major components of this increase in non-interest income included a $6,174 increase in
brokerage and insurance commissions and a $4,235 increase in service charges and fees on deposit accounts. Non-interest expenses increased for the first nine months of 2006 by $11,030 over the first nine months of 2005 mainly due to higher
stock-based compensation expense for retirement eligible employees, higher costs of group health benefits and an increase in the number of full-time equivalent employees compared to the first nine months of 2005, primarily from acquisitions in 2005.



27



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##### Table of Contents

Business Line Results

Sky Financials two major lines of business include community banking and financial services. Community banking includes lending and related services to businesses and consumers, mortgage banking and deposit-gathering. Financial
services consists of non-banking companies engaged in trust and wealth management, insurance and other financial-related services. Sky Financials business line results for the nine months ended September 30, 2006 and 2005 are summarized
in the table below.



|                                |  |                   |         |   |      |   |         |  
|------------------------------- |  | ----------------- | ------- | - | ---- | - | ------- | -
|                                |  | Net Income (Loss) |        
|Nine Months Ended September 30, |  | 2006              |         |   | 2005 |  
|Community Banking               |  | $                 | 152,570 |   |      | $ | 125,444 |  
|Financial Services Affiliates   |  |                   | 8,937   |   |      |   | 8,328   |  
|Parent and Other                |  |                   | (11,225 | ) |      |   | (4,922  | )
|                                |  |                   |         |   |      |   |         |  
|Consolidated Total              |  | $                 | 150,282 |   |      | $ | 128,850 |  
|                                |  |                   |         |   |      |   |         |  

The higher community banking net income in the first nine months of 2006 as compared to the same period of the
previous year is mainly due to the lower credit losses in the current year and the impact of acquisitions and organic growth. The benefits from higher average earning assets and disciplined net interest margin management contributed to a 5.5%
increase in net interest income. The higher non-interest income over 2005 was primarily the result from increases in service charges and fees on deposit accounts, partially offset by lower mortgage banking income and a decrease in gains on sales of
securities. Non-interest expenses increased 3.2% over the first nine months of 2005, primarily due to higher salaries and employee benefits expense. This increase was primarily the result of higher stock-based compensation expense and a higher
number of full-time equivalent employees due to the acquisitions in 2005. The efficiency ratio, defined as non-interest expense divided by the sum of fully taxable equivalent net interest income plus non-interest income, for the community banking
segment was 50.03% for the first nine months of 2006 compared to 51.34% in the first nine months of 2005. The 2006 community banking results reflect a ROE of 13.05% and a ROA of 1.31% compared to 11.48% and 1.13%, respectively, in the first nine
months of 2005.

The financial service affiliates net income increased as compared to 2005 from acquisitions and growth in brokerage and insurance
commissions and trust services.

Parent and other includes the net funding costs of the parent company and intercompany billings to other affiliates for
shared services. The decrease in parent and other results of operations from the prior year period relate primarily to higher interest expenses retained by the parent, higher expenses related to stock compensation and net derivative losses on swaps
which included revised accounting recorded in the second quarter. The higher interest costs retained by the parent relates primarily to the advanced issuance of $150,000 of trust preferred securities to fund the Union Federal Bank Acquisition in the
fourth quarter of 2006.

Net Interest Income

Net
interest income for the first nine months of 2006 was $398,035, an increase of $15,609 or 4.1% from $382,426 for the first nine months of 2005. Net interest income, the difference between interest income earned on interest-earning assets and
interest expense incurred on interest-bearing liabilities, is the most significant component of Sky Financials earnings. Net interest income is affected by changes in the volumes, rates and composition of interest-earning assets and
interest-bearing liabilities. Average earning assets increased 3.9% from the first nine months of 2005 from a combination of organic growth and acquisitions. Average loans for the period increased 4.6% over 2005s volume during the same period.
Sky Financials net interest margin for the nine months ended September 30, 2006 and 2005 was 3.72% for both periods. The net interest margin for 2006 reflected a difficult interest rate environment, primarily in the third quarter, which
was partially offset by disciplined spread management and interest rate risk management practices. In addition, the margin in the first nine months of 2006 benefited from interest collected on certain non-accrual loans that increased the margin by
approximately 1 basis point.



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##### Table of Contents

The following table reflects the components of Sky Financials net interest income for the nine months ended
September 30, 2006 and 2005. Rates are computed on a tax equivalent basis and non-accrual loans have been included in the average balances. Certain amounts from prior year have been reclassified to conform to current year presentation.



