##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended September 30, 2004



Commission File No. 1-14473



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Sky Financial Group, Inc.

(Exact Name of Registrant as Specified in its Charter)



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



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



(419) 327-6300

(Registrants Telephone Number)



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



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



The number
of shares outstanding of the Registrants common stock, without par value, was 105,525,815 at October 31, 2004.



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##### Table of Contents

SKY FINANCIAL GROUP, INC.



INDEX

|                              |  |                                                                                                                             |  |            
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | -----------
|                              |  |                                                                                                                             |  | Page Number
|PART I.
FINANCIAL INFORMATION |  |                                                                                                                            
|                              |  |                                                                                                                            
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                            |  | 3          
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Balance SheetsSeptember 30, 2004 and December 31, 2003                                               |  | 3          
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Statements of IncomeThree and nine months ended September 30, 2004 and 2003                          |  | 4          
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Statements of Changes in Shareholders EquityThree and nine months ended September 30, 2004 and 2003 |  | 5          
|                              |  |                                                                                                                            
|                              |  | Condensed Consolidated Statements of Cash FlowsNine months ended September 30, 2004 and 2003                                |  | 6          
|                              |  |                                                                                                                            
|                              |  | Notes to Condensed Consolidated Financial Information                                                                       |  | 7          
|                              |  |                                                                                                                            
|Item 2.                       |  | Managements Discussion and Analysis of FinancialCondition and Results of Operations                                        |  | 21         
|                              |  |                                                                                                                            
|Item 3.                       |  | Quantitative and Qualitative DisclosuresAbout Market Risk                                                                   |  | 33         
|                              |  |                                                                                                                            
|Item 4.                       |  | Controls and Procedures                                                                                                     |  | 34         
|                              | 
|PART II.
OTHER INFORMATION    |  |                                                                                                                            
|                              |  |                                                                                                                            
|Item 1.                       |  | Legal Proceedings                                                                                                           |  | 34         
|                              |  |                                                                                                                            
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                                                   |  | 36         
|                              |  |                                                                                                                            
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                             |  | 36         
|                              |  |                                                                                                                            
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                         |  | 36         
|                              |  |                                                                                                                            
|Item 5.                       |  | Other Information                                                                                                           |  | 36         
|                              |  |                                                                                                                            
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                            |  | 37         
|                              | 
|SIGNATURES                    |  | 38                                                                                                                         
|                              | 
|EXHIBIT INDEX                 |  | 39                                                                                                                         



2



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##### Table of Contents

PART I.
FINANCIAL INFORMATION

Item 1.
Condensed Financial Statements



SKY FINANCIAL GROUP, INC.



Condensed
Consolidated Balance Sheets (Unaudited)



|                                                                                                         |  |                   |            |   |                  |   |            |  
|-------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | ---------- | -
|(Dollars and shares in thousands)                                                                        |  | September 30,2004 |            |   | December 31,2003 |  
|Assets                                                                                                   |  |                   |            |   |                  |   |            |  
|Cash and due from banks                                                                                  |  | $                 | 238,820    |   |                  | $ | 251,364    |  
|Interest-earning deposits with financial institutions                                                    |  |                   | 30,118     |   |                  |   | 22,808     |  
|Loans held for sale                                                                                      |  |                   | 31,107     |   |                  |   | 28,062     |  
|Securities available for sale                                                                            |  |                   | 3,118,884  |   |                  |   | 2,511,369  |  
|                                                                                                         |  |                  
|Total loans                                                                                              |  |                   | 10,262,393 |   |                  |   | 8,643,862  |  
|Less allowance for credit losses                                                                         |  |                   | (147,479   | ) |                  |   | (124,943   | )
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Net loans                                                                                                |  |                   | 10,114,914 |   |                  |   | 8,518,919  |  
|                                                                                                         |  |                  
|Premises and equipment, net                                                                              |  |                   | 154,252    |   |                  |   | 153,285    |  
|Goodwill                                                                                                 |  |                   | 446,356    |   |                  |   | 185,859    |  
|Core deposits and other intangibles, net                                                                 |  |                   | 73,865     |   |                  |   | 51,155     |  
|Assets of discontinued operations                                                                        |  |                   |           |   |                  |   | 874,765    |  
|Accrued interest receivable and other assets                                                             |  |                   | 434,816    |   |                  |   | 348,609    |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Total assets                                                                                             |  | $                 | 14,643,132 |   |                  | $ | 12,946,195 |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Liabilities                                                                                              |  |                   |            |   |                  |   |            |  
|Deposits                                                                                                 |  |                   |            |   |                  |   |            |  
|Non-interest bearing deposits                                                                            |  | $                 | 1,477,061  |   |                  | $ | 1,233,272  |  
|Interest-bearing deposits                                                                                |  |                   | 8,677,287  |   |                  |   | 7,282,261  |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Total deposits                                                                                           |  |                   | 10,154,348 |   |                  |   | 8,515,533  |  
|Securities sold under repurchase agreements and federal funds purchased                                  |  |                   | 921,175    |   |                  |   | 994,896    |  
|Debt and Federal Home Loan Bank advances                                                                 |  |                   | 1,804,739  |   |                  |   | 1,310,975  |  
|Junior subordinated debentures owed to unconsolidated subsidiary trusts                                  |  |                   | 185,067    |   |                  |   | 164,806    |  
|Liabilities of discontinued operations                                                                   |  |                   |           |   |                  |   | 822,498    |  
|Accrued interest payable and other liabilities                                                           |  |                   | 161,388    |   |                  |   | 138,911    |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Total Liabilities                                                                                        |  |                   | 13,226,717 |   |                  |   | 11,947,619 |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Shareholders Equity                                                                                     |  |                   |            |   |                  |   |            |  
|Serial preferred stock, $10.00 par value; 10,000 shares authorized; none issued                          |  |                   |           |   |                  |   |           |  
|Common stock, no par value; 150,000 shares authorized; 105,441 and 92,459 shares issued in 2004 and 2003 |  |                   | 1,101,883  |   |                  |   | 764,860    |  
|Retained earnings                                                                                        |  |                   | 317,706    |   |                  |   | 234,000    |  
|Treasury stock; 113 and 42 shares in 2004 and 2003                                                       |  |                   | (2,330     | ) |                  |   | (742       | )
|Accumulated other comprehensive income (loss)                                                            |  |                   | (844       | ) |                  |   | 458        |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Total Shareholders Equity                                                                               |  |                   | 1,416,415  |   |                  |   | 998,576    |  
|                                                                                                         |  |                   |            |   |                  |   |            |  
|Total Liabilities and Shareholders Equity                                                               |  | $                 | 14,643,132 |   |                  | $ | 12,946,195 |  
|                                                                                                         |  |                   |            |   |                  |   |            |  



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



3



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##### Table of Contents

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

|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | ---- | ------------------------------- | ------- | ---- |  | ---- | ------- |  | - | ------- | -
|                                                                                                                                                         |  | Three Months Ended September 30, |         |      | Nine months ended September 30, |        
|(Dollars and shares in thousands, except per share data)                                                                                                 |  | 2004                             |         | 2003 |                                 |         | 2004 |  | 2003 |        
|Interest Income                                                                                                                                          |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Loans, including fees                                                                                                                                    |  | $                                | 145,447 |      | $                               | 127,704 |      |  | $    | 389,943 |  | $ | 369,203 |  
|Securities                                                                                                                                               |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Taxable                                                                                                                                                  |  |                                  | 32,970  |      |                                 | 23,710  |      |  |      | 84,926  |  |   | 73,615  |  
|Non-taxable                                                                                                                                              |  |                                  | 201     |      |                                 | 202     |      |  |      | 607     |  |   | 567     |  
|Federal funds sold and other                                                                                                                             |  |                                  | 154     |      |                                 | 91      |      |  |      | 344     |  |   | 270     |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Total interest income                                                                                                                                    |  |                                  | 178,772 |      |                                 | 151,707 |      |  |      | 475,820 |  |   | 443,655 |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Interest Expense                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Deposits                                                                                                                                                 |  |                                  | 37,179  |      |                                 | 35,091  |      |  |      | 101,281 |  |   | 110,969 |  
|Borrowed funds                                                                                                                                           |  |                                  | 19,077  |      |                                 | 15,813  |      |  |      | 47,533  |  |   | 44,493  |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Total interest expense                                                                                                                                   |  |                                  | 56,256  |      |                                 | 50,904  |      |  |      | 148,814 |  |   | 155,462 |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Net Interest Income                                                                                                                                      |  |                                  | 122,516 |      |                                 | 100,803 |      |  |      | 327,006 |  |   | 288,193 |  
|Provision for Credit Losses                                                                                                                              |  |                                  | 8,360   |      |                                 | 8,325   |      |  |      | 26,045  |  |   | 24,150  |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Net interest income after provision for credit losses                                                                                                    |  |                                  | 114,156 |      |                                 | 92,478  |      |  |      | 300,961 |  |   | 264,043 |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Non-Interest Income                                                                                                                                      |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Brokerage and insurance commissions                                                                                                                      |  |                                  | 14,703  |      |                                 | 10,047  |      |  |      | 42,462  |  |   | 31,453  |  
|Service charges and fees on deposit accounts                                                                                                             |  |                                  | 13,820  |      |                                 | 9,932   |      |  |      | 34,569  |  |   | 28,026  |  
|Trust services income                                                                                                                                    |  |                                  | 5,079   |      |                                 | 3,585   |      |  |      | 13,285  |  |   | 10,576  |  
|Mortgage banking income                                                                                                                                  |  |                                  | 6,845   |      |                                 | 19,359  |      |  |      | 19,169  |  |   | 42,602  |  
|Net securities gains (losses)                                                                                                                            |  |                                  | 1,854   |      |                                 | (2,034  | )    |  |      | 6,259   |  |   | (1,474  | )
|Other income                                                                                                                                             |  |                                  | 10,446  |      |                                 | 9,090   |      |  |      | 30,021  |  |   | 25,666  |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Total non-interest income                                                                                                                                |  |                                  | 52,747  |      |                                 | 49,979  |      |  |      | 145,765 |  |   | 136,849 |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Non-Interest Expense                                                                                                                                     |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Salaries and employee benefits                                                                                                                           |  |                                  | 51,133  |      |                                 | 45,261  |      |  |      | 139,071 |  |   | 124,733 |  
|Occupancy and equipment expense                                                                                                                          |  |                                  | 15,962  |      |                                 | 12,987  |      |  |      | 42,272  |  |   | 36,713  |  
|Merger, integration and restructuring expense                                                                                                            |  |                                  | 3,831   |      |                                 |        |      |  |      | 4,177   |  |   | 3,486   |  
|Amortization expense                                                                                                                                     |  |                                  | 3,553   |      |                                 | 1,869   |      |  |      | 7,403   |  |   | 4,993   |  
|Other operating expense                                                                                                                                  |  |                                  | 23,413  |      |                                 | 21,735  |      |  |      | 65,770  |  |   | 60,619  |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Total non-interest expense                                                                                                                               |  |                                  | 97,892  |      |                                 | 81,852  |      |  |      | 258,693 |  |   | 230,544 |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Income From Continuing Operations Before Income Taxes                                                                                                    |  |                                  | 69,011  |      |                                 | 60,605  |      |  |      | 188,033 |  |   | 170,348 |  
|Income Taxes From Continuing Operations                                                                                                                  |  |                                  | 22,863  |      |                                 | 20,166  |      |  |      | 61,732  |  |   | 57,254  |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Income From Continuing Operations                                                                                                                        |  |                                  | 46,148  |      |                                 | 40,439  |      |  |      | 126,301 |  |   | 113,094 |  
|                                                                                                                                                         |  |                                  |         |     
|Income From Discontinued Operations, net of tax of $0 and $687 and $10,105 and $1,258 for three months and nine months ended 2004 and 2003,
respectively |  |                                  |        |      |                                 | 1,129   |      |  |      | 18,725  |  |   | 2,056   |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Net Income                                                                                                                                               |  | $                                | 46,148  |      | $                               | 41,568  |      |  | $    | 145,026 |  | $ | 115,150 |  
|                                                                                                                                                         |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Income From Continuing Operations per Common Share                                                                                                       |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Basic                                                                                                                                                    |  | $                                | .44     |      | $                               | .45     |      |  | $    | 1.30    |  |   | 1.27    |  
|Diluted                                                                                                                                                  |  |                                  | .43     |      |                                 | .44     |      |  |      | 1.28    |  |   | 1.26    |  
|Income From Discontinued Operations per Common Share                                                                                                     |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Basic                                                                                                                                                    |  |                                  |        |      |                                 | .01     |      |  |      | .19     |  |   | .02     |  
|Diluted                                                                                                                                                  |  |                                  |        |      |                                 | .01     |      |  |      | .19     |  |   | .02     |  
|Income per Common Share                                                                                                                                  |  |                                  |         |      |                                 |         |      |  |      |         |  |   |         |  
|Basic                                                                                                                                                    |  | $                                | .44     |      |                                 | .46     |      |  |      | 1.49    |  |   | 1.30    |  
|Diluted                                                                                                                                                  |  |                                  | .43     |      |                                 | .46     |      |  |      | 1.47    |  |   | 1.29    |  



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



4



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##### Table of Contents

SKY FINANCIAL GROUP, INC.



