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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 March 31, 2004



Commission File No. 1-14473



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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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No ̈



The number
of shares outstanding of the Registrants common stock, without par value, was 93,097,833 at April 30, 2004.



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##### Table of Contents

SKY FINANCIAL GROUP, INC.



INDEX



|                              |  |                                                                                                                 |  |            
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | -----------
|                              |  |                                                                                                                 |  | Page Number
|PART I. FINANCIAL INFORMATION |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                |  |            
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Balance Sheets March 31, 2004 and December 31, 2003                                      |  | 3          
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Income Three months ended March 31, 2004 and 2003                          |  | 4          
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Changes in Shareholders Equity Three months ended March 31, 2004 and 2003 |  | 5          
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Cash Flows Three months ended March 31, 2004 and 2003                      |  | 6          
|                              |  |                                                                                                                
|                              |  | Notes to Condensed Consolidated Financial Information                                                           |  | 7          
|                              |  |                                                                                                                
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           |  | 18         
|                              |  |                                                                                                                
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                      |  | 26         
|                              |  |                                                                                                                
|Item 4.                       |  | Controls and Procedures                                                                                         |  | 27         
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                                               |  | 27         
|                              |  |                                                                                                                
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                                       |  | 29         
|                              |  |                                                                                                                
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                 |  | 29         
|                              |  |                                                                                                                
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                             |  | 29         
|                              |  |                                                                                                                
|Item 5.                       |  | Other Information                                                                                               |  | 30         
|                              |  |                                                                                                                
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                |  | 30         
|                              | 
|SIGNATURES                    |  | 31                                                                                                             
|                              | 
|EXHIBIT INDEX                 |  | 32                                                                                                             



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PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements



SKY FINANCIAL GROUP, INC.



Condensed
Consolidated Balance Sheets (Unaudited)



|                                                                                                        |  |               |            |   |                  |   |            |  
|------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|(Dollars and shares in thousands)                                                                       |  | March 31,2004 |            |   | December 31,2003 |  
|Assets                                                                                                  |  |               |            |   |                  |   |            |  
|Cash and due from banks                                                                                 |  | $             | 200,783    |   |                  | $ | 251,364    |  
|Interest-earning deposits with financial institutions                                                   |  |               | 29,051     |   |                  |   | 22,808     |  
|Loans held for sale                                                                                     |  |               | 57,650     |   |                  |   | 28,062     |  
|Securities available for sale                                                                           |  |               | 2,613,816  |   |                  |   | 2,511,369  |  
|Total loans                                                                                             |  |               | 8,555,651  |   |                  |   | 8,643,862  |  
|Less allowance for credit losses                                                                        |  |               | (125,043   | ) |                  |   | (124,943   | )
|                                                                                                        |  |               |            |   |                  |   |            |  
|Net loans                                                                                               |  |               | 8,430,608  |   |                  |   | 8,518,919  |  
|                                                                                                        |  |              
|Premises and equipment, net                                                                             |  |               | 152,621    |   |                  |   | 153,285    |  
|Goodwill                                                                                                |  |               | 194,108    |   |                  |   | 185,859    |  
|Core deposits and other intangibles, net                                                                |  |               | 49,248     |   |                  |   | 51,155     |  
|Assets of discontinued operations                                                                       |  |               |           |   |                  |   | 874,765    |  
|Accrued interest receivable and other assets                                                            |  |               | 365,506    |   |                  |   | 348,609    |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Total assets                                                                                            |  | $             | 12,093,391 |   |                  | $ | 12,946,195 |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Liabilities                                                                                             |  |               |            |   |                  |   |            |  
|Deposits                                                                                                |  |               |            |   |                  |   |            |  
|Non-interest bearing deposits                                                                           |  | $             | 1,229,981  |   |                  | $ | 1,233,272  |  
|Interest-bearing deposits                                                                               |  |               | 7,541,365  |   |                  |   | 7,282,261  |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Total deposits                                                                                          |  |               | 8,771,346  |   |                  |   | 8,515,533  |  
|Securities sold under repurchase agreements and federal funds purchased                                 |  |               | 931,792    |   |                  |   | 994,896    |  
|Debt and Federal Home Loan Bank advances                                                                |  |               | 986,750    |   |                  |   | 1,310,975  |  
|Junior subordinated debentures owed to unconsolidated subsidiary trusts                                 |  |               | 169,669    |   |                  |   | 164,806    |  
|Liabilities of discontinued operations                                                                  |  |               |           |   |                  |   | 822,498    |  
|Accrued interest payable and other liabilities                                                          |  |               | 167,677    |   |                  |   | 138,911    |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Total Liabilities                                                                                       |  |               | 11,027,234 |   |                  |   | 11,947,619 |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Shareholders Equity                                                                                    |  |               |            |   |                  |   |            |  
|Serial preferred stock, $10.00 par value; 10,000 shares authorized; none issued                         |  |               |           |   |                  |   |           |  
|Common stock, no par value; 150,000 shares authorized; 93,109 and 92,485 shares issued in 2004 and 2003 |  |               | 778,122    |   |                  |   | 764,860    |  
|Retained earnings                                                                                       |  |               | 273,129    |   |                  |   | 234,000    |  
|Treasury stock; 45 and 42 shares in 2004 and 2003                                                       |  |               | (742       | ) |                  |   | (742       | )
|Accumulated other comprehensive income                                                                  |  |               | 15,648     |   |                  |   | 458        |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Total Shareholders Equity                                                                              |  |               | 1,066,157  |   |                  |   | 998,576    |  
|                                                                                                        |  |               |            |   |                  |   |            |  
|Total Liabilities and Shareholders Equity                                                              |  | $             | 12,093,391 |   |                  | $ | 12,946,195 |  
|                                                                                                        |  |               |            |   |                  |   |            |  



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



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|                                                                                  
|----------------------------------------------------------------------------------
|SKY FINANCIAL GROUP, INC.  Condensed
Consolidated Statements of Income (Unaudited)



|                                                                                                    |  |                             |         |      |   |        
|--------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | ---- | - | -------
|                                                                                                    |  | Three Months EndedMarch 31,
|(Dollars and shares in thousands, except per share data)                                            |  | 2004                        |         | 2003
|Interest Income                                                                                     |  |                             |         |      |   |        
|Loans, including fees                                                                               |  | $                           | 123,093 |      | $ | 115,700
|Securities                                                                                          |  |                             |         |      |   |        
|Taxable                                                                                             |  |                             | 25,709  |      |   | 25,819 
|Non-taxable                                                                                         |  |                             | 119     |      |   | 149    
|Federal funds sold and other                                                                        |  |                             | 100     |      |   | 52     
|                                                                                                    |  |                             |         |      |   |        
|Total interest income                                                                               |  |                             | 149,021 |      |   | 141,720
|                                                                                                    |  |                             |         |      |   |        
|Interest Expense                                                                                    |  |                             |         |      |   |        
|Deposits                                                                                            |  |                             | 32,322  |      |   | 38,360 
|Borrowed funds                                                                                      |  |                             | 14,896  |      |   | 12,990 
|                                                                                                    |  |                             |         |      |   |        
|Total interest expense                                                                              |  |                             | 47,218  |      |   | 51,350 
|                                                                                                    |  |                             |         |      |   |        
|Net Interest Income                                                                                 |  |                             | 101,083 |      |   | 90,370 
|Provision for Credit Losses                                                                         |  |                             | 6,665   |      |   | 7,500  
|                                                                                                    |  |                             |         |      |   |        
|Net interest income after provision for credit losses                                               |  |                             | 95,138  |      |   | 82,870 
|                                                                                                    |  |                             |         |      |   |        
|Non-Interest Income                                                                                 |  |                             |         |      |   |        
|Brokerage and insurance commissions                                                                 |  |                             | 14,308  |      |   | 10,591 
|Service charges and fees on deposit accounts                                                        |  |                             | 9,642   |      |   | 8,604  
|Trust services income                                                                               |  |                             | 4,105   |      |   | 3,339  
|Mortgage banking income                                                                             |  |                             | 5,445   |      |   | 9,358  
|Net securities gains                                                                                |  |                             | 1,528   |      |   | 478    
|Other income                                                                                        |  |                             | 8,381   |      |   | 7,416  
|                                                                                                    |  |                             |         |      |   |        
|Total non-interest income                                                                           |  |                             | 43,409  |      |   | 39,786 
|                                                                                                    |  |                             |         |      |   |        
|Non-Interest Expense                                                                                |  |                             |         |      |   |        
|Salaries and employee benefits                                                                      |  |                             | 44,198  |      |   | 38,390 
|Occupancy and equipment expense                                                                     |  |                             | 12,874  |      |   | 11,836 
|Merger, integration and restructuring expense                                                       |  |                             | 346     |      |   |       
|Amortization expense                                                                                |  |                             | 1,907   |      |   | 1,420  
|Other operating expense                                                                             |  |                             | 19,178  |      |   | 16,924 
|                                                                                                    |  |                             |         |      |   |        
|Total non-interest expense                                                                          |  |                             | 78,503  |      |   | 68,570 
|                                                                                                    |  |                             |         |      |   |        
|Income From Continuing Operations Before Income Taxes                                               |  |                             | 60,044  |      |   | 54,086 
|Income Taxes From Continuing Operations                                                             |  |                             | 20,092  |      |   | 18,252 
|                                                                                                    |  |                             |         |      |   |        
|Income From Continuing Operations                                                                   |  |                             | 39,952  |      |   | 35,834 
|Income From Discontinued Operations, net of tax of $10,105 and $172 for 2004 and 2003, respectively |  |                             | 18,725  |      |   | 236    
|                                                                                                    |  |                             |         |      |   |        
|Net Income                                                                                          |  | $                           | 58,677  |      | $ | 36,070 
|                                                                                                    |  |                             |         |      |   |        
|Earnings per Common Share From Continuing Operations                                                |  |                             |         |      |   |        
|Basic                                                                                               |  | $                           | .43     |      | $ | .41    
|Diluted                                                                                             |  |                             | .42     |      |   | .41    
|Earnings per Common Share From Discontinued Operations                                              |  |                             |         |      |   |        
|Basic                                                                                               |  |                             | .20     |      |   |       
|Diluted                                                                                             |  |                             | .20     |      |   |       
|Earnings per Common Share                                                                           |  |                             |         |      |   |        
|Basic                                                                                               |  |                             | .63     |      |   | .41    
|Diluted                                                                                             |  |                             | .62     |      |   | .41    



The accompanying notes are an integral
part of the financial statements



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SKY FINANCIAL GROUP, INC.