|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|-------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | ---------------------- | ------------------------------------ | -------- |  | ---- | -------------- |  | ---------------------- | ---------- | ---- | - | ------- |  | ---- | -
|                                                                                             |  | Nine Months Ended September 30, 2006 |            |                        | Nine Months Ended September 30, 2005 |         
|                                                                                             |  | AverageBalance                       |            | InterestIncome/Expense |                                      | Rate     |  |      | AverageBalance |  | InterestIncome/Expense |            | Rate |  
|                                                                                             |  | (Dollars in thousands)               |           
|Assets                                                                                       |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-earning assets:                                                                     |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing deposits in banks                                                           |  | $                                    | 13,514     |                        | $                                    | 559      |  | 5.53 | %              |  | $                      | 34,429     |      | $ | 471     |  | 1.83 | %
|Federal funds sold                                                                           |  |                                      | 2,090      |                        |                                      | 73       |  | 4.68 |                |  |                        | 1,403      |      |   | 17      |  | 1.62 |  
|Securities                                                                                   |  |                                      | 3,136,041  |                        |                                      | 112,088  |  | 4.78 |                |  |                        | 3,058,160  |      |   | 101,736 |  | 4.45 |  
|Loans and loans held for sale                                                                |  |                                      | 11,217,949 |                        |                                      | 620, 890 |  | 7.40 |                |  |                        | 10,730,126 |      |   | 507,250 |  | 6.32 |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-earning assets                                                                |  |                                      | 14,369,594 |                        |                                      | 733,610  |  | 6.82 |                |  |                        | 13,824,118 |      |   | 609,474 |  | 5.89 |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-earning assets                                                                   |  |                                      | 1,350,422  |                        |                                      |          |  |      |                |  |                        | 1,249,956  |      |   |         |  |      |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Total assets                                                                                 |  | $                                    | 15,720,016 |                        |                                      |          |  |      |                |  | $                      | 15,074,074 |      |   |         |  |      |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Liabilities and Shareholders Equity                                                         |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing liabilities:                                                                |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Demand deposits                                                                              |  | $                                    | 363,478    |                        |                                      | 5,452    |  | 2.01 |                |  | $                      | 366,804    |      |   | 3,741   |  | 1.36 |  
|Savings deposits                                                                             |  |                                      | 3,352,362  |                        |                                      | 48,534   |  | 1.94 |                |  |                        | 3,761,892  |      |   | 32,990  |  | 1.17 |  
|Time deposits                                                                                |  |                                      | 5,625,461  |                        |                                      | 172,981  |  | 4.11 |                |  |                        | 4,818,003  |      |   | 111,481 |  | 3.09 |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing deposits                                                              |  |                                      | 9,341,301  |                        |                                      | 226,967  |  | 3.25 |                |  |                        | 8,946,699  |      |   | 148,212 |  | 2.11 |  
|Short-term borrowings                                                                        |  |                                      | 934,044    |                        |                                      | 30,446   |  | 4.36 |                |  |                        | 867,071    |      |   | 19,134  |  | 2.95 |  
|Junior Subordinated Debentures                                                               |  |                                      | 259,613    |                        |                                      | 15,172   |  | 7.81 |                |  |                        | 189,678    |      |   | 8,809   |  | 6.21 |  
|Debt and FHLB advances                                                                       |  |                                      | 1,764,904  |                        |                                      | 60,704   |  | 4.60 |                |  |                        | 1,834,531  |      |   | 48,400  |  | 3.53 |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing liabilities                                                           |  |                                      | 12,299,862 |                        |                                      | 333,289  |  | 3.62 |                |  |                        | 11,837,979 |      |   | 224,555 |  | 2.53 |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-bearing liabilities                                                              |  |                                      | 1,833,522  |                        |                                      |          |  |      |                |  |                        | 1,764,210  |      |   |         |  |      |  
|Shareholders equity                                                                         |  |                                      | 1,586,632  |                        |                                      |          |  |      |                |  |                        | 1,471,885  |      |   |         |  |      |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Total liabilities and equity                                                                 |  | $                                    | 15,720,016 |                        |                                      |          |  |      |                |  | $                      | 15,074,074 |      |   |         |  |      |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest income (tax equivalent basis)                                                   |  |                                      |            |                        | $                                    | 400,321  |  |      |                |  |                        |            |      | $ | 384,919 |  |      |  
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest rate spread (tax equivalent basis)                                              |  |                                      |            |                        |                                      |          |  | 3.20 | %              |  |                        |            |      |   |         |  | 3.36 | %
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest margin, (interest income, taxable equivalent basis, to interest earning assets) |  |                                      |            |                        |                                      |          |  | 3.72 | %              |  |                        |            |      |   |         |  | 3.72 | %
|                                                                                             |  |                                      |            |                        |                                      |          |  |      |                |  |                        |            |      |   |         |  |      |  



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Provision for Credit Losses

The provision for credit losses represents the charge to income necessary to adjust the allowance for loan losses and the allowance for unfunded loan commitments and letters of credit to an amount that represents managements
assessment of the estimated probable credit losses inherent in Sky Financials loan portfolio which have been incurred at each balance sheet date. The provision for credit losses decreased $19,367 or 42.6% to $26,075 in the first nine months of
2006 compared to $45,442 in the first nine months of 2005. The higher provision for credit losses in the first nine months of 2005 was due to higher net charge-offs in the first quarter, primarily from two large commercial credits and the sale of a
group of non-performing consumer loans which totaled $15,700. Net charge-offs were $26,191 or 0.31% (annualized) of average loans during the nine months ended September 30, 2006, compared to $45,562 or 0.57% (annualized) for the same period in
2005. Sky Financial expects credit losses for the remainder of 2006 to remain below .35% (annualized), generally consistent with those achieved during the first nine months as a result of the improved credit risk profile achieved over the last year.

Non-Interest Income

Non-interest income for the first
nine months of 2006 was $163,547, an increase of $8,369 or 5.4% from $155,178 for the first nine months of 2005. The change in non-interest income reflects the growth from acquisitions and the emphasis of Sky Financial on expanding its profitable
fee-based businesses. These increases were partially offset by net losses on derivatives which included a charge for revised accounting for derivatives recorded in the second quarter of 2006 and gains from the breakage of certain derivative
instruments in the third quarter of 2006.

During the second quarter 2006, Sky Financial identified and corrected immaterial accounting errors related to
certain derivative hedging relationships. The misstatements related to Sky Financials interpretation and application of the shortcut method of hedge accounting under Statement No. 133. Sky Financial determined that these
hedges did not qualify for hedge accounting using the shortcut method. As a result, changes in the market value of the derivatives should have been recorded through non-interest income with no corresponding offset to the hedged item. Sky
Financial evaluated the impact of these errors and concluded that the impact was not material to prior quarterly and annual periods. Accordingly, an adjustment was recorded in the second quarter of 2006 to correct the cumulative impact of these
errors. The cumulative impact of these out-of-period adjustments resulted in a charge to non-interest income in the second quarter of 2006 of $9,930 ($6,603 after tax), which is included in derivative gains (losses) on swaps in the Consolidated
Statements of Income.

