##### 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 March 31, 2004



OR



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



For the transition period from              to



Commission File Number 0-13270



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Unizan Financial Corp.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Ohio                                                           |  | 34-1442295                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



220 Market Avenue
South, Canton, Ohio 44702

(Address of principal executive offices)

(Zip Code)



(330) 438-1118

(Registrants telephone number, including area code)



---



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 ̈



Indicate the number of shares outstanding of each of the issuers classes of common
stock as of the latest practicable date.



|                                 |  |                                 
|-------------------------------- |  | --------------------------------
|Class                            |  | Outstanding as of April 30, 2004
|Common Stock, $1.00 Stated Value |  | 21,758,794                      



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##### Table of Contents

INDEX

UNIZAN FINANCIAL CORP.



|           |  |                                                                                       |  |         
|---------- |  | ------------------------------------------------------------------------------------- |  | --------
|           |  |                                                                                       |  | PAGE NO.
|PART I.    |  | FINANCIAL INFORMATION                                                                 |  |         
|           |  |                                                                                      
|Item 1.    |  | Financial Statements                                                                  |  |         
|           |  |                                                                                      
|           |  | Consolidated Balance Sheets                                                           |  | 1       
|           |  |                                                                                      
|           |  | Consolidated Statements of Income                                                     |  | 2       
|           |  |                                                                                      
|           |  | Consolidated Statements of Comprehensive Income                                       |  | 3       
|           |  |                                                                                      
|           |  | Consolidated Statements of Cash Flows                                                 |  | 4       
|           |  |                                                                                      
|           |  | Notes to Consolidated Financial Statements                                            |  | 5-10    
|           |  |                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 11-18   
|           |  |                                                                                      
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 19-20   
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 20      
|           |  |                                                                                      
|PART II.   |  | OTHER INFORMATION                                                                     |  |         
|           |  |                                                                                      
|           |  | Other Information                                                                     |  | 21-23   
|           |  |                                                                                      
|           |  | Item 1.
Legal Proceedings                                                             |  |         
|           |  |                                                                                      
|           |  | Item 2.
Changes in Securities and Use of Proceeds                                     |  |         
|           |  |                                                                                      
|           |  | Item 3.
Defaults upon Senior Securities                                               |  |         
|           |  |                                                                                      
|           |  | Item 4.
Submission of Matters to a Vote of Security Holders                           |  |         
|           |  |                                                                                      
|           |  | Item 5.
Other Information                                                             |  |         
|           |  |                                                                                      
|           |  | Item 6.
Exhibits and Reports on Form 8-K                                              |  |         
|           |  |                                                                                      
|           |  | (a)
Exhibits on Item 601 of Regulation S-K                                            |  |         
|           | 
|Signatures |  | 23                                                                                   



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##### Table of Contents

Unizan Financial Corp.