(Unaudited)



Condensed Consolidated Statements of Changes in Shareholders
Equity



|                                                   |  |                             |           |   |      |   |         |  
|-------------------------------------------------- |  | --------------------------- | --------- | - | ---- | - | ------- | -
|                                                   |  | Three Months EndedMarch 31, |          
|(Dollars in thousands, except per share data)      |  | 2004                        |           |   | 2003 |  
|Balance at beginning of period                     |  | $                           | 998,576   |   |      | $ | 832,433 |  
|                                                   |  |                            
|Comprehensive income                               |  |                             |           |   |      |   |         |  
|Net income                                         |  |                             | 58,677    |   |      |   | 36,070  |  
|Other comprehensive income (loss)                  |  |                             | 15,190    |   |      |   | (8,585  | )
|                                                   |  |                             |           |   |      |   |         |  
|Total comprehensive income                         |  |                             | 73,867    |   |      |   | 27,485  |  
|                                                   |  |                             |           |   |      |   |         |  
|Common cash dividends                              |  |                             | (19,548   | ) |      |   | (17,461 | )
|Shares issued for stock option exercises           |  |                             | 5,625     |   |      |   | 346     |  
|Common shares issued to acquire Spencer- Patterson |  |                             | 7,637     |   |      |   |        |  
|Fractional shares and other items                  |  |                             |          |   |      |   | (501    | )
|                                                   |  |                             |           |   |      |   |         |  
|Balance at end of period                           |  | $                           | 1,066,157 |   |      | $ | 842,302 |  
|                                                   |  |                             |           |   |      |   |         |  
|Common cash dividend per share                     |  | $                           | .21       |   |      | $ | .20     |  
|                                                   |  |                             |           |   |      |   |         |  



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



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|                                                                                      
|--------------------------------------------------------------------------------------
|SKY FINANCIAL GROUP, INC.  Condensed
Consolidated Statement of Cash Flows  (Unaudited)

|                                                                                  |  |                             |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | --------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Three Months EndedMarch 31, |         
|(Dollars in thousands, except share data)                                         |  | 2004                        |          |   | 2003 |  
|Operating Activities                                                              |  |                             |          |   |      |   |          |  
|Net cash provided from (used for) continuing operations                           |  | $                           | 4,795    |   |      | $ | (23,827  | )
|Net cash provided from (used for) from discontinued operations                    |  |                             | 15,165   |   |      |   | (1,024   | )
|                                                                                  |  |                             |          |   |      |   |          |  
|Net cash provided from (used for) from operations                                 |  |                             | 19,960   |   |      |   | (24,851  | )
|                                                                                  |  |                             |          |   |      |   |          |  
|Investing Activities                                                              |  |                             |          |   |      |   |          |  
|Net increase in interest bearing deposits in other banks                          |  |                             | (6,243   | ) |      |   | (1,605   | )
|Net decrease in federal funds sold                                                |  |                             |          |   |      |   | 11,100   |  
|Securities available for sale:                                                    |  |                             |          |   |      |   |          |  
|Proceeds from maturities and payments                                             |  |                             | 211,677  |   |      |   | 426,987  |  
|Proceeds from sales                                                               |  |                             | 49,477   |   |      |   | 24,513   |  
|Purchases                                                                         |  |                             | (341,946 | ) |      |   | (683,715 | )
|Proceeds from sales of non-mortgage loans                                         |  |                             | 1,397    |   |      |   | 14,165   |  
|Net (increase) decrease in loans                                                  |  |                             | 84,690   |   |      |   | (51,396  | )
|Purchases of premises and equipment                                               |  |                             | (4,528   | ) |      |   | (2,746   | )
|Proceeds from sales of premises and equipment                                     |  |                             | 187      |   |      |   | 93       |  
|Proceeds from sales of other real estate                                          |  |                             | 1,790    |   |      |   | 991      |  
|Proceeds from sale of discontinued operations, net of cash sold                   |  |                             | 71,441   |   |      |   |          |  
|Cash paid to acquire Access Partners                                              |  |                             |         |   |      |   | (154     | )
|                                                                                  |  |                             |          |   |      |   |          |  
|Net cash provided from (used for) investing activities from continuing operations |  |                             | 67,942   |   |      |   | (261,767 | )
|Net cash used for investing activities from discontinued operations               |  |                             | (26,126  | ) |      |   | (47,873  | )
|                                                                                  |  |                             |          |   |      |   |          |  
|Net cash provided from (used for) investing activities                            |  |                             | 41,816   |   |      |   | (309,640 | )
|                                                                                  |  |                             |          |   |      |   |          |  
|Financing Activities                                                              |  |                             |          |   |      |   |          |  
|Net increase in deposit accounts                                                  |  |                             | 255,813  |   |      |   | 354,078  |  
|Net increase (decrease) in federal funds and repurchase agreements                |  |                             | (63,104  | ) |      |   | 180,707  |  
|Net increase (decrease) in borrowings under bank lines of credit                  |  |                             | (60,216  | ) |      |   | 3,680    |  
|Net decrease in short-term FHLB advances                                          |  |                             | (250,000 | ) |      |   | (295,000 | )
|Proceeds from issuance of debt and long-term FHLB advances                        |  |                             |         |   |      |   | 50,580   |  
|Repayment of debt and long-term FHLB advances                                     |  |                             | (12,056  | ) |      |   | (637     | )
|Cash dividends and fractional shares paid                                         |  |                             | (19,548  | ) |      |   | (17,962  | )
|Proceeds from issuance of common stock                                            |  |                             | 5,625    |   |      |   | 346      |  
|                                                                                  |  |                             |          |   |      |   |          |  
|Net cash provided from (used for) financing activities from continuing operations |  |                             | (143,486 | ) |      |   | 275,792  |  
|Net cash provided from financing activities from discontinued operations          |  |                             | 31,129   |   |      |   | 50,547   |  
|                                                                                  |  |                             |          |   |      |   |          |  
|Net cash provided from (used for) financing activities                            |  |                             | (112,357 | ) |      |   | 326,339  |  
|                                                                                  |  |                             |          |   |      |   |          |  
|Net decrease in cash and due from banks                                           |  |                             | (50,581  | ) |      |   | (8,152   | )
|Cash and due from banks at beginning of period                                    |  |                             | 251,364  |   |      |   | 239,967  |  
|                                                                                  |  |                             |          |   |      |   |          |  
|Cash and due from banks at end of period                                          |  | $                           | 200,783  |   |      | $ | 231,815  |  
|                                                                                  |  |                             |          |   |      |   |          |  
|Supplemental Disclosures                                                          |  |                             |          |   |      |   |          |  
|Interest paid                                                                     |  | $                           | 48,388   |   |      | $ | 49,385   |  
|Income taxes paid                                                                 |  |                             | 18,349   |   |      |   | 7,818    |  
|Non-cash transactions                                                             |  |                             |          |   |      |   |          |  
|Common shares issued to acquire Spencer-Patterson.                                |  |                             | 7,637    |   |      |   |          |  



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



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##### Table of Contents

SKY FINANCIAL GROUP, INC.



Notes to Condensed
Consolidated Financial Information (Unaudited)



(Dollars 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 eastern 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, such as 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 March 31, 2004, 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, 2003, 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.



The condensed consolidated financial statements, notes to the condensed consolidated financial statements and statistical information reflect the sale of Sky Financial
Solutions, which was sold on March 31, 2004, in discontinued operations, unless otherwise noted.



New Accounting Pronouncements



On March
9, 2004, the SEC issued Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments (SAB 105). This bulletin was issued to inform registrants of the SECs view that the fair value of the recorded loan
commitments, that are required to follow derivative accounting under FAS 133, Accounting for Derivative Instruments and Hedging Activities, should not consider the expected future cash flows related to the associated servicing of the
future loan. In addition, SAB 105 requires registrants to disclose their accounting policy for loan commitments. The provisions of SAB 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004.
The impact of this new pronouncement is not expected to be material to the Sky Financials financial condition, results of operations, or cash flows.



In December 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued AICPA Statement of Position No. 03-3,
Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), to address accounting for differences between the contractual cash flows of certain loans and debt securities and the cash flows expected to be collected
when loans or debt securities are acquired in a transfer and those cash flow differences are attributable, at least in part, to credit quality. As such, SOP 03-3 applies to such loans and debt securities acquired in purchase business combinations
and does not apply to originated loans. The application of SOP 03-3 limits the interest income, including accretion of purchase price discounts, that may be recognized for certain loans and debt securities. Additionally, SOP 03-3 requires that the
excess of contractual cash flows over cash flows expected to be collected not be



7



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##### Table of Contents

recognized as an adjustment of yield or valuation allowance, such as the allowance for loan and lease losses. Subsequent
to the initial investment, increases in expected cash flows generally should be recognized prospectively through adjustment of the yield on the loan or debt security over its remaining life. Decreases in expected cash flows should be recognized as
impairment. SOP 03-3 is effective for loans and debt securities acquired in fiscal years beginning after December 15, 2004, with early application encouraged. The impact of this new pronouncement is not expected to be material to Sky
Financials financial condition, results of operations, or cash flows.



2. Stock Based Compensation



Sky Financial applies Accounting
Principles Board Opinion No. 25 in accounting for stock options and discloses the fair value of options granted as permitted by SFAS No. 123. No stock-based employee compensation cost is reflected in net income, as all options granted under those
plans had an exercise price equal to the market value of the common stock at date of grant.