During the third quarter of 2006, Sky Financial redesignated the affected derivatives related to the convertible advances from the
Federal Home Loan Bank of Cincinnati as hedges using the long-haul method of hedge accounting. The swaps related to the junior subordinated debentures owed to unconsolidated subsidiary trust were not redesignated as hedges and Sky Financial
terminated the swaps. The breakage of these instruments with a total notional value of $108,600 during the third quarter resulted in a gain of $3,228 ($2,098 after tax) recorded as derivative gains on swaps.

Non-interest income growth was most significant in brokerage and insurance commissions, which recorded revenues of $50,828 during the first nine months of 2006, an
increase of $6,174 or 13.8% from the same period in 2005. The increased revenues were primarily due to acquisitions in late 2005 and early 2006. Service charges and fees on deposit accounts for the first nine months of 2006 were $45,226, up $4,235
or 10.3% from the first nine months of 2005 primarily due to deposit growth from acquisitions and organic growth and fee increases on certain products and services. Trust services income for the first nine months of 2006 was $17,728, up $1,321 or
8.1% over the first nine month of 2005, primarily from acquisitions and organic growth. The assets under trust management have grown to $5.0 billion at September 30, 2006 from $4.7 billion at September 30, 2005. Other income increased
$6,254 or 19.8% over the first nine months of 2005 due to gains totaling $2.2 million on the early extinguishment of debt, higher debit card fees and higher gains on the sales of loans.

Mortgage banking income was $18,321 during the first nine months of 2006, a decrease of $1,039 or 5.4%. This decrease was due primarily to lower origination and sales revenue and lower recapture of impairment charges,
partially offset by lower amortization expenses. The components of mortgage banking income for the first nine months of 2006 and 2005 are as follows:



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##### Table of Contents

|                                |  |                   |        |   |                   |   |         |  
|------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------- | -
|                                |  | September 30,2006 |        |   | September 30,2005 |  
|Origination and sales revenue   |  | $                 | 14,038 |   |                   | $ | 17,648  |  
|Mortgage loan servicing income  |  |                   | 11,675 |   |                   |   | 11,424  |  
|Amortization expense            |  |                   | (7,374 | ) |                   |   | (10,694 | )
|Impairment (charges) recoveries |  |                   | (18    | ) |                   |   | 982     |  
|                                |  |                   |        |   |                   |   |         |  
|Total                           |  | $                 | 18,321 |   |                   | $ | 19,360  |  
|                                |  |                   |        |   |                   |   |         |  

Non-Interest Expense

Non-interest expense for the first nine months of 2006 was $309,963, an increase of $11,030 or 3.7%, from $298,933 reported for the same period of 2005. Salary and other employee costs were $173,212, up $11,908 or 7.4% as compared to the
first nine months of 2005 mainly due to higher stock-based compensation expense for retirement eligible employees as discussed further below, higher costs of group health benefits and an increase in employees over the prior year. The increased
number of employees is mainly due to additional employees from the acquisitions of Falls Bank in the fourth quarter of 2005 and two insurance agencies in the fourth quarter of 2005. Occupancy and equipment costs were $52,141, up $948 or 1.9%
compared to the same period of 2005 and other operating expenses were $71,712, down $2,593 or 3.5% as compared to the first nine months of 2005, primarily as a result of continued focus on controlling operating expenses and a $2,355 state tax
benefit recorded in the third quarter of 2006. Amortization expense increased $435, or 4.0% from the first nine months of 2005 due to the additional intangible assets acquired from recent acquisitions. Merger, integration and restructuring charges
of $1,485 were recognized in the first nine months of 2006 related to the fourth quarter 2006 acquisition of Union Federal Bank and additional costs related to the fourth quarter 2005 acquisition of Falls Bank. Charges of $1,153 were recognized in
the first nine months of 2005 related to the acquisitions of Falls Bank and Belmont Bancorp. Expenses were further impacted by the addition of seven new financial centers over the last twelve months. The efficiency ratio was 54.97% for the first
nine months of 2006, down from 55.35% for the same period last year. The efficiency ratio is defined as non-interest expense divided by the sum of fully taxable equivalent net interest income plus non-interest income.

Sky Financial adopted FAS 123(R) in the fourth quarter of 2005 using the modified retrospective method for interim periods and retrospectively adjusted the first three
quarters of 2005 for stock option expense using the pro forma expense originally disclosed. In the first quarter of 2006, shares of restricted stock and stock options were granted to directors, officers and employees under various restricted stock
and stock option plans and, as required by FAS 123(R), the compensation costs for the awards granted after the adoption of FAS 123(R) to employee participants that were retirement eligible were recognized at the grant date. As a result, the first
nine months of 2006 expense of $5,647 was higher than the $4,073 expensed in the first nine months of 2005 as this change in policy resulted in the acceleration of the expense for the awards issued to participants that were retirement eligible under
the plans.

Income Taxes

The provision for income
taxes for the first nine months of 2006 increased $10,883 to $75,262 from $64,379 for the same period in 2005 due to higher pretax income. The effective tax rate for the nine months ended September 30, 2006 was 33.4% as compared to 33.3% for
the first nine months of 2005 and 33.4% for the full year of 2005.

Balance Sheet

At September 30, 2006, total assets were $15,920,631, an increase of $237,340 from December 31, 2005, due primarily to an increase in loans of $156,414, related to organic growth. This growth was largely
financed by an increase in deposits.

Total deposits increased $640,748 due to organic growth, which allowed debt levels to decrease by $344,148 and
securities sold under repurchase agreements and federal funds purchased to decline by $148,417.

