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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, 2007



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

For the transition period from  to

Commission File No. 1-14473



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LOGO

Sky Financial Group, Inc.

(Exact Name of Registrant as Specified in its Charter)



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



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

(419) 327-6300

(Registrants Telephone Number)



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

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

Large accelerated
filer  x    Accelerated filer ̈Non-accelerated filer ̈

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

The number of shares outstanding of the Registrants common stock, without par value, was 117,875,027 at April 20, 2007.



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SKY FINANCIAL GROUP, INC.

I
NDEX



|                              |  |                                                                                                                 |  |            
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | -----------
|                              |  |                                                                                                                 |  | Page Number
|PART I. FINANCIAL INFORMATION |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                |  |            
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Balance Sheets March 31, 2007 and December 31, 2006                                      |  | 3          
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Income Three months ended March 31, 2007 and 2006                          |  | 4          
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Changes in Shareholders Equity Three months ended March 31, 2007 and 2006 |  | 5          
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Cash Flows Three months ended March 31, 2007 and 2006                      |  | 6          
|                              |  |                                                                                                                
|                              |  | Notes to Condensed Consolidated Financial Information                                                           |  | 7          
|                              |  |                                                                                                                
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           |  | 20         
|                              |  |                                                                                                                
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                      |  | 29         
|                              |  |                                                                                                                
|Item 4.                       |  | Controls and Procedures                                                                                         |  | 30         
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                                               |  | 31         
|                              |  |                                                                                                                
|Item 1A.                      |  | Risk Factors                                                                                                    |  | 32         
|                              |  |                                                                                                                
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                     |  | 32         
|                              |  |                                                                                                                
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                 |  | 33         
|                              |  |                                                                                                                
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                             |  | 33         
|                              |  |                                                                                                                
|Item 5.                       |  | Other Information                                                                                               |  | 33         
|                              |  |                                                                                                                
|Item 6.                       |  | Exhibits                                                                                                        |  | 33         
|                              | 
|SIGNATURES                    |  | 34                                                                                                             
|                              | 
|EXHIBIT INDEX                 |  | 35                                                                                                             



2



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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 31,2007 |            |   | December 31,2006 |  
|Assets                                                                                                    |  |               |            |   |                  |   |            |  
|Cash and due from banks                                                                                   |  | $             | 326,448    |   |                  | $ | 345,858    |  
|Interest-earning deposits with financial institutions                                                     |  |               | 11,055     |   |                  |   | 12,245     |  
|Federal funds sold                                                                                        |  |               | 45,132     |   |                  |   | 40,000     |  
|Loans held for sale                                                                                       |  |               | 17,357     |   |                  |   | 20,019     |  
|Securities available for sale                                                                             |  |               | 3,043,833  |   |                  |   | 3,129,960  |  
|                                                                                                          |  |              
|Total loans                                                                                               |  |               | 12,837,735 |   |                  |   | 12,826,817 |  
|Less allowance for loan and lease losses                                                                  |  |               | (172,407   | ) |                  |   | (172,990   | )
|                                                                                                          |  |               |            |   |                  |   |            |  
|Net loans                                                                                                 |  |               | 12,665,328 |   |                  |   | 12,653,827 |  
|                                                                                                          |  |              
|Premises and equipment, net                                                                               |  |               | 204,241    |   |                  |   | 206,145    |  
|Goodwill                                                                                                  |  |               | 728,355    |   |                  |   | 728,260    |  
|Core deposits and other intangibles, net                                                                  |  |               | 70,151     |   |                  |   | 73,442     |  
|Accrued interest receivable and other assets                                                              |  |               | 511,109    |   |                  |   | 516,338    |  
|                                                                                                          |  |               |            |   |                  |   |            |  
|Total assets                                                                                              |  | $             | 17,623,009 |   |                  | $ | 17,726,094 |  
|                                                                                                          |  |               |            |   |                  |   |            |  
|Liabilities                                                                                               |  |               |            |   |                  |   |            |  
|Deposits                                                                                                  |  |               |            |   |                  |   |            |  
|Non-interest bearing deposits                                                                             |  | $             | 1,855,488  |   |                  | $ | 1,953,658  |  
|Interest-bearing deposits                                                                                 |  |               | 11,279,964 |   |                  |   | 11,266,995 |  
|                                                                                                          |  |               |            |   |                  |   |            |  
|Total deposits                                                                                            |  |               | 13,135,452 |   |                  |   | 13,220,653 |  
|Securities sold under repurchase agreements and federal funds purchased                                   |  |               | 1,208,182  |   |                  |   | 978,661    |  
|Debt and Federal Home Loan Bank advances                                                                  |  |               | 814,391    |   |                  |   | 1,103,786  |  
|Junior subordinated debentures owed to unconsolidated subsidiary trusts                                   |  |               | 335,125    |   |                  |   | 335,294    |  
|Accrued interest payable and other liabilities                                                            |  |               | 199,227    |   |                  |   | 207,052    |  
|                                                                                                          |  |               |            |   |                  |   |            |  
|Total liabilities                                                                                         |  |               | 15,692,377 |   |                  |   | 15,845,446 |  
|                                                                                                          |  |               |            |   |                  |   |            |  
|Shareholders Equity                                                                                      |  |               |            |   |                  |   |            |  
|Serial preferred stock, $10.00 par value; 10,000 shares authorized; none issued                           |  |               |           |   |                  |   |           |  
|Common stock, no par value; 350,000 shares authorized; 119,597 and 118,728 shares issued in 2007 and 2006 |  |               | 1,463,133  |   |                  |   | 1,442,507  |  
|Retained earnings                                                                                         |  |               | 538,825    |   |                  |   | 516,626    |  
|Treasury stock; 1,763 and 1,750 shares in 2007 and 2006                                                   |  |               | (47,637    | ) |                  |   | (47,303    | )
|Accumulated other comprehensive loss                                                                      |  |               | (23,689    | ) |                  |   | (31,182    | )
|                                                                                                          |  |               |            |   |                  |   |            |  
|Total shareholders equity                                                                                |  |               | 1,930,632  |   |                  |   | 1,880,648  |  
|                                                                                                          |  |               |            |   |                  |   |            |  
|Total liabilities and shareholders equity                                                                |  | $             | 17,623,009 |   |                  | $ | 17,726,094 |  
|                                                                                                          |  |               |            |   |                  |   |            |  

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



3



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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) |  | 2007                        |         | 2006 |  
|Interest Income                                          |  |                             |         |      |   |         |  
|Loans, including fees                                    |  | $                           | 241,492 |      | $ | 198,052 |  
|Securities                                               |  |                             |         |      |   |         |  
|Taxable                                                  |  |                             | 38,519  |      |   | 35,654  |  
|Non-taxable                                              |  |                             | 416     |      |   | 53      |  
|Federal funds sold and other                             |  |                             | 840     |      |   | 285     |  
|                                                         |  |                             |         |      |   |         |  
|Total interest income                                    |  |                             | 281,267 |      |   | 234,044 |  
|                                                         |  |                             |         |      |   |         |  
|Interest Expense                                         |  |                             |         |      |   |         |  
|Deposits                                                 |  |                             | 106,794 |      |   | 66,190  |  
|Borrowed funds                                           |  |                             | 31,707  |      |   | 35,018  |  
|                                                         |  |                             |         |      |   |         |  
|Total interest expense                                   |  |                             | 138,501 |      |   | 101,208 |  
|                                                         |  |                             |         |      |   |         |  
|Net Interest Income                                      |  |                             | 142,766 |      |   | 132,836 |  
|Provision for Credit Losses                              |  |                             | 10,703  |      |   | 7,154   |  
|                                                         |  |                             |         |      |   |         |  
|Net interest income after provision for credit losses    |  |                             | 132,063 |      |   | 125,682 |  
|                                                         |  |                             |         |      |   |         |  
|Non-Interest Income                                      |  |                             |         |      |   |         |  
|Brokerage and insurance commissions                      |  |                             | 18,492  |      |   | 19,792  |  
|Service charges and fees on deposit accounts             |  |                             | 20,811  |      |   | 13,499  |  
|Trust services income                                    |  |                             | 6,935   |      |   | 5,881   |  
|Mortgage banking income                                  |  |                             | 5,731   |      |   | 5,563   |  
|Net securities gains                                     |  |                             | 565     |      |   | (5      | )
|Other income                                             |  |                             | 16,279  |      |   | 11,929  |  
|                                                         |  |                             |         |      |   |         |  
|Total non-interest income                                |  |                             | 68,813  |      |   | 56,659  |  
|                                                         |  |                             |         |      |   |         |  
|Non-Interest Expense                                     |  |                             |         |      |   |         |  
|Salaries and employee benefits                           |  |                             | 66,366  |      |   | 59,814  |  
|Occupancy and equipment expense                          |  |                             | 21,319  |      |   | 17,643  |  
|Merger, integration and restructuring expense            |  |                             | 1,723   |      |   | 180     |  
|Amortization expense                                     |  |                             | 4,560   |      |   | 3,877   |  
|Other operating expense                                  |  |                             | 28,912  |      |   | 24,664  |  
|                                                         |  |                             |         |      |   |         |  
|Total non-interest expense                               |  |                             | 122,880 |      |   | 106,178 |  
|                                                         |  |                             |         |      |   |         |  
|Income before income taxes                               |  |                             | 77,996  |      |   | 76,163  |  
|Income taxes                                             |  |                             | 26,375  |      |   | 25,523  |  
|                                                         |  |                             |         |      |   |         |  
|Net income                                               |  | $                           | 51,621  |      | $ | 50,640  |  
|                                                         |  |                             |         |      |   |         |  
|Earnings per Common Share                                |  |                             |         |      |   |         |  
|Basic                                                    |  | $                           | 0.44    |      | $ | 0.47    |  
|Diluted                                                  |  |                             | 0.44    |      |   | 0.46    |  

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



4



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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)         |  | 2007                        |           |   | 2006 |  
|Balance at beginning of period                        |  | $                           | 1,880,648 |   |      | $ | 1,553,877 |  
|                                                      |  |                            
|Comprehensive income (loss)                           |  |                             |           |   |      |   |           |  
|Net income                                            |  |                             | 51,621    |   |      |   | 50,640    |  
|Other comprehensive income (loss)                     |  |                             | 7,493     |   |      |   | (21,395   | )
|                                                      |  |                             |           |   |      |   |           |  
|Total comprehensive income (loss)                     |  |                             | 59,114    |   |      |   | 29,245    |  
|                                                      |  |                             |           |   |      |   |           |  
|Common cash dividends                                 |  |                             | (29,455   | ) |      |   | (25,009   | )
|Shares issued for stock option exercises              |  |                             | 19,440    |   |      |   | 3,786     |  
|Stock based compensation expense                      |  |                             | 1,152     |   |      |   | 2,895     |  
|Common shares issued to acquire Peter B. Burke Agency |  |                             |          |   |      |   | 1,777     |  
|Other                                                 |  |                             | (267      | ) |      |   |          |  
|                                                      |  |                             |           |   |      |   |           |  
|Balance at end of period                              |  | $                           | 1,930,632 |   |      | $ | 1,566,571 |  
|                                                      |  |                             |           |   |      |   |           |  
|Common cash dividend per share                        |  | $                           | 0.25      |   |      | $ | 0.23      |  
|                                                      |  |                             |           |   |      |   |           |  