The following table summarizes the pro forma effects assuming compensation cost for such awards had been recorded based upon the estimated fair value (in thousands, except per share data):



|                                                                                                                                            |  |                             |        |      |   |       
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                                                                                                                            |  | Three months endedMarch 31,
|                                                                                                                                            |  | 2004                        |        | 2003
|Net income, as reported                                                                                                                     |  | $                           | 58,677 |      | $ | 36,070
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                             | 630    |      |   | 532   
|                                                                                                                                            |  |                             |        |      |   |       
|Pro forma net income                                                                                                                        |  | $                           | 58,047 |      | $ | 35,538
|                                                                                                                                            |  |                             |        |      |   |       
|Earnings per share:                                                                                                                         |  |                             |        |      |   |       
|Basic - as reported                                                                                                                         |  | $                           | .63    |      | $ | .41   
|                                                                                                                                            |  |                             |        |      |   |       
|Basic  pro forma                                                                                                                           |  | $                           | .62    |      | $ | .41   
|                                                                                                                                            |  |                             |        |      |   |       
|Diluted  as reported                                                                                                                       |  | $                           | .62    |      | $ | .41   
|                                                                                                                                            |  |                             |        |      |   |       
|Diluted  pro forma                                                                                                                         |  | $                           | .62    |      | $ | .41   
|                                                                                                                                            |  |                             |        |      |   |       



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 Activity), of the 2003 Annual Report and Form 10-K, provide detail with regard to
the Corporation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, 2003.



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4. Mergers, Acquisitions and Divestitures



Community Banking



On January 8, 2004, Sky Financial announced an agreement to acquire Second Bancorp Incorporated (Second Bancorp), a $2.1 billion bank
holding company headquartered in Warren, Ohio, and its wholly-owned subsidiary Second National Bank. Under the terms of the agreement, shareholders of Second Bancorp will be entitled to receive 1.26 Sky Financial common shares in exchange for each
Second Bancorp common share held. The exchange is expected to qualify as a tax-free transaction to the Second Bancorp shareholders. Following the merger, which is contingent upon the receipt of regulatory approvals, and is expected to close in the
second quarter of 2004, Second National Bank will be merged with and into Sky Bank.



On October 19, 2003, Sky Financial acquired GLB Bancorp, Inc. (GLB), a $225 million bank holding company headquartered in Mentor, OH, and its wholly-owned subsidiary Great Lakes Bank, by acquiring all of the outstanding capital stock of GLB
for an aggregate purchase price of $43,263 including direct acquisition costs of $191. GLB shareholders received 1,717 shares of Sky Financial common stock.



On April 30, 2003, Sky Financial acquired the outstanding capital stock of Metropolitan Financial Corp (Metropolitan), a $1.5 billion savings and loan holding company
headquartered in Highland Hills, Ohio, and its wholly-owned subsidiary, Metropolitan Bank and Trust Company, for a purchase price of $81,294, including direct acquisition costs of $673. Metropolitan shareholders received 2,887 shares of Sky
Financial common stock and $25,327 in cash. The acquisitions of Second Bancorp, GLB and Metropolitan complement Sky Financials operations in northeastern Ohio by enhancing its presence in the Cleveland metropolitan area and other areas of
northeastern Ohio.



Sky Financial accounted for the acquisitions of
Metropolitan and GLB as purchases and included their results from the effective date of the acquisition.



The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisitions of Metropolitan and GLB occurred at the beginning of the first quarter 2003. The pro forma results of
operations for all other acquisitions are not significant and, accordingly, are not presented.



|                                                        |  |               |        
|------------------------------------------------------- |  | ------------- | -------
|                                                        |  | March 31,2003
|Net interest income                                     |  | $             | 103,163
|                                                        | 
|Income from continuing operations                       |  |               | 37,699 
|                                                        | 
|Earnings per share from continuing operations  Basic   |  |               | .43    
|                                                        | 
|Earnings per share from continuing operations  Diluted |  |               | .42    



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



On April 1, 2004, Sky Financial acquired EOB, Inc., a group benefit insurance agency
headquartered in Canton, Ohio for 177 shares of Sky Financial common stock and $516 in cash.



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On January 5, 2004, Sky Financial acquired Spencer-Patterson Insurance Agency, a full-service professional liability,
personal and commercial agency headquartered in Findlay, Ohio, for 297 shares of Sky Financial common stock and $743 in cash.



On July 8, 2003, Sky Financial acquired Insurance Buyers Service Agency, Inc., a professional liability, personal and commercial insurance agency headquartered in
Boardman, Ohio, for 164 shares of Sky Financial common stock.



All of the
purchases completed in 2004 and 2003 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.



Discontinued Operations



On March 31, 2004, Sky Financial completed the sale of its dental financing affiliate, Sky
Financial Solutions. Sky Financial Solutions has been reported as a discontinued operation and the condensed consolidated financial statements for the three months ended March 31, 2003 have been reclassified to reflect this presentation. Sky
Financial Solutions results of operations included revenues of $38,714 and $8,117 and pre-tax net income of $28,830 and $408 for the three months ended March 31, 2004 and 2003, respectively. Revenues and pre-tax income for the three months ended
March 31, 2004 included a pre-tax gain on the sale of Sky Financial Solutions of $30,578 ($19,876 after-tax).



The major classes of assets and liabilities included in the condensed consolidated balance sheets as of December 31, 2003 are as follows:



|                                               |  |   |        
|---------------------------------------------- |  | - | -------
|Assets                                         |  |   |        
|Cash                                           |  | $ | 91,763 
|Net loans                                      |  |   | 763,408
|Other assets                                   |  |   | 19,594 
|                                               |  |   |        
|Total assets                                   |  | $ | 874,765
|                                               |  |   |        
|Liabilities                                    |  |   |        
|Debt                                           |  |   | 799,990
|Accrued interest payable and other liabilities |  |   | 22,508 
|                                               |  |   |        
|Total liabilities                              |  | $ | 822,498
|                                               |  |   |        



5. Securities Available for Sale



The unrealized gains and losses and estimated fair values at March 31,
2004 and December 31, 2003 are as follows:



|                                                |  |                     |           |                      |   |                       |  |   |        |  
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------ | -
|March 31, 2004                                  |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|U.S. Treasury and U.S. Government agencies      |  | $                   | 232,351   |                      | $ | 3,373                 |  | $ |       |  
|Obligations of state and political subdivisions |  |                     | 22,149    |                      |   | 199                   |  |   | (20    | )
|Corporate and other securities                  |  |                     | 65,288    |                      |   | 2,912                 |  |   |       |  
|Mortgage-backed securities                      |  |                     | 2,155,747 |                      |   | 24,377                |  |   | (4,296 | )
|                                                |  |                     |           |                      |   |                       |  |   |        |  
|Total debt securities available for sale        |  |                     | 2,475,535 |                      |   | 30,861                |  |   | (4,316 | )
|Marketable equity securities                    |  |                     | 45,633    |                      |   | 5,590                 |  |   | (699   | )
|FHLB, FRB and Bankers Bank Stock               |  |                     | 92,648    |                      |   |                      |  |   |       |  
|                                                |  |                     |           |                      |   |                       |  |   |        |  
|Total securities available for sale             |  | $                   | 2,613,816 |                      | $ | 36,451                |  | $ | (5,015 | )
|                                                |  |                     |           |                      |   |                       |  |   |        |  



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|                                                |  |                     |           |                      |   |                       |  |   |         |  
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------- | -
|December 31, 2003                               |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|U.S. Treasury and U.S. Government agencies      |  | $                   | 326,158   |                      | $ | 2,748                 |  | $ | (508    | )
|Obligations of state and political subdivisions |  |                     | 22,337    |                      |   | 164                   |  |   | (33     | )
|Corporate and other securities                  |  |                     | 69,446    |                      |   | 3,011                 |  |   |        |  
|Mortgage-backed securities                      |  |                     | 1,955,606 |                      |   | 15,090                |  |   | (15,620 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total debt securities available for sale        |  |                     | 2,373,547 |                      |   | 21,013                |  |   | (16,161 | )
|Marketable equity securities                    |  |                     | 45,862    |                      |   | 6,337                 |  |   | (938    | )
|FHLB, FRB and Bankers Bank Stock               |  |                     | 91,960    |                      |   |                      |  |   |        |  
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total securities available for sale             |  | $                   | 2,511,369 |                      | $ | 27,350                |  | $ | (17,099 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  



6. Loans



The loan portfolios are as follows:



|                                       |  |               |           |                  |   |          
|-------------------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                                       |  | March 31,2004 |           | December 31,2003
|Real estate loans:                     |  |               |           |                  |   |          
|Construction                           |  | $             | 521,413   |                  | $ | 491,086  
|Residential mortgage                   |  |               | 2,067,669 |                  |   | 2,045,317
|Non-residential mortgage               |  |               | 2,934,112 |                  |   | 2,896,116
|Commercial, financial and agricultural |  |               | 2,314,668 |                  |   | 2,440,442
|Installment and credit card loans      |  |               | 717,789   |                  |   | 770,901  
|                                       |  |               |           |                  |   |          
|Total loans                            |  | $             | 8,555,651 |                  | $ | 8,643,862
|                                       |  |               |           |                  |   |          



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



|                           |  |               |        |                  |   |       
|-------------------------- |  | ------------- | ------ | ---------------- | - | ------
|                           |  | March 31,2004 |        | December 31,2003
|Non-accrual loans          |  | $             | 90,132 |                  | $ | 81,979
|Restructured loans         |  |               | 585    |                  |   | 599   
|                           |  |               |        |                  |   |       
|Total non-performing loans |  | $             | 90,717 |                  | $ | 82,578
|                           |  |               |        |                  |   |       



Non-accrual loans include $26,600 of
loans that are secured by pools of commercial leases for which payment is over 90 days past due. See Note 15 Commitments and Contingencies for additional discussion.