Shareholders equity totaled $1,644,955 at
September 30, 2006, increasing $91,078 from December 31, 2005. Common stock increased $11,289 due to stock option exercises, shares issued for an insurance agency acquisition



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##### Table of Contents

and stock based compensation expense. Treasury stock decreased by $4,139, due primarily to shares issued for restricted
stock during the first quarter of 2006. Net retained earnings (net income less cash dividends) at September 30, 2006 totaled $506,637 as compared to $430,710 at December 31, 2005. The increase is due to the net income for the period, less
dividends paid. Accumulated other comprehensive loss increased by $277.

Non-Performing Assets

The following table presents the aggregate amounts of non-performing assets and respective ratios on the dates indicated.



|                                                                     |  |                   |         |   |                  |   |         |                   |  |   |         |  
|-------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | ----------------- |  | - | ------- | -
|                                                                     |  | September 30,2006 |         |   | December 31,2005 |   |         | September 30,2005 | 
|Non-accrual loans                                                    |  | $                 | 127,279 |   |                  | $ | 119,030 |                   |  | $ | 126,131 |  
|Restructured loans                                                   |  |                   | 43      |   |                  |   | 479     |                   |  |   | 495     |  
|                                                                     |  |                   |         |   |                  |   |         |                   |  |   |         |  
|Total non-performing loans                                           |  |                   | 127,322 |   |                  |   | 119,509 |                   |  |   | 126,626 |  
|Other real estate owned                                              |  |                   | 13,992  |   |                  |   | 17,476  |                   |  |   | 14,700  |  
|Non-performing investments                                           |  |                   |        |   |                  |   |        |                   |  |   | 10,299  |  
|                                                                     |  |                   |         |   |                  |   |         |                   |  |   |         |  
|Total non-performing assets                                          |  | $                 | 141,314 |   |                  | $ | 136,985 |                   |  | $ | 151,625 |  
|                                                                     |  |                   |         |   |                  |   |         |                   |  |   |         |  
|Loans 90 days or more past due and still accruing interest           |  | $                 | 17,207  |   |                  | $ | 27,987  |                   |  | $ | 24,424  |  
|                                                                     |  |                   |        
|Non-performing loans to total loans                                  |  |                   | 1.13    | % |                  |   | 1.07    | %                 |  |   | 1.16    | %
|Non-performing assets to total loans plus other real estate owned    |  |                   | 1.25    |   |                  |   | 1.23    |                   |  |   | 1.39    |  
|Allowance for loan losses to total non-performing loans              |  |                   | 113.34  |   |                  |   | 120.88  |                   |  |   | 121.11  |  
|Loans 90 days or more past due and not on non-accrual to total loans |  |                   | .15     |   |                  |   | .25     |                   |  |   | .22     |  

Performing loans where some concerns exist as to the ability of the borrower to comply with present loan repayment
terms, excluding non-performing loans, approximated $112,802 and $140,220 at September 30, 2006 and December 31, 2005, respectively, and are being closely monitored by management and the Boards of Directors of the subsidiaries. The amounts
included in these loans resulted from an evaluation, on a loan-by-loan basis, of loans classified as doubtful and substandard but are not included in the non-performing loan category. The classification of these loans,
however, does not imply that management expects losses on each of these loans, but believes that a higher level of scrutiny is prudent under the circumstances. These loans require close monitoring despite the fact that they are currently performing.
Such classifications relate to specific concerns relating to each individual borrower and do not relate to any concentrated risk elements common to all loans in this group.

For the nine months ended September 30, 2006, the amount of interest income that would have been recorded under the original loan terms for total loans classified as non-accrual and restructured was $8,802. The
amount actually collected and recorded, as interest income for these loans, was $2,020, which included $1,033 of interest from the collection of previously recorded non-accrual loans that were secured by pools of commercial leases.

Included in nonaccrual loans are $15,437 at September 30, 2006 and $20,400 at December 31, 2005 of loans that are secured by pools of commercial leases
for which payment is over 90 days past due. These loans are guaranteed by surety bonds. Sky Financial is engaged in litigation with the insurance companies to enforce their payment obligations, as are a number of other banks nationwide. These
non-accrual loans are currently reflected in the consolidated balance sheet at the amount of the unpaid balance, under contractual terms. After consultation with its counsel as to the strength of its position, Sky Financial believes that the credits
are well secured and that the prospects for recovery of its unpaid balance is probable.



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##### Table of Contents

Allowance for Credit Losses

The table below summarizes the changes in the allowance for credit losses:



|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                               |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                               |  | 2006                            |         |   | 2005                           |   |         | 2006 |  |   | 2005    |  
|Balance of allowance at beginning of period                                    |  | $                               | 144,601 |   |                                | $ | 152,543 |      |  | $ | 144,461 |   |  | $ | 151,389 |  
|                                                                               |  |                                 |         |  
|Loans charged-off:                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Real estate                                                                    |  |                                 | (4,309  | ) |                                |   | (3,331  | )    |  |   | (12,271 | ) |  |   | (15,803 | )
|Commercial and agricultural                                                    |  |                                 | (3,759  | ) |                                |   | (2,394  | )    |  |   | (11,060 | ) |  |   | (22,949 | )
|Installment and credit card                                                    |  |                                 | (3,834  | ) |                                |   | (4,943  | )    |  |   | (10,596 | ) |  |   | (14,266 | )
|Other loans                                                                    |  |                                 | (38     | ) |                                |   | (49     | )    |  |   | (358    | ) |  |   | (214    | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total loans charged-off                                                        |  |                                 | (11,940 | ) |                                |   | (10,717 | )    |  |   | (34,285 | ) |  |   | (53,232 | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Recoveries                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Real estate                                                                    |  |                                 | 493     |   |                                |   | 275     |      |  |   | 1,570   |   |  |   | 1,774   |  
|Commercial and agricultural                                                    |  |                                 | 252     |   |                                |   | 1,047   |      |  |   | 697     |   |  |   | 1,702   |  
|Installment and credit card                                                    |  |                                 | 1,259   |   |                                |   | 1,331   |      |  |   | 5,532   |   |  |   | 3,931   |  
|Other loans                                                                    |  |                                 | 46      |   |                                |   | 67      |      |  |   | 295     |   |  |   | 263     |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total recoveries                                                               |  |                                 | 2,050   |   |                                |   | 2,720   |      |  |   | 8,094   |   |  |   | 7,670   |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net loans charged-off                                                          |  |                                 | (9,890  | ) |                                |   | (7,997  | )    |  |   | (26,191 | ) |  |   | (45,562 | )
|Provision for credit losses                                                    |  |                                 | 9,445   |   |                                |   | 8,725   |      |  |   | 26,075  |   |  |   | 45,442  |  
|Reserve of acquired institution                                                |  |                                 |         |   |                                |   |        |      |  |   |         |   |  |   | 2,361   |  
|Transfer to allowance for unfunded commitments and letters of credit and other |  |                                 | 154     |   |                                |   | 80      |      |  |   | (35     | ) |  |   | (279    | )
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Balance of allowance at end of period                                          |  | $                               | 144,310 |   |                                | $ | 153,351 |      |  | $ | 144,310 |   |  | $ | 153,351 |  
|                                                                               |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Ratio of net charge-offs to average loans outstanding                          |  |                                 | 0.35    | % |                                |   | 0.29    | %    |  |   | 0.31    | % |  |   | 0.57    | %

At September 30, 2006 and December 31, 2005, an allowance for unfunded commitments and letters of credit
of $522 and $279 was included in accrued interest payable and other liabilities.

Sky Financial maintains an allowance for credit losses at a level
adequate to absorb managements estimate of probable losses inherent in the loan portfolio. The allowance is comprised of a general allowance, a specific allowance for identified problem loans and an unallocated allowance.

The general allowance is determined by applying estimated loss factors to the credit exposures from outstanding loans. For construction, commercial and commercial real
estate loans, loss factors are applied based on internal risk grades of these loans. For residential real estate, installment, credit card and other loans, loss factors are applied on a portfolio basis. Loss factors are based on Sky Financials
historical loss experience and are reviewed for modification on a quarterly basis, along with other factors affecting the collectibility of the loan portfolio.

Specific allowances are established for all classified loans, where management has determined that, due to identified significant conditions, it is probable that Sky Financial will be unable to collect all amounts due according to the
contractual terms of the loan agreement.

The unallocated allowance recognizes the estimation risk associated with the allocated general and specific
allowances and incorporates managements evaluation of existing conditions that are not included in the allocated allowance determinations. These conditions are reviewed quarterly by management and include general economic conditions, credit
quality trends, and internal loan review and regulatory examination findings.



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The following table sets forth Sky Financials allocation of the allowance for credit losses as of
September 30, 2006 and December 31, 2005.



|                                       |  |                   |         |                 |   |        
|-------------------------------------- |  | ----------------- | ------- | --------------- | - | -------
|                                       |  | September 30,2006 |         | December 312005
|Specific:                              |  |                   |         |                 |   |        
|Construction                           |  | $                 | 48      |                 | $ |       
|Real estate                            |  |                   | 4,370   |                 |   | 2,541  
|Commercial, financial and agricultural |  |                   | 5,465   |                 |   | 5,122  
|                                       |  |                   |         |                 |   |        
|Sub-total                              |  |                   | 9,883   |                 |   | 7,663  
|General                                |  |                   |         |                 |   |        
|Construction                           |  |                   | 7,163   |                 |   | 5,605  
|Real estate                            |  |                   | 52,595  |                 |   | 54,238 
|Commercial, financial and agricultural |  |                   | 43,592  |                 |   | 43,922 
|Installment and credit card            |  |                   | 19,771  |                 |   | 21,846 
|                                       |  |                   |         |                 |   |        
|Sub-total                              |  |                   | 123,121 |                 |   | 125,611
|                                       |  |                   |         |                 |   |        
|Total allocated                        |  |                   | 133,004 |                 |   | 133,274
|Unallocated                            |  |                   | 11,306  |                 |   | 11,187 
|                                       |  |                   |         |                 |   |        
|Total                                  |  | $                 | 144,310 |                 | $ | 144,461
|                                       |  |                   |         |                 |   |        

The following table gives the percent of loans in each category to total loans:



|                                       |  |                   |   |  |                  |  
|-------------------------------------- |  | ----------------- | - |  | ---------------- | -
|                                       |  | September 30,2006 |   |  | December 31,2005 |  
|Construction                           |  | 10.3              | % |  | 9.1              | %
|Real estate                            |  | 55.9              |   |  | 57.5             |  
|Commercial, financial and agricultural |  | 27.7              |   |  | 27.1             |  
|Installment and credit card            |  | 6.1               |   |  | 6.3              |  
|                                       |  |                   |   |  |                  |  
|Total                                  |  | 100.0             | % |  | 100.0            | %
|                                       |  |                   |   |  |                  |  

Liquidity and Capital Resources

Management of liquidity is of growing importance to the banking industry. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits and to take
advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of balance sheet structure, the ability to liquidate assets, and the availability of alternative sources
of funds. To meet the needs of the clients and to manage the risk of the bank, financial institutions have developed innovative ways to meet clients needs while at the same time manage both liquidity and interest rate risk. This is being done
through liquidity management and the balance of deposit growth and alternative sources of borrowing.