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



5



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SKY FINANCIAL GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                               |  |                             |          |   |      |   |          |  
|------------------------------------------------------------------------------ |  | --------------------------- | -------- | - | ---- | - | -------- | -
|                                                                               |  | Three Months EndedMarch 31, |         
|(Dollars in thousands, except share data)                                      |  | 2007                        |          |   | 2006 |  
|Operating Activities                                                           |  |                             |          |   |      |   |          |  
|Net income                                                                     |  | $                           | 51,621   |   |      | $ | 50,640   |  
|Adjustments to reconcile net income to net cash from operating activities:     |  |                             |          |   |      |   |          |  
|Depreciation, amortization and accretion                                       |  |                             | 7,828    |   |      |   | 7,622    |  
|Stock-based compensation                                                       |  |                             | 1,152    |   |      |   | 2,895    |  
|Tax benefits from tax deductions in excess of the compensation cost recognized |  |                             | (2,239   | ) |      |   | (417     | )
|Net gains on sales of assets                                                   |  |                             | (3,230   | ) |      |   | (2,212   | )
|Provision for credit losses                                                    |  |                             | 10,703   |   |      |   | 7,154    |  
|Proceeds from sales of loans held for sale                                     |  |                             | 208,371  |   |      |   | 205,592  |  
|Disbursements on originations of loans held for sale                           |  |                             | (203,508 | ) |      |   | (202,640 | )
|Net change in other assets and liabilities                                     |  |                             | (1,619   | ) |      |   | (19,058  | )
|                                                                               |  |                             |          |   |      |   |          |  
|Net cash provided from operations                                              |  |                             | 69,079   |   |      |   | 49,576   |  
|                                                                               |  |                             |          |   |      |   |          |  
|Investing Activities                                                           |  |                             |          |   |      |   |          |  
|Net decrease in interest bearing deposits in other banks                       |  |                             | 1,190    |   |      |   | 5,385    |  
|Net increase in federal funds sold                                             |  |                             | (5,132   | ) |      |   | (23,000  | )
|Securities available for sale:                                                 |  |                             |          |   |      |   |          |  
|Proceeds from maturities and payments                                          |  |                             | 128,728  |   |      |   | 121,130  |  
|Proceeds from sales                                                            |  |                             | 55,328   |   |      |   | 10       |  
|Purchases                                                                      |  |                             | (84,943  | ) |      |   | (202,737 | )
|Proceeds from sales of non-mortgage loans                                      |  |                             | 72,844   |   |      |   | 62,236   |  
|Net increase in loans                                                          |  |                             | (99,283  | ) |      |   | (18,449  | )
|Purchases of premises and equipment                                            |  |                             | (4,231   | ) |      |   | (4,818   | )
|Proceeds from sales of premises and equipment                                  |  |                             | 1,138    |   |      |   | 763      |  
|Proceeds from sales of other real estate                                       |  |                             | 3,398    |   |      |   | 1,735    |  
|Net cash paid for acquisitions                                                 |  |                             | (22      | ) |      |   | (169     | )
|                                                                               |  |                             |          |   |      |   |          |  
|Net cash provided by (used for) investing activities                           |  |                             | 69,015   |   |      |   | (57,914  | )
|                                                                               |  |                             |          |   |      |   |          |  
|Financing Activities                                                           |  |                             |          |   |      |   |          |  
|Net (decrease) increase in deposit accounts                                    |  |                             | (94,800  | ) |      |   | 247,740  |  
|Net increase (decrease) in federal funds and repurchase agreements             |  |                             | 229,370  |   |      |   | (137,174 | )
|Net decrease in short-term FHLB advances                                       |  |                             | (200,000 | ) |      |   | (100,000 | )
|Proceeds from issuance of debt and long-term FHLB advances                     |  |                             | 5,002    |   |      |   | 26,116   |  
|Repayment of debt and long-term FHLB advances                                  |  |                             | (58,271  | ) |      |   | (65,443  | )
|Net decrease in borrowings under bank lines of credit                          |  |                             | (35,000  | ) |      |   |         |  
|Cash dividends and cash paid for fractional shares                             |  |                             | (25,184  | ) |      |   | (24,914  | )
|Tax benefits from tax deductions in excess of the compensation cost recognized |  |                             | 2,239    |   |      |   | 417      |  
|Proceeds from issuance of common stock                                         |  |                             | 19,440   |   |      |   | 3,786    |  
|Other items                                                                    |  |                             | (300     | ) |      |   |         |  
|                                                                               |  |                             |          |   |      |   |          |  
|Net cash used for financing activities                                         |  |                             | (157,504 | ) |      |   | (49,472  | )
|                                                                               |  |                             |          |   |      |   |          |  
|Net decrease in cash and due from banks                                        |  |                             | (19,410  | ) |      |   | (57,810  | )
|Cash and due from banks at beginning of period                                 |  |                             | 345,858  |   |      |   | 318,114  |  
|                                                                               |  |                             |          |   |      |   |          |  
|Cash and due from banks at end of period                                       |  | $                           | 326,448  |   |      | $ | 260,304  |  
|                                                                               |  |                             |          |   |      |   |          |  
|Supplemental Disclosures                                                       |  |                             |          |   |      |   |          |  
|Interest paid                                                                  |  | $                           | 132,468  |   |      | $ | 96,709   |  
|Income taxes paid                                                              |  |                             | 4,035    |   |      |   | 37,046   |  
|Non-cash transactions                                                          |  |                             |          |   |      |   |          |  
|Common shares issued to acquire Peter B. Burke Agency                          |  |                             |         |   |      |   | 1,777    |  

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



6



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SKY FINANCIAL GROUP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

1.
Accounting Policies

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

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

These condensed consolidated unaudited interim
financial statements are prepared without an audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of Sky Financial at March 31,
2007, 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, 2006, 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.

New Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities(FAS 159). FAS 159 provides companies with an option to report selected financial assets and liabilities at fair
value. FAS 159s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. FAS 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. FAS 159 requires companies to provide additional information that will help
investors and other users of financial statements to more easily understand the effect of the companys choice to use fair value on its earnings. It also requires entities to display the fair value of those assets and liabilities for which the
company has chosen to use fair value on the face of the balance sheet. FAS 159 is effective as of the beginning of an entitys first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning
of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of Statement 157. Sky Financial did not early adopt FAS 159.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements(FAS 157). FAS 157 enhances existing guidance
for measuring assets and liabilities using fair value. Prior to the issuance of FAS 157, guidance for applying fair value was incorporated in several accounting pronouncements. FAS 157 provides a single definition of fair value, together with a
framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. FAS 157 also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a
fair value hierarchy with the highest priority being quoted prices in active markets. Under FAS 157, fair value measurements are disclosed by level within that hierarchy. While FAS 157 does not add any new fair value measurements, it does change
current



7



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practice. Changes to practice include: (1) a requirement for an entity to include its own credit standing in the measurement of its liabilities;
(2) a modification of the transaction price presumption; (3) a prohibition on the use of block discounts when valuing large blocks of securities for broker-dealers and investment companies; and (4) a requirement to adjust the value of
restricted stock for the effect of the restriction, even if the restriction lapses within one year. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal
years. Sky Financial has not determined the impact of adopting FAS 157 on its financial statements.

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

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial
Assets: An Amendment of FASB Statement No. 140 (FAS 140 and FAS 156). FAS 140 establishes, among other things, the accounting for all separately recognized servicing assets and servicing liabilities. This Statement amends FAS 140 to require
that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. This Statement permits, but does not require, the subsequent measurement of separately recognized servicing assets and
servicing liabilities at fair value. Under this Statement, an entity can elect subsequent fair value measurement to account for its separately recognized servicing assets and servicing liabilities. Adoption of this Statement was required as of the
beginning of the first fiscal year that began after September 15, 2006. Sky Financial adopted FAS 156 on January 1, 2007 and did not elect the fair value measurement option.

In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments: An Amendment of FASB Statements No. 133 and 140(FAS 155).
FAS 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the
requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative
requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends Statement 140 to eliminate the prohibition on a qualifying special purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other than another derivative financial instrument. FAS 155 was effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that
began after September 15, 2006. The adoption of FAS 155 did not have a material effect on Sky Financials results of operations or the statement of condition.

2. Stock Based Compensation

The following table illustrates the total stock compensation expense recorded in
salaries and employee benefits expense for the three months ended March 31, 2007 and 2006:



|                         |  |                             |       |      |   |      
|------------------------ |  | --------------------------- | ----- | ---- | - | -----
|                         |  | Three months endedMarch 31,
|                         |  | 2007                        |       | 2006
|Stock option expense     |  | $                           | 673   |      | $ | 1,927
|Restricted stock expense |  |                             | 479   |      |   | 968  
|                         |  |                             |       |      |   |      
|Total expense            |  | $                           | 1,152 |      | $ | 2,895
|                         |  |                             |       |      |   |      
|Tax benefit              |  | $                           | 403   |      | $ | 1,013
|                         |  |                             |       |      |   |      



8



---

There were no stock options or restricted shares issued in the first quarter 2007. In the first quarter of 2006, 157
shares of restricted stock and 677 stock options were granted to directors, officers and employees under various restricted stock and stock option plans.

In accordance with Sky Financials stock option and restricted shares plans, employee participants that are 55 or older are eligible to retire, which has the effect of immediately vesting all non-vested options and restricted shares.
Prior to the adoption of FAS 123(R), Sky Financials accounting policy was to recognize compensation cost over the contractual vesting period with no acceleration based on retirement age. Compensation cost for all awards granted prior to the
adoption of FAS 123(R) will continue to be recognized over the contractual vesting period and any remaining unrecognized compensation cost will be accelerated when an employee actually retires. Compensation cost for awards granted or modified after
the adoption of FAS 123(R) will be recognized over a period to the date employee first becomes eligible for retirement. In accordance with this change in policy, stock option expense for the three months ended March 31, 2007 and 2006 included
expense of $86 and $112, respectively for stock options that were granted to retirement eligible participants prior to the adoption of FAS 123(R) that are continuing to be expensed over the contractual terms of the option.