11



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7. Borrowings



Sky Financials debt, Federal Home Loan Bank (FHLB) advances and obligated mandatorily redeemable capital securities of subsidiary trusts are comprised of the
following:



|                                                                         |  |               |           |                  |   |          
|------------------------------------------------------------------------ |  | ------------- | --------- | ---------------- | - | ---------
|                                                                         |  | March 31,2004 |           | December 31,2003
|Borrowings under bank lines of credit                                    |  | $             |          |                  | $ | 60,216   
|Borrowings under FHLB lines of credit                                    |  |               | 820,176   |                  |   | 1,084,133
|Subordinated note, 5.35%, due April 2013                                 |  |               | 50,000    |                  |   | 50,000   
|Subordinated note, 6.125%, due October 2012                              |  |               | 65,000    |                  |   | 65,000   
|Subordinated note, 7.08%, due January 2008                               |  |               | 50,000    |                  |   | 50,000   
|Junior subordinated debentures owed to unconsolidated subsidiary trusts: |  |               |           |                  |   |          
|Due February 2027 at 9.875%                                              |  |               | 28,223    |                  |   | 27,765   
|Due June 2027 at 10.20%                                                  |  |               | 25,523    |                  |   | 24,491   
|Due May 2030 at 9.34%                                                    |  |               | 68,328    |                  |   | 64,955   
|Due June 2029 at 9.50%                                                   |  |               | 16,667    |                  |   | 16,667   
|Due October 2033 at 4.09% (variable)                                     |  |               | 30,928    |                  |   | 30,928   
|Capital lease obligation                                                 |  |               | 1,084     |                  |   | 1,117    
|Other items                                                              |  |               | 490       |                  |   | 509      
|                                                                         |  |               |           |                  |   |          
|Total borrowings                                                         |  | $             | 1,156,419 |                  | $ | 1,475,781
|                                                                         |  |               |           |                  |   |          



The amount of junior subordinated
debentures owed to unconsolidated subsidiary trusts represent the par value adjusted for any unamortized discount or other basis adjustments related to hedging the debt with derivative instruments. These hedging relationships exchange the fixed
interest rate on the borrowings to a variable rate based on LIBOR plus a spread, resulting in a lower effective rate paid on the borrowings. See Note 13 for further discussion of derivative instruments.



8. Other Comprehensive Income (Loss)



Other comprehensive income (loss) consisted of the following:



|                                                                  |  |                             |         |   |      |   |         |  
|----------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                  |  | Three Months EndedMarch 31, |        
|                                                                  |  | 2004                        |         |   | 2003 |  
|Securities available for sale:                                    |  |                             |         |   |      |   |         |  
|Unrealized securities gains (losses) arising during period        |  | $                           | 32,592  |   |      | $ | (11,628 | )
|Reclassification adjustment for (gains) losses included in income |  |                             | 1,528   |   |      |   | (478    | )
|                                                                  |  |                             |         |   |      |   |         |  
|                                                                  |  |                             | 34,120  |   |      |   | (12,106 | )
|                                                                  |  |                             |         |   |      |   |         |  
|Cash flow hedge derivatives                                       |  |                             |         |   |      |   |         |  
|                                                                  |  |                             |         |   |      |   |         |  
|Change in fair value of cash flow hedge derivatives               |  |                             | 616     |   |      |   | (1,932  | )
|Amounts reclassified to interest expense                          |  |                             | (11,364 | ) |      |   | 830     |  
|                                                                  |  |                             |         |   |      |   |         |  
|                                                                  |  |                             | (10,748 | ) |      |   | (1,102  | )
|                                                                  |  |                             |         |   |      |   |         |  
|Net unrealized gain (loss)                                        |  |                             | 23,372  |   |      |   | (13,208 | )
|Tax effect                                                        |  |                             | (8,182  | ) |      |   | 4,623   |  
|                                                                  |  |                             |         |   |      |   |         |  
|Total other comprehensive income (loss)                           |  | $                           | 15,190  |   |      | $ | (8,585  | )
|                                                                  |  |                             |         |   |      |   |         |  



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9. Earnings Per Share



Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under stock options. For the three months ended March 31, 2004 and 2003, 31 and 2,813 weighted average
shares, respectively, under option were excluded from the diluted earnings per share calculation as they were anti-dilutive.



|                                                     |  |                             |        |      |   |       
|---------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                                     |  | Three Months EndedMarch 31,
|                                                     |  | 2004                        |        | 2003
|Numerator:                                           |  |                             |        |      |   |       
|Income From Continuing Operations                    |  | $                           | 39,952 |      | $ | 35,834
|Income From Discontinued Operations                  |  |                             | 18,725 |      |   | 236   
|                                                     |  |                             |        |      |   |       
|Net income                                           |  | $                           | 58,677 |      | $ | 36,070
|                                                     |  |                             |        |      |   |       
|Denominator:                                         |  |                             |        |      |   |       
|Weighted-average common shares outstanding (basic)   |  |                             | 92,957 |      |   | 87,076
|Effect of stock options                              |  |                             | 1,269  |      |   | 540   
|                                                     |  |                             |        |      |   |       
|Weighted-average common shares outstanding (diluted) |  |                             | 94,226 |      |   | 87,616
|                                                     |  |                             |        |      |   |       
|Earnings per share from Continuing Operations:       |  |                             |        |      |   |       
|Basic                                                |  | $                           | .43    |      | $ | .41   
|Diluted                                              |  |                             | .42    |      |   | 41    
|                                                     |  |                            
|Earnings per share from Discontinued Operations:     |  |                             |        |      |   |       
|Basic                                                |  |                             | .20    |      |   |      
|Diluted                                              |  |                             | .20    |      |   |      
|                                                     |  |                            
|Earnings per share:                                  |  |                             |        |      |   |       
|Basic                                                |  | $                           | .63    |      | $ | .41   
|Diluted                                              |  |                             | .62    |      |   | .41   



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 March 31, 2004, 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.



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##### Table of Contents

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. 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 |        
|March 31, 2004                         |  | Amount |           | Ratio |                                              |   | Amount |                                                                          | Ratio   |  |     | Amount |  | Ratio |        
|Total capital to risk-weighted assets  |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |         |  |      |  
|Sky Financial                          |  | $      | 1,216,874 |       | 12.9                                         | % |        | $                                                                        | 741,957 |  | 8.0 | %      |  | $     | 927,446 |  | 10.0 | %
|Sky Bank                               |  |        | 1,031,957 |       | 11.4                                         |   |        |                                                                          | 725,974 |  | 8.0 |        |  |       | 907,468 |  | 10.0 |  
|                                       |  |        |           |       |                                              |  
|Tier I capital to risk-weighted assets |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |         |  |      |  
|Sky Financial                          |  | $      | 955,852   |       | 10.1                                         | % |        | $                                                                        | 370,978 |  | 4.0 | %      |  | $     | 556,467 |  | 6.0  | %
|Sky Bank                               |  |        | 842,172   |       | 9.3                                          |   |        |                                                                          | 362,987 |  | 4.0 |        |  |       | 544,481 |  | 6.0  |  
|                                       |  |        |           |       |                                              |  
|Tier I capital to average assets       |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |         |  |      |  
|Sky Financial                          |  | $      | 955,852   |       | 7.6                                          | % |        | $                                                                        | 503,478 |  | 4.0 | %      |  | $     | 629,347 |  | 5.0  | %
|Sky Bank                               |  |        | 842,172   |       | 7.3                                          |   |        |                                                                          | 462,023 |  | 4.0 |        |  |       | 577,529 |  | 5.0  |  



|                                       |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|-------------------------------------- |  | ------ | --------- | ----- | -------------------------------------------- | - | ------ | ------------------------------------------------------------------------ | ------- |  | --- | ------ |  | ----- | --------- |  | ---- | -
|                                       |  | Actual |           |       | Minimum RequiredFor CapitalAdequacy Purposes |   |        | Required to be Well CapitalizedUnder Prompt CorrectiveAction Regulations |        
|December 31, 2003                      |  | Amount |           | Ratio |                                              |   | Amount |                                                                          | Ratio   |  |     | Amount |  | Ratio |          
|Total capital to risk-weighted assets  |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,194,121 |       | 11.8                                         | % |        | $                                                                        | 807,852 |  | 8.0 | %      |  | $     | 1,009,815 |  | 10.0 | %
|Sky Bank                               |  |        | 1,009,529 |       | 11.2                                         |   |        |                                                                          | 723,302 |  | 8.0 |        |  |       | 904,127   |  | 10.0 |  
|                                       |  |        |           |       |                                              |  
|Tier I capital to risk-weighted assets |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 908,756   |       | 9.0                                          | % |        | $                                                                        | 403,926 |  | 4.0 | %      |  | $     | 605,889   |  | 6.0  | %
|Sky Bank                               |  |        | 820,683   |       | 9.1                                          |   |        |                                                                          | 361,651 |  | 4.0 |        |  |       | 542,476   |  | 6.0  |  
|                                       |  |        |           |       |                                              |  
|Tier I capital to average assets       |  |        |           |       |                                              |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 908,756   |       | 7.3                                          | % |        | $                                                                        | 500,565 |  | 4.0 | %      |  | $     | 625,707   |  | 5.0  | %
|Sky Bank                               |  |        | 820,083   |       | 7.1                                          |   |        |                                                                          | 460,498 |  | 4.0 |        |  |       | 575,622   |  | 5.0  |  



11. Goodwill and Intangible Assets



Goodwill at March 31, 2004 and December 31, 2003 was $194,108 and
$185,859 respectively. Sky Financial recorded $8,249 in goodwill as a result of the Spencer-Patterson acquisition during the first quarter of 2004. Management is still reviewing the valuations of certain assets and liabilities and may adjust
goodwill once these assessments are completed. Goodwill is reviewed annually for impairment. Sky Financial will complete this review during the second quarter of 2004.



Net other intangible assets at March 31, 2004 and December 31, 2003 were $49,248 and $51,155, respectively. These assets consist primarily
of core deposits intangibles and are being amortized in accordance with Sky Financials policy. For the years ended December 31, 2004 through 2008, estimated future amortization expense is estimated to be approximately $7,700 per year.



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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 consists of non-banking companies engaged in trust and wealth management, insurance and other financial-related services.