CONSOLIDATED BALANCE SHEETS



|                                                                                              |  |                |           |   |                  |   |           |  
|--------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | ---------------- | - | --------- | -
|(Unaudited, except December 31, 2003) (In
thousands except per share data)                    |  | March 31, 2004 |           |   | December 31,2003 |  
|ASSETS                                                                                        |  |                |           |   |                  |   |           |  
|Cash and cash equivalents                                                                     |  | $              | 71,924    |   |                  | $ | 56,558    |  
|Federal funds sold                                                                            |  |                | 250       |   |                  |   |          |  
|Interest bearing deposits with banks                                                          |  |                | 4,830     |   |                  |   | 1,942     |  
|Securities held-to-maturity, (Fair value: $2,678 and $2,982, respectively)                    |  |                | 2,556     |   |                  |   | 2,861     |  
|Securities available-for-sale, at fair value                                                  |  |                | 484,760   |   |                  |   | 471,775   |  
|Federal Home Loan Bank stock, at cost                                                         |  |                | 35,061    |   |                  |   | 34,716    |  
|Loans originated and held for sale                                                            |  |                | 4,744     |   |                  |   | 2,679     |  
|Loans:                                                                                        |  |                |           |   |                  |   |           |  
|Commercial, financial and agricultural                                                        |  |                | 258,677   |   |                  |   | 261,167   |  
|Aircraft                                                                                      |  |                | 134,889   |   |                  |   | 133,277   |  
|Commercial real estate                                                                        |  |                | 662,289   |   |                  |   | 658,699   |  
|Residential real estate                                                                       |  |                | 449,057   |   |                  |   | 450,398   |  
|Consumer                                                                                      |  |                | 464,323   |   |                  |   | 464,943   |  
|                                                                                              |  |                |           |   |                  |   |           |  
|Total loans                                                                                   |  |                | 1,969,235 |   |                  |   | 1,968,484 |  
|Less allowance for loan losses                                                                |  |                | (24,611   | ) |                  |   | (24,611   | )
|                                                                                              |  |                |           |   |                  |   |           |  
|Net loans                                                                                     |  |                | 1,944,624 |   |                  |   | 1,943,873 |  
|Premises and equipment, net                                                                   |  |                | 24,641    |   |                  |   | 25,353    |  
|Goodwill                                                                                      |  |                | 91,971    |   |                  |   | 91,971    |  
|Other intangible assets                                                                       |  |                | 17,836    |   |                  |   | 18,661    |  
|Accrued interest receivable and other assets                                                  |  |                | 77,987    |   |                  |   | 76,860    |  
|                                                                                              |  |                |           |   |                  |   |           |  
|Total Assets                                                                                  |  | $              | 2,761,184 |   |                  | $ | 2,727,249 |  
|                                                                                              |  |                |           |   |                  |   |           |  
|LIABILITIES                                                                                   |  |                |           |   |                  |   |           |  
|Deposits:                                                                                     |  |                |           |   |                  |   |           |  
|Noninterest bearing deposits                                                                  |  | $              | 214,844   |   |                  | $ | 206,501   |  
|Interest bearing deposits                                                                     |  |                | 1,731,299 |   |                  |   | 1,769,291 |  
|                                                                                              |  |                |           |   |                  |   |           |  
|Total deposits                                                                                |  |                | 1,946,143 |   |                  |   | 1,975,792 |  
|Short-term borrowings                                                                         |  |                | 59,364    |   |                  |   | 56,413    |  
|Other borrowings                                                                              |  |                | 403,110   |   |                  |   | 344,853   |  
|Subordinated note                                                                             |  |                | 20,619    |   |                  |   | 20,619    |  
|Accrued taxes, expenses and other liabilities                                                 |  |                | 25,262    |   |                  |   | 26,749    |  
|                                                                                              |  |                |           |   |                  |   |           |  
|Total Liabilities                                                                             |  |                | 2,454,498 |   |                  |   | 2,424,426 |  
|                                                                                              |  |               
|SHAREHOLDERS EQUITY                                                                          |  |                |           |   |                  |   |           |  
|Common stock ($1.00 stated value, 100,000,000 shares authorized and 22,123,069 shares issued) |  |                | 22,123    |   |                  |   | 22,123    |  
|Additional paid-in capital                                                                    |  |                | 224,722   |   |                  |   | 223,613   |  
|Retained earnings                                                                             |  |                | 74,461    |   |                  |   | 74,993    |  
|Stock held by deferred compensation plan, 118,616 and 118,616 shares at cost                  |  |                | (2,016    | ) |                  |   | (2,016    | )
|Treasury stock, 368,389 and 440,276 shares at cost                                            |  |                | (10,308   | ) |                  |   | (11,515   | )
|Accumulated other comprehensive loss                                                          |  |                | (2,296    | ) |                  |   | (4,375    | )
|                                                                                              |  |                |           |   |                  |   |           |  
|Total Shareholders Equity                                                                    |  |                | 306,686   |   |                  |   | 302,823   |  
|                                                                                              |  |                |           |   |                  |   |           |  
|Total Liabilities and Shareholders Equity                                                    |  | $              | 2,761,184 |   |                  | $ | 2,727,249 |  
|                                                                                              |  |                |           |   |                  |   |           |  



See Notes to the
Consolidated Financial Statements



1



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##### Table of Contents

Unizan Financial Corp.

CONSOLIDATED STATEMENTS OF INCOME



|                                                                     |      |                              |            |  |   |           
|-------------------------------------------------------------------- | ---- | ---------------------------- | ---------- |  | - | ----------
|(Unaudited) (In thousands
except per share data)                     |      | Three Months Ended March 31,
|                                                                     | 2004 |                              | 2003      
|Interest income:                                                     |      |                              |            |  |   |           
|Interest and fees on loans:                                          |      |                              |            |  |   |           
|Taxable                                                              |      | $                            | 27,642     |  | $ | 31,355    
|Tax exempt                                                           |      |                              | 32         |  |   | 42        
|Interest and dividends on securities                                 |      |                              |            |  |   |           
|Taxable                                                              |      |                              | 4,121      |  |   | 5,516     
|Tax exempt                                                           |      |                              | 476        |  |   | 418       
|Interest on bank deposits and federal funds sold                     |      |                              | 8          |  |   | 9         
|                                                                     |      |                              |            |  |   |           
|Total interest income                                                |      |                              | 32,279     |  |   | 37,340    
|                                                                     |      |                              |            |  |   |           
|Interest expense:                                                    |      |                              |            |  |   |           
|Interest on deposits                                                 |      |                              | 9,150      |  |   | 11,051    
|Interest on subordinated note                                        |      |                              | 505        |  |   |          
|Interest on company obligated mandatorily redeemable trust preferred |      |                              |           |  |   | 505       
|Interest on borrowings                                               |      |                              | 3,832      |  |   | 4,493     
|                                                                     |      |                              |            |  |   |           
|Total interest expense                                               |      |                              | 13,487     |  |   | 16,049    
|                                                                     |      |                              |            |  |   |           
|Net interest income                                                  |      |                              | 18,792     |  |   | 21,291    
|Provision for loan losses                                            |      |                              | 1,000      |  |   | 1,269     
|                                                                     |      |                              |            |  |   |           
|Net interest income after provision for loan losses                  |      |                              | 17,792     |  |   | 20,022    
|                                                                     |      |                             
|Other income:                                                        |      |                              |            |  |   |           
|Trust, financial planning, brokerage and insurance sales             |      |                              | 1,870      |  |   | 1,712     
|Customer service fees                                                |      |                              | 1,844      |  |   | 1,553     
|Gains on sale of loans                                               |      |                              | 1,245      |  |   | 2,130     
|Security gains, net                                                  |      |                              | 71         |  |   |          
|Other operating income                                               |      |                              | 1,984      |  |   | 1,557     
|                                                                     |      |                              |            |  |   |           
|Total other income                                                   |      |                              | 7,014      |  |   | 6,952     
|                                                                     |      |                              |            |  |   |           
|Other expenses:                                                      |      |                              |            |  |   |           
|Salaries, wages, pension and benefits                                |      |                              | 12,774     |  |   | 8,932     
|Occupancy expense                                                    |      |                              | 867        |  |   | 911       
|Furniture, equipment and data processing expense                     |      |                              | 1,438      |  |   | 1,428     
|Taxes other than income taxes                                        |      |                              | 630        |  |   | 517       
|Other intangible amortization expense                                |      |                              | 825        |  |   | 858       
|Other operating expense                                              |      |                              | 4,880      |  |   | 4,064     
|                                                                     |      |                              |            |  |   |           
|Total other expenses                                                 |      |                              | 21,414     |  |   | 16,710    
|                                                                     |      |                              |            |  |   |           
|Income before income taxes                                           |      |                              | 3,392      |  |   | 10,264    
|Provision for income taxes                                           |      |                              | 980        |  |   | 3,228     
|                                                                     |      |                              |            |  |   |           
|Net income                                                           |      | $                            | 2,412      |  | $ | 7,036     
|                                                                     |      |                              |            |  |   |           
|Earnings per share:                                                  |      |                              |            |  |   |           
|Basic                                                                |      | $                            | 0.11       |  | $ | 0.32      
|Diluted                                                              |      | $                            | 0.11       |  | $ | 0.32      
|                                                                     |      |                              |            |  |   |           
|Dividends per share                                                  |      | $                            | 0.135      |  | $ | 0.135     
|                                                                     |      |                              |            |  |   |           
|Weighted average shares outstanding:                                 |      |                              |            |  |   |           
|Basic                                                                |      |                              | 21,733,289 |  |   | 21,831,377
|Diluted                                                              |      |                              | 21,972,349 |  |   | 22,290,839
|                                                                     |      |                              |            |  |   |           