Certificates of deposit provide Sky Financial with a
dependable source of funding. However, market pricing can be highly competitive and this source of funds must be prudently managed. As of September 30, 2006, a total of $4,540,786 of contractual time deposits would mature in the next twelve
months. The maturities are reasonably disbursed across the year and there are no unusual concentrations of individual clients. At Sky Financial, time deposit maturities are monitored through the corporate Asset/ Liability Committee (ALCO). Maturing
balances are summarized by month, original term and existing rate within each of the eight regional market areas. Heavy maturity periods are monitored closely and proactive marketing plans are created that address both the client and Sky
Financials needs and preferences. Regional management along with funds management meets weekly to discuss general economic and market conditions. During this meeting, each region reports the results of the prior



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weeks pricing and promotional efforts. Each region then determines its rates for the coming week. Regional pricing
allows Sky Financial to attract deposits at the most efficient cost available. Retained time deposits are monitored and the percent retained is reported monthly to ALCO.

Management of Sky Financial expects that a significant portion of the scheduled maturities will be retained throughout 2006 and into the first six months of 2007. In the unlikely event that these are not retained by
Sky Financial, a minimum liquidity ratio has been established at 10% of non-collateralized liabilities. This 10% ratio consists of readily marketable securities and unused borrowing capacity. At least 8% of the assets must be in unencumbered
marketable assets. In addition, Sky Financial has a standing contingent liquidity management plan that prioritizes the steps needed to compensate for temporary disruptions in liquidity.

In addition to maintaining a stable core deposit base, Sky Financials banking subsidiary maintains adequate liquidity primarily through the use of investment securities and unused borrowing capacity. At
September 30, 2006, securities and other short term investments with maturities of one year or less totaled $37,347. In addition, the mortgage-backed securities provide an estimated cash flow of approximately $665,818 over a twelve-month
timeframe. The banking subsidiary is a member of the Federal Home Loan Bank (FHLB). The FHLB provides a reliable source of funds over and above retail deposits. As of September 30, 2006, the banking subsidiary had total credit availability with
the FHLB of $2,046,093 of which it had outstanding borrowings of $1,279,243.

Sky Financial maintains a $100,000 line of credit with a group of
unaffiliated banks that expires May 25, 2007. As of September 30, 2006 and December 31, 2005, Sky Financial had no outstanding balances on the line of credit.

Sky Financial enters into derivative contracts under which it is required to either receive cash or pay cash to counterparties depending on changes in interest rates. Derivative contracts are carried at their fair
value on the consolidated balance sheet with the fair value representing the net present value of expected future cash receipts or payments based on market interest rates as of the balance sheet date. The contracts are primarily interest rate swaps
and cash is settled quarterly.

A schedule of significant commitments at September 30, 2006 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 3,569,109
|Standby letters of credit    |  |   | 296,084  
|Letters of credit            |  |   | 2,465    

Since Sky Financial is a holding company and does not conduct operations, its primary sources of liquidity are
dividends paid to it by its banking subsidiary and borrowings from outside sources. For the banking subsidiary, regulatory approval is required in order to pay dividends in excess of the subsidiarys earnings retained for the current year plus
retained net profits for the prior two years. As a result of these restrictions, dividends that could be paid to Sky Financial by its bank subsidiary, without prior regulatory approval, were limited to $206,536 at September 30, 2006.

Asset/Liability Management

Closely related to
liquidity management is the management of interest rate risk. Sky Financial manages its rate sensitivity position to avoid wide swings in its net interest margin due to changes in market rates. At September 30, 2006, Sky Financials gap
position, the difference between the dollar value of interest rate sensitive assets and interest rate sensitive liabilities, was a positive 101.8% for six months and a negative 88.3% for one year. The six month position was within Sky
Financials Asset/Liability Committee (ALCO) guidelines, while the one year position was slightly below the ALCO guidelines. Sky Financial expects to increase the one year position to be within the ALCO guidelines after the integration of Union
Federal Bank. In addition, Sky Financial is following prudent interest rate risk strategies and managing its interest rate position in anticipation of future rate changes. Therefore Sky Financial does not expect to experience any significant
fluctuations in its net interest margin as a consequence of changes in market rates. See also Item. 3, Quantitative and Qualitative Disclosures About Market Risk.



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Forward-Looking Statements

This report includes forward-looking statements by Sky Financial relating to such matters as anticipated operating results, credit quality expectations, prospects for new lines of business, technological developments, economic trends
(including interest rates), acquisition, reorganization and divestiture transactions and similar matters. Such statements are based upon the current beliefs and expectations of Sky Financials management and are subject to risks and
uncertainties. While Sky Financial believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could prove to be inaccurate, and accordingly, actual results and experience could
differ materially from the anticipated results or other expectations expressed by Sky Financial in its forward-looking statements. Factors that could cause actual results or experience to differ from results discussed in the forward-looking
statements include, but are not limited to: economic conditions; volatility and direction of market interest rates; capital investment in and operating results of non-banking business ventures of Sky Financial; governmental legislation and
regulation; material unforeseen changes in the financial condition or results of operations of Sky Financials customers; customer reaction to and unforeseen complications with respect to Sky Financials integration of acquisitions;
difficulties in realizing expected cost savings from acquisitions; difficulties associated with data conversions in acquisitions; and other risks identified from time-to- time in Sky Financials other public documents on file with the
Securities and Exchange Commission. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements, and the purpose of this paragraph is to secure the use of the safe harbor provisions.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 contains
important requirements for public companies in the area of financial disclosure, internal controls and corporate governance. In accordance with the requirements of the Sarbanes-Oxley Act, written certifications for this quarterly report on Form 10-Q
by the chief executive officer and the chief financial officer accompany this report as filed with the SEC. See Controls and Procedures for Sky Financials evaluation of disclosure controls and procedures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk that a financial
institutions earnings and capital, or its ability to meet its business objectives, will be adversely affected by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and/or commodity
prices. Within Sky Financial, the dominant market risk exposure is changes in interest rates. The negative effect of this exposure is felt through the net interest margin, mortgage banking revenues and the market value of various assets and
liabilities.