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 fully 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
months ended March 31, 2004 and 2003 is included in the following tables:



|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|----------------------------------------------------- |  | ---------------- | ---------- | --------------------------- | - | ------ | --------------- |  | - | ------- | - |  | - | ----------
|Three months ended March 31, 2004                     |  | CommunityBanking |            | FinancialServicesAffiliates |   |        | ParentAnd Other |  |   | Total  
|Net interest income                                   |  | $                | 102,425    |                             | $ | 166    |                 |  | $ | (788    | ) |  | $ | 101,803   
|Provision for credit Losses                           |  |                  | 6,470      |                             |   | 195    |                 |  |   |        |   |  |   | 6,665     
|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Net interest income after provision                   |  |                  | 95,955     |                             |   | (29    | )               |  |   | (788    | ) |  |   | 95,138    
|Other non-interest income                             |  |                  | 25,163     |                             |   | 17,624 |                 |  |   | 622     |   |  |   | 43,409    
|Other non-interest expense                            |  |                  | 67,106     |                             |   | 12,308 |                 |  |   | (911    | ) |  |   | 78,503    
|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Income from continuing operations before income taxes |  |                  | 54,012     |                             |   | 5,287  |                 |  |   | 745     |   |  |   | 60,044    
|Income taxes from continuing operations               |  |                  | 18,179     |                             |   | 2,131  |                 |  |   | (218    | ) |  |   | 20,092    
|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Net income from continuing operations                 |  | $                | 35,833     |                             | $ | 3,156  |                 |  | $ | 963     |   |  | $ | 39,952    
|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at January 1, 2004                           |  | $                | 152,214    |                             | $ | 33,645 |                 |  | $ |        |   |  | $ | 185,859   
|Net activity                                          |  |                  |           |                             |   | 8,249  |                 |  |   |        |   |  |   | 8,249     
|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at March 31, 2004                            |  | $                | 152,214    |                             | $ | 41,894 |                 |  | $ |        |   |  | $ | 194,108   
|                                                      |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Average assets                                        |  | $                | 11,752,301 |                             | $ | 89,212 |                 |  | $ | 183,423 |   |  | $ | 12,024,936
|Depreciation and amortization                         |  |                  | 5,289      |                             |   | 239    |                 |  |   | 189     |   |  |   | 5,717     



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|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|----------------------------------------------------- |  | ---------------- | ---------- | - | --------------------------- | - | ------ | --------------- |  | - | ------- | - |  | - | ----------
|Three months ended March 31, 2003                     |  | CommunityBanking |            |   | FinancialServicesAffiliates |   |        | Parentand Other |  |   | Total  
|Net interest income                                   |  | $                | 89,943     |   |                             | $ | 130    |                 |  | $ | 297     |   |  | $ | 90,370    
|Provision for credit Losses                           |  |                  | 7,275      |   |                             |   | 225    |                 |  |   |        |   |  |   | 7,500     
|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|Net interest income after provision                   |  |                  | 82,668     |   |                             |   | (95    | )               |  |   | 297     |   |  |   | 82,870    
|Other income                                          |  |                  | 25,994     |   |                             |   | 13,088 |                 |  |   | 704     |   |  |   | 39,786    
|Other expense                                         |  |                  | 56,837     |   |                             |   | 10,550 |                 |  |   | 1,184   |   |  |   | 68,571    
|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|Income (loss) from continuing operations income taxes |  |                  | 51,825     |   |                             |   | 2,443  |                 |  |   | (183    | ) |  |   | 54,085    
|Income taxes from continuing operations               |  |                  | 17,327     |   |                             |   | 1,085  |                 |  |   | (161    | ) |  |   | 18,251    
|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|Net income (loss) from continuing operations          |  | $                | 34,498     |   |                             | $ | 1,358  |                 |  | $ | (22     | ) |  | $ | 35,834    
|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at January 1, 2003                           |  | $                | 79,119     |   |                             | $ | 29,657 |                 |  | $ |        |   |  | $ | 108,776   
|Net activity                                          |  |                  | (68        | ) |                             |   | 248    |                 |  |   |        |   |  |   | 180       
|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at March 31, 2003                            |  | $                | 79,051     |   |                             | $ | 29,905 |                 |  | $ |        |   |  | $ | 108,956   
|                                                      |  |                  |            |   |                             |   |        |                 |  |   |         |   |  |   |           
|Average assets                                        |  | $                | 10,158,758 |   |                             | $ | 88,041 |                 |  | $ | 125,846 |   |  | $ | 10,372,645
|Depreciation and amortization                         |  |                  | 5,664      |   |                             |   | 216    |                 |  |   | 244     |   |  |   | 6,124     



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.



Fair Value Hedges



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 $108.6 million of the junior subordinated debentures owed to unconsolidated subsidiary trusts to 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 trust preferred security agreements. 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. Because the hedging arrangement is considered highly effective, changes in the interest rate swaps fair values exactly offset the corresponding changes in the fair value of the junior subordinated debentures and, as a
result, the changes in the fair value do not result in an impact on net income.



Cash Flow Hedges



Sky Financial has entered into amortizing interest rate swaps to fix the rate on its $40 million of variable rate advances with the Federal Home Loan Bank of Cincinnati.
Under the terms of the arrangements, Sky Financial pays a fixed rate of interest and receives a variable rate based on LIBOR. The swaps are considered to be highly effective. Accordingly, any change in the swaps fair value is recorded in other
comprehensive income, net of tax.



Interest
Rate Caps



During 2002, Sky Financial entered into two interest rate cap
arrangements, and paid $1,456 to hedge its interest risk on $48.6 million 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. Changes in the



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time value of the interest rate caps, which are excluded from the assessment of hedge effectiveness, increased interest
expense by $55 in the first quarters of 2004 and 2003. No deferred gains or losses in accumulated other comprehensive income at March 31, 2004 are expected to be reclassified to earnings in 2004.



The following table presents the contract/notional and fair value amounts of all derivative
transactions at March 31, 2004 and December 31, 2003:



|                       |  |                      |         |           |                   |        |                      |  |           |         |  |   |      
|---------------------- |  | -------------------- | ------- | --------- | ----------------- | ------ | -------------------- |  | --------- | ------- |  | - | -----
|                       |  | March 31, 2004       |         |           | December 31, 2003
|                       |  | Contractual/Notional |         | FairValue |                   |        | Contractual/Notional |  | FairValue
|Interest rate swaps    |  |                      |         |           |                   |        |                      |  |           |         |  |   |      
|Fair value hedges      |  | $                    | 108,600 |           | $                 | 9,993  |                      |  | $         | 108,600 |  | $ | 5,129
|Cash flow hedges       |  |                      | 40,000  |           |                   | (3,062 | )                    |  |           | 40,000  |  |   | 91   
|Interest rate caps     |  |                      | 48,600  |           |                   | 454    |                      |  |           | 48,600  |  |   | 728  
|                       |  |                      |         |           |                   |        |                      |  |           |         |  |   |      
|Derivative instruments |  | $                    | 197,200 |           | $                 | 7,385  |                      |  | $         | 197,200 |  | $ | 5,948
|                       |  |                      |         |           |                   |        |                      |  |           |         |  |   |      



14. Merger, Integration and
Restructuring Expense



The following is a summary of activity in the
merger, integration and restructuring liability for the three months ended March 31, 2004:



|                  |  |   |       |  
|----------------- |  | - | ----- | -
|Beginning balance |  | $ | 2,523 |  
|Accruals          |  |   | 346   |  
|Cash payments     |  |   | (704  | )
|                  |  |   |       |  
|Ending balance    |  | $ | 2,165 |  
|                  |  |   |       |  



Sky Financial recorded merger,
integration and restructuring expense during the first quarter of 2004 associated with the sale of Sky Financial Solutions.



15. Commitments and Contingencies



Sky Financial is involved in litigation with three insurance companies who issued surety bonds on insurance policies as security for four related loans aggregating
$26,600. The subject loans are secured by pools of commercial leases, the payments under which are guaranteed by the surety bonds. Sky Financial is engaged in litigation with these insurance companies to enforce the payment obligations, as are a
number of other banks nationwide. After consultation with legal counsel, management believes that the credits are well secured and the prospects for recovery of all principal and interest are good. The entire portfolio has been placed on non-accrual
status pending outcome of the litigation.



A schedule of significant
commitments at March 31, 2004 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 2,474,460
|Standby letters of credit    |  |   | 325,700  
|Letters of credit            |  |   | 2,342    



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.



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



(Dollars in thousands, except per share data)



Three Months Ended March 31, 2004 and 2003



Results of Operations



Diluted earnings per common share for the first quarter of 2004 was $.62 ($.63 basic), compared to $.41 ($.41 basic) for the same period in 2003. Net income for the first quarter of 2004 was $58,677, an increase of
$22,607 over the first quarter of 2003 net income of $36,070. Return on average equity (ROE) and return on average assets (ROA) were 22.83% and 1.83%, respectively, for the first quarter of 2004, compared to 17.37% and 1.33%, respectively, in 2003.



Sky Financial sold Sky Financial Solutions, its dental finance operation
during the first quarter of 2004. The operating results of Sky Financial Solutions has been reclassified as income from discontinued operations for all periods presented. Income from discontinued operations, including the gain on the sale, resulted
in earnings of $.20 per diluted share ($.20 basic) during the first quarter of 2004.



Diluted earnings per common share from continuing operations for the first quarter of 2004 was $.42 ($.43 basic), as compared to $.41 ($.41 basic) for the same period in 2003. Income from continuing operations for the first quarter of 2004
was $39,952, an increase of $4,118 over the first quarter of 2003 net income from continuing operations of $35,834. Sky Financials net income from continuing operations during the first quarter of 2004 includes the results of Metropolitan,
which was acquired in April 2003, and GLB, which was acquired in October 2003. ROE and ROA on a continuing operations basis were 15.54% and 1.34%, respectively, for the first quarter of 2004, compared to 17.25% and 1.40%, respectively, in 2003.