See Notes to the
Consolidated Financial Statements



2



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##### Table of Contents

Unizan Financial Corp.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



|                                                                                  |  |                             |        |   |      |   |       |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ----- | -
|                                                                                  |  | Three Months EndedMarch 31, |       
|(Unaudited) (In
thousands)                                                        |  | 2004                        |        |   | 2003 |  
|Net Income                                                                        |  | $                           | 2,412  |   |      | $ | 7,036 |  
|                                                                                  |  |                            
|Unrealized holding gains/(losses) on available-for-sale securities                |  |                             | 3,530  |   |      |   | (201  | )
|Reclassification adjustment for gains on securities included in net income        |  |                             | (71    | ) |      |   |      |  
|Net                                                                               |  |                             | 3,459  |   |      |   | (201  | )
|                                                                                  |  |                             |        |   |      |   |       |  
|                                                                                  |  |                            
|Unrealized losses on cash flow hedges                                             |  |                             | (676   | ) |      |   | (307  | )
|Reclassification adjustment for losses on cash flow hedges included in net income |  |                             | 415    |   |      |   | 354   |  
|                                                                                  |  |                             |        |   |      |   |       |  
|Net                                                                               |  |                             | (261   | ) |      |   | 47    |  
|                                                                                  |  |                            
|Total                                                                             |  |                             | 3,198  |   |      |   | (154  | )
|Tax (expense)/benefit                                                             |  |                             | (1,119 | ) |      |   | 54    |  
|                                                                                  |  |                             |        |   |      |   |       |  
|Other comprehensive income (loss), net of tax                                     |  |                             | 2,079  |   |      |   | (100  | )
|                                                                                  |  |                             |        |   |      |   |       |  
|Comprehensive income                                                              |  | $                           | 4,491  |   |      | $ | 6,936 |  
|                                                                                  |  |                             |        |   |      |   |       |  