(Unaudited)



Condensed Consolidated Statements of Changes in Shareholders
Equity



|                                                             |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------------- | --------- | - | ------------------------------ | - | ------- | ---- |  | - | --------- | - |  | - | ------- | -
|                                                             |  | Three Months EndedSeptember 30, |           |   | Nine months endedSeptember 30, |  
|(Dollars in thousands, except per share data)                |  | 2004                            |           |   | 2003                           |   |         | 2004 |  |   | 2003      |  
|Balance at beginning of period                               |  | $                               | 1,040,208 |   |                                | $ | 915,010 |      |  | $ | 998,576   |   |  | $ | 832,433 |  
|                                                             |  |                                 |           |  
|Comprehensive income                                         |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|Net income                                                   |  |                                 | 46,148    |   |                                |   | 41,568  |      |  |   | 145,026   |   |  |   | 115,150 |  
|Other comprehensive income (loss)                            |  |                                 | 41,750    |   |                                |   | (12,797 | )    |  |   | (1,300    | ) |  |   | (25,195 | )
|                                                             |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|Total comprehensive income                                   |  |                                 | 87,898    |   |                                |   | 28,771  |      |  |   | 143,726   |   |  |   | 89,955  |  
|                                                             |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|Common cash dividends                                        |  |                                 | (22,170   | ) |                                |   | (18,081 | )    |  |   | (61,320   | ) |  |   | (53,554 | )
|Shares issued for stock option exercises                     |  |                                 | 1,422     |   |                                |   | 2,518   |      |  |   | 14,181    |   |  |   | 4,570   |  
|Common shares issued to acquire Second Bancorp               |  |                                 | 310,645   |   |                                |   |        |      |  |   | 310,645   |   |  |   |        |  
|Common shares issued to acquire Spencer - Patterson          |  |                                 |          |   |                                |   |        |      |  |   | 7,637     |   |  |   |        |  
|Common shares issued to acquire EOB, Inc.                    |  |                                 |          |   |                                |   |        |      |  |   | 4,558     |   |  |   |        |  
|Common shares issued to acquire Metropolitan Financial Corp. |  |                                 |          |   |                                |   |        |      |  |   |          |   |  |   | 55,294  |  
|Common shares issued to acquire Insurance                    |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|Buyers Service Agency, Inc.                                 |  |                                 |          |   |                                |   | 3,698   |      |  |   |          |   |  |   | 3,698   |  
|Treasury shares acquired                                     |  |                                 | (1,588    | ) |                                |   |         |      |  |   | (1,588    | ) |  |   |         |  
|Fractional shares and other items                            |  |                                 |          |   |                                |   | 28      |      |  |   |          |   |  |   | (452    | )
|                                                             |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|Balance at end of period                                     |  | $                               | 1,416,415 |   |                                | $ | 931,944 |      |  | $ | 1,416,415 |   |  | $ | 931,944 |  
|                                                             |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  
|Common cash dividend per share                               |  | $                               | .21       |   |                                | $ | .20     |      |  | $ | .63       |   |  | $ | .60     |  
|                                                             |  |                                 |           |   |                                |   |         |      |  |   |           |   |  |   |         |  



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



5



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##### Table of Contents

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

|                                                                         |  |                                 |            |   |      |   |            |  
|------------------------------------------------------------------------ |  | ------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                         |  | Nine months ended September 30, |           
|(Dollars in thousands, except share data)                                |  | 2004                            |            |   | 2003 |  
|Operating Activities                                                     |  |                                 |            |   |      |   |            |  
|Net cash provided from continuing operations                             |  | $                               | 103,238    |   |      | $ | 160,129    |  
|Net cash provided from (used for) discontinued operations                |  |                                 | 15,165     |   |      |   | (10,723    | )
|                                                                         |  |                                 |            |   |      |   |            |  
|Net cash provided from operations                                        |  |                                 | 118,403    |   |      |   | 149,406    |  
|                                                                         |  |                                 |            |   |      |   |            |  
|Investing Activities                                                     |  |                                 |            |   |      |   |            |  
|Net increase in interest bearing deposits in other banks                 |  |                                 | (431       | ) |      |   | (4,030     | )
|Net decrease in federal funds sold                                       |  |                                 |           |   |      |   | 11,100     |  
|Securities available for sale:                                           |  |                                 |            |   |      |   |            |  
|Proceeds from maturities and payments                                    |  |                                 | 612,447    |   |      |   | 1,266,755  |  
|Proceeds from sales                                                      |  |                                 | 348,331    |   |      |   | 259,618    |  
|Purchases                                                                |  |                                 | (1,060,216 | ) |      |   | (1,719,901 | )
|Proceeds from sales of non-mortgage loans                                |  |                                 | 70,314     |   |      |   | 452,645    |  
|Net increase in loans                                                    |  |                                 | (356,075   | ) |      |   | (555,688   | )
|Purchases of premises and equipment                                      |  |                                 | (2,251     | ) |      |   | (14,195    | )
|Proceeds from sales of premises and equipment                            |  |                                 | 986        |   |      |   | 3,769      |  
|Proceeds from sales of other real estate                                 |  |                                 | 5,178      |   |      |   | 3,177      |  
|Proceeds from sale of discontinued operations, net of cash sold          |  |                                 | 71,441     |   |      |   |           |  
|Net cash received in acquisitions                                        |  |                                 | 35,689     |   |      |   | 48,394     |  
|Other items                                                              |  |                                 |           |   |      |   | (196       | )
|                                                                         |  |                                 |            |   |      |   |            |  
|Net cash used for investing activities from continuing operations        |  |                                 | (274,587   | ) |      |   | (248,552   | )
|Net cash used for investing activities from discontinued operations      |  |                                 | (26,126    | ) |      |   | (149,061   | )
|                                                                         |  |                                 |            |   |      |   |            |  
|Net cash used for investing activities                                   |  |                                 | (300,713   | ) |      |   | (397,613   | )
|                                                                         |  |                                 |            |   |      |   |            |  
|Financing Activities                                                     |  |                                 |            |   |      |   |            |  
|Net increase in deposit accounts                                         |  |                                 | 302,273    |   |      |   | 46,539     |  
|Net decrease in federal funds and repurchase agreements                  |  |                                 | (211,029   | ) |      |   | (64,108    | )
|Net decrease in borrowings under bank lines of credit                    |  |                                 | (60,216    | ) |      |   | (5,667     | )
|Net increase (decrease) in short-term FHLB advances                      |  |                                 | (55,000    | ) |      |   | 180,000    |  
|Proceeds from issuance of debt and long-term FHLB advances               |  |                                 | 300,641    |   |      |   | 60,580     |  
|Repayment of debt and long-term FHLB advances                            |  |                                 | (89,305    | ) |      |   | (133,077   | )
|Cash dividends and fractional shares paid                                |  |                                 | (61,320    | ) |      |   | (54,006    | )
|Treasury shares acquired                                                 |  |                                 | (1,588     | ) |      |   |           |  
|Proceeds from issuance of common stock                                   |  |                                 | 14,181     |   |      |   | 4,570      |  
|                                                                         |  |                                 |            |   |      |   |            |  
|Net cash provided from financing activities from continuing operations   |  |                                 | 138,637    |   |      |   | 34,831     |  
|Net cash provided from financing activities from discontinued operations |  |                                 | 31,129     |   |      |   | 156,263    |  
|                                                                         |  |                                 |            |   |      |   |            |  
|Net cash provided from financing activities                              |  |                                 | 169,766    |   |      |   | 191,094    |  
|                                                                         |  |                                 |            |   |      |   |            |  
|Net decrease in cash and due from banks                                  |  |                                 | (12,544    | ) |      |   | (57,113    | )
|Cash and due from banks at beginning of period                           |  |                                 | 251,364    |   |      |   | 253,172    |  
|                                                                         |  |                                 |            |   |      |   |            |  
|Cash and due from banks at end of period                                 |  |                                 | 238,820    |   |      |   | 196,059    |  
|Less cash at discontinued operations                                     |  |                                 |           |   |      |   | (11,277    | )
|                                                                         |  |                                 |            |   |      |   |            |  
|Cash at end of period, net of discontinued operations                    |  | $                               | 238,820    |   |      | $ | 184,782    |  
|                                                                         |  |                                 |            |   |      |   |            |  
|Supplemental Disclosures                                                 |  |                                 |            |   |      |   |            |  
|                                                                         |  |                                
|Interest paid                                                            |  | $                               | 164,966    |   |      | $ | 180,168    |  
|Income taxes paid                                                        |  |                                 | 48,386     |   |      |   | 63,539     |  
|Non-cash transactions                                                    |  |                                 |            |   |      |   |            |  
|Common shares issued to acquire Second Bancorp                           |  |                                 | 310,645    |   |      |   |            |  
|Common shares issued to acquire Spencer-Patterson.                       |  |                                 | 7,637      |   |      |   |            |  
|Common shares issued to acquire EOB, Inc.                                |  |                                 | 4,558      |   |      |   |            |  
|Common shares issued to acquire Metropolitan                             |  |                                 |            |   |      |   | 55,294     |  
|Treasury shares issued to acquire Insurance Buyers Services, Inc.        |  |                                 |            |   |      |   | 3,698      |  



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



6



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##### Table of Contents

SKY FINANCIAL GROUP, INC.



Notes to Condensed
Consolidated Financial Information (Unaudited)



(Dollars in
thousands, except per share data)



1. Accounting Policies



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



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



These condensed consolidated unaudited interim financial statements are prepared without an
audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of Sky Financial at September 30, 2004, and its results of operations and cash
flows for the periods presented. In accordance with US GAAP for interim financial information, these statements do not include certain information and footnote disclosures required for complete annual financial statements. Sky Financials
Annual Report for the year ended December 31, 2003, contains consolidated financial statements and related notes which should be read in conjunction with the accompanying condensed consolidated financial statements. The results of operations for the
interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year.



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



New Accounting Pronouncements



In March
2004, the Financial Accounting Standards Board ratified the consensus reached by the Emerging Issues Task Force in Issue 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (EITF 03-1). EITF
03-1 provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. In September 2004, the FASB issued FSP 03-1-1 which delayed the effective date for
the measurement and recognition guidance contained in paragraphs 1020 of Issue 03-1 due to additional proposed guidance expected to be finalized in the fourth quarter of 2004. Gross unrealized losses on available for sale securities was
$22,871 at September 30, 2004. Sky Financial is continuing to evaluate the impact of EITF 03-1. The amount of other-than-temporary impairment to be recognized, if any, will be dependent on market conditions, managements intent and ability to
hold investments until a forecasted recovery, and the finalization of the proposed guidance by the FASB.



On March 9, 2004, the SEC issued Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments (SAB 105). This bulletin was issued to inform registrants of the SECs view
that the fair value of the recorded loan commitments, that are required to follow derivative accounting under FAS 133, Accounting for Derivative Instruments and Hedging Activities, should not consider the expected future cash flows related to the
associated servicing of the future loan. The provisions of SAB 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The adoption of this Staff Accounting Bulletin in the second quarter of
2004 did not have a material impact on Sky Financial.



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##### Table of Contents

In December 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants
issued AICPA Statement of Position No. 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), to address accounting for differences between the contractual cash flows of certain loans and debt securities
and the cash flows expected to be collected when loans or debt securities are acquired in a transfer and those cash flow differences are attributable, at least in part, to credit quality. As such, SOP 03-3 applies to such loans and debt securities
purchased or acquired in purchase business combinations and does not apply to originated loans. The application of SOP 03-3 limits the interest income, including accretion of purchase price discounts, that may be recognized for certain loans and
debt securities. Additionally, SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) not be recognized as an adjustment of yield or valuation allowance, such as the allowance
for loan and lease losses. Subsequent to the initial investment, increases in expected cash flows generally should be recognized prospectively through adjustment of the yield on the loan or debt security over its remaining life. Decreases in
expected cash flows should be recognized as impairment. SOP 03-3 is effective for loans and debt securities acquired in fiscal years beginning after December 15, 2004, with early application encouraged. The impact of this new pronouncement is not
expected to be material to Sky Financials financial condition, results of operations, or cash flows.



2. Stock Based Compensation



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



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



|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                                                                                                                                            |  | Three Months EndedSeptember 30, |        | Nine months endedSeptember 30,
|                                                                                                                                            |  | 2004                            |        | 2003                           |   | 2004   |  | 2003
|Net income, as reported                                                                                                                     |  | $                               | 46,148 |                                | $ | 41,568 |  | $    | 145,026 |  | $ | 115,150
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                 | 630    |                                |   | 581    |  |      | 1,890   |  |   | 1,694  
|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Pro forma net income                                                                                                                        |  | $                               | 45,518 |                                | $ | 40,987 |  | $    | 143,136 |  | $ | 113,456
|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Earnings per share:                                                                                                                         |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Basic - as reported                                                                                                                         |  | $                               | .44    |                                | $ | .46    |  | $    | 1.49    |  | $ | 1.30   
|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Basic  pro forma                                                                                                                           |  | $                               | .43    |                                | $ | .45    |  | $    | 1.47    |  | $ | 1.26   
|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Diluted  as reported                                                                                                                       |  | $                               | .43    |                                | $ | .46    |  | $    | 1.47    |  | $ | 1.29   
|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Diluted  pro forma                                                                                                                         |  | $                               | .43    |                                | $ | .45    |  | $    | 1.46    |  | $ | 1.27   
|                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |        



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##### Table of Contents

3. Critical Accounting Policies



The accounting and reporting policies of Sky Financial are in accordance with accounting principles generally accepted within the United
States of America and conform to general practices within the financial services industry. Accounting and reporting policies for the allowance for credit losses and mortgage servicing rights are deemed critical since they involve the use of
estimates and require significant management judgments. Application of assumptions different than those used by management could result in material changes in Sky Financials financial position or results of operations. Note 1 (Summary of
Significant Accounting Policies), note 4 (Loans and Allowance for Credit Losses) and note 20 (Mortgage Banking Activity), of the 2003 Annual Report and Form 10-K, provide detail with regard to the Corporations accounting for the allowance for
loan losses and for mortgage servicing rights. There have been no significant changes in the application of accounting policies since December 31, 2003.