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 first quarter ended March 31, 2004 and 2003 are summarized in the table below.



|                              |  |                   |        |      |   |        |  
|----------------------------- |  | ----------------- | ------ | ---- | - | ------ | -
|                              |  | Net Income (Loss) |       
|Quarter Ended March 31,       |  | 2004              |        | 2003 |  
|Community Banking             |  | $                 | 35,833 |      | $ | 34,498 |  
|Financial Services Affiliates |  |                   | 3,156  |      |   | 1,358  |  
|Parent and Other              |  |                   | 963    |      |   | (22    | )
|                              |  |                   |        |      |   |        |  
|Consolidated Total            |  | $                 | 39,952 |      | $ | 35,834 |  
|                              |  |                   |        |      |   |        |  



The higher community banking net
income in the first quarter of 2004 as compared to the same period of the previous year is mainly due to acquisitions completed during the last year. As the result, the first quarter 2004 reflects higher net interest income, service charges and fees
on deposits and gains on sale of securities. These increases were partially offset by a decrease in mortgage banking income and an increase in employee expenses and other operating expenses. The efficiency ratio for the community banking segment was
52.25% for the first quarter of 2004 compared to 48.72% in the first quarter of 2003. The 2004 community banking results reflect a ROE of 14.87% and a ROA of 1.23% compared to 18.68% and 1.36%, respectively, in the first quarter of 2003.



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The financial service affiliates net income increased as compared to 2003 from growth in brokerage and insurance
commissions.



Parent and other includes the net funding costs of the parent
company and intercompany billings to other affiliates for shared services.



Net Interest Income



Net interest income for the first quarter
of 2004 was $101,083, an increase of $10,713 or 11.9% from $90,370 in the first quarter of 2003. 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 15.1% from the first quarter last year, with strong growth in average loans, increasing 17.9% from last year, which included organic growth of 2.5% and the addition of Metropolitan and GLB. Average deposits were up 11.6% from the same
quarter last year, however, decreased 3.2% when excluding the impact of Metropolitan and GLB. Sky Financials net interest margin for the three months ended March 31, 2004 was 3.69%, a decrease of 1 basis point from last quarter and 12 basis
points from first quarter a year ago. The lower net interest margin primarily reflects the impact of the extended low rate environment and the incremental effect of the acquisitions.



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The following table reflects the components of Sky Financials net interest income for the three months ended March
31, 2004 and 2003. Rates are computed on a tax equivalent basis and non-accrual loans have been included in the average balances.



|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|-------------------------------------------------------------------------------------------- |  | --------------------------------- | ---------- | ---------------------- | --------------------------------- | ------- |  | ---- | -------------- |  | ---------------------- | ---------- | ---- | - | ------- |  | ---- | -
|                                                                                             |  | Three Months Ended March 31, 2004 |            |                        | Three Months Ended March 31, 2003 |        
|(Dollars in thousands)                                                                       |  | AverageBalance                    |            | InterestIncome/Expense |                                   | Rate    |  |      | AverageBalance |  | InterestIncome/Expense |            | Rate |  
|Assets                                                                                       |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-earning assets:                                                                     |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing deposits in banks                                                           |  | $                                 | 33,800     |                        | $                                 | 88      |  | 1.05 | %              |  | $                      | 28,096     |      | $ | 47      |  | .67  | %
|Federal funds sold                                                                           |  |                                   | 5,165      |                        |                                   | 12      |  | .96  |                |  |                        | 1,831      |      |   | 5       |  | 1.06 |  
|Securities                                                                                   |  |                                   | 2,449,138  |                        |                                   | 26,679  |  | 4.38 |                |  |                        | 2,254,581  |      |   | 26,686  |  | 4.81 |  
|Loans and loans held for sale                                                                |  |                                   | 8,692,269  |                        |                                   | 123,093 |  | 5.70 |                |  |                        | 7,431,937  |      |   | 115,700 |  | 6.33 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-earning assets                                                                |  |                                   | 11,180,372 |                        |                                   | 149,872 |  | 5.39 |                |  |                        | 9,716,445  |      |   | 142,438 |  | 5.96 |  
|Assets of discontinued operations                                                            |  |                                   | 864,778    |                        |                                   |         |  |      |                |  |                        | 655,232    |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-earning assets                                                                   |  |                                   | 844,564    |                        |                                   |         |  |      |                |  |                        | 656,200    |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total assets                                                                                 |  | $                                 | 12,889,714 |                        |                                   |         |  |      |                |  | $                      | 11,027,877 |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Liabilities and Shareholders Equity                                                         |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing liabilities:                                                                |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Demand deposits                                                                              |  | $                                 | 1,107,652  |                        |                                   | 350     |  | .13  |                |  | $                      | 832,188    |      |   | 270     |  | .13  |  
|Savings deposits                                                                             |  |                                   | 2,689,994  |                        |                                   | 6,372   |  | .95  |                |  |                        | 2,333,925  |      |   | 8,345   |  | 1.45 |  
|Time deposits                                                                                |  |                                   | 3,650,512  |                        |                                   | 25,600  |  | 2.82 |                |  |                        | 3,659,200  |      |   | 29,745  |  | 3.31 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing deposits                                                              |  |                                   | 7,448,158  |                        |                                   | 32,322  |  | 1.75 |                |  |                        | 6,825,313  |      |   | 38,360  |  | 2.29 |  
|Short-term borrowings                                                                        |  |                                   | 988,628    |                        |                                   | 5,248   |  | 2.14 |                |  |                        | 772,361    |      |   | 4,696   |  | 2.47 |  
|Junior Subordinated Debentures/ Trust Preferred Securities                                   |  |                                   | 164,859    |                        |                                   | 2,016   |  | 4.92 |                |  |                        | 116,515    |      |   | 1,325   |  | 4.62 |  
|Debt and FHLB advances                                                                       |  |                                   | 1,083,015  |                        |                                   | 7,632   |  | 2.83 |                |  |                        | 780,350    |      |   | 6,968   |  | 3.63 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing liabilities                                                           |  |                                   | 9,684,660  |                        |                                   | 47,218  |  | 1.96 |                |  |                        | 8,494,539  |      |   | 51,350  |  | 2.46 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Liabilities of discontinued operations                                                       |  |                                   | 801,742    |                        |                                   |         |  |      |                |  |                        | 615,457    |      |   |         |  |      |  
|Noninterest-bearing liabilities                                                              |  |                                   | 1,369,713  |                        |                                   |         |  |      |                |  |                        | 1,075,581  |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Shareholders equity                                                                         |  |                                   | 1,033,599  |                        |                                   |         |  |      |                |  |                        | 842,300    |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total liabilities and equity                                                                 |  | $                                 | 12,889,714 |                        |                                   |         |  |      |                |  | $                      | 11,027,877 |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest income (tax equivalent basis)                                                   |  |                                   |            |                        | $                                 | 102,654 |  |      |                |  |                        |            |      | $ | 91,088  |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest rate spread (tax equivalent basis)                                              |  |                                   |            |                        |                                   |         |  | 3.43 | %              |  |                        |            |      |   |         |  | 3.50 | %
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest margin, (interest income, taxable equivalent basis, to interest earning assets) |  |                                   |            |                        |                                   |         |  | 3.69 | %              |  |                        |            |      |   |         |  | 3.81 | %
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  



Provision for Credit Losses



The provision for credit losses represents the charge to income necessary
to adjust the allowance for loan losses 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 $835 or 11.1% to $6,665 in the first quarter of 2004 compared to $7,500 in the first quarter of 2003. The lower provision for credit losses in the first quarter of 2004 was due to lower net charge-offs and less
growth in the



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##### Table of Contents

loan portfolio as compared to the first quarter of 2003. Net charge-offs were $6,565 or 0.30% (annualized) of average
loans during the three months ended March 31, 2004, compared to $7,252 or 0.40% (annualized) for the same period in 2003.



|                                                                    |  |               |   |  |                  |   |  |               |  
|------------------------------------------------------------------- |  | ------------- | - |  | ---------------- | - |  | ------------- | -
|                                                                    |  | March 31,2004 |   |  | December 31,2003 |   |  | March 31,2003 |  
|Allowance for credit losses as a percentage of loans                |  | 1.46          | % |  | 1.45             | % |  | 1.45          | %
|Allowance for credit losses as a percentage of non-performing loans |  | 137.84        | % |  | 151.30           | % |  | 168.26        | %



See section titled
Non-Performing Assets of managements discussion and analysis regarding $26,600 of non-performing loans backed by sureties.



Non-Interest Income



The change in non-interest income reflects the impact of acquisitions and the emphasis of Sky Financial on expanding its profitable fee-based businesses offset by a decrease in mortgage banking revenues. Non-interest
income for the first quarter of 2004 was $43,409, an increase of $3,623 or 9.1% from $39,786 for the same quarter of 2003. Non-interest income growth was most significant in brokerage and insurance commissions, which recorded revenues of $14,308
during the first quarter of 2004, an increase of $3,717 or 35.1% from the same period in 2003, reflecting growth from both acquisitions and increased sales. Service charges for the first quarter of 2004 were $9,642, up $1,038 or 12.1% from the first
quarter of 2003 primarily due to deposit growth from acquisitions. Mortgage banking income was $5,445 during the first quarter of 2004, a decrease of $3,913 or 41.8%, due primarily to a decrease in loan originations as compared to the same period of
2003.



Non-Interest Expense



The change in non-interest expense is primarily attributed to additional costs as a result
of the Metropolitan and GLB acquisitions. Non-interest expense for the first quarter of 2004 was $78,503, an increase of $9,933 or 14.5%, from $68,570 reported for the same quarter of 2003. Salary and other employee costs were $44,198, up $5,808 or
15.1% as compared to the first quarter of 2003 due to an increase in full time equivalent employees, mostly from acquisitions. Occupancy and equipment costs were $12,874, up $1,038 or 8.8% compared to the same period of 2003 and other operating
expenses were $19,178, up $2,254 or 13.3% as compared to the first quarter of 2003, both due primarily to acquisitions. Merger, integration and restructuring charges were recognized in the first quarter of 2004 due to the sale of Sky Financial
Solutions. The efficiency ratio was 53.75% for the first quarter of 2004, up from 52.39% for the same quarter last year.



Income Taxes



The provision for income taxes for the first quarter of 2004 increased $1,840 to $20,092 from $18,252 for the same period in 2003. The effective tax rate for the three months ended March 31, 2004 was 33.5% as compared
to 33.7% for the same period in 2003.