See Notes to the
Consolidated Financial Statements



3



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##### Table of Contents

Unizan Financial Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                           |  |                             |         |   |      |   |          |  
|-------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | -------- | -
|                                                                           |  | Three months endedMarch 31, |        
|(Unaudited) (In
thousands)                                                 |  | 2004                        |         |   | 2003 |  
|Cash flows from operating activities:                                      |  |                             |         |   |      |   |          |  
|Net income                                                                 |  | $                           | 2,412   |   |      | $ | 7,036    |  
|Adjustments to reconcile net income to net cash from operating activities: |  |                             |         |   |      |   |          |  
|Depreciation and amortization                                              |  |                             | 1,881   |   |      |   | (867     | )
|Provision for loan losses                                                  |  |                             | 1,000   |   |      |   | 1,269    |  
|Net securities gains                                                       |  |                             | (71     | ) |      |   |         |  
|Loans originated for resale                                                |  |                             | (18,219 | ) |      |   | (50,835  | )
|Proceeds from sale of loan originations                                    |  |                             | 17,140  |   |      |   | 58,516   |  
|Gains from sale of loans originated for sale                               |  |                             | (986    | ) |      |   | (1,274   | )
|Gains from sale of residential real estate loans from portfolio            |  |                             | (259    | ) |      |   | (856     | )
|Federal Home Loan Bank stock dividend                                      |  |                             | (345    | ) |      |   | (329     | )
|Net increase in bank owned life insurance                                  |  |                             | (673    | ) |      |   | (576     | )
|Changes in:                                                                |  |                             |         |   |      |   |          |  
|Interest receivable                                                        |  |                             | (89     | ) |      |   | (357     | )
|Interest payable                                                           |  |                             | 218     |   |      |   | 287      |  
|Other assets and liabilities, net                                          |  |                             | (2,625  | ) |      |   | (7,203   | )
|                                                                           |  |                             |         |   |      |   |          |  
|Net cash from operating activities                                         |  |                             | (616    | ) |      |   | 4,811    |  
|                                                                           |  |                             |         |   |      |   |          |  
|Cash flows from investing activities:                                      |  |                             |         |   |      |   |          |  
|Net change in interest bearing deposits with banks                         |  |                             | (2,888  | ) |      |   | 646      |  
|Net change in federal funds sold                                           |  |                             | (250    | ) |      |   | 5,450    |  
|Proceeds from sales of securities available-for-sale                       |  |                             | 571     |   |      |   |         |  
|Proceeds from maturities of securities held-to-maturity                    |  |                             | 295     |   |      |   | 607      |  
|Proceeds from maturities of securities available-for-sale                  |  |                             | 19,810  |   |      |   | 59,111   |  
|Purchases of securities available-for-sale                                 |  |                             | (30,191 | ) |      |   | (127,664 | )
|Net increase in loans made to customers                                    |  |                             | (9,589  | ) |      |   | (76,600  | )
|Proceeds from sale of loans                                                |  |                             | 7,341   |   |      |   | 24,372   |  
|Purchases of premises and equipment                                        |  |                             | (109    | ) |      |   | (948     | )
|                                                                           |  |                             |         |   |      |   |          |  
|Net cash from investing activities                                         |  |                             | (15,010 | ) |      |   | (115,026 | )
|                                                                           |  |                             |         |   |      |   |          |  
|Cash flows from financing activities:                                      |  |                             |         |   |      |   |          |  
|Net change in deposits                                                     |  |                             | (29,649 | ) |      |   | 86,338   |  
|Cash dividends paid                                                        |  |                             | (2,935  | ) |      |   | (2,917   | )
|Treasury stock sales                                                       |  |                             | 13,014  |   |      |   | 3,320    |  
|Treasury stock purchases                                                   |  |                             | (10,707 | ) |      |   | (13,849  | )
|Net change in stock held in deferred compensation plan                     |  |                             |        |   |      |   | (32      | )
|Net change in short-term borrowings                                        |  |                             | 2,951   |   |      |   | 24,175   |  
|Net change in Federal Home Loan Bank overnight borrowings                  |  |                             | 54,300  |   |      |   | (10,100  | )
|Proceeds from other borrowings                                             |  |                             | 4,585   |   |      |   | 50,885   |  
|Repayment of other borrowings                                              |  |                             | (567    | ) |      |   | (19,792  | )
|                                                                           |  |                             |         |   |      |   |          |  
|Net cash from financing activities                                         |  |                             | 30,992  |   |      |   | 118,028  |  
|                                                                           |  |                             |         |   |      |   |          |  
|Net change in cash and cash equivalents                                    |  |                             | 15,366  |   |      |   | 7,813    |  
|                                                                           |  |                            
|Cash and cash equivalents at beginning of year                             |  |                             | 56,558  |   |      |   | 70,082   |  
|                                                                           |  |                             |         |   |      |   |          |  
|Cash and cash equivalents at end of period                                 |  | $                           | 71,924  |   |      | $ | 77,895   |  
|                                                                           |  |                             |         |   |      |   |          |  
|Supplemental cash flow disclosures:                                        |  |                             |         |   |      |   |          |  
|Income taxes paid                                                          |  | $                           |        |   |      | $ |         |  
|Interest paid                                                              |  | $                           | 13,243  |   |      | $ | 15,811   |  



See the Notes to the
Consolidated Financial Statements





4



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##### Table of Contents

UNIZAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2004 (Unaudited)

(In
thousands, except per share data)



The consolidated financial statements
for interim periods are unaudited; however, in the opinion of management of Unizan Financial Corp. (Company), the accompanying consolidated financial statements contain all material adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include
all disclosures normally required by accounting principles generally accepted in the United States of America. Reference should be made to the Companys consolidated financial statements and notes thereto included in the Companys annual
report on Form 10-K for the year ended December 31, 2003 for additional disclosures, including a summary of the Companys accounting policies. The results of operations for the three month period ended March 31, 2004 are not necessarily
indicative of the results to be expected for the full year.



1) SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:



Basis of
Presentation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. Unless otherwise indicated,
dollars are in thousands except per share data.



Accounting
Pronouncements: In December 2003, the FASB revised FIN No. 46, Consolidation of Variable Interest Entities. FIN 46, as revised in December 2003, changes the accounting model for consolidation from one based on consideration of
control through voting interests. Whether to consolidate an entity will now also consider whether that entity has sufficient equity at risk to enable it to operate without additional financial support, whether the equity owners in that entity lack
the obligation to absorb expected losses at the right to receive residual returns at the entity, or whether voting rights in the entity are not proportional to the equity interest and substantially all the entitys activities are conducted for
an investor with few voting rights. As of December 31, 2003, the Company applied the provisions of FIN 46 to a wholly-owned subsidiary trust that issued capital securities to third-party investors. The application of FIN 46 resulted in the
deconsolidation of the wholly-owned subsidiary trust. As a result, amounts previously reported as company obligated mandatorily redeemable trust preferred in liabilities have been recaptioned subordinated note and continue to
be presented in liabilities on the balance sheet. The deconsolidation of the Trust increased the Companys balance sheet by $619, the difference representing the Companys common ownership in the Trust. The adoption of FIN 46 did not have
a material impact on the Companys consolidated financial condition or results of operations.