4. Mergers, Acquisitions and Divestitures



Community Banking



On July 1, 2004, Sky Financial acquired Second Bancorp Incorporated (Second Bancorp), a $2.3 billion bank holding company headquartered in Warren, Ohio, and its wholly-owned subsidiary Second National Bank of Warren
by acquiring all of the outstanding capital stock of Second Bancorp for an aggregate purchase price of $312,760, including direct acquisition costs of $2,115. Second Bancorp shareholders received approximately 11,952 shares of Sky Financial common
stock. The value of the common shares was determined based on the market price of Sky Financial common stock on the date that the final terms of the acquisition were agreed to and announced.



The purchase price, including fees and other direct acquisition costs, was allocated based on
a preliminary determination of estimated fair values at the date of the acquisition as follows:



|                                         |  |   |          
|---------------------------------------- |  | - | ---------
|Cash                                     |  | $ | 44,683   
|Loans                                    |  |   | 1,291,570
|Securities available for sale            |  |   | 519,029  
|Premises and equipment                   |  |   | 18,955   
|Core deposit intangibles                 |  |   | 29,155   
|Goodwill                                 |  |   | 247,984  
|Other assets                             |  |   | 99,076   
|                                         |  |   |          
|Total assets acquired                    |  |   | 2,250,452
|                                         |  |   |          
|Deposits                                 |  |   | 1,336,542
|Debt and Federal Home Loan Bank advances |  |   | 561,574  
|Other liabilities                        |  |   | 39,576   
|                                         |  |   |          
|Total liabilities acquired               |  |   | 1,937,692
|                                         |  |   |          
|Net assets acquired                      |  | $ | 312,760  
|                                         |  |   |          



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



On April 30, 2003, Sky Financial acquired the outstanding capital stock of Metropolitan Financial Corp (Metropolitan), a $1.5 billion savings and loan holding company
headquartered in Highland Hills, Ohio, and its wholly-owned subsidiary, Metropolitan Bank and Trust Company, for a purchase price of $81,294, including direct acquisition costs of $673. Metropolitan shareholders received 2,887 shares of Sky
Financial common stock and $25,327 in cash.



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##### Table of Contents

The acquisitions of Second Bancorp, GLB and Metropolitan complement Sky Financials operations in northeastern Ohio
by enhancing its presence in the Cleveland metropolitan area and other areas of northeastern Ohio. Sky Financial accounted for the acquisitions of Second Bancorp, GLB and Metropolitan as purchases and included their results from the effective date
of the acquisition.



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



|                                                        |  |                                 |         |                                |   |         |  |      |         |  |   |        
|------------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------ | - | ------- |  | ---- | ------- |  | - | -------
|                                                        |  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                        |  | 2004                            |         | 2003                           |   | 2004    |  | 2003
|Net interest income                                     |  | $                               | 122,516 |                                | $ | 117,926 |  | $    | 356,434 |  | $ | 351,583
|                                                        |  |                                 |         |                               
|Income from continuing operations                       |  |                                 | 46,148  |                                |   | 45,585  |  |      | 104,806 |  |   | 127,231
|                                                        |  |                                 |         |                               
|Earnings per share from continuing operations  Basic   |  |                                 | .44     |                                |   | .44     |  |      | 1.01    |  |   | 1.22   
|                                                        |  |                                 |         |                               
|Earnings per share from continuing operations  Diluted |  |                                 | .43     |                                |   | .43     |  |      | 1.00    |  |   | 1.21   



Pro forma results for the nine months
ended September 30, 2004, include a provision of approximately $19,400 related to the charge-off of certain loans by Second Bancorp during the second quarter of 2004.



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 July 1, 2004, Sky Financial acquired Stouffer-Herzog in conjunction with the purchase of Second Bancorp, as previously discussed.



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



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



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



All of the purchases completed in 2004 and 2003 were recorded under the purchase method of
accounting and the results of operations of the acquired businesses are included in Sky Financials operations from the effective dates of the acquisitions. Disclosures of the pro forma results of the acquisitions of the financial service
affiliates are immaterial to Sky Financials consolidated financial statements.



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##### Table of Contents

Discontinued Operations



On March 31, 2004, Sky Financial completed the sale of its dental financing affiliate, Sky Financial Solutions. Sky Financial Solutions has been reported as a
discontinued operation and the condensed consolidated financial statements as of December 31, 2003 for the three and nine months ended September 30, 2003 have been reclassified to reflect this presentation. Sky Financial Solutions results of
operations for the three months ended September 30, 2003 included revenues of $8,218, and pre-tax net income of $1,818. Results of operations for the nine months ended September 30, 2004 and 2003 included revenues of $34,120 and $16,470,
respectively and pre-tax net income of $24,668 and $3,312, respectively. Revenues and pre-tax income for the nine months ended September 30, 2004 included a pre-tax gain on the sale of Sky Financial Solutions of $30,578 ($19,876 after-tax).



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



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



5. Securities Available for Sale



The unrealized gains and losses and estimated fair values at September
30, 2004 and December 31, 2003 are as follows:



|                                                |  |                     |           |                      |   |                       |  |   |         |  
|----------------------------------------------- |  | ------------------- | --------- | -------------------- | - | --------------------- |  | - | ------- | -
|September 30, 2004                              |  | EstimatedFair Value |           | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|U.S. Treasury and U.S. Government agencies      |  | $                   | 173,469   |                      | $ | 964                   |  | $ | (434    | )
|Obligations of state and political subdivisions |  |                     | 17,580    |                      |   | 149                   |  |   | (10     | )
|Corporate and other securities                  |  |                     | 63,116    |                      |   | 1,898                 |  |   | (281    | )
|Mortgage-backed securities                      |  |                     | 2,690,675 |                      |   | 15,533                |  |   | (21,084 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total debt securities available for sale        |  |                     | 2,944,840 |                      |   | 18,544                |  |   | (21,809 | )
|Marketable equity securities                    |  |                     | 46,067    |                      |   | 3,984                 |  |   | (1,062  | )
|FHLB, FRB and Bankers Bank Stock               |  |                     | 127,977   |                      |   |                      |  |   |        |  
|                                                |  |                     |           |                      |   |                       |  |   |         |  
|Total securities available for sale             |  | $                   | 3,118,884 |                      | $ | 22,528                |  | $ | (22,871 | )
|                                                |  |                     |           |                      |   |                       |  |   |         |  



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##### Table of Contents

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



Management classified $11,705 in
investment securities as non-performing during the third quarter. Sky Financial is not accruing income on these investments.



6. Loans



The loan portfolios are as follows:



|                                       |  |                   |            |                  |   |          
|-------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ---------
|                                       |  | September 30,2004 |            | December 31,2003
|Real estate loans:                     |  |                   |            |                  |   |          
|Construction                           |  | $                 | 451,117    |                  | $ | 491,086  
|Residential mortgage                   |  |                   | 2,695,573  |                  |   | 2,045,317
|Non-residential mortgage               |  |                   | 3,487,953  |                  |   | 2,896,116
|Commercial, financial and agricultural |  |                   | 2,781,338  |                  |   | 2,440,442
|Installment loans                      |  |                   | 846,412    |                  |   | 770,901  
|                                       |  |                   |            |                  |   |          
|Total loans                            |  | $                 | 10,262,393 |                  | $ | 8,643,862
|                                       |  |                   |            |                  |   |          



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



|                           |  |                   |         |                  |   |       
|-------------------------- |  | ----------------- | ------- | ---------------- | - | ------
|                           |  | September 30,2004 |         | December 31,2003
|Non-accrual loans          |  | $                 | 122,050 |                  | $ | 81,979
|Restructured loans         |  |                   | 556     |                  |   | 599   
|                           |  |                   |         |                  |   |       
|Total non-performing loans |  | $                 | 122,606 |                  | $ | 82,578
|                           |  |                   |         |                  |   |       



Non-accrual loans include $34,600 of
loans that are secured by pools of commercial leases backed by surety bonds and insurance policies for which payment is over 90 days past due. See Note 15 Commitments and Contingencies for additional discussion.



12



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##### Table of Contents

7. Borrowings



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



|                                                                         |  |                   |           |                  |   |          
|------------------------------------------------------------------------ |  | ----------------- | --------- | ---------------- | - | ---------
|                                                                         |  | September 30,2004 |           | December 31,2003
|Borrowings under bank lines of credit                                    |  | $                 |          |                  | $ | 60,216   
|Borrowings under FHLB lines of credit                                    |  |                   | 1,638,274 |                  |   | 1,084,133
|Subordinated note, 5.35%, due April 2013                                 |  |                   | 50,000    |                  |   | 50,000   
|Subordinated note, 6.125%, due October 2012                              |  |                   | 65,000    |                  |   | 65,000   
|Subordinated note, 7.08%, due January 2008                               |  |                   | 50,000    |                  |   | 50,000   
|Junior subordinated debentures owed to unconsolidated subsidiary trusts: |  |                   |           |                  |   |          
|Due February 2027 at 9.875%                                              |  |                   | 27,555    |                  |   | 27,765   
|Due June 2027 at 10.20%                                                  |  |                   | 25,373    |                  |   | 24,491   
|Due May 2030 at 9.34%                                                    |  |                   | 67,370    |                  |   | 64,955   
|Due December 2031 at 9.00%                                               |  |                   | 33,841    |                  |   |         
|Due October 2033 at 4.09% (variable)                                     |  |                   | 30,928    |                  |   | 30,928   
|Due June 2029 at 9.50%                                                   |  |                   |          |                  |   | 16,667   
|Capital lease obligation                                                 |  |                   | 1,019     |                  |   | 1,117    
|Other items                                                              |  |                   | 446       |                  |   | 509      
|                                                                         |  |                   |           |                  |   |          
|Total borrowings                                                         |  | $                 | 1,989,806 |                  | $ | 1,475,781
|                                                                         |  |                   |           |                  |   |          



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



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##### Table of Contents

8. Other Comprehensive Income (Loss)



Other comprehensive income (loss) consisted of the following:



|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                           |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                           |  | 2004                            |         |   | 2003                           |   |         | 2004 |  |   | 2003    |  
|Securities available for sale:                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Unrealized securities gains (losses) arising during period |  | $                               | 86,210  |   |                                | $ | (22,784 | )    |  | $ | 30,987  |   |  | $ | (32,263 | )
|Reclassification adjustment for losses included in income  |  |                                 | 1,854   |   |                                |   | 2,034   |      |  |   | 6,259   |   |  |   | 1,474   |  
|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                           |  |                                 | 88,064  |   |                                |   | (20,750 | )    |  |   | 37,246  |   |  |   | (30,789 | )
|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cash flow hedge derivatives                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Change in fair value of cash flow hedge derivatives        |  |                                 | (23,833 | ) |                                |   | 443     |      |  |   | (39,862 | ) |  |   | (10,199 | )
|Amounts reclassified to interest expense                   |  |                                 |        |   |                                |   | 620     |      |  |   | 616     |   |  |   | 2,227   |  
|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                           |  |                                 | (23,833 | ) |                                |   | 1,063   |      |  |   | (39,246 | ) |  |   | (7,972  | )
|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net unrealized gain (loss)                                 |  |                                 | 64,231  |   |                                |   | (19,687 | )    |  |   | (2,000  | ) |  |   | (38,761 | )
|Tax effect                                                 |  |                                 | (22,481 | ) |                                |   | 6,890   |      |  |   | 700     |   |  |   | 13,566  |  
|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total other comprehensive income (loss)                    |  | $                               | 41,750  |   |                                | $ | (12,797 | )    |  | $ | (1,300  | ) |  | $ | (25,195 | )
|                                                           |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



9. Earnings Per Share



Basic earnings per share is computed by dividing net income by the
weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable
under stock options. For the three months ended September 30, 2004 and 2003, 1,387 and 831 weighted average shares, respectively, under option were excluded from the diluted earnings per share calculation as they were anti-dilutive. For the nine
months ended September 30, 2004 and 2003, 1,381 and 2,186 weighted average shares, respectively, under option were excluded from the diluted earnings per share calculation as they were anti-dilutive.



|                                                     |  |                                 |         |                                |   |        |  |      |         |  |   |        
|---------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                                                     |  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                     |  | 2004                            |         | 2003                           |   | 2004   |  | 2003
|Numerator:                                           |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Income From Continuing Operations                    |  | $                               | 46,148  |                                | $ | 40,439 |  | $    | 126,301 |  | $ | 113,094
|Income From Discontinued Operations                  |  |                                 |        |                                |   | 1,129  |  |      | 18,725  |  |   | 2,056  
|                                                     |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Net income                                           |  | $                               | 46,148  |                                | $ | 41,568 |  | $    | 145,026 |  | $ | 115,150
|                                                     |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Denominator:                                         |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Weighted-average common shares outstanding (basic)   |  |                                 | 105,479 |                                |   | 90,287 |  |      | 97,298  |  |   | 88,813 
|Effect of stock options                              |  |                                 | 929     |                                |   | 901    |  |      | 999     |  |   | 672    
|                                                     |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Weighted-average common shares outstanding (diluted) |  |                                 | 106,408 |                                |   | 91,188 |  |      | 98,297  |  |   | 89,485 
|                                                     |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Income From Continuing Operations per share:         |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Basic                                                |  | $                               | .44     |                                | $ | .45    |  | $    | 1.30    |  | $ | 1.27   
|Diluted                                              |  |                                 | .43     |                                |   | .44    |  |      | 1.28    |  |   | 1.26   
|                                                     |  |                                 |         |                               
|Income from Discontinued Operations per share:       |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Basic                                                |  |                                 |        |                                |   | .01    |  |      | .19     |  |   | .02    
|Diluted                                              |  |                                 |        |                                |   | .01    |  |      | .19     |  |   | .02    
|                                                     |  |                                 |         |                               
|Earnings per share:                                  |  |                                 |         |                                |   |        |  |      |         |  |   |        
|Basic                                                |  | $                               | .44     |                                | $ | .46    |  | $    | 1.49    |  | $ | 1.30   
|Diluted                                              |  |                                 | .43     |                                |   | .46    |  |      | 1.47    |  |   | 1.29   



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10. Capital Resources



The Federal Reserve Board (FRB) has established risk-based capital guidelines that must be observed by financial holding companies and banks. Failure to meet specified
minimum capital requirements can result in certain mandatory actions by primary regulators of Sky Financial and its bank subsidiary that could have a material effect on Sky Financials financial condition or results of operations. Under capital
adequacy guidelines, Sky Financial and its bank subsidiary must meet specific quantitative measures of their assets, liabilities and certain off-balance sheet items as determined under regulatory accounting practices. Sky Financials and its
banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believes, as of September 30, 2004, that Sky Financial and its bank meet all
capital adequacy requirements to which they are subject.