3. Critical Accounting Policies

The accounting and reporting
policies of Sky Financial are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the financial services industry. Accounting and reporting policies for the
allowance for credit losses and mortgage servicing rights are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by management could result in
material changes in Sky Financials financial position or results of operations. Note 1 (Summary of Significant Accounting Policies), note 4 (Loans and Allowance for Credit Losses) and note 20 (Mortgage Banking Activities), of the 2006 Annual
Report and Form 10-K, provide detail with regard to Sky Financials accounting for the allowance for loan losses and for mortgage servicing rights. There have been no significant changes in the application of accounting policies since
December 31, 2006.

4. Mergers, Acquisitions and Divestitures

Huntington Merger

On December 20, 2006, Sky Financial and Huntington Bancshares Incorporated (Huntington)
announced the signing of a definitive agreement to merge the two companies in a stock (90%) and cash (10%) transaction valued at approximately $3.5 billion. Under the terms of the agreement, Sky Financial Group shareholders will receive
1.098 shares of Huntington common stock and a cash payment of $3.023 for each share of Sky Financial Group.

The merger was unanimously approved by both
companies boards of directors and is expected to close early in the 2007 third quarter, pending customary regulatory approvals, as well as the approval of Huntingtons and Sky Financial Groups shareholders.

Community Banking

Wells River

On November 15, 2006, Sky Financial completed its acquisition of Wells River Bancorp, Inc. (Wells River) and its wholly-owned subsidiary, Perpetual Savings Bank, a
$71.3 million bank that operated three full-service branches in Ohios Columbiana County. The aggregate purchase price was $10,992, including direct acquisition costs of $24. The acquisition of Wells River expands Sky Financials community
banking business further in the eastern Ohio market. Wells River shareholders received approximately 178 shares of Sky Financial common stock and cash of $6,600. The total purchase price for Wells River has been allocated to the tangible and
identifiable intangible assets and liabilities based upon their respective fair values. Such allocations have not been finalized and as such, the allocation of the purchase consideration included in the accompanying Consolidated Balance Sheet at
March 31, 2007, is preliminary.



9



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Union Federal

On
October 17, 2006, Sky Financial completed its acquisition of Union Federal Bank of Indianapolis (Union Federal) and its parent company, Waterfield Mortgage Company, Inc., Ft. Wayne, Indiana. Sky Financial purchased Waterfields retail and
commercial banking business conducted primarily through Union Federal Bank, which added approximately $2.3 billion in assets. The aggregate purchase price was $332,217 including direct acquisition costs of approximately $2,392. Waterfield
shareholders received $136,505 in cash and 7,467 shares of Sky Financial common stock. The acquisition of Union Federal Bank expanded Sky Financials Indiana presence into the growing Indianapolis market with the addition of 42 branches in this
area. Sky Financial also acquired Waterfield Insurance as part of the acquisition. The total purchase price for Union Federal has been allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair
values. Such allocations have not been finalized and as such, the allocation of the purchase consideration included in the accompanying Consolidated Balance Sheet at March 31, 2007, is preliminary.

The following pro forma consolidated results of operations have been prepared as if the acquisitions of Wells River and Union Federal occurred at the beginning of 2006.



|                                   |  |                   |        
|---------------------------------- |  | ----------------- | -------
|                                   |  | Three MonthsEnded
|                                   |  | March 31, 2006   
|Net interest income                |  | $                 | 143,537
|Net income                         |  |                   | 49,477 
|Earnings per common share Basic   |  |                   | 0.43   
|Earnings per common share Diluted |  |                   | 0.42   

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 September 30, 2006, Sky Financial acquired Lindig Benefits Consultants located in Worthington, Ohio for 44
shares of Sky Financial common stock and $150 in cash.

On January 3, 2006, Sky Financial acquired the Peter B. Burke Insurance Agency in Pittsburgh,
Pennsylvania for 64 shares of Sky Financial common stock and $206 in cash.

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



10



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5. Securities

The
unrealized gains and losses and estimated fair values at March 31, 2007 and December 31, 2006 are as follows:



|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------------- | - |  | - | ---------
|March 31, 2007                                  |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | AmortizedCost
|U.S. Treasury                                   |  | $                   | 201       |                      | $ | 1                     |  | $ |              |   |  | $ | 200      
|U.S. government agencies and corporations       |  |                     | 66,310    |                      |   |                      |  |   | (711          | ) |  |   | 67,021   
|Obligations of state and political subdivisions |  |                     | 55,009    |                      |   | 105                   |  |   | (11           | ) |  |   | 54,915   
|Corporate and other securities                  |  |                     | 4,950     |                      |   |                      |  |   |              |   |  |   | 4,950    
|Mortgage-backed securities                      |  |                     | 2,689,389 |                      |   | 5,659                 |  |   | (37,053       | ) |  |   | 2,720,783
|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          
|Total debt securities available for sale        |  |                     | 2,815,859 |                      |   | 5,765                 |  |   | (37,775       | ) |  |   | 2,847,869
|Marketable equity securities available for sale |  |                     | 34,263    |                      |   | 357                   |  |   | (1,197        | ) |  |   | 35,103   
|FHLB, FRB and Bankers Bank Stock (1)           |  |                     | 193,711   |                      |   |                      |  |   |              |   |  |   | 193,711  
|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          
|Total securities                                |  | $                   | 3,043,833 |                      | $ | 6,122                 |  | $ | (38,972       | ) |  | $ | 3,076,683
|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          



|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------------- | - |  | - | ---------
|December 31, 2006                               |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | AmortizedCost
|U.S. Treasury                                   |  | $                   | 200       |                      | $ | 1                     |  | $ |              |   |  | $ | 199      
|U.S. government agencies and corporations       |  |                     | 65,927    |                      |   |                      |  |   | (1,040        | ) |  |   | 66,967   
|Obligations of state and political subdivisions |  |                     | 43,555    |                      |   | 98                    |  |   | (16           | ) |  |   | 43,473   
|Corporate and other securities                  |  |                     | 4,950     |                      |   |                      |  |   |              |   |  |   | 4,950    
|Mortgage-backed securities                      |  |                     | 2,785,018 |                      |   | 3,748                 |  |   | (48,235       | ) |  |   | 2,829,505
|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          
|Total debt securities available for sale        |  |                     | 2,899,650 |                      |   | 3,847                 |  |   | (49,291       | ) |  |   | 2,945,094
|Marketable equity securities available for sale |  |                     | 36,599    |                      |   | 514                   |  |   | (57           | ) |  |   | 36,142   
|FHLB, FRB and Bankers Bank Stock (1)           |  |                     | 193,711   |                      |   |                      |  |   |              |   |  |   | 193,711  
|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          
|Total securities                                |  | $                   | 3,129,960 |                      | $ | 4,361                 |  | $ | (49,348       | ) |  | $ | 3,174,947
|                                                |  |                     |           |                      |   |                       |  |   |               |   |  |   |          

---

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

6. Loans

The loan portfolio was as follows:



|                                       |  |               |            |                  |   |           
|-------------------------------------- |  | ------------- | ---------- | ---------------- | - | ----------
|                                       |  | March 31,2007 |            | December 31,2006
|Real estate loans:                     |  |               |            |                  |   |           
|Construction                           |  | $             | 844,494    |                  | $ | 823,327   
|Residential mortgage                   |  |               | 3,687,134  |                  |   | 3,737,726 
|Non-residential mortgage               |  |               | 3,463,487  |                  |   | 3,451,926 
|Commercial, financial and agricultural |  |               | 4,075,208  |                  |   | 4,031,549 
|Installment and credit card loans      |  |               | 767,412    |                  |   | 782,289   
|                                       |  |               |            |                  |   |           
|Total loans                            |  | $             | 12,837,735 |                  | $ | 12,826,817
|                                       |  |               |            |                  |   |           



11



---

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



|                           |  |               |         |                  |   |        
|-------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                           |  | March 31,2007 |         | December 31,2006
|Non-accrual loans          |  | $             | 146,343 |                  | $ | 137,111
|Restructured loans         |  |               | 40      |                  |   | 42     
|                           |  |               |         |                  |   |        
|Total non-performing loans |  | $             | 146,383 |                  | $ | 137,153
|                           |  |               |         |                  |   |        

Non-accrual loans include $15,430 and $15,435 of loans at March 31, 2007 and December 31, 2006,
respectively, that are secured by surety bonds and the assignment of payment streams from pools of commercial leases for which payment is over 90 days past due. See Note 15 Commitments and Contingencies for additional discussion.

7. Borrowings

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



|                                                                         |  |               |           |                  |   |          
|------------------------------------------------------------------------ |  | ------------- | --------- | ---------------- | - | ---------
|                                                                         |  | March 31,2007 |           | December 31,2006
|Borrowings under FHLB lines of credit                                    |  | $             | 649,274   |                  | $ | 903,645  
|Borrowings under bank line of credit                                     |  |               |          |                  |   | 35,000   
|Subordinated note, due April 2013 at 5.35%                               |  |               | 50,000    |                  |   | 50,000   
|Subordinated note, due October 2012 at 6.125%                            |  |               | 65,000    |                  |   | 65,000   
|Subordinated note, due January 2008 at 7.08%                             |  |               | 50,000    |                  |   | 50,000   
|Junior subordinated debentures owed to unconsolidated subsidiary trusts: |  |               |           |                  |   |          
|Due February 2027 at 9.88%                                               |  |               | 25,774    |                  |   | 25,774   
|Due June 2027 at 10.20%                                                  |  |               | 24,451    |                  |   | 24,451   
|Due May 2030 at 9.34%                                                    |  |               | 61,856    |                  |   | 61,856   
|Due April 2032 at 9.09% (variable)                                       |  |               | 20,848    |                  |   | 20,949   
|Due October 2032 at 9.01% (variable)                                     |  |               | 10,364    |                  |   | 10,413   
|Due April 2033 at 8.63% (variable)                                       |  |               | 6,264     |                  |   | 6,283    
|Due October 2033 at 8.32% (variable)                                     |  |               | 30,928    |                  |   | 30,928   
|Due June 2036 at 6.77% (variable)                                        |  |               | 77,320    |                  |   | 77,320   
|Due June 2036 at 6.76% (variable)                                        |  |               | 77,320    |                  |   | 77,320   
|Capital lease obligation and other items                                 |  |               | 117       |                  |   | 104      
|                                                                         |  |               |           |                  |   |          
|Total borrowings                                                         |  | $             | 1,149,516 |                  | $ | 1,439,080
|                                                                         |  |               |           |                  |   |          

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



12



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8. Other Comprehensive Income (Loss)