Sky Financial manages market risk through its Asset/Liability Committee (ALCO) at the consolidated level. This committee monitors interest
rate risk through sensitivity analysis, whereby it measures potential changes in future earnings and the fair market values of financial instruments that may result from one or more hypothetical changes in interest rates. This analysis is performed
by estimating the expected cash flows of Sky Financials financial instruments using interest rates in effect at September 30, 2006 and December 31, 2005. For the fair value estimates, the cash flows are then discounted to year end to
arrive at an estimated present value of Sky Financials financial instruments. Hypothetical changes in interest rates are then applied to the financial instruments, and the cash flows and fair values are again estimated using these hypothetical
rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows. Sky Financial applied these interest rate shocks to its financial instruments up 200 and 100 basis points
and down 100 and 200 basis points.

The following table presents the potential ratio of Sky Financials interest rate sensitive assets (i.e. assets
that will mature or reprice within a specific time period) divided by its interest rate sensitive liabilities (i.e. liabilities that will mature or reprice within a specific time period), commonly referred to as the interest rate sensitivity
gap or gap, over a six-month time period and a twelve-month time period.



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|             |  |                   |   |  |         |   |  |               |  
|------------ |  | ----------------- | - |  | ------- | - |  | ------------- | -
|             |  | September 30,2006 |   |  | ALCOMax |   |  | GuidelinesMin |  
|Six Month    |  | 101.8             | % |  | 125     | % |  | 95            | %
|Twelve Month |  | 88.3              | % |  | 125     | % |  | 90            | %

The six month position was within Sky Financials ALCO guidelines, while the one year position was slightly
below the ALCO guidelines. Sky Financial expects to increase the one year position to be within the ALCO guidelines after the integration of Union Federal Bank. In addition, Sky Financial is following prudent interest rate risk strategies and
managing its interest rate position in anticipation of future rate changes.

The following table presents an analysis of Sky Financials sensitivity
to changes in market rates based on annual net interest income and the economic value of equity (EVE) due to sudden and sustained changes in market rates.



|                         |  |                   |   |  |                  |   |  |                |   
|------------------------ |  | ----------------- | - |  | ---------------- | - |  | -------------- | --
|                         |  | September 30,2006 |   |  | December 31,2005 |   |  | ALCOGuidelines |   
|One Year Net Interest    |  |                   |   |  |                  |   |  |                |   
|Income Change            |  |                   |   |  |                  |   |  |                |   
|+200 Basis points        |  | 2.3               | % |  | 1.8              | % |  | (10.0          | )%
|+100 Basis points        |  | 1.3               |   |  | 1.0              |   |  | (5.0           | ) 
|-100 Basis points        |  | (1.9              | ) |  | (2.0             | ) |  | (5.0           | ) 
|-200 Basis points        |  | (5.9              | ) |  | (5.8             | ) |  | (10.0          | ) 
|Economic Value of Equity |  |                   |   |  |                  |   |  |                |   
|+200 Basis points        |  | (13.0             | ) |  | (11.3            | ) |  | (15.0          | ) 
|+100 Basis points        |  | (6.2              | ) |  | (5.2             | ) |  | (10.0          | ) 
|-100 Basis points        |  | 3.7               |   |  | 3.2              |   |  | (10.0          | ) 
|-200 Basis points        |  | 4.8               |   |  | 3.6              |   |  | (15.0          | ) 

The projected volatility of net interest income and the economic value of equity at September 30, 2006 and
December 31, 2005 fall within the ALCO guidelines.

The preceding analysis is based on numerous assumptions, including relative levels of market
interest rates, loan prepayments and reactions of depositors to changes in interest rates, and should not be relied upon as being indicative of actual results. Further, the analysis does not necessarily contemplate all actions Sky Financial may
undertake in response to changes in interest rates.

Sky Financial also utilizes interest rate swaps and caps to effectively manage its interest rate risk.
At September 30, 2006, the fair values of Sky Financials derivative arrangements aggregated $(4,705) on contracts with notional amounts of $401,878.

Item 4. Controls and Procedures

Sky Financial maintains disclosure controls and procedures designed to ensure that the
information Sky Financial must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported accurately and on a timely basis. Sky Financials management carried out an evaluation, under the
supervision and with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the design and operation of Sky Financials disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2006, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the chief executive officer along with the chief financial officer concluded that Sky Financials
disclosure controls and procedures as of September 30, 2006, are effective.



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Changes in Internal Control over Financial Reporting

There have not been any changes in Sky Financials internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during Sky Financials most recent fiscal
quarter that have materially affected, or are reasonably likely to materially affect, Sky Financials internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In re Commercial Money Center, Inc. Equipment Lease Litigationin the U. S. District
Court for the Northern District of Ohio, Eastern Division, MDL Case No. 1:02-CV-16000

Between August 2000 and December 2001, Sky Bank and two of
its predecessor banks provided financing to a commercial borrower and its affiliated entities for the purchase of six separate portfolios of commercial lease pools, and a warehouse line of credit to finance lease pools. These loans are secured by
assignments of the payment streams from the underlying leases, surety bonds or insurance policies, and a limited guarantee from the sole member of the commercial borrower.

Upon default of these commercial loans, Sky Bank (and its predecessors) made demand for payment from Illinois Union Insurance Company (IU), RLI Insurance Company (RLI), and Royal Indemnity
Company (Royal) under the relevant surety bonds and insurance policies. IU, RLI, and Royal (collectively, the Sureties) have failed to make the payments required under the surety bonds and insurance policies. As a result, in
the spring of 2002, Sky and its predecessors filed suit against each of the Sureties seeking to enforce Sky Banks rights under the surety bonds and insurance policies issued by the Sureties in connection with the commercial lease pools.
Skys complaints claim breach of contract, bad faith and allege that the Sureties are liable for the payments due to Sky under the terms of the bonds and are estopped from asserting fraud as a defense to paying any claims under the bonds. In
October, 2002, the suits were consolidated for pretrial purposes with more than 35 other lawsuits involving similar claims in the United States District Court for the Northern District of Ohio, Eastern Division, under the Federal Multi-district
Litigation (MDL) Rules.