Stock Incentive Plan: Employee compensation expense under stock options is reported using the intrinsic value method. All options granted had an
exercise price equal to or greater than the market price of the underlying common stock at the date of grant. Any tax benefit realized by the Company from the exercise of non-qualified stock options is added to paid-in-capital. During the first
quarter of 2004, an expense of $3,638 was recognized in relation to the exercise of certain stock options as a result of the settlement of options for cash or with shares held for less than six months. The following table illustrates the effect on
net income and earnings per share if expense was measured using the fair value method of SFAS No. 123, Accounting for Stock-Based Compensation:



|                                                                                  |  |                             |       |      |   |      
|--------------------------------------------------------------------------------- |  | --------------------------- | ----- | ---- | - | -----
|                                                                                  |  | Three Months EndedMarch 31,
|                                                                                  |  | 2004                        |       | 2003
|Net income, as reported                                                           |  | $                           | 2,412 |      | $ | 7,036
|Deduct: Stock based compensation expense determined under fair value based method |  |                             | 15    |      |   | 64   
|                                                                                  |  |                             |       |      |   |      
|Pro forma net income                                                              |  | $                           | 2,397 |      | $ | 6,972
|Earnings per share, as reported:                                                  |  |                             |       |      |   |      
|Basic                                                                             |  | $                           | 0.11  |      | $ | 0.32 
|Diluted                                                                           |  | $                           | 0.11  |      | $ | 0.32 
|Pro forma earnings per share:                                                     |  |                             |       |      |   |      
|Basic                                                                             |  | $                           | 0.11  |      | $ | 0.32 
|Diluted                                                                           |  | $                           | 0.11  |      | $ | 0.31 



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##### Table of Contents

For purposes of providing the pro forma disclosures required under SFAS No. 123, the fair value of the
stock options granted were estimated at the date of grant using a Black-Scholes option pricing model. The weighted average assumptions used in the option pricing model were as follows:



|                                               |  |                             |   |  |       |  
|---------------------------------------------- |  | --------------------------- | - |  | ----- | -
|                                               |  | Three Months EndedMarch 31, |  
|                                               |  | 2004                        |   |  | 2003  |  
|Nonqualified Stock Options  Immediate Vesting |  |                             |   |  |       |  
|Risk-free interest rate                        |  | 1.02                        | % |  | 1.96  | %
|Expected dividend yield                        |  | 2.90                        | % |  | 3.07  | %
|Expected option life (years)                   |  | 0.67                        |   |  | 3.0   |  
|Expected volatility                            |  | 16.00                       | % |  | 31.00 | %



2) PENDING MERGER



On January 27, 2004, Huntington Bancshares Incorporated, a $31 billion
regional bank holding company headquartered in Columbus, Ohio, and Unizan Financial Corp. announced the signing of a definitive agreement to merge the two organizations and their subsidiaries. Under terms of the agreement, Unizan shareholders will
receive 1.1424 shares of Huntington common stock, on a tax-free basis, for each share of Unizan. Based on the $23.10 closing price of Huntingtons common stock on January 26, 2004, this represents a price of $26.39 per Unizan share, a 15%
premium to Unizans per share closing price of $22.95, and values the transaction at approximately $587 million. The merger was unanimously approved by both boards and is expected to close in early July of 2004, pending customary regulatory
approvals, as well as Unizan shareholder approval. In order for the merger agreement to be approved, the holders of two-thirds of the Unizan shares outstanding and entitled to vote thereon must vote in favor of adoption of the merger agreement.



3) COMPUTATION OF EARNINGS PER SHARE



The computation of earnings per share is as follows.



|                                                                                          |  |                             |        |      |   |       
|----------------------------------------------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                                                                          |  | Three Months EndedMarch 31,
|                                                                                          |  | 2004                        |        | 2003
|Weighted average common shares outstanding - basic                                        |  |                             | 21,733 |      |   | 21,831
|Dilutive effect due to stock incentive plans                                              |  |                             | 239    |      |   | 460   
|                                                                                          |  |                             |        |      |   |       
|Weighted average common shares outstanding adjusted for dilutive common stock equivalents |  |                             | 21,972 |      |   | 22,291
|                                                                                          |  |                             |        |      |   |       
|Net income                                                                                |  | $                           | 2,412  |      | $ | 7,036 
|                                                                                          |  |                             |        |      |   |       
|Basic earnings per share                                                                  |  | $                           | 0.11   |      | $ | 0.32  
|                                                                                          |  |                             |        |      |   |       
|Diluted earnings per share                                                                |  | $                           | 0.11   |      | $ | 0.32  
|                                                                                          |  |                             |        |      |   |       