Other comprehensive income (loss) consisted of the following:



|                                                                  |  |                             |        |   |      |   |         |  
|----------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                  |  | Three Months EndedMarch 31, |       
|                                                                  |  | 2007                        |        |   | 2006 |  
|Securities available for sale:                                    |  |                             |        |   |      |   |         |  
|Unrealized securities gains (losses) arising during period        |  | $                           | 12,702 |   |      | $ | (34,386 | )
|Reclassification adjustment for (gains) losses included in income |  |                             | (565   | ) |      |   | 5       |  
|                                                                  |  |                             |        |   |      |   |         |  
|                                                                  |  |                             | 12,137 |   |      |   | (34,381 | )
|                                                                  |  |                             |        |   |      |   |         |  
|Cash flow hedge derivatives                                       |  |                             |        |   |      |   |         |  
|Change in fair value of cash flow hedge derivatives               |  |                             | (605   | ) |      |   | 1,463   |  
|                                                                  |  |                            
|Minimum pension liability and other                               |  |                             | (4     | ) |      |   | 3       |  
|                                                                  |  |                             |        |   |      |   |         |  
|Other comprehensive income (loss) before income taxes             |  |                             | 11,528 |   |      |   | (32,915 | )
|Tax effect                                                        |  |                             | (4,035 | ) |      |   | 11,520  |  
|                                                                  |  |                             |        |   |      |   |         |  
|Total other comprehensive income (loss)                           |  | $                           | 7,493  |   |      | $ | (21,395 | )
|                                                                  |  |                             |        |   |      |   |         |  

9. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding less the weighted average unvested restricted shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of shares determined for the basic computation in addition to the dilutive effect of potential common shares issuable under stock options and the restricted shares. For the three months ended March 31, 2007 and
2006, 930 and 745 weighted average shares, respectively, under option were excluded from the diluted earnings per share calculation as they were anti-dilutive.



|                                                     |  |                             |         |      |   |        
|---------------------------------------------------- |  | --------------------------- | ------- | ---- | - | -------
|                                                     |  | Three Months EndedMarch 31,
|                                                     |  | 2007                        |         | 2006
|Numerator:                                           |  |                             |         |      |   |        
|Net income                                           |  | $                           | 51,621  |      | $ | 50,640 
|                                                     |  |                             |         |      |   |        
|Denominator:                                         |  |                             |         |      |   |        
|Weighted-average common shares outstanding (basic)   |  |                             | 117,291 |      |   | 108,337
|Effect of non-vested restricted shares               |  |                             | 101     |      |   | 70     
|Effect of stock options                              |  |                             | 937     |      |   | 880    
|                                                     |  |                             |         |      |   |        
|Weighted-average common shares outstanding (diluted) |  |                             | 118,329 |      |   | 109,287
|                                                     |  |                             |         |      |   |        
|Earnings per share:                                  |  |                             |         |      |   |        
|Basic                                                |  | $                           | 0.44    |      | $ | 0.47   
|Diluted                                              |  |                             | 0.44    |      |   | 0.46   



13



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10. Capital Resources

The Federal Reserve Board (FRB) has established risk-based capital guidelines that must be observed by financial holding companies and banks. Failure to meet specified minimum capital requirements can result in certain mandatory actions by
primary regulators of Sky Financial and its bank subsidiary that could have a material effect on Sky Financials financial condition or results of operations. Under capital adequacy guidelines, Sky Financial and its bank subsidiary must meet
specific quantitative measures of their assets, liabilities and certain off-balance sheet items as determined under regulatory accounting practices. Sky Financials and its banks capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and other factors. Management believes, as of March 31, 2007, that Sky Financial and its bank meet all capital adequacy requirements to which they are subject.

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

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



|                                       |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|-------------------------------------- |  | ------ | --------- | ----- | --------------------------------------------- | - | ------ | ------------------------------------------------------------------------ | --------- |  | --- | ------ |  | ----- | --------- |  | ---- | -
|                                       |  | Actual |           |       | Minimum RequiredFor Capital Adequacy Purposes |   |        | Required to be Well CapitalizedUnder Prompt CorrectiveAction Regulations |          
|March 31, 2007                         |  | Amount |           | Ratio |                                               |   | Amount |                                                                          | Ratio     |  |     | Amount |  | Ratio |          
|Total capital to risk-weighted assets  |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,763,324 |       | 12.3                                          | % |        | $                                                                        | 1,148,203 |  | 8.0 | %      |  | $     | 1,435,254 |  | 10.0 | %
|Sky Bank                               |  |        | 1,624,722 |       | 11.6                                          |   |        |                                                                          | 1,123,892 |  | 8.0 |        |  |       | 1,404,865 |  | 10.0 |  
|                                       |  |        |           |       |                                               |  
|Tier 1 capital to risk-weighted assets |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,475,485 |       | 10.3                                          | % |        | $                                                                        | 574,101   |  | 4.0 | %      |  | $     | 861,152   |  | 6.0  | %
|Sky Bank                               |  |        | 1,384,683 |       | 9.9                                           |   |        |                                                                          | 561,946   |  | 4.0 |        |  |       | 842,919   |  | 6.0  |  
|                                       |  |        |           |       |                                               |  
|Tier 1 capital to average assets       |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,475,485 |       | 8.7                                           | % |        | $                                                                        | 677,514   |  | 4.0 | %      |  | $     | 846,893   |  | 5.0  | %
|Sky Bank                               |  |        | 1,384,683 |       | 8.2                                           |   |        |                                                                          | 672,223   |  | 4.0 |        |  |       | 840,279   |  | 5.0  |  
|                                       |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  



|                                       |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|-------------------------------------- |  | ------ | --------- | ----- | --------------------------------------------- | - | ------ | ------------------------------------------------------------------------ | --------- |  | --- | ------ |  | ----- | --------- |  | ---- | -
|                                       |  | Actual |           |       | Minimum RequiredFor Capital Adequacy Purposes |   |        | Required to be Well CapitalizedUnder Prompt CorrectiveAction Regulations |          
|December 31, 2006                      |  | Amount |           | Ratio |                                               |   | Amount |                                                                          | Ratio     |  |     | Amount |  | Ratio |          
|Total capital to risk-weighted assets  |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,728,756 |       | 12.1                                          | % |        | $                                                                        | 1,145,890 |  | 8.0 | %      |  | $     | 1,432,362 |  | 10.0 | %
|Sky Bank                               |  |        | 1,674,968 |       | 12.0                                          |   |        |                                                                          | 1,121,830 |  | 8.0 |        |  |       | 1,401,038 |  | 10.0 |  
|                                       |  |        |           |       |                                               |  
|Tier 1 capital to risk-weighted assets |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,430,069 |       | 10.0                                          | % |        | $                                                                        | 572,945   |  | 4.0 | %      |  | $     | 859,417   |  | 6.0  | %
|Sky Bank                               |  |        | 1,432,087 |       | 10.2                                          |   |        |                                                                          | 560,415   |  | 4.0 |        |  |       | 840,623   |  | 6.0  |  
|                                       |  |        |           |       |                                               |  
|Tier 1 capital to average assets       |  |        |           |       |                                               |   |        |                                                                          |           |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,430,069 |       | 8.5                                           | % |        | $                                                                        | 674,074   |  | 4.0 | %      |  | $     | 842,592   |  | 5.0  | %
|Sky Bank                               |  |        | 1,432,087 |       | 8.7                                           |   |        |                                                                          | 655,936   |  | 4.0 |        |  |       | 819,920   |  | 5.0  |  



14



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11. Goodwill and Intangible Assets

Goodwill at March 31, 2007 and December 31, 2006 was $728,355 and $728,260 respectively. Goodwill is reviewed annually for impairment. Sky Financial completed this review during the second quarter of 2006
and determined that goodwill was not impaired.

Net other intangible assets at March 31, 2007 and December 31, 2006 were $70,151 and $73,442,
respectively. These assets consist primarily of core deposit intangibles and customer relationship intangibles and are being amortized in accordance with Sky Financials accounting policies. Amortization expense on finitelived intangible
assets is expected to be $17,592, $16,161, $13,610, $11,758 and $10,411 in 2007, 2008, 2009, 2010, and 2011 respectively. These charges are exclusive of any changes in amortization due to future acquisitions.

12. Line of Business Reporting

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

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

Selected segment information for the three ended March 31, 2007 and 2006 is included in
the following tables:



|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|------------------------------------------ |  | ---------------- | ---------- | - | --------------------------- | - | -------------- |  | - | ------ | - |  | - | ----------
|Three months ended March 31, 2007          |  | CommunityBanking |            |   | FinancialServicesAffiliates |   | ParentAndOther |  |   | Total 
|Net interest income (expense)              |  | $                | 147,873    |   |                             | $ | 129            |  | $ | (5,236 | ) |  | $ | 142,766   
|Provision for credit losses                |  |                  | 10,703     |   |                             |   |               |  |   |       |   |  |   | 10,703    
|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|Net interest income (loss) after provision |  |                  | 137,170    |   |                             |   | 129            |  |   | (5,236 | ) |  |   | 132,063   
|Non-interest income                        |  |                  | 45,307     |   |                             |   | 23,266         |  |   | 240    |   |  |   | 68,813    
|Non-interest expense                       |  |                  | 103,538    |   |                             |   | 16,739         |  |   | 2,603  |   |  |   | 122,880   
|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|Income before income taxes                 |  |                  | 78,939     |   |                             |   | 6,656          |  |   | (7,599 | ) |  |   | 77,996    
|Income taxes                               |  |                  | 26,747     |   |                             |   | 2,781          |  |   | (3,153 | ) |  |   | 26,375    
|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|Net income                                 |  | $                | 52,192     |   |                             | $ | 3,875          |  | $ | (4,446 | ) |  | $ | 51,621    
|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|Goodwill at January 1, 2007                |  | $                | 678,378    |   |                             | $ | 49,882         |  | $ |       |   |  | $ | 728,260   
|Net activity                               |  |                  | (3,633     | ) |                             |   | 3,728          |  |   |       |   |  |   | 95        
|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|Goodwill at March 31, 2007                 |  | $                | 674,745    |   |                             | $ | 53,610         |  | $ |       |   |  | $ | 728,355   
|                                           |  |                  |            |   |                             |   |                |  |   |        |   |  |   |           
|Average assets                             |  | $                | 17,500,461 |   |                             | $ | 101,787        |  | $ | 89,727 |   |  | $ | 17,691,975
|Depreciation and amortization              |  |                  | 9,404      |   |                             |   | 459            |  |   | 148    |   |  |   | 10,011    