The key defense of the Sureties in denying Sky Banks claims under the surety bonds is that they were
fraudulently induced by the originator of the commercial leases to issue the surety bonds in the first instance. The Sureties have also asserted related defenses that the underlying equipment leases are invalid, usurious, or otherwise unenforceable.
Sky Bank believes that none of these defenses can defeat Sky Banks claims under the surety bonds, which, in the view of Sky Bank, provide for absolute and unconditional guarantees of payment. Moreover, Sky Bank believes that the Sureties are
responsible to Sky Bank, as the Obligee or Named Insured under the bonds, for the underwriting of the lessees and leases, including all issues of fraud, and that the Sureties waived any defense of fraud to claims under the bonds.

On December 21, 2005, Sky sold and assigned to a third party, without recourse, all of its rights and interests in three loans secured by commercial lease pools and
surety bonds issued by Royal. On March 31, 2006, Sky and IU settled in full its litigation pertaining to two loans secured by pools of leases and insurance policies issued by IU. The aggregate principal balance of the three loans sold to a
third party and the two loans which were settled was $14.2 million, and the aggregate proceeds received by Sky in the sale and the settlement was $14.9 million.

With respect to the remaining pool and the warehouse line of credit secured by surety bonds issued by RLI, which has a remaining principal balance of $15.4 million, Sky has amended its complaint and expects to proceed with pretrial
discovery and motion practice in the MDL court in anticipation of trial.

Sky Financial has reviewed the relevant matters of fact and law with its special
counsel and believes that it has substantial and meritorious claims against the remaining Surety. Sky Financial has and will continue to vigorously assert all the rights and remedies available to it to obtain payment under the bonds. While the



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ultimate outcome of this matter cannot be determined at this time, Sky Financial management does not believe that the
outcome of these pending legal proceedings will materially affect the consolidated financial position or results of operations of Sky Financial.

American Home Mortgage Corp. v. Union Federal Bank

of Indianapolis, Case No. 06-CV-7864 (JGK) (RLE),

U.S. District Court for the Southern District of New York

Prior to
its acquisition by Sky, Waterfield Mortgage Company, Incorporated (Waterfield) sold its mortgage banking business to American Home Mortgage Corp. (American Home). As part of the sale agreement, an escrow in the amount of $55
million was established and any purchase price adjustment associated with the sale of the mortgage banking business was to be deducted from the escrow. Waterfield and American Home were unable to reach agreement as to the purchase price adjustment,
and American Home filed the captioned lawsuit against Waterfields subsidiary, Union Federal Bank, for breach of contract, negligent misrepresentation and declaratory and injunctive relief, and has made a claim for relief in excess of $29
million.

Sky completed its acquisition of Waterfield on October 17, 2006, and as a result, has become a party in interest in the litigation. Sky, in
conjunction with the former shareholders of Waterfield to the extent of their respective interests in the escrow, have filed, inter alia, a motion to dismiss the action as well a motion to substitute the entity representing Waterfield
shareholders in place of Union Federal Bank as the party in interest in the litigation.

After consultation with special counsel, Sky believes that it has
substantial and meritorious defenses and that exposure, if any, should be absorbed by the escrow, and as such is not expected to have a material effect on the consolidated financial position or results of operations of Sky.

******

Sky Financial and its affiliates are, from time to
time, involved in various lawsuits and claims which arise in the normal course of business. Some of these proceedings seek relief or damages that are substantial, and in some instances are filed as class actions. Nonetheless, based upon the advice
of counsel, management is of the opinion that any liabilities that may result from these lawsuits and claims will not have a material adverse effect on the consolidated financial condition or results of operations of Sky Financial.

Item 1A. Risk Factors

There were no material changes to the risk factors as presented in Sky Financials annual
report on Form 10-K for the year ended December 31, 2005.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

(c) Purchases of Equity
Securities by the Issuer and Affiliated Purchasers

None

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibits



|            |  |                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                               
|(11.1)      |  | Statement Re Computation of Earnings Per Common Share                                                                                                                                                     
|            |  | The information required by this exhibit is incorporated herein by reference from the information contained in Note 9 Earnings Per Share on page 14
of Sky Financials Form 10-Q for September 30, 2006.
|            | 
|(31.1)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                       
|            | 
|(31.2)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                       
|            | 
|(32.1)*     |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                     
|            | 
|(32.2)*     |  | Section 1350 Certification of Chief Financial Officer                                                                                                                                                     

---

|* | This exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any
filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.



|                                                  
|--------------------------------------------------
|SKY FINANCIAL GROUP, INC.                         
|                                                  
|/s/ Kevin T. Thompson                             
|Kevin T. Thompson                                 
|Executive Vice President / Chief Financial Officer

DATE: October 27, 2006

SKY FINANCIAL GROUP, INC.



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                               
|(11.1)      |  | Statement Re Computation of Earnings Per Common Share                                                                                                                                                     
|            |  | The information required by this exhibit is incorporated herein by reference from the information contained in Note 9 Earnings Per Share on page 14 of
Sky Financials Form 10-Q for September 30, 2006.
|            | 
|(31.1)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                       
|            | 
|(31.2)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                       
|            | 
|(32.1)*     |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                     
|            | 
|(32.2)*     |  | Section 1350 Certification of Chief Financial Officer                                                                                                                                                     

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|* | This exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any
filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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