Sky Financial and its
bank have been notified by their respective regulators that, as of the most recent regulatory examinations, each is regarded as well capitalized under the regulatory framework for prompt corrective action. 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 Required For Capital Adequacy Purposes |   |        | Required to be Well CapitalizedUnder Prompt CorrectiveAction Regulations |        
|September 30, 2004                     |  | Amount |           | Ratio |                                                |   | Amount |                                                                          | Ratio   |  |     | Amount |  | Ratio |          
|Total capital to risk-weighted assets  |  |        |           |       |                                                |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,345,264 |       | 12.1                                           | % |        | $                                                                        | 890,782 |  | 8.0 | %      |  | $     | 1,113,478 |  | 10.0 | %
|Sky Bank                               |  |        | 1,197,842 |       | 11.1                                           |   |        |                                                                          | 863,100 |  | 8.0 |        |  |       | 1,078,875 |  | 10.0 |  
|Tier I capital to risk-weighted assets |  |        |           |       |                                                |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,063,100 |       | 9.6                                            | % |        | $                                                                        | 445,391 |  | 4.0 | %      |  | $     | 668,087   |  | 6.0  | %
|Sky Bank                               |  |        | 986,735   |       | 9.2                                            |   |        |                                                                          | 431,550 |  | 4.0 |        |  |       | 647,325   |  | 6.0  |  
|Tier I capital to average assets       |  |        |           |       |                                                |   |        |                                                                          |         |  |     |        |  |       |           |  |      |  
|Sky Financial                          |  | $      | 1,063,100 |       | 7.6                                            | % |        | $                                                                        | 559,977 |  | 4.0 | %      |  | $     | 699,971   |  | 5.0  | %
|Sky Bank                               |  |        | 986,735   |       | 7.1                                            |   |        |                                                                          | 554,880 |  | 4.0 |        |  |       | 693,599   |  | 5.0  |  



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##### Table of Contents

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



11. Goodwill and Intangible Assets



Goodwill at September 30, 2004 and December 31, 2003 was $446,356 and
$185,859 respectively. Sky Financial recorded $247,984 as a result of the Second Bancorp acquisition, $7,533 as a result of the Spencer-Patterson acquisition and $4,980 as a result of the EOB, Inc. acquisition. Management is still reviewing the
valuations of certain assets and liabilities related to the Second Bancorp acquisition and may adjust goodwill once these assessments are completed. Goodwill is reviewed annually for impairment. Sky Financial completed this review during the second
quarter of 2004 and determined that goodwill was not impaired.



Net other
intangible assets at September 30, 2004 and December 31, 2003 were $73,865 and $51,155, respectively. These assets consist primarily of core deposits intangibles and are being amortized in accordance with Sky Financials policy. Amortization
expense on finite-lived intangible assets is expected to be $9,500, $12,200, $11,300, $10,500 and $9,600 in 2004, 2005, 2006, 2007 and 2008 respectively. These charges are exclusive 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 consists of non-banking companies engaged in trust and wealth management,
insurance and other financial-related services.



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



16



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##### Table of Contents

Selected segment information for the three months ended September 30, 2004 and 2003 is included in the following tables:



|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|----------------------------------------------------- |  | ---------------- | ---------- | --------------------------- | - | --------------- |  | - | ------- | - |  | - | ----------
|Three Months Ended September 30,
2004                 |  | CommunityBanking |            | FinancialServicesAffiliates |   | ParentAnd Other |  |   | Total  
|Net interest income                                   |  | $                | 123,430    |                             | $ | 146             |  | $ | (1,060  | ) |  | $ | 122,516   
|Provision for credit losses                           |  |                  | 8,300      |                             |   | 60              |  |   |        |   |  |   | 8,360     
|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net interest income after provision                   |  |                  | 115,130    |                             |   | 86              |  |   | (1,060  | ) |  |   | 114,156   
|Non-interest income                                   |  |                  | 34,395     |                             |   | 19,006          |  |   | (654    | ) |  |   | 52,747    
|Non-interest expense                                  |  |                  | 78,722     |                             |   | 14,328          |  |   | 4,842   |   |  |   | 97,892    
|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Income from continuing operations before income taxes |  |                  | 70,803     |                             |   | 4,764           |  |   | (6,556  | ) |  |   | 69,011    
|Income taxes from continuing operations               |  |                  | 23,700     |                             |   | 1,816           |  |   | (2,653  | ) |  |   | 22,863    
|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net income from continuing operations                 |  | $                | 47,103     |                             | $ | 2,948           |  | $ | (3,903  | ) |  | $ | 46,148    
|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at July 1, 2004                              |  | $                | 152,214    |                             | $ | 46,108          |  | $ |        |   |  | $ | 198,322   
|Net activity                                          |  |                  | 247,984    |                             |   | 50              |  |   |        |   |  |   | 248,034   
|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at September 30, 2004                        |  | $                | 400,198    |                             | $ | 46,158          |  | $ |        |   |  | $ | 446,356   
|                                                      |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Average assets                                        |  | $                | 14,306,087 |                             | $ | 101,724         |  | $ | 115,338 |   |  | $ | 14,523,149
|Depreciation and amortization                         |  |                  | 7,224      |                             |   | 394             |  |   | 167     |   |  |   | 7,785     



|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|------------------------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | ------ | --------------- |  | - | ------- | - |  | - | ----------
|Three Months Ended September 30,
2003                        |  | CommunityBanking |            | FinancialServicesAffiliates |   |        | ParentAnd Other |  |   | Total  
|Net interest income                                          |  | $                | 101,797    |                             | $ | 74     |                 |  | $ | (1,068  | ) |  | $ | 100,803   
|Provision for credit losses                                  |  |                  | 8,100      |                             |   | 225    |                 |  |   |        |   |  |   | 8,325     
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Net interest income after provision                          |  |                  | 93,697     |                             |   | (151   | )               |  |   | (1,068  | ) |  |   | 92,478    
|Non-interest income                                          |  |                  | 36,250     |                             |   | 12,940 |                 |  |   | 789     |   |  |   | 49,979    
|Non-interest expense                                         |  |                  | 66,209     |                             |   | 10,706 |                 |  |   | 4,937   |   |  |   | 81,852    
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Income (loss) from continuing operations before income taxes |  |                  | 63,738     |                             |   | 2,083  |                 |  |   | (5,216  | ) |  |   | 60,605    
|Income taxes from continuing operations                      |  |                  | 21,407     |                             |   | 831    |                 |  |   | (2,072  | ) |  |   | 20,166    
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Net income (loss) from continuing operations                 |  | $                | 42,331     |                             | $ | 1,252  |                 |  | $ | (3,144  | ) |  | $ | 40,439    
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at July 1, 2003                                     |  | $                | 131,693    |                             | $ | 29,905 |                 |  | $ |        |   |  | $ | 161,598   
|Net activity                                                 |  |                  | 76         |                             |   | 3,740  |                 |  |   |        |   |  |   | 3,816     
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at September 30, 2003                               |  | $                | 131,769    |                             | $ | 33,645 |                 |  | $ |        |   |  | $ | 165,414   
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Average assets                                               |  | $                | 11,627,586 |                             | $ | 76,973 |                 |  | $ | 124,913 |   |  | $ | 11,829,469
|Depreciation and amortization                                |  |                  | 5,276      |                             |   | 170    |                 |  |   | 180     |   |  |   | 5,626     



17



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##### Table of Contents

Selected segment information for the nine months ended September 30, 2004 and 2003 is included in the following tables:



|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|------------------------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | --------------- |  | - | ------- | - |  | - | ----------
|Nine Months Ended September 30,
2004                         |  | CommunityBanking |            | FinancialServicesAffiliates |   | ParentAnd Other |  |   | Total  
|Net interest income                                          |  | $                | 329,255    |                             | $ | 441             |  | $ | (2,690  | ) |  | $ | 327,006   
|Provision for credit                                         |  |                  | 25,810     |                             |   | 235             |  |   |        |   |  |   | 26,045    
|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net interest income after provision                          |  |                  | 303,445    |                             |   | 206             |  |   | (2,690  | ) |  |   | 300,961   
|Non-interest income                                          |  |                  | 91,508     |                             |   | 53,009          |  |   | 1,248   |   |  |   | 145,765   
|Non-interest expense                                         |  |                  | 213,804    |                             |   | 39,839          |  |   | 5,050   |   |  |   | 258,693   
|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Income (loss) from continuing operations before income taxes |  |                  | 181,149    |                             |   | 13,376          |  |   | (6,492  | ) |  |   | 188,033   
|Income taxes from continuing operations                      |  |                  | 60,904     |                             |   | 5,305           |  |   | (4,477  | ) |  |   | 61,732    
|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Net income (loss) from continuing operations                 |  | $                | 120,245    |                             | $ | 8,071           |  | $ | (2,015  | ) |  | $ | 126,301   
|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at January 1, 2004                                  |  | $                | 152,214    |                             | $ | 33,645          |  | $ |        |   |  | $ | 185,859   
|Net activity                                                 |  |                  | 247,984    |                             |   | 12,513          |  |   |        |   |  |   | 260,497   
|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Goodwill at September 30, 2004                               |  | $                | 400,198    |                             | $ | 46,158          |  | $ |        |   |  | $ | 446,356   
|                                                             |  |                  |            |                             |   |                 |  |   |         |   |  |   |           
|Average assets                                               |  | $                | 12,656,260 |                             | $ | 97,010          |  | $ | 117,536 |   |  | $ | 13,180,681
|Depreciation and amortization                                |  |                  | 17,771     |                             |   | 918             |  |   | 549     |   |  |   | 19,238    



|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|------------------------------------------------------------ |  | ---------------- | ---------- | --------------------------- | - | ------ | --------------- |  | - | ------- | - |  | - | ----------
|Nine Months Ended September 30,
2003                         |  | CommunityBanking |            | FinancialServicesAffiliates |   |        | ParentAnd Other |  |   | Total  
|Net interest income                                          |  | $                | 289,644    |                             | $ | 295    |                 |  | $ | (1,746  | ) |  | $ | 288,193   
|Provision for credit losses                                  |  |                  | 23,475     |                             |   | 675    |                 |  |   |        |   |  |   | 24,150    
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Net interest income after provision                          |  |                  | 266,169    |                             |   | (380   | )               |  |   | (1,746  | ) |  |   | 264,043   
|Non-interest income                                          |  |                  | 94,797     |                             |   | 39,649 |                 |  |   | 2,403   |   |  |   | 136,849   
|Non-interest expense                                         |  |                  | 185,449    |                             |   | 32,205 |                 |  |   | 12,890  |   |  |   | 230,544   
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Income (loss) from continuing operations before income taxes |  |                  | 175,517    |                             |   | 7,064  |                 |  |   | (12,233 | ) |  |   | 170,348   
|Income taxes from continuing operations                      |  |                  | 59,008     |                             |   | 2,827  |                 |  |   | (4,581  | ) |  |   | 57,254    
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Net income (loss) from continuing operations                 |  | $                | 116,509    |                             | $ | 4,237  |                 |  | $ | (7,652  | ) |  | $ | 113,094   
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at January 1, 2003                                  |  | $                | 79,119     |                             | $ | 29,657 |                 |  | $ |        |   |  | $ | 108,776   
|Net activity                                                 |  |                  | 52,650     |                             |   | 3,988  |                 |  |   |        |   |  |   | 56,638    
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Goodwill at September 30, 2003                               |  | $                | 131,769    |                             | $ | 33,645 |                 |  | $ |        |   |  | $ | 165,414   
|                                                             |  |                  |            |                             |   |        |                 |  |   |         |   |  |   |           
|Average assets                                               |  | $                | 11,020,116 |                             | $ | 74,839 |                 |  | $ | 117,536 |   |  | $ | 11,212,491
|Depreciation and amortization                                |  |                  | 15,018     |                             |   | 635    |                 |  |   | 549     |   |  |   | 16,202    



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.