Balance Sheet



At March 31, 2004, total assets were $12,093,391, a decrease of $852,804 from December 31,
2003. This decrease was primarily attributable to the sale of Sky Financial Solutions, which had assets of $874,765 at December 31, 2003. Assets from continuing operations increased $21,961 from December 31, 2003, due primarily to an increase in
securities available for sale of $102,447 due to increased investment purchases, an increase in loans held for sale of $29,588 due to the timing of mortgage loan sales, an increase in goodwill of $8,249 due to the purchase of Spenser-Patterson and
an increase in other assets of $16,897, due to net changes in interest receivable and various other asset accounts. The increases were partially offset by a decrease in loans of $88,211 and cash and interest bearing deposits of $44,338. The decrease
in loans is due to portfolio loans of $115,975 at December 31, 2003 recorded at Sky Bank that were sold with Sky Financial Solutions. After excluding these portfolio loans, the loan balance grew organically $27,764.



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The net growth in assets was funded primarily by growth in total deposits, up $255,813, due primarily to organic growth.
Debt decreased $382,466, due to the payoff of the line of credit, as well as payments on FHLB advances, repurchase agreements and federal funds purchased.



Shareholders equity totaled $1,066,157 at March 31, 2004, increasing $67,581 from December 31, 2003. Common stock increased $13,262, mainly due to $7,637 of stock
issued to Spencer-Patterson shareholders. Net retained earnings (net income less cash dividends) for the three months ended March 31, 2004 totaled $39,129. Accumulated other comprehensive income increased by $15,190, primarily due to an increase in
the market value of securities available for sale.



Non-Performing Assets



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



|                                                                     |  |               |         |   |                  |   |        |               |  |   |        |  
|-------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------ | ------------- |  | - | ------ | -
|                                                                     |  | March 31,2004 |         |   | December 31,2003 |   |        | March 31,2003 | 
|Non-accrual loans                                                    |  | $             | 90,132  |   |                  | $ | 81,979 |               |  | $ | 62,257 |  
|Restructured loans                                                   |  |               | 585     |   |                  |   | 599    |               |  |   | 1,291  |  
|                                                                     |  |               |         |   |                  |   |        |               |  |   |        |  
|Total non-performing loans                                           |  |               | 90,717  |   |                  |   | 82,578 |               |  |   | 63,548 |  
|Other real estate owned                                              |  |               | 10,775  |   |                  |   | 10,441 |               |  |   | 4,679  |  
|                                                                     |  |               |         |   |                  |   |        |               |  |   |        |  
|Total non-performing assets                                          |  | $             | 101,492 |   |                  | $ | 93,019 |               |  | $ | 68,227 |  
|                                                                     |  |               |         |   |                  |   |        |               |  |   |        |  
|Loans 90 days or more past due and not on non-accrual                |  | $             | 26,039  |   |                  | $ | 13,841 |               |  | $ | 12,995 |  
|Non-performing loans to total loans                                  |  |               | 1.06    | % |                  |   | .96    | %             |  |   | .87    | %
|Non-performing assets to total loans plus other real estate owned    |  |               | 1.19    |   |                  |   | 1.08   |               |  |   | .93    |  
|Allowance for credit losses to total non-performing loans            |  |               | 137.84  |   |                  |   | 151.30 |               |  |   | 168.26 |  
|Loans 90 days or more past due and not on non-accrual to total loans |  |               | .30     |   |                  |   | .16    |               |  |   | .18    |  



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 $107,366 and $98,312 at March 31, 2004 and December 31, 2003, respectively, and are being closely monitored by
management and the Boards of Directors of the subsidiaries. The amounts included in these loans results 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.



Included in non-accrual loans at March 31, 2004 are $26,600 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 or insurance policies. Sky Financial is engaged in litigation with the insurance companies to enforce their payment
obligations, as are a number of other banks nationwide. After consultation with its counsel as to the strength of its position, Sky believes that the credits are well secured and the prospects for recovery of all principal and interest are good.





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##### Table of Contents

Allowance for Credit Losses



The following table presents a summary of Sky Financials credit loss experience for the three months ended March 31, 2004 and 2003:



|                                                      |  |                             |         |   |      |   |         |  
|----------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                      |  | Three Months EndedMarch 31, |        
|                                                      |  | 2004                        |         |   | 2003 |  
|Balance of allowance at beginning of year             |  | $                           | 124,943 |   |      | $ | 106,675 |  
|                                                      |  |                            
|Loans charged-off:                                    |  |                             |         |   |      |   |         |  
|Real estate                                           |  |                             | (1,850  | ) |      |   | (1,713  | )
|Commercial and agricultural                           |  |                             | (1,934  | ) |      |   | (1,455  | )
|Installment and credit card                           |  |                             | (4,523  | ) |      |   | (5,547  | )
|Other loans                                           |  |                             | (41     | ) |      |   | (86     | )
|                                                      |  |                             |         |   |      |   |         |  
|Total loans charged-off                               |  |                             | (8,348  | ) |      |   | (8,801  | )
|                                                      |  |                             |         |   |      |   |         |  
|Recoveries                                            |  |                             |         |   |      |   |         |  
|Real estate                                           |  |                             | 388     |   |      |   | 49      |  
|Commercial and agricultural                           |  |                             | 212     |   |      |   | 287     |  
|Installment and credit card                           |  |                             | 1,183   |   |      |   | 1,213   |  
|                                                      |  |                             |         |   |      |   |         |  
|Total recoveries                                      |  |                             | 1,783   |   |      |   | 1,549   |  
|                                                      |  |                             |         |   |      |   |         |  
|Net loans charged-off                                 |  |                             | (6,565  | ) |      |   | (7,252  | )
|Provision charged to operating expense                |  |                             | 6,665   |   |      |   | 7,500   |  
|                                                      |  |                             |         |   |      |   |         |  
|Balance of allowance at end of period                 |  | $                           | 125,043 |   |      | $ | 106,923 |  
|                                                      |  |                             |         |   |      |   |         |  
|Ratio of net charge-offs to average loans Outstanding |  |                             | .30     | % |      |   | .40     | %



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 revision on a quarterly basis, along with other factors affecting the collectibility of the
loan portfolio.



Specific allowances are established for all criticized and
classified loans, where management has determined that, due to identified significant conditions, the probability that a loss has been incurred exceeds the general allowance loss factor determination for those loans.



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, macro credit quality trends, and internal loan review and regulatory examination findings. The following table sets forth Sky Financials allocation of the allowance for credit losses as of March 31, 2004 and December 31, 2003.



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##### Table of Contents

|                                       |  |                |         |                   |   |        
|-------------------------------------- |  | -------------- | ------- | ----------------- | - | -------
|                                       |  | March 31, 2004 |         | December 31, 2003
|Real estate                            |  | $              | 48,270  |                   | $ | 46,670 
|Commercial, financial and agricultural |  |                | 40,085  |                   |   | 39,967 
|Installment and credit card            |  |                | 26,137  |                   |   | 26,519 
|Construction                           |  |                | 2,856   |                   |   | 2,295  
|Unallocated                            |  |                | 7,695   |                   |   | 9,492  
|                                       |  |                |         |                   |   |        
|Total                                  |  | $              | 125,043 |                   | $ | 124,943
|                                       |  |                |         |                   |   |        



Discontinued Operations



Net income from discontinued operations was $18,725 during the first
quarter of 2004 versus $236 during the same period in 2003 due primarily to the gain recognized from the sale of 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.



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.



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 March 31, 2004 securities and other short-term investments with maturities of one
year or less totaled $13,801. In addition, the mortgage-backed securities provide an estimated cash flow of approximately $642,000 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 March 31, 2004, the banking subsidiary had total credit availability with the FHLB of $1,276,859, of which it had outstanding borrowings of $820,176.



During 2003, Sky Financial renegotiated an agreement with non-affiliated financial
institutions which enabled Sky Financial to borrow up to $120,000 through May 30, 2004. Management has the intent and ability to renegotiate this agreement for substantially similar terms during the second quarter of 2004.



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.



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##### Table of Contents

A schedule of significant commitments at March 31, 2004 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 2,474,460
|Standby letters of credit    |  |   | 325,700  
|Letters of credit            |  |   | 2,342    



Sky Financial currently does not have
an authorization to repurchase shares from the Board of Directors.



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 $36,293 at March 31, 2004.



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 March 31, 2004, Sky Financials gap
position, the difference between the dollar value of interest rate sensitive assets and interest rate sensitive liabilities, was positive for six months and one year and remained within Sky Financials Asset/Liability Committee (ALCO)
guidelines. 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.



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



On July 30, 2002, President Bush
signed into law the Sarbanes-Oxley Act of 2002, which contains important new requirements for public companies in the area of financial disclosure, internal controls and corporate governance. We do not anticipate any significant changes in the
operations of and reporting by Sky Financial as a result of the Act. 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.



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##### Table of Contents

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 March 31, 2004 and December 31, 2003. 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 300, 200 and 100 basis points and down 100 basis points. Down 300 and 200 basis points was not measured due to the low
probability of such a decline.



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.



|             |  |               |   |  |         |   |  |               |  
|------------ |  | ------------- | - |  | ------- | - |  | ------------- | -
|             |  | March 31,2004 |   |  | ALCOMax |   |  | GuidelinesMin |  
|Six Month    |  | 124.0         | % |  | 125     | % |  | 95            | %
|Twelve Month |  | 114.5         |   |  | 125     | % |  | 95            | %



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.



|                         |  |               |   |  |                  |   |  |                |  
|------------------------ |  | ------------- | - |  | ---------------- | - |  | -------------- | -
|                         |  | March 31,2004 |   |  | December 31,2003 |   |  | ALCOGuidelines |  
|One Year Net Interest    |  |               |   |  |                  |   |  |                |  
|Income Change            |  |               |   |  |                  |   |  |                |  
|+300 Basis points        |  | 4.5           | % |  | 1.6              | % |  |               | %
|+200 Basis points        |  | 3.4           |   |  | 1.3              |   |  | (10.0          | )
|+100 Basis points        |  | 1.9           |   |  | .7               |   |  | (5.0           | )
|-100 Basis points        |  | (4.7          | ) |  | (2.9             | ) |  | (5.0           | )
|Economic Value of Equity |  |               |   |  |                  |   |  |                |  
|+300 Basis points        |  | (14.1         | ) |  | (18.0            | ) |  |               |  
|+200 Basis points        |  | (8.2          | ) |  | (11.0            | ) |  | (15.0          | )
|+100 Basis points        |  | (3.0          | ) |  | (4.7             | ) |  | (10.0          | )
|-100 Basis points        |  | (0.5          | ) |  | 1.6              |   |  | (10.0          | )



The projected volatility of net
interest income and the economic value of equity at March 31, 2004 and December 31, 2003 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.