15



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|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | ---------------- |  | - | ------- | - |  | - | ----------
|Three months ended March 31, 2006          |  | CommunityBanking |            | FinancialServicesAffiliates |   | Parent And Other |  |   | Total  
|Net interest income (loss)                 |  | $                | 135,028    |                             | $ | 104              |  | $ | (2,296  | ) |  | $ | 132,836   
|Provision for credit losses                |  |                  | 7,154      |                             |   |                 |  |   |        |   |  |   | 7,154     
|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|Net interest income (loss) after provision |  |                  | 127,874    |                             |   | 104              |  |   | (2,296  | ) |  |   | 125,682   
|Non-interest income                        |  |                  | 32,009     |                             |   | 24,251           |  |   | 399     |   |  |   | 56,659    
|Non-interest expense                       |  |                  | 88,470     |                             |   | 16,757           |  |   | 951     |   |  |   | 106,178   
|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|Income (loss) before income taxes          |  |                  | 71,413     |                             |   | 7,598            |  |   | (2,848  | ) |  |   | 76,163    
|Income taxes                               |  |                  | 23,878     |                             |   | 3,131            |  |   | (1,486  | ) |  |   | 25,523    
|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|Net income (loss)                          |  | $                | 47,535     |                             | $ | 4,467            |  | $ | (1,362  | ) |  | $ | 50,640    
|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|Goodwill at January 1, 2006                |  | $                | 461,571    |                             | $ | 60,291           |  | $ |        |   |  | $ | 521,862   
|Net activity                               |  |                  | 160        |                             |   | 1,598            |  |   |        |   |  |   | 1,758     
|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|Goodwill at March 31, 2006                 |  | $                | 461,731    |                             | $ | 61,889           |  | $ |        |   |  | $ | 523,620   
|                                           |  |                  |            |                             |   |                  |  |   |         |   |  |   |           
|Average assets                             |  | $                | 15,455,153 |                             | $ | 101,387          |  | $ | 102,782 |   |  | $ | 15,659,322
|Depreciation and amortization              |  |                  | 8,018      |                             |   | 414              |  |   | 192     |   |  |   | 8,624     

13. Derivative Instruments and Hedging Activities

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

The derivative instruments and hedging relationships have been designated and qualify as either fair value or cash flow hedges. To qualify for
hedge accounting under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, the effectiveness of each hedging relationship is assessed both at hedge inception and at each
reporting period thereafter. Also, at the end of each reporting period, ineffectiveness in the hedging relationships is measured as the difference between the change in fair value of the derivative instruments and the change in fair value of either
the hedged items (fair value hedges) or expected cash flows (cash flow hedges). Ineffectiveness, if any, is recorded as derivative gains (losses) on swaps as a component of non-interest income.

Fair Value Hedges - Interest Rate Swaps

Sky Financial uses interest
rate swap agreements to hedge a portion of its fixed rate borrowings. The interest rate swaps effectively convert the fixed rate of interest on $249,150 of advances from the Federal Home Loan Bank of Cincinnati (FHLB) and $95,000 of wholesale
repurchase agreements to variable rates based on LIBOR plus a spread as defined in the agreements. Sky Financial also uses interest rate swap agreements to hedge long-term fixed rate commercial loans. At March 31, 2007, Sky Financial had
$18,032 of such agreements. The commercial loan swaps effectively convert the fixed rate of interest on these commercial loans to a variable rate based on LIBOR plus a spread as defined in the agreements. The interest rate swaps involve no exchange
of principal either at inception or maturity and have maturities identical to the commercial loans. The arrangements have been designated as fair value hedges and both the change in the fair value of the hedges and the hedged transactions are
reflected in earnings. The hedging arrangements of the advances from the FHLB, the wholesale repurchase agreements and the long-term fixed rate commercial loans are considered highly effective, and changes in the fair value of the interest rate
swaps exactly offset the corresponding changes in the hedged items. As a result, the changes in the fair value do not result in an impact on net income.



16



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Cash Flow Hedges

In
the first quarter of 2006, Sky Financial entered into two interest rate swaps that fix the rate on $150,000 of variable rate borrowings on junior subordinated debentures owed to unconsolidated subsidiary trusts. Under the terms of the arrangement,
Sky Financial pays a fixed rate of interest and receives a variable rate based on LIBOR. Hedge effectiveness is assessed on a quarterly basis using the long-haul method. The effective portion of the change in the swaps fair value is recorded
in other comprehensive income, net of tax. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the variable-rate subordinated notes.

Interest Rate Caps

During 2002, Sky Financial entered into two
interest rate cap arrangements, and paid $1,456 to hedge its interest risk on $48,600 of federal funds purchased. The interest rate caps are designed to offset the impact of changes in the federal fund purchased rate above the weighted average
stated rate of 5.90%, and, as such, are considered to be highly effective. Any changes in the intrinsic values are recorded in other comprehensive income. The changes in the time values of the interest rate caps, which are excluded from the
assessment of hedge effectiveness, increased interest expense by $54 in the first quarter of 2007 and 2006. No deferred gains or losses in accumulated other comprehensive income at March 31, 2007 are expected to be reclassified to income from
continuing operations in 2007.

The following table presents the contract/notional and fair value amounts of all derivative transactions at March 31,
2007 and December 31, 2006:



|                                     |  |                 |         |            |   |        |  
|------------------------------------ |  | --------------- | ------- | ---------- | - | ------ | -
|                                     |  | Notional Amount |         | Fair Value |  
|At March 31, 2007                    |  |                 |         |            |   |        |  
|Designated hedging instruments       |  |                 |         |            |   |        |  
|Fair value hedges                    |  | $               | 362,182 |            | $ | 127    |  
|Cash flow hedges                     |  |                 | 150,000 |            |   | (1,068 | )
|Interest rate caps                   |  |                 | 48,600  |            |   | 31     |  
|                                     |  |                 |         |            |   |        |  
|Total derivative hedging instruments |  | $               | 560,782 |            | $ | (910   | )
|                                     |  |                 |         |            |   |        |  
|At December 31, 2006                 |  |                 |         |            |   |        |  
|Designated hedging instruments       |  |                 |         |            |   |        |  
|Fair value hedges                    |  | $               | 432,303 |            | $ | 13     |  
|Cash flow hedges                     |  |                 | 150,000 |            |   | (405   | )
|Interest rate caps                   |  |                 | 48,600  |            |   | 7      |  
|                                     |  |                 |         |            |   |        |  
|Total derivative hedging instruments |  | $               | 630,903 |            | $ | (335   | )
|                                     |  |                 |         |            |   |        |  

Interest Rate Swaps on Behalf of Clients

Sky Financial has entered into several commercial loan swaps in order to provide commercial loan clients the ability to swap from variable to fixed interest rates. Under these agreements, Sky Financial enters into a
variable rate loan agreement with a client in addition to a swap agreement. This swap agreement effectively swaps the clients variable rate loan into a fixed rate loan. Sky Financial then enters into a corresponding swap agreement with a third
party in order to swap its exposure on the variable to fixed rate swap on the commercial loan. At March 31, 2007 and December 31, 2006, Sky Financial had $185,908 and $159,371, respectively, of notional amount of such agreements. As the
interest rate swaps with the clients and third parties are not designated as hedges under FAS No. 133, the instruments are marked to market in earnings. As the interest rate swaps are structured to offset each other, there was no net impact to
earnings in the first quarter of 2007 and 2006 related to these swaps.



17



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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, 2007:



|                                    |  |                                 |        |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   |        |  
|----------------------------------- |  | ------------------------------- | ------ | - | --------------- | - | ---- | ------------------------- |  | - | --------------------------- | - |  | ----- | ---- | - |  | - | ------ | -
|                                    |  | EmployeeSeveranceandTermination |        |   | ConversionCosts |   |      | Lease/ContractTermination |  |   | ProfessionalFees/OtherCosts |   |  | Total |     
|Balance as of January 1, 2007       |  | $                               | 1,686  |   |                 | $ | 101  |                           |  | $ | 663                         |   |  | $     |     |   |  | $ | 2,450  |  
|Accruals charged to expense         |  |                                 | 739    |   |                 |   | 773  |                           |  |   | 5                           |   |  |       | 206  |   |  |   | 1,723  |  
|Cash payments and other adjustments |  |                                 | (1,844 | ) |                 |   | (829 | )                         |  |   | (85                         | ) |  |       | (206 | ) |  |   | (2,964 | )
|                                    |  |                                 |        |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   |        |  
|Balance as of March 31, 2007        |  | $                               | 581    |   |                 | $ | 45   |                           |  | $ | 583                         |   |  | $     |     |   |  | $ | 1,209  |  
|                                    |  |                                 |        |   |                 |   |      |                           |  |   |                             |   |  |       |      |   |  |   |        |  

During the first quarter of 2007, Sky Financial recorded $1,723 ($1,120 after tax) of merger, integration and
restructuring expense related to additional costs from the fourth quarter 2006 acquisition of Union Federal and costs incurred related to the pending merger with Huntington.

During the first quarter of 2006, Sky Financial recorded $180 ($117 after tax) of merger, integration and restructuring expense related to the pending acquisition of Union Federal Bank and additional costs related to
the fourth quarter 2005 acquisition of Falls Bank.

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

15. Commitments and Contingencies

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

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

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

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



18



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

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

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

American Home Mortgage Corp. v. Union Federal
Bank of Indianapolis, Case No. 06-CV-7864 (JGK) (RLE), U.S. District Court for the Southern District of New York

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

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

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

A schedule of significant commitments at March 31, 2007 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 3,544,599
|Standby letters of credit    |  |   | 260,218  
|Letters of credit            |  |   | 705      

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



19



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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)

Huntington Merger

On December 20, 2006, Sky Financial and Huntington Bancshares Incorporated (Huntington) announced the signing of a definitive agreement to merge the two companies in
a stock (90%) and cash (10%) transaction valued at approximately $3.5 billion. Under the terms of the agreement, Sky Financial shareholders will receive 1.098 shares of Huntington common stock and a cash payment of $3.023 for each share of
Sky Financial.

The merger was unanimously approved by both companies boards of directors and is expected to close early in the 2007 third quarter,
pending customary regulatory approvals, as well as the approval of Huntingtons and Sky Financials shareholders.

Three Months Ended
March 31, 2007 and 2006

Overview

Net income
for the first quarter of 2007 was $51,621 or $0.44 per diluted share, up from $50,640 or $0.46 per diluted share in the first quarter of 2006. Sky Financials results for the first quarter 2007 reflected a continued focus on its strategic
priorities with an improved margin over the fourth quarter 2006, consistent credit quality and strong expense control, despite a challenging economic and interest rate environment.

For the first quarter 2007, net interest income increased $9,930 over the first quarter 2006, mainly due to the growth in assets attributable to organic growth and acquisitions. The provision for credit losses
increased $3,549, primarily due to higher credit losses and greater average loans during the quarter. With the expansion from acquisitions throughout 2006 and the growth of fee-based businesses, non-interest income increased $12,154. The major
components of the increase in non-interest income included an increase of $7,312 in service charges and fees on deposit accounts and an increase of $1,054 in trust services income. Non-interest expenses increased for the first quarter 2007 by
$16,702 over the first quarter 2006 due to an increase of $6,552 in salaries and employee costs from an increase in the number of full-time equivalent employees and an increase of $3,676 in occupancy and equipment expense. These increases are
primarily from the acquisitions in late 2006.