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4) SECURITIES



The amortized cost and fair value of available-for-sale securities were as follows:



|                                                 |  |                |         |                      |   |                       |  |   |            |   |  |   |        
|------------------------------------------------ |  | -------------- | ------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | -------
|                                                 |  | March 31, 2004
|                                                 |  | AmortizedCost  |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|Securities available-for-sale:                   |  |                |         |                      |   |                       |  |   |            |   |  |   |        
|U.S. Treasury securities                         |  | $              | 1,009   |                      | $ |                      |  | $ |           |   |  | $ | 1,009  
|Obligations of states and political subdivisions |  |                | 44,377  |                      |   | 1,939                 |  |   | (17        | ) |  |   | 46,299 
|Corporate obligations                            |  |                | 41,730  |                      |   | 1,151                 |  |   | (1,101     | ) |  |   | 41,780 
|Mortgage-backed and related securities           |  |                | 379,164 |                      |   | 1,963                 |  |   | (2,019     | ) |  |   | 379,108
|Other securities                                 |  |                | 18,596  |                      |   | 9                     |  |   | (2,041     | ) |  |   | 16,564 
|                                                 |  |                |         |                      |   |                       |  |   |            |   |  |   |        
|Total securities available-for-sale              |  | $              | 484,876 |                      | $ | 5,062                 |  | $ | (5,178     | ) |  | $ | 484,760
|                                                 |  |                |         |                      |   |                       |  |   |            |   |  |   |        



|                                                 |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|------------------------------------------------ |  | ----------------- | ------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | -------
|                                                 |  | December 31, 2003
|                                                 |  | AmortizedCost     |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|Securities available-for-sale:                   |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|U.S. Treasury securities                         |  | $                 | 1,000   |                      | $ | 7                     |  | $ |           |   |  | $ | 1,007  
|Obligations of states and political subdivisions |  |                   | 46,222  |                      |   | 1,627                 |  |   | (36        | ) |  |   | 47,813 
|Corporate obligations                            |  |                   | 42,241  |                      |   | 794                   |  |   | (1,684     | ) |  |   | 41,351 
|Mortgage-backed and related securities           |  |                   | 367,272 |                      |   | 1,205                 |  |   | (3,735     | ) |  |   | 364,742
|Other securities                                 |  |                   | 18,615  |                      |   | 39                    |  |   | (1,792     | ) |  |   | 16,862 
|                                                 |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Total securities available-for-sale              |  | $                 | 475,350 |                      | $ | 3,672                 |  | $ | (7,247     | ) |  | $ | 471,775
|                                                 |  |                   |         |                      |   |                       |  |   |            |   |  |   |        



Available-for-sale
securities, which have been in a continuous unrealized-loss position for more than twelve months, not recognized in income at March 31, 2004 was $3,389 compared to $3,586 at December 31, 2003. Management believes the unrealized losses on these
securities are temporary in nature. Management also believes the Company has the ability to hold these securities to maturity and the issuers have the ability to re-pay. In 2003, an impairment charge was recognized on a trust preferred security
issued by North Country Financial Corporation as part of a credit review process. Since the decline in the fair value of this security was already recognized in earnings at the date of impairment and there has been no further decline in fair value
since then, it is not included in the unrealized losses in the above tables.



5) OTHER BORROWINGS:



Federal Home Loan Bank
(FHLB) advances and other borrowings were as follows:



|                                          |  |                |         |             |                   |   |        |   |             |  |      |  
|----------------------------------------- |  | -------------- | ------- | ----------- | ----------------- | - | ------ | - | ----------- |  | ---- | -
|                                          |  | March 31, 2004 |         |             | December 31, 2003 |  
|                                          |  | Amount         |         | AverageRate |                   |   | Amount |   | AverageRate | 
|FHLB advances                             |  | $              | 322,421 |             | 4.10              | % |        | $ | 268,721     |  | 5.57 | %
|Term repurchase agreements                |  |                | 45,000  |             | 5.47              |   |        |   | 45,000      |  | 5.44 |  
|Line of credit with financial institution |  |                | 20,000  |             | 1.98              |   |        |   | 15,500      |  | 2.03 |  
|Term debt with a financial institution    |  |                | 15,000  |             | 3.76              |   |        |   | 15,000      |  | 3.61 |  
|Capital leases                            |  |                | 454     |             | 6.91              |   |        |   | 482         |  | 4.35 |  
|Subordinated term notes                   |  |                | 235     |             | 3.22              |   |        |   | 150         |  | 2.61 |  
|                                          |  |                |         |             |                   |   |        |   |             |  |      |  
|                                          |  | $              | 403,110 |             |                   |   |        | $ | 344,853     |  |      |  
|                                          |  |                |         |             |                   |   |        |   |             |  |      |  



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Pursuant to collateral agreements with the FHLB, advances are secured by FHLB stock and qualifying first
mortgage loans. At March 31, 2004, FHLB advances outstanding were comprised of the following:



|                     |  |              |   |  |        |        
|-------------------- |  | ------------ | - |  | ------ | -------
|Maturity             |  | InterestRate |   |  | Amount
|Within 1 year        |  | 2.44         | % |  | $      | 74,784 
|1 year thru 2 years  |  | 2.56         |   |  |        | 105,191
|2 years thru 3 years |  | 4.97         |   |  |        | 25,801 
|3 years thru 4 years |  | 4.96         |   |  |        | 17,798 
|4 years thru 5 years |  | 4.01         |   |  |        | 63,000 
|More than 5 years    |  | 3.87         |   |  |        | 35,847 
|                     |  |              |   |  |        |        
|Total                |  |              |   |  | $      | 322,421
|                     |  |              |   |  |        |        



FHLB advances must be
secured by eligible collateral as specified by the FHLB. Accordingly, the Company has a blanket pledge of its one-to-four family residential mortgages, multi-family, commercial real estate and home equity loans held in the loan portfolio as
collateral for the advances outstanding at March 31, 2004 with a required minimum ratio of collateral to advances of 135%. Also, the Company has an investment in FHLB stock of $35,061 at March 31, 2004 of which approximately $16,097 is pledged as
collateral for outstanding advances. FHLB advances comprise a combination of fixed and variable rate advances. Variable rate advances can be paid off, in part or in full, on any monthly interest reset date without penalty. Fixed rate advances are
generally subject to early prepayment fees approximately equal to the present value of the lost cash flow to the FHLB.