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##### Table of Contents

Sky Financial also utilizes interest rate swaps and caps to effectively manage it interest rate risk. At March 31, 2004,
the fair values of Sky Financials derivative arrangements aggregated $7,385 on contracts with notional amounts of $197,200.



Item 4. Controls and Procedures



The management
of Sky Financial is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934. As of March 31, 2004, an evaluation was performed under
the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Sky Financials disclosure and controls procedures. Based on that
evaluation, management concluded that Sky Financials disclosure controls and procedures as of March 31, 2004 were effective in ensuring that information required to be disclosed in this Quarterly Report on Form 10-Q were recorded, processed,
summarized and reported within the time period required by the United States Securities and Exchange Commissions rules and forms.



Managements responsibilities related to establishing and maintaining effective disclosure controls and procedures include maintaining effective internal controls
over financial reporting that are designed to produce reliable financial statements in accordance with accounting policies generally accepted in the United States of America. Management has assessed Sky Financials system of internal control
over financial reporting as described in Internal Control  Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of March 31,
2004, its system of internal control over financial reporting met those criteria.



There have been no significant changes in Sky Financials internal controls or in other factors that could significantly affect internal controls subsequent to March 31, 2004.



PART II. OTHER INFORMATION



Item 1. Legal Proceedings



Between August 2000
and December 2001, Sky Bank provided financing to a commercial borrower and its affiliated entities for the purchase of three separate portfolios of commercial lease pools, and a warehouse line of credit to finance lease pools. During 2001,
Metropolitan Bank and Trust Company, which was merged with Sky Bank on May 16, 2003, provided similar financing to the same commercial borrower and its affiliated entities. These loans, with a current outstanding balance of $26,600, 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 predecessor Metropolitan) 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 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. A similar suit was filed by Metropolitan in June, 2002. 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.



On January 31, 2003, Sky Bank and the other Claimants in the MDL Proceeding (MDL 02CV16000, Docket No. 1490) filed a consolidated Motion for Judgment on the Pleadings
(the Motion) seeking a determination that the Sureties are liable, as a matter of law, under the relevant surety bonds and insurance policies. The Motion is pending with the MDL Court and discovery in the MDL Proceeding is underway.



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##### Table of Contents

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.



Sky Bank believes that the language of the surety bonds (and in the case of IU, the insurance
policies) clearly provides 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. Sky Bank also believes that the surety bonds make it clear that the Sureties were responsible for the performance of the originator of the leases as sub-servicer of the leases. Finally, Sky Bank believes that the
surety bonds provide that if the Obligee or Named Insured fails to receive a payment due under a lease from the sub-servicer, a default under the lease occurs, and the Sureties payment obligations are triggered. Relevant excerpts from the RLI
and Royal surety bonds are set forth below:



The Surety is
responsible to the Obligee for the individual underwriting of each lessee and Lease, including but not limited to, all related credit matters, issues of fraud, bankruptcy and the accurate and timely performance by any sub-servicer designated by
Surety, and Surety shall assert no defenses to any claim under this Bond as a result of any of the foregoing. This Lease Bond and the Suretys obligation constitute an unconditional and absolute guarantee of payment, not collection. If the
Obligee fails to receive a payment under the Lease from the Surety, as servicer, or from any sub-servicer, on the scheduled due date, a default under the Lease occurs. Upon such default, the Surety shall have thirty (30) days to cause the default to
be remedied. The Surety shall make payment on this bond to Obligee upon receipt of demand from Obligee, within this 30 day period.



Relevant excerpts from the IU insurance policies are set forth below:



The issuance of this endorsement shall represent the Companys approval of the individual underwriting and execution and delivery of each Lease,
including, but not limited to, all related credit matters, issues of fraud, bankruptcy, validity, legality and enforceability and the Company shall pay all claims hereunder unconditionally and assert no defenses to any claim under this endorsement
as a result of any of the foregoing or based on any act or omission of the master-servicer or sub-servicer. If the named insured fails to receive a payment under the lease from the lesseethen default under the lease occurs. Upon such default,
the Company shall have thirty (30) days to cause the default to be remedied. Upon the passage of such 30-day period, then the Company shall make payment hereunder to the named insured in immediately available funds.



Furthermore, Sky Bank believes that as a further inducement to Sky Bank to extend credit, the
Sureties issued representation letters and legal opinions which confirmed the validity and enforceability of its surety bonds, and in effect acknowledged the assignment of the bonds to Sky Bank.



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 Sureties, due in part to the fact that, under the terms of the bonds, the Sureties undertake the responsibility for all credit matters and any fraud that may have occurred in the
underwriting of the credit, and waive all defenses associated with the bonds, including defenses of fraud. 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 any of these pending legal proceedings will materially affect the consolidated financial position or results of
operations of Sky Financial.



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##### Table of Contents

Second Bancorp, a pending acquisition of Sky Financial, provided similar financing with a current outstanding balance of
$7,800. Second Bancorp is a party to the MDL Proceedings. Sky Financial is currently evaluating Second Bancorps position and the merits of the claims it is asserting and the defenses to which it may be subject.



Sky Financial is, from time to time, involved in various lawsuits and claims that arise in
the normal course of business. In the opinion of management, any liabilities that may result from these lawsuits and claims will not materially affect the consolidated financial position or results of operations of Sky Financial.



Item 2. Changes in Securities and Use of Proceeds



Not applicable.



Item 3. Defaults Upon Senior Securities



Not applicable.



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



At the Annual Meeting of Shareholders of Sky Financial Group, Inc. held April 21, 2004, ballot totals for the election of five (5) Class III Directors to serve a three-year term until the Annual Meeting of
Shareholders in 2007 were as follows:



|                                      |  |            |  |          
|------------------------------------- |  | ---------- |  | ---------
|Class III Directors Term Expires 2007 |  | FOR        |  | WITHHELD 
|Fred H. Johnson, III.                 |  | 73,379,592 |  | 2,369,680
|Gerard P. Mastroianni                 |  | 74,589,571 |  | 1,159,701
|James C. McBane                       |  | 73,818,892 |  | 1,930,380
|Robert E. Spitler                     |  | 73,448,628 |  | 2,300,644
|Joseph N. Tosh, II.                   |  | 74,358,451 |  | 1,490,821



Total shares voted were 75,749,272 or
81.43% of the outstanding shares.



The following incumbent Class I and Class II
Directors who were not nominees for election at the April 17, 2002 Annual Meeting were as follows:



Marty E. Adams

George N. Chandler

Robert C Duvall

Marylouise Fennell, RSM

D. James
Hilliker

Richard R. Hollington, Jr.

Jonathan A. Levy

Thomas J. OShane

Gregory L. Ridler

Edward J. Reiter

Emerson J. Ross Jr.

C. Gregory Spangler



Ballot totals for approval of the Seventh Amended and Restated Articles of Incorporation of Sky Financial Group, Inc. were as follows:



|           |  |          
|---------- |  | ---------
|FOR        |  | WITHHELD 
|66,856,631 |  | 8,892,641



Total shares voted were 75,749,272 or
81.43% of the outstanding shares.



Ballot totals for approval of the 2004
Restricted Stock Plan were as follows:



|           |  |          
|---------- |  | ---------
|FOR        |  | WITHHELD 
|54,528,339 |  | 6,541,884





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##### Table of Contents

Total shares voted were 61,070,223 or 65.65% of the outstanding shares.



Item 5. Other Information



Not
applicable.



Item 6. Exhibits and Reports on Form 8-K



(a) Exhibits



|           |  |                                                                                                                                                                                                                                                                 
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                     
|           | 
|(3)        |  | Seventh Amended and Restated Articles of Incorporation of Sky Financial Group, Inc.                                                                                                                                                                             
|           | 
|(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 7 Earnings Per
Share on page 11 of Sky Financials Form 10-Q for September 30, 2003.
|           | 
|(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.                                                                                                                                                                                                          



(b) Reports on Form
8-K



Current report on Form 8-K dated January 13, 2004,
announcing that it had entered into a definitive agreement to acquire Second Bancorp, Incorporated, Warren, Ohio, and its wholly-owned subsidiary, Second National Bank.



Current report on Form 8-K dated January 22, 2004 reporting Sky Financials third quarter and year end results.



Current report on Form 8-K dated February 4, 2004 announcing
that the Annual Meeting of Sky Financials Shareholders will be held on April 24, 2004.



Current report on Form 8-K dated February 24, 2004 filing Investor Slides presented to at the Midwest Super-Community Bank Conference.



Current report on Form 8-K dated April 21, 2004, reporting Sky Financials first quarter results.



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##### Table of Contents

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: May 10, 2004

SKY FINANCIAL GROUP, INC.



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##### Table of Contents

EXHIBIT INDEX



|           |   |  |                                                                                                                                                                                                                                                              |  |            
|---------- | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------
|ExhibitNo. |   |  | Description                                                                                                                                                                                                                                                  |  | Page Number
|(3         | ) |  | Seventh Amended and Restated Articles of Incorporation of Sky Financial Group, Inc.                                                                                                                                                                          |  |            
|           |   | 
|(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 7 Earnings Per
Share on page 11 of Sky Financials Form 10-Q for March 31, 2004. |  |            
|           |   | 
|(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.                                                                                                                                                                                                       |  |            



32