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,
2007 and 2006 are summarized in the table below.



|                              |  |                   |        |   |      |   |        |  
|----------------------------- |  | ----------------- | ------ | - | ---- | - | ------ | -
|                              |  | Net Income (Loss) |       
|Quarter Ended March 31,       |  | 2007              |        |   | 2006 |  
|Community Banking             |  | $                 | 52,192 |   |      | $ | 47,535 |  
|Financial Services Affiliates |  |                   | 3,875  |   |      |   | 4,467  |  
|Parent and Other              |  |                   | (4,446 | ) |      |   | (1,362 | )
|                              |  |                   |        |   |      |   |        |  
|Consolidated Total            |  | $                 | 51,621 |   |      | $ | 50,640 |  
|                              |  |                   |        |   |      |   |        |  

The higher community banking net income in the first quarter of 2007 as compared to the same period of the
previous year is mainly due to higher net interest income and non-interest income, partially offset by higher non-interest expenses. Higher average earning assets from acquisitions and organic growth contributed to a $12,845 or 9.5% increase in net
interest income. The effects of the higher average earning assets were partially offset by a lower net interest margin than in the prior year. The higher non-interest income over 2006 was primarily due to higher income from service charges.
Non-interest expenses increased $15,068 or 17.0% over the first quarter of 2006, primarily due to higher salaries and employee benefits expense due to acquisitions in the fourth quarter 2006. The



20



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efficiency ratio, defined as non-interest expense divided by the sum of fully taxable equivalent net interest income plus non-interest income, for the
community banking segment was 53.32% for the first quarter of 2007 compared to 52.72% in the first quarter of 2006. The 2007 community banking results reflect a ROE of 10.59% and a ROA of 1.21% compared to 12.47% and 1.25%, respectively, in the
first quarter of 2006.

The financial service affiliates net income decreased as compared to 2006 due primarily to decreased income from brokerage
and insurance commissions. This decrease is primarily due to the sale of the wholesale insurance business in the fourth quarter 2006 and decreased contingent income. This decrease was partially offset by higher trust services income.

Parent and other includes the net funding costs of the parent company and intercompany billings to other affiliates for shared services. The decrease in parent and other
results of operations from the prior year first quarter relate primarily to higher interest expenses retained by the parent and higher merger, integration and restructuring expenses that are retained on the parent.

Net Interest Income

Net interest income for the first quarter of
2007 was $142,766, an increase of $9,930 or 7.5% from $132,836 in the first quarter of 2006. 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 12.0%
from the first quarter last year from a combination of organic growth and acquisitions. Average loans for the quarter increased 15.0% over 2006s volume during the same quarter, with organic growth contributing 2.4% in addition to the
acquisitions. Sky Financials net interest margin for the three months ended March 31, 2007 and 2006 was 3.64% and 3.78%, respectively. The 14 basis point decline in the net interest margin reflected compressed interest rate spreads from
an unfavorable interest rate environment and the effects of the addition of Union Federal in the fourth quarter of 2006 that had a lower margin which were partially offset by the fourth quarter balance sheet restructuring. In addition, the margin in
the first quarter of 2006 benefited from interest collected on certain non-accrual loans that increased the margin approximately 3 basis points.



21



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The following table reflects the components of Sky Financials net interest income for the three months ended
March 31, 2007 and 2006. Rates are computed on a tax equivalent basis and non-accrual loans have been included in the average balances. Certain amounts related to brokered deposits from prior year have been reclassified to conform to current
year presentation.



|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|-------------------------------------------------------------------------------------------- |  | --------------------------------- | ---------- | ---------------------- | --------------------------------- | ------- |  | ---- | -------------- |  | ---------------------- | ---------- | ---- | - | ------- |  | ---- | -
|                                                                                             |  | Three Months Ended March 31, 2007 |            |                        | Three Months Ended March 31, 2006 |        
|                                                                                             |  | AverageBalance                    |            | InterestIncome/Expense |                                   | Rate    |  |      | AverageBalance |  | InterestIncome/Expense |            | Rate |  
|                                                                                             |  | (Dollars in thousands)            |           
|Assets                                                                                       |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |        
|Interest-earning assets:                                                                     |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing deposits in banks                                                           |  | $                                 | 9,414      |                        | $                                 | 210     |  | 9.03 | %              |  | $                      | 12,546     |      | $ | 256     |  | 8.26 | %
|Federal funds sold                                                                           |  |                                   | 50,545     |                        |                                   | 630     |  | 5.06 |                |  |                        | 2,644      |      |   | 29      |  | 4.42 |  
|Securities                                                                                   |  |                                   | 3,106,414  |                        |                                   | 39,159  |  | 5.11 |                |  |                        | 3,115,505  |      |   | 35,735  |  | 4.65 |  
|Loans and loans held for sale                                                                |  |                                   | 12,869,321 |                        |                                   | 242,253 |  | 7.63 |                |  |                        | 11,188,221 |      |   | 198,792 |  | 7.21 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-earning assets                                                                |  |                                   | 16,035,694 |                        |                                   | 282,252 |  | 7.14 |                |  |                        | 14,318,916 |      |   | 234,812 |  | 6.65 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-earning assets                                                                   |  |                                   | 1,656,281  |                        |                                   |         |  |      |                |  |                        | 1,340,406  |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total assets                                                                                 |  | $                                 | 17,691,975 |                        |                                   |         |  |      |                |  | $                      | 15,659,322 |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |        
|Liabilities and Shareholders Equity                                                         |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Interest-bearing liabilities:                                                                |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Demand deposits                                                                              |  | $                                 | 420,048    |                        |                                   | 2,487   |  | 2.40 |                |  | $                      | 338,576    |      |   | 1,488   |  | 1.78 |  
|Savings deposits                                                                             |  |                                   | 3,955,419  |                        |                                   | 23,302  |  | 2.39 |                |  |                        | 3,403,785  |      |   | 14,446  |  | 1.72 |  
|Time deposits                                                                                |  |                                   | 5,885,967  |                        |                                   | 68,435  |  | 4.72 |                |  |                        | 5,014,172  |      |   | 46,799  |  | 3.79 |  
|Brokered deposits                                                                            |  |                                   | 1,000,951  |                        |                                   | 12,570  |  | 5.09 |                |  |                        | 358,208    |      |   | 3,457   |  | 3.91 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing deposits                                                              |  |                                   | 11,262,385 |                        |                                   | 106,794 |  | 3.85 |                |  |                        | 9,114,741  |      |   | 66,190  |  | 2.95 |  
|Short-term borrowings                                                                        |  |                                   | 1,052,180  |                        |                                   | 12,330  |  | 4.75 |                |  |                        | 1,020,649  |      |   | 10,358  |  | 4.12 |  
|Junior Subordinated Debentures                                                               |  |                                   | 335,202    |                        |                                   | 6,378   |  | 7.72 |                |  |                        | 184,440    |      |   | 3,479   |  | 7.65 |  
|Debt and FHLB advances                                                                       |  |                                   | 1,106,913  |                        |                                   | 12,999  |  | 4.76 |                |  |                        | 947,637    |      |   | 21,181  |  | 4.41 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total interest-bearing liabilities                                                           |  |                                   | 13,756,680 |                        |                                   | 138,501 |  | 4.08 |                |  |                        | 12,267,467 |      |   | 101,208 |  | 3.35 |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Noninterest-bearing liabilities                                                              |  |                                   | 2,036,673  |                        |                                   |         |  |      |                |  |                        | 1,821,066  |      |   |         |  |      |  
|Shareholders equity                                                                         |  |                                   | 1,898,622  |                        |                                   |         |  |      |                |  |                        | 1,570,789  |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Total liabilities and equity                                                                 |  | $                                 | 17,691,975 |                        |                                   |         |  |      |                |  | $                      | 15,659,322 |      |   |         |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest income (tax equivalent basis)                                                   |  |                                   |            |                        | $                                 | 143,751 |  |      |                |  |                        |            |      | $ | 133,604 |  |      |  
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest rate spread (tax equivalent basis)                                              |  |                                   |            |                        |                                   |         |  | 3.06 | %              |  |                        |            |      |   |         |  | 3.30 | %
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  
|Net interest margin, (interest income, taxable equivalent basis, to interest earning assets) |  |                                   |            |                        |                                   |         |  | 3.64 | %              |  |                        |            |      |   |         |  | 3.78 | %
|                                                                                             |  |                                   |            |                        |                                   |         |  |      |                |  |                        |            |      |   |         |  |      |  



22



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Provision for Credit Losses

The provision for credit losses represents the charge to income necessary to adjust the allowance for loan losses and the allowance for unfunded loan commitments and letters of credit to an amount that represents managements
assessment of the estimated probable credit losses inherent in Sky Financials loan portfolio which have been incurred at each balance sheet date. The provision for credit losses increased $3,549 or 49.6% to $10,703 in the first quarter of 2007
compared to $7,154 in the first quarter of 2006. Net charge-offs were $11,340 or 0.36% (annualized) of average loans during the three months ended March 31, 2007, compared to $8,030 or 0.29% (annualized) for the same period in 2006. Sky
Financial expects credit losses for the remainder of 2007 to remain consistent with those achieved during the first quarter.



|                                                                  |  |               |   |  |                  |   |  |               |  
|----------------------------------------------------------------- |  | ------------- | - |  | ---------------- | - |  | ------------- | -
|                                                                  |  | March 31,2007 |   |  | December 31,2006 |   |  | March 31,2006 |  
|Allowance for loan losses as a percentage of loans                |  | 1.34          | % |  | 1.35             | % |  | 1.29          | %
|Allowance for loan losses as a percentage of non-performing loans |  | 117.78        | % |  | 126.13           | % |  | 111.27        | %

See section titled Non-Performing Assets of managements discussion and analysis regarding
$15,430 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 partially offset by a decrease in brokerage and insurance
commissions. Non-interest income for the first quarter of 2007 was $68,813, an increase of $12,154 or 21.5% from $56,659 for the first quarter of 2006.

Non-interest income growth was most significant in service charges and fees on deposit accounts, which recorded revenues of $20,811 during the first quarter of 2007, an increase of $7,312 or 54.2% from the same period in 2006. The increased
revenues were primarily due to higher volumes in deposit accounts from acquisitions, continued growth in transaction accounts and fee increases on certain types of accounts. Trust services income for the first quarter of 2007 was $6,935, up $1,054
or 17.9% over the first quarter of 2006, primarily from acquisitions and organic growth. The assets under trust management have grown to $5.8 billion at March 31, 2007 from $4.9 billion at March 31, 2006. Brokerage and insurance commission
for the first quarter of 2007 were $18,492, down $1,300 or 6.6% from the first quarter of 2006 primarily due to the fourth quarter 2006 sale of the wholesale insurance business and decreased contingent income. Other income increased $4,350 or 36.5%
over the first quarter of 2006 due to higher checkcard and deposit fees.