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##### Table of Contents

Fair Value Hedges



Sky Financial uses interest rate swap agreements to hedge a portion of its fixed rate borrowings. The interest rate swaps effectively
convert the fixed rate of interest on $108,600 of the junior subordinated debentures owed to unconsolidated subsidiary trusts and $215,000 of advances to the Federal Home Loan Bank of Cincinnati to variable rate based on LIBOR plus a spread as
defined in the agreements. The interest rate swaps involve no exchange of principal either at inception or maturity and have maturities and call options identical to the trust preferred security agreements or FHLB advance agreements. The
arrangements have been designated as fair value hedges and both the change in the fair value of the hedges and the hedged transactions are reflected in earnings. Because the hedging arrangement is considered highly effective, changes in the fair
value of the interest rate swaps exactly offset the corresponding changes in the fair value of the junior subordinated debentures and FHLB advances and, as a result, the changes in the fair value do not result in an impact on net income.



Cash Flow Hedges



In 2003, Sky Financial acquired amortizing interest rate swaps that fix the rate on its $40,000 of variable rate advances with the Federal
Home Loan Bank of Cincinnati. Under the terms of the arrangements, Sky Financial pays a fixed rate of interest and receives a variable rate based on LIBOR. The swaps are considered to be highly effective. Accordingly, any change in the swaps
fair value is recorded in other comprehensive income, net of tax.



Interest
Rate Caps



During 2002, Sky Financial entered into two interest rate cap
arrangements, and paid $1,456 to hedge its interest risk on $48,600 of federal funds purchased. The interest rate caps are designed to offset the impact of changes in the federal funds purchased rate above the weighted average stated rate of 5.90%,
and, as such, are considered to be highly effective. Any changes in the intrinsic values are recorded in other comprehensive income. Changes in the time value of the interest rate caps, which are excluded from the assessment of hedge effectiveness,
increased interest expense by $165 in the nine months of 2004 and 2003. No deferred gains or losses in accumulated other comprehensive income at September 30, 2004 are expected to be reclassified to earnings in 2004.



The following table presents the contract/notional and fair value amounts of all derivative
transactions at September 30, 2004 and December 31, 2003:



|                       |  |                      |         |           |                   |        |                      |  |           |         |  |   |        |  
|---------------------- |  | -------------------- | ------- | --------- | ----------------- | ------ | -------------------- |  | --------- | ------- |  | - | ------ | -
|                       |  | September 30, 2004   |         |           | December 31, 2003 |       
|                       |  | Contractual/Notional |         | FairValue |                   |        | Contractual/Notional |  | FairValue |        
|Interest rate swaps    |  |                      |         |           |                   |        |                      |  |           |         |  |   |        |  
|Fair value hedges      |  | $                    | 323,600 |           | $                 | 13,271 |                      |  | $         | 108,600 |  | $ | 5,129  |  
|Cash flow hedges       |  |                      | 40,000  |           |                   | (1,746 | )                    |  |           | 40,000  |  |   | (3,291 | )
|Interest rate caps     |  |                      | 48,600  |           |                   | 352    |                      |  |           | 48,600  |  |   | 728    |  
|                       |  |                      |         |           |                   |        |                      |  |           |         |  |   |        |  
|Derivative instruments |  | $                    | 412,200 |           | $                 | 11,877 |                      |  | $         | 197,200 |  | $ | 2,566  |  
|                       |  |                      |         |           |                   |        |                      |  |           |         |  |   |        |  



14. Merger, Integration and
Restructuring Expense



Sky Financial recorded $4,177 ($2,715 after tax) of
merger, integration and restructuring expense during the nine month period ended September 30, 2004, of which $3,831 ($2,490 after tax) was recorded in the third quarter primarily related to the acquisition of Second Bancorp and $346 ($225 after
tax) was recorded in the first quarter for the sale of Sky Financial Solutions. Sky Financial also recorded merger, integration, and restructuring liabilities of $3,167 in connection with the allocation of the purchase price of Second Bancorp.



The following is a summary of activity in the merger, integration and
restructuring liability for the nine months ended September 30, 2004:



|                      |  |   |        |  
|--------------------- |  | - | ------ | -
|Beginning balance     |  | $ | 2,523  |  
|Accruals              |  |   | 4,177  |  
|Business combinations |  |   | 3,167  |  
|Cash payments         |  |   | (7,443 | )
|                      |  |   |        |  
|Ending balance        |  | $ | 2,424  |  
|                      |  |   |        |  



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##### Table of Contents

15. Commitments and Contingencies



Sky Financial is involved in litigation with three insurance companies who issued surety bonds or insurance policies as security for certain
loans aggregating $34,400. The subject loans are secured by pools of commercial leases, the payments under which are guaranteed by the surety bonds. Sky Financial is engaged in litigation with these insurance companies to enforce the payment
obligations, as are a number of other banks nationwide. After consultation with legal counsel, management believes that the credits are well secured and the prospects for recovery of all principal and interest are good. The entire portfolio has been
placed on non-accrual status pending outcome of the litigation.



A schedule of
significant commitments at September 30, 2004 follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 2,973,540
|Standby letters of credit    |  |   | 356,801  
|Letters of credit            |  |   | 4,413    



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



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##### Table of Contents

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



(Dollars in thousands, except per share data)



Three Months Ended September 30, 2004 and 2003



Results of Operations



Net income for the third quarter of 2004 was $46,148, an increase of $4,580 over the third quarter of 2003 net income of $41,568. Diluted earnings per common share for the third quarter of 2004 was $.43 ($.44 basic),
compared to $.46 ($.46 basic) for the same period in 2003. Return on average equity (ROE) and return on average assets (ROA) were 13.21% and 1.26%, respectively, for the third quarter of 2004, compared to 18.00% and 1.31%, respectively, in 2003.



Income from continuing operations for the third quarter of 2004 was $46,148,
an increase of $5,709 over the third quarter of 2003 net income from continuing operations of $40,439. Diluted earnings per common share from continuing operations for the third quarter of 2004 was $.43 ($.44 basic), as compared to $.44 ($.45 basic)
for the same period in 2003. ROE and ROA on a continuing operations basis were 13.21% and 1.26%, respectively, for the third quarter of 2004, compared to 17.51% and 1.31%, respectively, in 2003.



Sky Financials results for the third quarter of 2004 includes the acquisitions of
Second Bancorp, which was acquired in July 2004 and GLB, which was acquired in October 2003. Additionally, merger, integration and restructuring expenses of $3,831 ($2,490 after-tax), or $.02 per share, impacted results for the third quarter of
2004. Results for the third quarter of 2003 included $1,129 of income from discontinued operations related to Sky Financials dental financing subsidiary, which was sold during the first quarter of 2004.



Business Line Results



Sky Financials two major lines of business include community banking and financial services. Community banking includes lending and
related services to businesses and consumers, mortgage banking and deposit-gathering. Financial services consists of non-banking companies engaged in trust and wealth management, insurance and other financial-related services. Sky Financials
business line results for the third quarter ended September 30, 2004 and 2003 are summarized in the table below.



|                              |  |                   |        |   |      |   |        |  
|----------------------------- |  | ----------------- | ------ | - | ---- | - | ------ | -
|                              |  | Net Income (Loss) |       
|Quarter Ended September 30,   |  | 2004              |        |   | 2003 |  
|Community Banking             |  | $                 | 47,103 |   |      | $ | 42,331 |  
|Financial Services Affiliates |  |                   | 2,948  |   |      |   | 1,252  |  
|Parent and Other              |  |                   | (3,903 | ) |      |   | (3,144 | )
|                              |  |                   |        |   |      |   |        |  
|Consolidated Total            |  | $                 | 46,148 |   |      | $ | 40,439 |  
|                              |  |                   |        |   |      |   |        |  



The higher community banking net
income in the third quarter of 2004 as compared to the same period of the previous year is mainly due to the net positive impact from acquisitions offset by lower mortgage banking income. The third quarter 2004 reflects higher net interest income,
service charges and fees on deposits and gains on sale of securities. These increases were offset by a decrease in mortgage banking income and an increase in employee expenses and other operating expenses. The efficiency ratio for the community
banking segment was 49.60% for the third quarter of 2004 compared to 47.64% in the third quarter of 2003. The 2004 community banking results reflect a ROE of 13.89% and a ROA of 1.28% compared to 18.36% and 1.42%, respectively, in the third quarter
of 2003.



The financial service affiliates net income increased as
compared to 2003 from growth in brokerage and insurance commissions as a result of increased sales and acquisitions. Parent and other includes the net funding costs of the parent company, intercompany billings to other affiliates for shared
services, and all merger, integration and restructuring expenses.



21



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##### Table of Contents

Net Interest Income



Net interest income for the third quarter of 2004 was $122,516, an increase of $21,713 or 21.5% from $100,803 in the third quarter of 2003. Net interest income, the
difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities, is the most significant component of Sky Financials earnings. Net interest income is affected by changes in the
volumes, rates and composition of interest-earning assets and interest-bearing liabilities. Average earning assets increased 20.6% from the third quarter last year, with strong growth in average loans, increasing 20.6% from last year, which included
organic growth of 5.8% and the impact of the Second Bancorp and GLB acquisitions. Average deposits were up 17.1% from the same quarter last year, which included .7% organic growth. Sky Financials net interest margin for the three months ended
September 30, 2004 was 3.69%, consistent with last quarter and an increase of 3 basis points from third quarter a year ago. The higher net interest margin primarily reflects the improvements in funding mix and the benefit from recent rises in
short-term interest rates.



The following table reflects the components of Sky
Financials net interest income for the three months ended September 30, 2004 and 2003. Rates are computed on a tax equivalent basis and non-accrual loans have been included in the average balances.



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|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|-------------------------------------------------------------------------------------------- | -------------- | ------------------------------------- | ---------------------- |  | ------------------------------------- | ------- |  | -------------- | - | ---------------------- | - | ---------- |  | - | ------- |  | ---- | -
|(Dollars in thousands)                                                                       |                | Three Months Ended September 30, 2004 |                        |  | Three Months Ended September 30, 2003 |        
|                                                                                             | AverageBalance |                                       | InterestIncome/Expense |  | Rate                                  |         |  | AverageBalance |   | InterestIncome/Expense |   | Rate       | 
|Assets                                                                                       |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Interest-earning assets:                                                                     |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Interest-bearing deposits in banks                                                           |                | $                                     | 42,017                 |  | $                                     | 149     |  | 1.41           | % |                        | $ | 35,814     |  | $ | 88      |  | .97  | %
|Federal funds sold                                                                           |                |                                       | 2,065                  |  |                                       | 6       |  | 1.16           |   |                        |   | 1,337      |  |   | 3       |  | .89  |  
|Securities                                                                                   |                |                                       | 3,078,861              |  |                                       | 34,074  |  | 4.40           |   |                        |   | 2,499,421  |  |   | 24,841  |  | 3.94 |  
|Loans and loans held for sale                                                                |                |                                       | 10,169,939             |  |                                       | 145,446 |  | 5.69           |   |                        |   | 8,487,682  |  |   | 127,703 |  | 5.97 |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total interest-earning assets                                                                |                |                                       | 13,292,882             |  |                                       | 179,675 |  | 5.38           |   |                        |   | 11,024,254 |  |   | 152,635 |  | 5.49 |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Assets from discontinued operations                                                          |                |                                       |                       |  |                                       |         |  |                |   |                        |   | 694,027    |  |   |         |  |      |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Noninterest-earning assets                                                                   |                |                                       | 1,230,267              |  |                                       |         |  |                |   |                        |   | 907,801    |  |   |         |  |      |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total assets                                                                                 |                | $                                     | 14,523,149             |  |                                       |         |  |                |   |                        | $ | 12,626,082 |  |   |         |  |      |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Liabilities and Shareholders Equity                                                         |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Interest-bearing liabilities:                                                                |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Demand deposits                                                                              |                | $                                     | 353,368                |  |                                       | 696     |  | .78            |   |                        |   | 252,475    |  |   | 361     |  | .57  |  
|Savings deposits                                                                             |                |                                       | 4,014,051              |  |                                       | 7,670   |  | .76            |   |                        |   | 3,489,416  |  |   | 7,031   |  | .80  |  
|Time deposits                                                                                |                |                                       | 4,337,033              |  |                                       | 28,814  |  | 2.64           |   |                        |   | 3,799,531  |  |   | 27,699  |  | 2.89 |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total interest-bearing deposits                                                              |                |                                       | 8,704,452              |  |                                       | 37,180  |  | 1.70           |   |                        |   | 7,541,422  |  |   | 35,091  |  | 1.85 |  
|Short-term borrowings                                                                        |                |                                       | 867,547                |  |                                       | 4,110   |  | 1.88           |   |                        |   | 824,163    |  |   | 4,380   |  | 2.11 |  
|Junior Subordinated Debentures/Trust Preferred Securities                                    |                |                                       | 182,288                |  |                                       | 2,308   |  | 5.04           |   |                        |   | 164,569    |  |   | 2,258   |  | 5.44 |  
|Debt and FHLB advances                                                                       |                |                                       | 1,734,164              |  |                                       | 12,658  |  | 2.90           |   |                        |   | 1,153,475  |  |   | 9,175   |  | 3.16 |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total interest-bearing liabilities                                                           |                |                                       | 11,488,451             |  |                                       | 56,256  |  | 1.95           |   |                        |   | 9,683,629  |  |   | 50,904  |  | 2.09 |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Liabilities of discontinued operations                                                       |                |                                       |                       |  |                                       |         |  |                |   |                        |   | 654,790    |  |   |         |  |      |  
|Noninterest-bearing liabilities                                                              |                |                                       | 1,644,685              |  |                                       |         |  |                |   |                        |   | 1,371,355  |  |   |         |  |      |  
|Shareholders equity                                                                         |                |                                       | 1,390,013              |  |                                       |         |  |                |   |                        |   | 916,308    |  |   |         |  |      |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total liabilities and equity                                                                 |                | $                                     | 14,523,149             |  |                                       |         |  |                |   |                        | $ | 12,626,082 |  |   |         |  |      |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Net interest income (tax equivalent basis)                                                   |                |                                       |                        |  | $                                     | 123,419 |  |                |   |                        |   |            |  | $ | 101,731 |  |      |  
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Net interest rate spread (tax equivalent basis)                                              |                |                                       |                        |  |                                       |         |  | 3.43           | % |                        |   |            |  |   |         |  | 3.41 | %
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Net interest margin, (interest income, taxable equivalent basis, to interest earning assets) |                |                                       |                        |  |                                       |         |  | 3.69           | % |                        |   |            |  |   |         |  | 3.66 | %
|                                                                                             |                |                                       |                        |  |                                       |         |  |                |   |                        |   |            |  |   |         |  |      |  