The Company has a line of credit of $25,000 from a financial institution that is used for liquidity purposes and to facilitate additional investment in
subsidiaries. The line of credit is secured by common stock of Unizan Bank, National Association. The total outstanding balance at March 31, 2004 was $20,000. The interest on each draw is variable and is priced off the Federal Funds Rate plus 0.85%
per annum and is paid quarterly. Also, the Company has a term loan of $15,000 from a financial institution that was used to facilitate additional investment in subsidiaries. The term loan is also secured by common stock of Unizan Bank, National
Association. The interest rate is variable and is priced off the LIBOR Rate plus 2.50% per annum and is paid quarterly. The debt matures on September 30, 2004.



At March 31, 2004, the Company had $45,000 in term repurchase agreements with Salomon Brothers, Inc. under which the Company sold mortgage-backed and
related securities classified as available-for-sale with a fair value of $47,437 at March 31, 2004. The repurchase agreements had a weighted average maturity of 4.2 years at March 31, 2004. Also, such repurchase agreements are callable at the option
of the counter-party. The securities are held at Salomon Brothers, Inc.



The Bank entered into two capital lease arrangements in order to finance the purchase of equipment. The aggregate outstanding balance of the leases as of March 31, 2004 was $454.



6) STOCK INCENTIVE PLAN:



In 1987, the shareholders approved a Stock Option and Performance Unit Plan reserving 764,040 shares of common stock, adjusted for stock dividends and
splits, for the granting of options to executive officers and other senior management personnel. Options are not exercisable for at least four years from the date of grant and are not fully exercisable until six years from the date of grant. The
duration of the exercise period is ten years. In 1997, the shareholders approved a Stock Option Plan reserving 1,000,000 shares of common stock, adjusted for stock dividends and splits for the granting of options to directors and employees of the
Corporation and its affiliates. In 2003, shareholders approved an amendment to the 1997 Stock Option Plan increasing the number of share authorized under the Plan by 1,800,000. Non-qualified stock options granted to directors are immediately
exercisable. Stock options granted to employees of the Company and its affiliates are partially exercisable one year from the date of grant and become fully exercisable five years from grant date. The duration of the exercise period is ten years. In
accordance with provisions of the Plan, upon shareholder approval of a change in control, as defined in the Plan, all options outstanding at the time of such change in control fully vested and became 100% exercisable. As options are exercised,
shareholders equity will be credited with the proceeds. The summary of stock option activity was as follows:



|                           |  |                    |  |           |  |                    |   |  |                               |  |                                |  |      
|-------------------------- |  | ------------------ |  | --------- |  | ------------------ | - |  | ----------------------------- |  | ------------------------------ |  | -----
|1987 Plan                  |  | Availablefor Grant |  | Exercised |  | OptionsOutstanding |   |  | WeightedAverageExercise Price |  | Range of OptionPrice per Share
|Balance, January 1, 2003   |  |                   |  | 528,046   |  | 226,470            |   |  | 8.35                          |  | 6.00                           |  | 15.00
|Exercised                  |  |                   |  | 173,779   |  | (173,779           | ) |  | 7.14                          |  | 6.00                           |  | 15.00
|                           |  |                    |  |           |  |                    |   |  |                               |  |                                |  |      
|Balance, December 31, 2003 |  |                   |  | 701,825   |  | 52,691             |   |  | 12.34                         |  | 9.63                           |  | 15.00
|Exercised                  |  |                   |  | 42,263    |  | (42,263            | ) |  | 12.42                         |  | 9.63                           |  | 15.00
|                           |  |                    |  |           |  |                    |   |  |                               |  |                                |  |      
|March 31, 2004             |  |                   |  | 744,088   |  | 10,428             |   |  | 12.03                         |  | 9.63                           |  | 15.00
|                           |  |                    |  |           |  |                    |   |  |                               |  |                                |  |      