Mortgage banking income was $5,731 during the first quarter of 2007, an increase
of $168 or 3.0%. This increase was due primarily to lower amortization in the first quarter of 2007. The components of mortgage banking income for the first quarter of 2007 and 2006 are as follows:



|                                |  |               |        |   |              |   |        |  
|------------------------------- |  | ------------- | ------ | - | ------------ | - | ------ | -
|                                |  | March 31,2007 |        |   | March 312006 |  
|Origination and sales revenue   |  | $             | 4,098  |   |              | $ | 4,146  |  
|Mortgage loan servicing income  |  |               | 3,941  |   |              |   | 3,924  |  
|Amortization expense            |  |               | (2,332 | ) |              |   | (2,488 | )
|Impairment (charges) recoveries |  |               | 24     |   |              |   | (19    | )
|                                |  |               |        |   |              |   |        |  
|Total                           |  | $             | 5,731  |   |              | $ | 5,563  |  
|                                |  |               |        |   |              |   |        |  



23



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Non-Interest Expense

Non-interest expense for the first quarter of 2007 was $122,880, an increase of $16,702 or 15.7%, from $106,178 reported for the same quarter of 2006. Salary and other employee costs were $66,366, up $6,552 or 11.0% as compared to the first
quarter of 2006 mainly due, an increase of approximately 468 full-time equivalent employees compared to the first quarter of 2006, partially offset by a decrease in stock compensation expense. In the first quarter of 2007, Sky Financial did not
grant any stock options or restricted shares, while in the first quarter of 2006, Sky Financial granted a significant number of stock options and restricted shares. A number of these grants in 2006 were to retirement eligible individuals and were
expensed immediately upon grant. The increased number of employees is mainly due to additional employees from the acquisitions of Union Federal and Wells River in 2006. Occupancy and equipment costs were $21,319, up $3,676 or 20.8% compared to the
same period of 2006 as a result of the acquisitions. Other operating expenses were $28,912, up $4,248 or 17.2% as compared to the first quarter of 2006, primarily a result of higher marketing expenses. Amortization expense increased $683, or 17.6%
from the first quarter of 2006 due to the additional intangible assets acquired from recent acquisitions. Merger, integration and restructuring charges of $1,723 were recognized in the first quarter of 2007 related to additional costs from the
fourth quarter 2006 acquisition of Union Federal and costs incurred related to the pending merger with Huntington. Expenses were further impacted by the addition of six new financial centers over the last twelve months. The efficiency ratio was
57.81% for the first quarter of 2007, up from 55.81% for the same quarter last year. The efficiency ratio is defined as non-interest expense divided by the sum of fully taxable equivalent net interest income plus non-interest income.

Income Taxes

The provision for income taxes for the first quarter of
2007 increased $852 to $26,375 from $25,523 for the same period in 2006 due to slightly higher pretax income. The effective tax rate for the three months ended March 31, 2007 was 33.8% as compared to 33.5% for the first quarter of 2006 and
33.2% for the full year of 2006.

Balance Sheet

At
March 31, 2007, total assets were $17,623,009, a decrease of $103,085 from December 31, 2006, due primarily to a decrease in securities of $86,127, primarily related to active management of the liquidity position in response to forecasted
interest rate changes.

Total loans increased $10,918 from December 31, 2006 from organic growth. Total deposits decreased $85,201 due to a
competitive marketplace and seasonal trends for deposits. Debt levels decreased by $289,564 while securities sold under repurchase agreements and federal funds purchased increased by $229,521.

Shareholders equity totaled $1,930,632 at March 31, 2007, increasing $49,984 from December 31, 2006. Common stock increased $20,626 due to stock option
exercises and stock based compensation expense. Treasury stock increased by $334. Net retained earnings (net income less cash dividends) at March 31, 2007 totaled $538,825 as compared to $516,626 at December 31, 2006. The increase is due
to the net income for the period, less dividends paid. Accumulated other comprehensive loss increased by $7,493, primarily due to unrealized gains on securities.



24



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Non-Performing Assets

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



|                                                                     |  |               |         |   |                  |   |         |               |  |   |         |  
|-------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | ------------- |  | - | ------- | -
|                                                                     |  | March 31,2007 |         |   | December 31,2006 |   |         | March 31,2006 | 
|Non-accrual loans                                                    |  | $             | 146,343 |   |                  | $ | 137,111 |               |  | $ | 128,402 |  
|Restructured loans                                                   |  |               | 40      |   |                  |   | 42      |               |  |   | 463     |  
|                                                                     |  |               |         |   |                  |   |         |               |  |   |         |  
|Total non-performing loans                                           |  |               | 146,383 |   |                  |   | 137,153 |               |  |   | 128,865 |  
|Other real estate owned                                              |  |               | 23,425  |   |                  |   | 21,669  |               |  |   | 18,319  |  
|                                                                     |  |               |         |   |                  |   |         |               |  |   |         |  
|Total non-performing assets                                          |  | $             | 169,808 |   |                  | $ | 158,822 |               |  | $ | 147,184 |  
|                                                                     |  |               |         |   |                  |   |         |               |  |   |         |  
|Loans 90 days or more past due and still accruing interest           |  | $             | 14,915  |   |                  | $ | 23,988  |               |  | $ | 20,408  |  
|                                                                     |  |               |        
|Non-performing loans to total loans                                  |  |               | 1.14    | % |                  |   | 1.07    | %             |  |   | 1.16    | %
|Non-performing assets to total loans plus other real estate owned    |  |               | 1.32    |   |                  |   | 1.24    |               |  |   | 1.33    |  
|Allowance for loan losses to total non-performing loans              |  |               | 117.78  |   |                  |   | 126.13  |               |  |   | 111.27  |  
|Loans 90 days or more past due and not on non-accrual to total loans |  |               | .12     |   |                  |   | .19     |               |  |   | .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 $109,051 and $113,395 at March 31, 2007 and December 31, 2006, respectively, and are being closely monitored by management and the Boards of Directors of the subsidiaries. The amounts
included in these loans resulted from an evaluation, on a loan-by-loan basis, of loans classified as doubtful and substandard but are not included in the non-performing loan category. The classification of these loans,
however, does not imply that management expects losses on each of these loans, but believes that a higher level of scrutiny is prudent under the circumstances. These loans require close monitoring despite the fact that they are currently performing.
Such classifications relate to specific concerns relating to each individual borrower and do not relate to any concentrated risk elements common to all loans in this group.

For the three months ended March 31, 2007, the amount of interest income that would have been recorded under the original loan terms for total loans classified as non-accrual and restructured was $3,268. The
amount actually collected and recorded, as interest income for these loans, was $42.

Included in nonaccrual loans are $15,430 at March 31, 2007
and $15,435 at December 31, 2006 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 issued by a creditworthy insurance company. Sky is engaged in
litigation with this insurance company to enforce their payment obligations, as are a number of other banks nationwide. These non-accrual loans are currently reflected in the consolidated balance sheet at the amount of the unpaid balance, under
contractual terms. After consultation with its counsel as to the strength of its position, Sky Financial believes that the credits are well secured and that the prospects for recovery of its balance, net of reserves, is probable.



25



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Allowance for Credit Losses

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



|                                                                     |  |                             |         |   |      |   |         |  
|-------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                     |  | Three Months EndedMarch 31, |        
|                                                                     |  | 2007                        |         |   | 2006 |  
|Balance of allowance at beginning of period                          |  | $                           | 172,990 |   |      | $ | 144,461 |  
|                                                                     |  |                            
|Loans charged-off:                                                   |  |                             |         |   |      |   |         |  
|Real estate                                                          |  |                             | (6,508  | ) |      |   | (4,106  | )
|Commercial and agricultural                                          |  |                             | (2,690  | ) |      |   | (2,418  | )
|Installment and credit card                                          |  |                             | (5,085  | ) |      |   | (3,876  | )
|Other loans                                                          |  |                             | (81     | ) |      |   | (280    | )
|                                                                     |  |                             |         |   |      |   |         |  
|Total loans charged-off                                              |  |                             | (14,364 | ) |      |   | (10,680 | )
|                                                                     |  |                             |         |   |      |   |         |  
|Recoveries                                                           |  |                             |         |   |      |   |         |  
|Real estate                                                          |  |                             | 694     |   |      |   | 273     |  
|Commercial and agricultural                                          |  |                             | 269     |   |      |   | 144     |  
|Installment and credit card                                          |  |                             | 1,829   |   |      |   | 2,044   |  
|Other loans                                                          |  |                             | 232     |   |      |   | 189     |  
|                                                                     |  |                             |         |   |      |   |         |  
|Total recoveries                                                     |  |                             | 3,024   |   |      |   | 2,650   |  
|                                                                     |  |                             |         |   |      |   |         |  
|Net loans charged-off                                                |  |                             | (11,340 | ) |      |   | (8,030  | )
|Provision for credit losses                                          |  |                             | 10,703  |   |      |   | 7,154   |  
|Transfer to allowance for unfunded commitments and letters of credit |  |                             | 54      |   |      |   | (202    | )
|                                                                     |  |                             |         |   |      |   |         |  
|Balance of allowance at end of period                                |  | $                           | 172,407 |   |      | $ | 143,383 |  
|                                                                     |  |                             |         |   |      |   |         |  
|Ratio of net charge-offs to average loans outstanding                |  |                             | 0.36    | % |      |   | 0.29    | %

At March 31, 2007 and December 31, 2006, an allowance for unfunded commitments and letters of credit of
$432 and $490 was included in accrued interest payable and other liabilities.

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

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

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

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

The following table sets forth Sky Financials allocation of the
allowance for credit losses as of March 31, 2007 and December 31, 2006.