Provision for Credit Losses



The provision for credit losses represents the charge to income necessary
to adjust the allowance for loan losses to an amount that represents managements assessment of the estimated probable credit losses inherent in Sky Financials loan portfolio which have been incurred at each balance sheet date. The
provision for credit



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##### Table of Contents

losses for the three months ended September 30, 2004 was $8,360 versus $8,325 in same quarter of 2003. Net charge-offs
were $8,106 or 0.32% (annualized) of average loans during the three months ended September 30, 2004, compared to $9,086 or 0.43% (annualized) for the same period in 2003.



|                                                                    |  |                   |   |  |                  |   |  |                   |  
|------------------------------------------------------------------- |  | ----------------- | - |  | ---------------- | - |  | ----------------- | -
|                                                                    |  | September 30,2004 |   |  | December 31,2003 |   |  | September 30,2003 |  
|Allowance for credit losses as a percentage of loans                |  | 1.44              | % |  | 1.45             | % |  | 1.46              | %
|Allowance for credit losses as a percentage of non-performing loans |  | 120.29            | % |  | 151.30           | % |  | 138.66            | %



See section titled
Non-Performing Assets of managements discussion and analysis regarding $34,400 of non-performing loans backed by sureties.



Non-Interest Income



Non-interest income for the third quarter of 2004 was $52,747, an increase of $2,768 or 5.5% from $49,979 for the same quarter of 2003. The change in non-interest income reflects the emphasis of Sky Financial on
expanding its profitable fee-based businesses, the impact of acquisitions and an increase in securities gains offset by a decrease in mortgage banking revenues. Brokerage and insurance commissions revenues of $14,703 during the third quarter of
2004, represented an increase of $4,656 or 46.3% from the same period in 2003, reflecting growth from both acquisitions and increased sales. Service charges for the third quarter of 2004 were $13,820, up $3,888 or 39.1% from the third quarter of
2003 primarily due to deposit growth, acquisitions and changes in service fees. Trust service income was $5,079 during the third quarter of 2004, an increase of $1,494 or 41.7% as compared to $3,585 recognized for same period of 2003 as a result of
acquisitions and increased sales. Other income increased to $10,446 in the third quarter of 2004, up from $9,090 in the same quarter last year due to gains on the sales of SBA and other commercial loans. For the third quarter of 2004, securities
gains were $1,854, an increase of $3,888 from the same period last year. Mortgage banking income was $6,845 during the third quarter of 2004, a decrease of $12,514 or 64.6%, due primarily to a decrease in loan originations as compared to the same
period of 2003.



Non-Interest Expense



Non-interest expense for the third quarter of 2004 was $97,892, an increase of $16,040 or
19.6%, from $81,852 reported for the same quarter of 2003. The change in non-interest expense is primarily attributed to additional costs as a result of the Second Bancorp and GLB acquisitions. The efficiency ratio was 55.57% for the third quarter
of 2004, up from 53.95% for the same quarter last year. Merger, integration and restructuring charges of $3,831 were recognized in the third quarter of 2004 due to the acquisition of Second Bancorp, which increased the efficiency ratio by 2.17%.
Salary and other employee costs were $51,133, up $5,872 or 13.0% as compared to the third quarter of 2003 due to an increase in full time equivalent employees, mostly from acquisitions. Occupancy and equipment costs were $15,962, up $2,975 or 22.9%
compared to the same period of 2003 and other operating expenses were $26,966, up $3,362 or 14.2% as compared to the third quarter of 2003, both due primarily to acquisitions.



Income Taxes



The provision for income taxes for the third quarter of 2004 increased $2,697 to $22,863 from $20,166 for the same period in 2003. The effective tax rate of 33.1% in the
third quarter of 2004 was consistent with third quarter 2003 rate of 33.2%.



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##### Table of Contents

Nine Months Ended September 30, 2004 and 2003



Results of Operations



Diluted earnings per common share for the nine months ended September 30, 2004 was $1.47 ($1.49 basic), compared to $1.29 ($1.30 basic) for the same period in 2003. Net
income for the first nine months of 2004 was $145,026, an increase of $29,876 over the first nine moths of 2003 net income of $115,150. Return on average equity (ROE) and return on average assets (ROA) were 16.67% and 1.47%, respectively, for the
nine months of 2004, compared to 17.39% and 1.29%, respectively, in 2003.



Sky
Financial sold Sky Financial Solutions, its dental finance operation during the first quarter of 2004. The operating results of Sky Financial Solutions has been reclassified as income from discontinued operations for all periods presented. Income
from discontinued operations recognized during the first quarter of 2004, including the gain on the sale, resulted in earnings of $.19 per diluted share ($.19 basic) included in the year to date results.



Diluted earnings per common share from continuing operations for the first nine months of
2004 was $1.28 ($1.30 basic), as compared to $1.26 ($1.27 basic) for the same period in 2003. Income from continuing operations for the nine months of 2004 was $126,301, an increase of $13,207 over the first nine months of 2003 net income from
continuing operations of $113,094. Sky Financials net income from continuing operations during the first nine months of 2004 includes the results of Metropolitan, which was acquired in April 2003, GLB, which was acquired in October 2003, and
Second Bancorp, which was acquired in July 2004. The results of 2004 were impacted by merger, integration and restructuring expenses of $4,177 ($2,715 after-tax or $.03 per diluted share) as compared to merger, integration and restructuring expenses
of $3,486 ($2,266 after-tax or $.03 per diluted share) for the nine months ended September 30, 2003. ROE and ROA on a continuing operations basis were 14.52% and 1.31%, respectively, for the first nine months of 2004, compared to 17.08% and 1.34%,
respectively, in 2003.



Business Line Results



Sky Financials two major lines of business include community banking and financial
services. Community banking includes lending and related services to businesses and consumers, mortgage banking and deposit-gathering. Financial services consists of non-banking companies engaged in trust and wealth management, insurance and other
financial-related services. Sky Financials business line results for the nine months ended September 30, 2004 and 2003 are summarized in the table below.



|                                |  |                   |         |   |      |   |         |  
|------------------------------- |  | ----------------- | ------- | - | ---- | - | ------- | -
|                                |  | Net Income (Loss) |        
|Nine Months Ended September 30, |  | 2004              |         |   | 2003 |  
|Community Banking               |  | $                 | 120,245 |   |      | $ | 116,509 |  
|Financial Services Affiliates   |  |                   | 8,071   |   |      |   | 4,237   |  
|Parent and Other                |  |                   | (2,015  | ) |      |   | (7,652  | )
|                                |  |                   |         |   |      |   |         |  
|Consolidated Total              |  | $                 | 126,301 |   |      | $ | 113,094 |  
|                                |  |                   |         |   |      |   |         |  



The higher community banking net
income for the first nine months of 2004 as compared to the same period of the previous year is mainly due to acquisitions completed during the last year, offset by lower mortgage banking income. As a result of the acquisitions, the nine months of
2004 reflects higher net interest income, service charges and fees on deposits and gains on sale of securities. These increases were substantially offset by a decrease in mortgage banking income and an increase in employee expenses and other
operating expenses. The efficiency ratio for the community banking segment was 50.81% for the first nine months of 2004 compared to 47.93% in the same period of 2003. The 2004 community banking results reflect a ROE of 14.77% and a ROA of 1.24%
compared to 18.66% and 1.41%, respectively, in the first nine months of 2003.



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



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##### Table of Contents

Parent and other includes the net funding costs of the parent company, intercompany billings to other affiliates for
shared services and merger, integration and restructuring expenses.



Net
Interest Income



Net interest income for the first nine months of 2004 was
$327,006, an increase of $38,813 or 13.5% from $288,193 in the first nine months of 2003. Net interest income, the difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities, is
the most significant component of Sky Financials earnings. Net interest income is affected by changes in the volumes, rates and composition of interest-earning assets and interest-bearing liabilities. Average earning assets increased 13.6%
from the prior year, with strong growth in average loans, increasing 15.0% from last year, which included organic growth and the addition of Second Bancorp, GLB and Metropolitan. Average deposits were up 11.0% from the same period last year due to
acquisitions. Sky Financials net interest margin for the nine months ended September 30, 2004 was 3.69%, a decrease of 1 basis point from last year. The lower net interest margin primarily reflects the incremental effect of the acquisitions
partially offset by an improving balance sheet mix and benefits from rising short-term interest rates.



The following table reflects the components of Sky Financials net interest income for the nine months ended September 30, 2004 and 2003. Rates are computed on a tax equivalent basis and non-accrual loans have
been included in the average balances.



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|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|-------------------------------------------------------------------------------------------- | -------------- | ------------------------------------ | ---------------------- |  | ------------------------------------ | ------- |  | -------------- | - | ---------------------- | - | ---------- |  | - | ------- |  | ---- | -
|(Dollars in thousands)                                                                       |                | Nine months ended September 30, 2004 |                        |  | Nine months ended September 30, 2003 |        
|                                                                                             | AverageBalance |                                      | InterestIncome/Expense |  | Rate                                 |         |  | AverageBalance |   | InterestIncome/Expense |   | Rate       | 
|Assets                                                                                       |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Interest-earning assets:                                                                     |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Interest-bearing deposits in banks                                                           |                | $                                    | 37,418                 |  |                                      | 324     |  | 1.16           | % |                        | $ | 31,612     |  | $ | 222     |  | .94  | %
|Federal funds sold                                                                           |                |                                      | 2,703                  |  |                                      | 20      |  | .99            |   |                        |   | 1,415      |  |   | 10      |  | .99  |  
|Securities                                                                                   |                |                                      | 2,701,042              |  |                                      | 88,100  |  | 4.36           |   |                        |   | 2,418,163  |  |   | 76,689  |  | 4.24 |  
|Loans and loans held for sale                                                                |                |                                      | 9,178,960              |  |                                      | 389,942 |  | 5.67           |   |                        |   | 8,040,361  |  |   | 369,203 |  | 6.14 |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total interest-earning assets                                                                |                |                                      | 11,920,123             |  |                                      | 478,386 |  | 5.36           |   |                        |   | 10,491,551 |  |   | 446,124 |  | 5.69 |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Assets of discontinued operation                                                             |                |                                      | 432,839                |  |                                      |         |  |                |   |                        |   | 674,735    |  |   |         |  |      |  
|Noninterest-earning assets                                                                   |                |                                      | 827,719                |  |                                      |         |  |                |   |                        |   | 784,278    |  |   |         |  |      |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total assets                                                                                 |                | $                                    | 13,180,681             |  |                                      |         |  |                |   |                        | $ | 11,950,564 |  |   |         |  |      |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Liabilities and Shareholders Equity                                                         |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Interest-bearing liabilities:                                                                |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Demand deposits                                                                              |                | $                                    | 277,384                |  |                                      | 1,429   |  | .69            |   |                        | $ | 206,765    |  |   | 997     |  | .64  |  
|Savings deposits                                                                             |                |                                      | 3,710,157              |  |                                      | 19,991  |  | .72            |   |                        |   | 3,284,860  |  |   | 24,063  |  | .98  |  
|Time deposits                                                                                |                |                                      | 3,905,584              |  |                                      | 79,860  |  | 2.73           |   |                        |   | 3,755,737  |  |   | 85,909  |  | 3.06 |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total interest-bearing deposits                                                              |                |                                      | 7,893,125              |  |                                      | 101,280 |  | 1.71           |   |                        |   | 7,247,362  |  |   | 110,969 |  | 2.05 |  
|Short-term borrowings                                                                        |                |                                      | 881,539                |  |                                      | 13,394  |  | 2.03           |   |                        |   | 826,439    |  |   | 14,121  |  | 2.28 |  
|Junior Subordinated Debentures/Trust Preferred Securities                                    |                |                                      | 170,261                |  |                                      | 6,147   |  | 4.82           |   |                        |   | 144,677    |  |   | 5,492   |  | 5.08 |  
|Debt and FHLB advances                                                                       |                |                                      | 1,322,456              |  |                                      | 27,993  |  | 2.83           |   |                        |   | 990,006    |  |   | 24,879  |  | 3.36 |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total interest-bearing liabilities                                                           |                |                                      | 10,267,381             |  |                                      | 148,814 |  | 1.94           |   |                        |   | 9,208,484  |  |   | 155,461 |  | 2.26 |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Liabilities of discontinued operations                                                       |                |                                      | 405,903                |  |                                      |         |  |                |   |                        |   | 635,232    |  |   |         |  |      |  
|Noninterest-bearing liabilities                                                              |                |                                      | 1,345,186              |  |                                      |         |  |                |   |                        |   | 1,221,486  |  |   |         |  |      |  
|Shareholders equity                                                                         |                |                                      | 1,162,211              |  |                                      |         |  |                |   |                        |   | 885,362    |  |   |         |  |      |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Total liabilities and equity                                                                 |                | $                                    | 13,180,681             |  |                                      |         |  |                |   |                        | $ | 11,950,564 |  |   |         |  |      |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Net interest income(tax equivalent basis)                                                    |                |                                      |                        |  | $                                    | 329,572 |  |                |   |                        |   |            |  | $ | 290,663 |  |      |  
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Net interest rate spread(tax equivalent basis)                                               |                |                                      |                        |  |                                      |         |  | 3.42           | % |                        |   |            |  |   |         |  | 3.43 | %
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  
|Net interest margin, (interest income, taxable equivalent basis, to interest earning assets) |                |                                      |                        |  |                                      |         |  | 3.69           | % |                        |   |            |  |   |         |  | 3.70 | %
|                                                                                             |                |                                      |                        |  |                                      |         |  |                |   |                        |   |            |  |   |         |  |      |  



Provision for Credit Losses



The provision for credit losses represents the charge to income necessary
to adjust the allowance for loan losses to an amount that represents managements assessment of the estimated probable credit losses inherent in Sky Financials loan portfolio which have been incurred at each balance sheet date. The
provision for credit



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losses increased $1,895 or 7.8% to $26,045 in the nine months of 2004 compared to $24,150 in the nine months of 2003. The
higher provision for credit losses during 2004 was due to higher net charge-offs and strong growth in the loan portfolio. Net charge-offs were $25,073 or 0.37% (annualized) of average loans during the nine months ended September 30, 2004, compared
to $23,413 or 0.39% (annualized) for the same period in 2003.



See section
titled Non-Performing Assets of managements discussion and analysis regarding $34,400 of non-performing loans backed by sureties.



Non-Interest Income



The change in non-interest income reflects the emphasis of Sky Financial on expanding its profitable fee-based businesses, the impact of acquisitions and higher securities gains, offset by a decrease in mortgage
banking revenues. Non-interest income for the first nine months of 2004 was $145,765, an increase of $8,916 or 6.5% from $136,849 for the first nine months of 2003. Non-interest income growth was most significant in brokerage and insurance
commissions, with revenues of $42,462 during the first nine months of 2004, an increase of $11,009 or 35.0% from the same period in 2003, reflecting growth from both acquisitions and increased sales. Service charges for the first nine months of 2004
were $34,569, up $6,543 or 23.3% from the first nine months of 2003 primarily due to deposit growth. Trust service income was $13,285 during the first nine months of 2004, an increase of $2,709 or 25.6% as compared to $10,576 recognized for same
period of 2003 as a result of acquisitions and increased sales. Other income increased to $30,021 in the nine months of 2004, up from $25,666 for the same period of 2003 due to gains on the sales of SBA and other commercial loans. Securities gains
were $6,259 through September 30, 2004, an increase of $7,733 from the same period last year. Mortgage banking income was $19,169 during the nine months of 2004, a decrease of $23,433 or 55.0%, due primarily to a decrease in loan originations as
compared to the same period of 2003.



Non-Interest Expense



The change in non-interest expense is primarily attributed to additional costs as a
result of the Second Bancorp, GLB and Metropolitan acquisitions. Non-interest expense for the first nine months of 2004 was $258,693, an increase of $28,149 or 12.2%, from $230,544 reported for the same period of 2003. Merger, integration and
restructuring charges of $4,177 were recognized in the first nine months of 2004 due to the acquisition of Second Bancorp and the sale of Sky Financial Solutions as compared to $3,486 recognized in the same period of 2003 due to the acquisition of
Metropolitan. Salary and other employee costs were $139,071, up $14,338 or 11.5% as compared to the first nine months of 2003 due to an increase in full time equivalent employees, mostly from acquisitions. Occupancy and equipment costs were $42,462,
up $5,559 or 15.1% compared to the same period of 2003 and other operating expenses were $73,173, up $7,561 or 11.5% as compared to the first nine months of 2003, both due primarily to acquisitions. The efficiency ratio was 55.57% for the first nine
months of 2004, up from 53.95% for the same period last year.



Income Taxes



The provision for income taxes for the first nine months of 2004
increased $4,478 to $61,732 from $57,254 for the same period in 2003. The effective tax rate decreased to 32.8% for the first nine months of 2004 as compared to 33.6% for the same period in 2003. The decrease in the effective tax rate is primarily
due to the resolution of certain tax contingencies in conjunction with the completion of various audits of previous open tax years by the Internal Revenue Service.



Balance Sheet



At September 30, 2004, total assets were $14,643,132, an increase of $1,696,937 from December 31, 2003. This increase was primarily attributable to the acquisition of
Second Bancorp, with $2.3 billion in assets, during the third quarter of 2004 offset by the sale of Sky Financial Solutions, a commercial financing subsidiary with $874,765 of assets, during the first quarter of 2004. The increase in loans of
$1,618,531, included $1,314,038 from Second Bancorp and organic growth of 4.9%, offset by a decrease in portfolio loans of $115,975 at Sky Bank that were sold with Sky Financial Solutions. Securities available for sale increased



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$607,515 primarily due to the acquisition of Second Bancorp of $419,029 and due to investment purchases. Other assets
increased $86,207, primarily as a result of the Second Bancorp acquisition. Goodwill and core deposit intangibles of $247,984 and $29,155, respectively, were also recognized as a result of the Second Bancorp acquisition and $12,463 due to the
purchase of Spenser-Patterson and EOB, Inc. The increases were partially offset by a decrease in cash and interest bearing deposits of $5,234.



The net growth in assets was funded primarily by growth in total deposits, up $1,638,815, which consisted of $1,336,542 from the acquisition of Second Bancorp and from
organic growth. Debt increased $420,043, due to the assumption of $646,315 from Second Bancorp and additional borrowings from the Federal Home Loan Bank, offset by payoffs of the line of credit and junior subordinated debentures owed to an
unconsolidated subsidiary trust and payments on repurchase agreements and federal funds purchased.



Shareholders equity totaled $1,416,415 at September 30, 2004, increasing $417,839 from December 31, 2003. Common stock increased $337,023, mainly due to $310,645 of stock issued to Second Bancorp shareholders,
$7,637 of stock issued to Spencer-Patterson shareholders, $4,558 of stock issued to EOB, Inc. shareholders and $14,183 of shares issued for stock from option exercises. Net retained earnings (net income less cash dividends) for the nine months ended
September 30, 2004 totaled $84,824. Accumulated other comprehensive income decreased by $2,420, primarily due to a decrease in the market value of securities available for sale.



Non-Performing Assets



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



|                                                                     |  |                   |         |   |                  |   |        |                   |  |   |        |  
|-------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------ | ----------------- |  | - | ------ | -
|                                                                     |  | September 30,2004 |         |   | December 31,2003 |   |        | September 30,2003 | 
|Non-accrual loans                                                    |  | $                 | 122,050 |   |                  | $ | 81,979 |                   |  | $ | 87,188 |  
|Restructured loans                                                   |  |                   | 556     |   |                  |   | 599    |                   |  |   | 1,245  |  
|                                                                     |  |                   |         |   |                  |   |        |                   |  |   |        |  
|Total non-performing loans                                           |  |                   | 122,606 |   |                  |   | 82,578 |                   |  |   | 88,433 |  
|Investment securities                                                |  |                   | 11,705  |   |                  |   |       |                   |  |   |       |  
|Other real estate owned                                              |  |                   | 11,924  |   |                  |   | 10,441 |                   |  |   | 7,583  |  
|                                                                     |  |                   |         |   |                  |   |        |                   |  |   |        |  
|Total non-performing assets                                          |  | $                 | 146,235 |   |                  | $ | 93,019 |                   |  | $ | 96,016 |  
|                                                                     |  |                   |         |   |                  |   |        |                   |  |   |        |  
|Loans 90 days or more past due and not on non-accrual                |  | $                 | 17,183  |   |                  | $ | 13,841 |                   |  | $ | 11,809 |  
|Non-performing loans to total loans                                  |  |                   | 1.19    | % |                  |   | .96    | %                 |  |   | 1.05   | %
|Non-performing assets to total assets                                |  |                   | 1.00    |   |                  |   | .72    |                   |  |   | .76    |  
|Allowance for credit losses to total non-performing loans            |  |                   | 120.29  |   |                  |   | 151.30 |                   |  |   | 138.66 |  
|Loans 90 days or more past due and not on non-accrual to total loans |  |                   | .17     |   |                  |   | .16    |                   |  |   | .14    |  



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 $128,987 and $98,312 at September 30, 2004 and December 31, 2003, respectively, and are being closely monitored by
management and the Boards of Directors of the subsidiaries. The acquisition of Second Bancorp resulted in additional non-performing loans of $20,172 during the third quarter.



The amount included in these loans results from an evaluation, on a loan-by-loan basis, of loans classified as doubtful and
substandard but are not included in the non-performing loan category. The classification of



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these loans, however, does not imply that management expects losses on each of these loans, but believes that a higher
level of scrutiny is prudent under the circumstances. These loans require close monitoring despite the fact that they are currently performing. Such classifications relate to specific concerns relating to each individual borrower and do not relate
to any concentrated risk elements common to all loans in this group.



Included
in non-accrual loans are $34,400 at September 30, 2004 and $28,600 at December 31, 2003 of loans that are secured by pools of commercial leases for which payment is over 90 days past due. These loans are guaranteed by surety bonds or insurance
policies. Sky Financial is engaged in litigation with the insurance companies to enforce their payment obligations, as are a number of other banks nationwide. After consultation with its counsel as to the strength of its position, Sky believes that
the credits are well secured and the prospects for recovery of all principal and interest are good.



Management also classified $11,705 in investment securities as non-performing during the third quarter. Sky Financial is not accruing income on these securities .



Allowance for Credit Losses



The following table presents a summary of Sky Financials credit loss experience for
the three and nine months ended September 30, 2004 and 2003:



|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                      |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                      |  | 2004                            |         |   | 2003                           |   |         | 2004 |  |   | 2003    |  
|Balance of allowance at beginning of period           |  | $                               | 125,661 |   |                                | $ | 123,378 |      |  | $ | 124,943 |   |  | $ | 106,675 |  
|                                                      |  |                                 |         |  
|Loans charged-off:                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Real estate                                           |  |                                 | (2,144  | ) |                                |   | (3,963  | )    |  |   | (6,542  | ) |  |   | (7,382  | )
|Commercial and agricultural                           |  |                                 | (3,209  | ) |                                |   | (2,586  | )    |  |   | (10,169 | ) |  |   | (6,992  | )
|Installment and credit card                           |  |                                 | (4,799  | ) |                                |   | (5,078  | )    |  |   | (14,239 | ) |  |   | (14,956 | )
|Other loans                                           |  |                                 | (23     | ) |                                |   | (126    | )    |  |   | (70     | ) |  |   | (291    | )
|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total loans charged-off                               |  |                                 | (10,175 | ) |                                |   | (11,753 | )    |  |   | (31,020 | ) |  |   | (29,621 | )
|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Recoveries                                            |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Real estate                                           |  |                                 | 698     |   |                                |   | 264     |      |  |   | 1,567   |   |  |   | 683     |  
|Commercial and agricultural                           |  |                                 | 248     |   |                                |   | 949     |      |  |   | 991     |   |  |   | 1,558   |  
|Installment and credit card                           |  |                                 | 1,123   |   |                                |   | 1,454   |      |  |   | 3,389   |   |  |   | 3,967   |  
|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total recoveries                                      |  |                                 | 2,069   |   |                                |   | 2,667   |      |  |   | 5,947   |   |  |   | 6,208   |  
|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net loans charged-off                                 |  |                                 | (8,106  | ) |                                |   | (9,086  | )    |  |   | (25,073 | ) |  |   | (23,413 | )
|Provision charged to operating expense                |  |                                 | 8,360   |   |                                |   | 8,325   |      |  |   | 26,045  |   |  |   | 24,150  |  
|Reserve of acquired institution                       |  |                                 | 21,564  |   |                                |   |        |      |  |   | 21,564  |   |  |   | 15,205  |  
|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Balance of allowance at end of period                 |  | $                               | 147,479 |   |                                | $ | 122,617 |      |  | $ | 147,479 |   |  | $ | 122,617 |  
|                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Ratio of net charge-offs to average loans outstanding |  |                                 | .32     | % |                                |   | .43     | %    |  |   | .37     | % |  |   | .39     | %



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



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



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



The unallocated allowance recognizes the estimation risk associated with the allocated general and specific allowances and incorporates managements evaluation of
existing conditions that are not included in the allocated allowance determinations. These conditions are reviewed quarterly by management and include general economic conditions, macro credit quality trends, and internal loan review and regulatory
examination findings. The following table sets forth Sky Financials allocation of the allowance for credit losses as of September 30, 2004 and December 31, 2003.



|                                       |  |                   |         |                  |   |        
|-------------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                                       |  | September 30,2004 |         | December 31,2003
|Real estate                            |  | $                 | 58,707  |                  | $ | 46,670 
|Commercial, financial and agricultural |  |                   | 46,161  |                  |   | 39,967 
|Installment and credit card            |  |                   | 29,875  |                  |   | 26,519 
|Construction                           |  |                   | 4,225   |                  |   | 2,295  
|Unallocated                            |  |                   | 8,511   |                  |   | 9,492  
|                                       |  |                   |         |                  |   |        
|Total                                  |  | $                 | 147,479 |                  | $ | 124,943
|                                       |  |                   |         |                  |   |        



Discontinued Operations



Net income from discontinued operations was $18,725 during the first nine
months of 2004 up from $2,056 during the same period in 2003 due primarily to the after-tax gain of $19,876 recognized from the sale of Sky Financial Solutions. The Sky Financial Solutions sales agreement contains a contingency based upon future
charge-offs between Sky Financial and the acquirer that may result in an adjustment to increase or decrease the sales price in future periods. Based on historical experience and expected future performance, management does not believe that this
provision will have a significant impact on future earnings, cash flows, or financial position.