26



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|                                       |  |               |         |                 |   |        
|-------------------------------------- |  | ------------- | ------- | --------------- | - | -------
|                                       |  | March 31,2007 |         | December 312006
|Specific:                              |  |               |         |                 |   |        
|Construction                           |  | $             | 90      |                 | $ | 30     
|Real estate                            |  |               | 5,471   |                 |   | 3,748  
|Commercial, financial and agricultural |  |               | 5,606   |                 |   | 5,429  
|                                       |  |               |         |                 |   |        
|Sub-total                              |  |               | 11,167  |                 |   | 9,207  
|General                                |  |               |         |                 |   |        
|Construction                           |  |               | 8,749   |                 |   | 9,059  
|Real estate                            |  |               | 58,236  |                 |   | 57,272 
|Commercial, financial and agricultural |  |               | 50,394  |                 |   | 51,093 
|Installment and credit card            |  |               | 22,409  |                 |   | 24,480 
|                                       |  |               |         |                 |   |        
|Sub-total                              |  |               | 139,788 |                 |   | 141,904
|                                       |  |               |         |                 |   |        
|Total allocated                        |  |               | 150,955 |                 |   | 151,111
|Unallocated                            |  |               | 21,452  |                 |   | 21,879 
|                                       |  |               |         |                 |   |        
|Total                                  |  | $             | 172,407 |                 | $ | 172,990
|                                       |  |               |         |                 |   |        

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



|                                       |  |               |   |  |                  |  
|-------------------------------------- |  | ------------- | - |  | ---------------- | -
|                                       |  | March 31,2007 |   |  | December 31,2006 |  
|Construction                           |  | 6.6           | % |  | 6.4              | %
|Real estate                            |  | 55.7          |   |  | 56.1             |  
|Commercial, financial and agricultural |  | 31.7          |   |  | 31.4             |  
|Installment and credit card            |  | 6.0           |   |  | 6.1              |  
|                                       |  |               |   |  |                  |  
|Total                                  |  | 100.0         | % |  | 100.0            | %
|                                       |  |               |   |  |                  |  

Liquidity and Capital Resources

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

Certificates of deposit provide Sky Financial with a
dependable source of funding. However, market pricing can be highly competitive and this source of funds must be prudently managed. As of March 31, 2007, a total of $5,317,371 of contractual time deposits would mature in the next twelve months.
The maturities are reasonably disbursed across the year and there are no unusual concentrations of individual clients. At Sky Financial, time deposit maturities are monitored through the corporate Asset/ Liability Committee (ALCO). Maturing balances
are summarized by month, original term and existing rate within each of the eight regional market areas. Heavy maturity periods are monitored closely and proactive marketing plans are created that address both the client and Sky Financials
needs and preferences. Regional management along with funds management meets weekly to discuss general economic and market conditions. During this meeting, each region reports the results of the prior weeks pricing and promotional efforts.
Each region then determines its rates for the coming week. Regional pricing allows Sky Financial to attract deposits at the most efficient cost available. Retained time deposits are monitored and the percent retained is reported monthly to ALCO.



27



---

Management of Sky Financial expects that a significant portion of the scheduled maturities will be retained throughout
2007 and into the first quarter of 2008. In the unlikely event that these are not retained by Sky Financial, a minimum liquidity ratio has been established at 10% of non-collateralized liabilities. This 10% ratio consists of readily marketable
securities and unused borrowing capacity. At least 8% of the assets must be in unencumbered marketable assets. In addition, Sky Financial has a standing contingent liquidity management plan that prioritizes the steps needed to compensate for
temporary disruptions in liquidity.

In addition to maintaining a stable core deposit base, Sky Financials banking subsidiary maintains adequate
liquidity primarily through the use of investment securities and unused borrowing capacity. At March 31, 2007, securities and other short term investments with maturities of one year or less totaled $25,382. In addition, the mortgage-backed
securities provide an estimated cash flow of approximately $653,140 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, 2007, the banking subsidiary had total credit availability with the FHLB of $2,035,717 of which it had outstanding borrowings of $649,237.

Sky Financial maintains a $100,000 line of credit with a group of unaffiliated banks that expires December 31, 2007 or upon completion of the merger with Huntington. As of March 31, 2007, Sky Financial had no outstanding balance
on the line of credit and $35,000 outstanding at December 31, 2006.

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

A schedule of significant commitments at March 31, 2007 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 3,544,599
|Standby letters of credit    |  |   | 260,218  
|Letters of credit            |  |   | 705      

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 $69,628 at March 31, 2007.

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, 2007, Sky Financials gap position, the difference
between the dollar value of interest rate sensitive assets and interest rate sensitive liabilities, was a negative 92.7% for six months and a negative 90.6% for one year. The six month position was below Sky Financials Asset/Liability
Committee (ALCO) guidelines, while the one year position was within the ALCO guidelines. Sky Financial is following prudent interest rate risk strategies and managing its interest rate position in anticipation of future rate changes. Therefore Sky
Financial does not expect to experience any significant fluctuations in its net interest margin as a consequence of changes in market rates. See also Item. 3, Quantitative and Qualitative Disclosures About Market Risk.

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



28



---

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 clients; client 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. This report also contains certain forward-looking statements about the benefits of the merger between Huntington and Sky Financial Group, which are subject to numerous assumptions,
risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors including: the businesses of Huntington and Sky Financial Group may not be integrated successfully or such
integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger may not be fully realized within the expected timeframes; disruption from the merger may make it more difficult to maintain
relationships with clients, associates, or suppliers; the required governmental approvals of the merger may not be obtained on the proposed terms and schedule; Huntington and/or Sky Financials stockholders may not approve the merger; and other
factors described in Huntingtons registration statement on Form S-4 regarding the merger. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements, and the purpose of this paragraph is to
secure the use of the safe harbor provisions.

Sarbanes-Oxley Act of 2002

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



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

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

Sky Financial manages market risk through its Asset/Liability Committee (ALCO) at the consolidated level.
This committee monitors interest rate risk through sensitivity analysis, whereby it measures potential changes in future earnings and the fair market values of financial instruments that may result from one or more hypothetical changes in interest
rates. This analysis is performed by estimating the expected cash flows of Sky Financials financial instruments using interest rates in effect at March 31, 2007 and December 31, 2006. For the fair value estimates, the cash flows are
then discounted to year end to arrive at an estimated present value of Sky Financials financial instruments. Hypothetical changes in interest rates are then applied to the financial instruments, and the cash flows and fair values are again
estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows. Sky Financial applied these interest rate shocks to its financial
instruments up 200 and 100 basis points and down 100 and 200 basis points.



29



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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 31,2007 |   |  | ALCOMax |   |  | GuidelinesMin |  
|Six Month    |  | 92.7          | % |  | 125     | % |  | 95            | %
|Twelve Month |  | 90.6          | % |  | 125     | % |  | 90            | %

The six month position was below Sky Financials Asset/Liability Committee (ALCO) guidelines, while the one
year position was within the ALCO guidelines. Sky Financial is following prudent interest rate risk strategies and managing its interest rate position in anticipation of future rate changes. Therefore Sky Financial does not expect to experience any
significant fluctuations in its net interest margin as a consequence of changes in market rates.

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 31,2007 |   |  | December 31,2006 |   |  | ALCOGuidelines_ |   
|One Year Net Interest    |  |               |   |  |                  |   |  |                 |   
|Income Change            |  |               |   |  |                  |   |  |                 |   
|+200 Basis points        |  | 0.6           | % |  | 0.4              | % |  | (10.0           | )%
|+100 Basis points        |  | 0.3           |   |  | 0.3              |   |  | (5.0            | ) 
|-100 Basis points        |  | (0.9          | ) |  | (0.7             | ) |  | (5.0            | ) 
|-200 Basis points        |  | (4.9          | ) |  | (4.5             | ) |  | (10.0           | ) 
|                         |  |               |  
|Economic Value of Equity |  |               |   |  |                  |   |  |                 |   
|+200 Basis points        |  | (12.9         | ) |  | (13.4            | ) |  | (15.0           | ) 
|+100 Basis points        |  | (6.2          | ) |  | (6.3             | ) |  | (10.0           | ) 
|-100 Basis points        |  | 3.2           |   |  | 3.7              |   |  | (10.0           | ) 
|-200 Basis points        |  | 4.7           |   |  | 5.4              |   |  | (15.0           | ) 

The projected volatility of net interest income and the economic value of equity at March 31, 2007 and
December 31, 2006 fall within the ALCO guidelines.

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

Sky Financial also utilizes interest rate swaps and caps to effectively manage its interest rate risk.
At March 31, 2007, the fair values of Sky Financials derivative arrangements aggregated $(910) on contracts with notional amounts of $560,782.



|Item 4. | Controls and Procedures
|------- | -----------------------

Sky Financial maintains disclosure
controls and procedures designed to ensure that the information Sky Financial must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported accurately and on a timely basis. Sky
Financials management carried out an evaluation, under the supervision and with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the design and operation of Sky Financials
disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2007, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the chief executive officer along with
the chief financial officer concluded that Sky Financials disclosure controls and procedures as of March 31, 2007, are effective.



30



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For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an
issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods
specified in the Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or
submits under the Act is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.

Changes in Internal Control over Financial Reporting

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

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

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

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

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

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

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



31



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

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

American Home Mortgage Corp. v. Union Federal Bank of Indianapolis, Case No. 06-CV-7864 (JGK) (RLE), U.S. District Court for the Southern District of New York

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

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

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

******

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



|Item 1A. | Risk Factors
|-------- | ------------

There were no material changes to the risk factors as
presented in Sky Financials annual report on Form 10-K for the year ended December 31, 2006.



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



| | (a) | Not applicable
| | --- | --------------



| | (b) | Not applicable
| | --- | --------------



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



32



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None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not applicable.



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

None



|Item 5. | Other Information
|------- | -----------------

None



|Item 6. | Exhibits
|------- | --------

Exhibits



Exhibit No.

Description(11.1)

Statement Re Computation of Earnings Per Common Share The information required by this exhibit is incorporated herein by reference from the information contained in Note 9 Earnings Per Share on page 13 of Sky Financials Form 10-Q for March 31,
2007.(31.1)

Rule 13a - 14(a)/15d-14(a) Certification of Chief Executive Officer(31.2)

Rule 13a - 14(a)/15d-14(a) Certification of Chief Financial Officer(32.1)*

Section 1350 Certification of Chief Executive Officer(32.2)*

Section 1350 Certification of Chief Financial Officer


---

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



33



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SIGNATURES

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

SKY FINANCIAL GROUP, INC.



|                                                  
|--------------------------------------------------
|/s/ Kevin T. Thompson                             
|Kevin T. Thompson                                 
|Executive Vice President / Chief Financial Officer
|                                                  
|DATE: April 27, 2007                              
|SKY FINANCIAL GROUP, INC.                         



34



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                             
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                 
|(11.1)      |  | Statement Re Computation of Earnings Per Common Share The information required by this exhibit is incorporated herein by reference from the information contained in Note 9 Earnings Per Share on page 13 of Sky Financials Form 10-Q for March 31,
2007.
|            | 
|(31.1)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                                         
|            | 
|(31.2)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                                                                         
|            | 
|(32.1)*     |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                                                                       
|            | 
|(32.2)*     |  | Section 1350 Certification of Chief Financial Officer                                                                                                                                                                                                       

---

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



35