Liquidity and Capital Resources



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



In
addition to maintaining a stable core deposit base, Sky Financials banking subsidiary maintains adequate liquidity primarily through the use of investment securities and unused borrowing capacity. At September 30, 2004 securities and other
short term investments with maturities of one year or less totaled $5,450. In addition, the mortgage-backed securities provide an estimated cash flow of approximately $629,596 over a twelve-month timeframe. The banking subsidiary is a member of the
Federal Home Loan Bank (FHLB). The FHLB provides a reliable source of funds over and above retail deposits. As of September 30, 2004, the banking subsidiary had total credit availability with the FHLB of $1,681,586, of which it had outstanding
borrowings of $1,634,145.



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During 2004, Sky Financial renegotiated an agreement with non-affiliated financial institutions which enabled Sky
Financial to borrow up to $100,000 through May 30, 2005. There were no borrowings under this agreement at September 30, 2004.



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



A schedule of significant commitments at September 30, 2004, follows:



|                             |  |   |          
|---------------------------- |  | - | ---------
|Commitments to extend credit |  | $ | 2,973,540
|Standby letters of credit    |  |   | 356,801  
|Letters of credit            |  |   | 4,413    



During September 2004, Sky
Financials Board of Directors authorized the company to repurchase up to 2,000 shares of common stock in the open market for a twelve month period. During the third quarter of 2004, Sky repurchased 68 shares under this authorization.



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 $57,517 at
September 30, 2004.



Asset/Liability Management



Closely related to liquidity management is the management of interest rate risk. Sky
Financial manages its rate sensitivity position to avoid wide swings in its net interest margin due to changes in market rates. At September 30, 2004, Sky Financials gap position, the difference between the dollar value of interest rate
sensitive assets and interest rate sensitive liabilities, was positive for six months and one year and remained within Sky Financials Asset/Liability Committee (ALCO) guidelines. Therefore Sky Financial does not expect to experience any
significant fluctuations in its net interest margin as a consequence of changes in market rates. See also Item. 3, Quantitative and Qualitative Disclosures About Market Risk.



Forward-Looking Statements



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



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Sarbanes-Oxley Act of 2002



On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002, which contains important new requirements for public
companies in the area of financial disclosure, internal controls and corporate governance. We do not anticipate any significant changes in the operations of and reporting by Sky Financial as a result of the Act. In accordance with the requirements
of the Sarbanes-Oxley Act, written certifications for this quarterly report on Form 10-Q by the chief executive officer and the chief financial officer accompany this report as filed with the SEC. See Controls and Procedures for Sky
Financials evaluation of disclosure controls and procedures.



Item 3.
Quantitative and Qualitative Disclosures About Market Risk



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



Sky Financial
manages market risk through its Asset/Liability Committee (ALCO) at the consolidated level. This committee monitors interest rate risk through sensitivity analysis, whereby it measures potential changes in future earnings and the fair market values
of financial instruments that may result from one or more hypothetical changes in interest rates. This analysis is performed by estimating the expected cash flows of Sky Financials financial instruments using interest rates in effect at
September 30, 2004 and December 31, 2003. For the fair value estimates, the cash flows are then discounted to year end to arrive at an estimated present value of Sky Financials financial instruments. Hypothetical changes in interest rates are
then applied to the financial instruments, and the cash flows and fair values are again estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the
assumed cash flows. Sky Financial applied these interest rate shocks to its financial instruments up 300, 200 and 100 basis points and down 100 basis points. Down 300 and 200 basis points was not measured due to the low probability of such a
decline.



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



|             |  |                    |   |  |         |   |  |               |  
|------------ |  | ------------------ | - |  | ------- | - |  | ------------- | -
|             |  | September 30, 2004 |   |  | ALCOMax |   |  | GuidelinesMin |  
|Six Month    |  | 105.6              | % |  | 125     | % |  | 95            | %
|Twelve Month |  | 104.9              |   |  | 125     | % |  | 95            | %



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



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|                         |  |                   |   |  |                  |   |  |                |  
|------------------------ |  | ----------------- | - |  | ---------------- | - |  | -------------- | -
|                         |  | September 30,2004 |   |  | December 31,2003 |   |  | ALCOGuidelines |  
|One Year Net Interest    |  |                   |   |  |                  |   |  |                |  
|Income Change            |  |                   |   |  |                  |   |  |                |  
|+300 Basis points        |  | 4.1               | % |  | 1.6              | % |  |               | %
|+200 Basis points        |  | 3.1               |   |  | 1.3              |   |  | (10.0          | )
|+100 Basis points        |  | 1.6               |   |  | .7               |   |  | (5.0           | )
|-100 Basis points        |  | (3.1              | ) |  | (2.9             | ) |  | (5.0           | )
|Economic Value of Equity |  |                   |   |  |                  |   |  |                |  
|+300 Basis points        |  | (13.7             | ) |  | (18.0            | ) |  |               |  
|+200 Basis points        |  | (8.3              | ) |  | (11.0            | ) |  | (15.0          | )
|+100 Basis points        |  | (3.4              | ) |  | (4.7             | ) |  | (10.0          | )
|-100 Basis points        |  | .9                |   |  | 1.6              |   |  | (10.0          | )



The projected volatility of net
interest income and the economic value of equity at September 30, 2004 and December 31, 2003 fall within the ALCO guidelines.



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



Sky Financial also utilizes interest rate swaps and caps to effectively manage it interest
rate risk. At September 30, 2004, the fair values of Sky Financials derivative arrangements aggregated $11,877 on contracts with notional amounts of $412,200.



Item 4.
Controls and Procedures



Sky Financial carried
out an evaluation, under the supervision and with the participation of Sky Financials management, of the effectiveness of the design and operation of Sky Financials disclosure controls and internal controls and procedures as of September
30, 2004 pursuant to Exchange Act Rules 13a-14 and 13a-15. These controls and procedures for financial reporting are the responsibility of Sky Financials management. Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that Sky Financials disclosure controls and procedures are effective in alerting them in a timely manner to material information relating to Sky Financial (including consolidated subsidiaries) required to be included in its
periodic filings with the Securities and Exchange Commission. Further, there have been no changes in Sky Financials internal controls over financial reporting during the last fiscal quarter that have materially affected or that are reasonably
likely to affect materially the Corporations internal controls over financial reporting.



PART II.
OTHER INFORMATION



Item 1.
Legal Proceedings



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



Between August 2000 and December 2001, Sky Bank provided financing to a commercial borrower and its affiliated entities for the purchase of three separate portfolios of
commercial lease pools, and a warehouse line of credit to finance lease pools. During 2001, Metropolitan Bank and Trust Company, which was merged with Sky Bank on May 16, 2003, and Second National Bank of Warren, which was merged with Sky Bank on
July 2, 2004, each provided similar financing to the same commercial borrower and its affiliated entities. These loans, with a current outstanding balance of $34.4 million, 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 Metropolitan and Second National) made demand for payment from Illinois Union Insurance Company
(IU), RLI Insurance Company (RLI), and Royal Indemnity Company (Royal) under the relevant surety bonds and insurance policies. IU, RLI, and Royal (collectively, the Sureties) have failed to make the
payments required under the surety bonds and insurance policies. As a result, in the spring of 2002, Sky filed suit against each of the Sureties seeking to enforce Sky Banks rights under the surety bonds and insurance policies issued by the
Sureties in connection with the commercial lease pools. Skys



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complaints claim breach of contract, bad faith and allege that the Sureties are liable for the payments due to Sky under
the terms of the bonds and are estopped from asserting fraud as a defense to paying any claims under the bonds. Similar suits were filed by Metropolitan in June, 2002 and by Second National in April and June, 2002. In October, 2002, the suits were
consolidated for pretrial purposes with more than 35 other lawsuits involving similar claims in the United States District Court for the Northern District of Ohio, Eastern Division, under the Federal Multi-district Litigation (MDL)
Rules.



On January 31, 2003, Sky Bank and the other Claimants in the MDL
Proceeding (MDL 02CV16000, Docket No. 1490) filed a consolidated Motion for Judgment on the Pleadings (the Motion) seeking a determination that the Sureties are liable, as a matter of law, under the relevant surety bonds and insurance
policies. The Motion is pending with the MDL Court and discovery in the MDL Proceeding is continuing. Amendments to the pleadings are currently due 14 days after the Court rules on the Motions. Sky is prepared to amend its complaint to include
additional claims against the Sureties.



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



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



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



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



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



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



Sky Financial has reviewed the relevant matters of fact and law with its special counsel and believes that it has substantial and
meritorious claims against the Sureties, due in part to the fact that, under the terms of the bonds, the Sureties undertake the responsibility for all credit matters and any fraud that may have occurred in the underwriting of the credit, and waive
all defenses associated with the bonds, including defenses of fraud. Sky Financial has and will continue to vigorously assert all the rights and remedies available to it to obtain payment under the bonds. While the ultimate outcome of this matter
cannot be determined at this time, Sky Financial management does not believe that the outcome of any of these pending legal proceedings will materially affect the consolidated financial position or results of operations of Sky Financial.



Scott M. Lukouski, et. al. vs. National Marine, Inc., Sky Financial Group, Inc., et.
al., Case No. 2004 CV 685 (Court of Common Pleas, Erie County, Ohio)



In October, 2004, Sky Financial was one of the named defendant lenders in a purported class action complaint seeking remedies related to the financing of watercraft by Second National Bank of Warren, a predecessor of Sky Bank. In the
acquisition, Sky Financial assumed a portfolio of indirect boat loans originated through National Marine, Inc. The complaint alleges that defendants engaged in fraudulent activities in connection with the purchase, sale and financing of watercraft,
and that defendant lenders failed to follow prudent banking practices in the purchase of commercial paper from National Marine. The complaint seeks injunctive and equitable relief, compensatory and punitive damages, and other remedies on behalf of a
class of borrowers. Sky Financial intends to vigorously defend against these claims, and believes that it has meritorious claims under certain insurance policies relating thereto. Sky Financial does not believe that the outcome of this proceeding is
likely to have a materially adverse 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 2.
Changes in Securities and Use of Proceeds





|                                        |  |                                 |  |                             |  |                                                                               |  |                                                                             
|--------------------------------------- |  | ------------------------------- |  | --------------------------- |  | ----------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------
|Period                                  |  | Total Number ofShares Purchased |  | Average PricePaid Per Share |  | Total Number of SharesPurchased as Part ofPublicly Announced Plansor Programs |  | Maximum Number ofShares that May Yet BePurchased Under thePlans are Programs
|September 1, 2004 to September 30, 2004 |  | 68                              |  | 25.21                       |  | 68                                                                            |  | 1,932                                                                       



During September 2004,
Sky Financials Board of Directors authorized the company to repurchase up to 2,000 shares of common stock in the open market for a twelve-month period. Sky Financial announced this authorization on September 17, 2004.



Item 3.
Defaults Upon Senior Securities



Not applicable.



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



Not applicable



Item 5.
Other Information



Not
applicable.



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Item 6.
Exhibits and Reports on Form 8-K



(a) 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 September 30, 2004.
|            | 
|(31.1)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                       
|            | 
|(31.2)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                       
|            | 
|(32.1)      |  | Section 1350 Certification of Chief Executive Officer.                                                                                                                                                    
|            | 
|(32.2)      |  | Section 1350 Certification of Chief Financial Officer.                                                                                                                                                    



(b) Reports on Form
8-K



Current report on Form 8-K dated September 17, reporting
that Sky Financial had restated the Consolidated Reports of Condition and Income on Form FFIEC 041 filed on behalf of The Second National Bank of Warren for the period ended June 30, 2004.



Current report on Form 8-K dated September 17, 2004, announcing Sky
Financials authorization by the Board of Directors to repurchase shares of its common stock.



Current report on Form 8-K dated September 20, 2004, reporting that R. John Wean III was elected on May 19, 2004, effective September 15, 2004 to Sky
Financials Board of Directors.



Current report on Form
8-K dated September 21, 2004, announcing that Sky Financial entered into an Agreement and Plan of Merger to acquire Prospect Bancshares.



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



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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: November 5, 2004                            
|SKY FINANCIAL GROUP, INC.                         



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                            |  | 
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Exhibit No. |  | Description                                                                                                                                                                                                |  | 
|            |  |                                                                                                                                                                                                           
|(11.1)      |  | Statement Re Computation of Earnings Per Common Share                                                                                                                                                      |  | 
|            |  | The information required by this exhibit is incorporated herein by reference from the information contained in Note 9 Earnings Per Share on page 14
of Sky Financials Form 10-Q for September 30, 2004. |  | 
|            |  |                                                                                                                                                                                                           
|(31.1)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                        |  | 
|            |  |                                                                                                                                                                                                           
|(31.2)      |  | Rule 13a - 14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                        |  | 
|            |  |                                                                                                                                                                                                           
|(32.1)      |  | Section 1350 Certification of Chief Executive Officer.                                                                                                                                                     |  | 
|            |  |                                                                                                                                                                                                           
|(32.2)      |  | Section 1350 Certification of Chief Financial Officer.                                                                                                                                                     |  | 



39