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##### Table of Contents

|                                |  |                    |   |  |           |  |                    |   |  |                               |  |                                |  |      
|------------------------------- |  | ------------------ | - |  | --------- |  | ------------------ | - |  | ----------------------------- |  | ------------------------------ |  | -----
|1997 Plan                       |  | Availablefor Grant |   |  | Exercised |  | OptionsOutstanding |   |  | WeightedAverageExercise Price |  | Range of OptionPrice per Share
|Balance, January 1, 2003        |  | 123,534            |   |  | 113,774   |  | 762,692            |   |  | 16.18                         |  | 12.69                          |  | 20.25
|New shares authorized for grant |  | 1,800,000          |   |  |          |  |                   |   |  |                               |  |                                |  |      
|Granted                         |  | (256,351           | ) |  |          |  | 256,351            |   |  | 17.60                         |  | 17.33                          |  | 19.56
|Forfeited                       |  | 33,193             |   |  |          |  | (33,193            | ) |  | 19.48                         |  | 17.33                          |  | 20.00
|Exercised                       |  |                   |   |  | 53,040    |  | (53,040            | ) |  | 16.08                         |  | 12.83                          |  | 20.00
|                                |  |                    |   |  |           |  |                    |   |  |                               |  |                                |  |      
|Balance, December 31, 2003      |  | 1,700,376          |   |  | 166,814   |  | 932,810            |   |  | 16.46                         |  | 12.69                          |  | 20.25
|Granted                         |  | (19,000            | ) |  |           |  | 19,000             |   |  | 26.37                         |  | 26.37                          |  | 26.37
|Exercised                       |  |                   |   |  | 352,330   |  | (352,330           | ) |  | 15.93                         |  | 12.69                          |  | 20.25
|                                |  |                    |   |  |           |  |                    |   |  |                               |  |                                |  |      
|March 31, 2004                  |  | 1,681,376          |   |  | 519,144   |  | 599,480            |   |  | 17.09                         |  | 12.69                          |  | 26.37
|                                |  |                    |   |  |           |  |                    |   |  |                               |  |                                |  |      



BancFirst Ohio Corp.
had a 1997 Omnibus Stock Incentive Plan (the BFOH Plan), which provided for the granting of stock options and other stock related awards to officers and employees. Upon the completion of the merger, all outstanding options of BancFirst were
converted to Unizan Financial Corp. at the exchange ratio of 1.325 and no additional options will be granted under the BFOH Plan. In accordance with provisions of the Plan, upon a change in control, as defined in the Plan, all options outstanding at
the time of such change in control fully vested and became 100% exercisable. The duration of the exercise period is twenty years. All options granted were at a price that equaled or exceeded the market value of the Companys common stock at the
date of grant. The summary of stock option activity was as follows:



|                           |  |                    |  |           |  |                    |   |  |                               |       |                                |   |       |  |   |      
|-------------------------- |  | ------------------ |  | --------- |  | ------------------ | - |  | ----------------------------- | ----- | ------------------------------ | - | ----- |  | - | -----
|1997 BFOH Plan             |  | Availablefor Grant |  | Exercised |  | OptionsOutstanding |   |  | WeightedAverageExercise Price |       | Range of OptionPrice per Share
|Balance, January 1, 2003   |  |                   |  | 157,918   |  | 641,279            |   |  | $                             | 17.11 |                                | $ | 10.06 |  | $ | 25.88
|Forfeited                  |  |                   |  |          |  | (16,902            | ) |  |                               | 19.42 |                                |   | 11.32 |  |   | 25.88
|Exercised                  |  |                   |  | 54,918    |  | (54,918            | ) |  |                               | 16.39 |                                |   | 11.32 |  |   | 20.13
|                           |  |                    |  |           |  |                    |   |  |                               |       |                                |   |       |  |   |      
|Balance, December 31, 2003 |  |                   |  | 212,836   |  | 569,459            |   |  |                               | 17.20 |                                |   | 10.06 |  |   | 25.88
|Forfeited                  |  |                   |  |          |  | (557               | ) |  |                               | 24.80 |                                |   | 21.56 |  |   | 25.88
|Exercised                  |  |                   |  | 92,584    |  | (92,584            | ) |  |                               | 16.93 |                                |   | 11.32 |  |   | 25.88
|                           |  |                    |  |           |  |                    |   |  |                               |       |                                |   |       |  |   |      
|March 31, 2004             |  |                   |  | 305,420   |  | 476,318            |   |  |                               | 17.24 |                                |   | 10.06 |  |   | 25.88
|                           |  |                    |  |           |  |                    |   |  |                               |       |                                |   |       |  |   |      



The weighted average
remaining option life for outstanding options issued under the 1987 Stock Option Plan was 1.8 years, 7.4 years for outstanding options issued under the 1997 Stock Option Plan and 16.3 years for outstanding options issued under the 1997 BFOH Stock
Option Plan. Upon the completion of the merger with Huntington Bancshares Incorporated, all outstanding options will be converted to Huntington Bancshares Incorporated options at the exchange ratio of 1.1424.



For options granted during 2004 and 2003, the weighted-average fair values at
the grant dates are as follows:



|                                              |  |      |       |      |   |      
|--------------------------------------------- |  | ---- | ----- | ---- | - | -----
|                                              |  | 2004 |       | 2003
|Nonqualified Stock Options- Immediate Vesting |  |      |       |      |   |      
|Exercise Price                                |  | $    | 26.37 |      | $ | 19.56
|Fair Value                                    |  | $    | 1.20  |      | $ | 3.54 
|                                              |  |     
|Nonqualified Stock Options- Delayed Vesting   |  |      |       |      |   |      
|Exercise Price                                |  |      | N/A   |      | $ | 17.33
|Fair Value                                    |  |      | N/A   |      | $ | 3.34 



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7) SEGMENT REPORTING:



The Company manages and operates two major lines of businesses: community banking and investment and funds management. Community banking includes lending
and related services to businesses and consumers, mortgage banking, and deposit gathering. Investment and funds management includes trust and investment services, financial planning services and retail sales of brokerage and insurance products.
These business lines are identified by the entities through which the product or service is delivered.



The reported line of business results reflect the underlying core operating performance within the business units. Parent and Other includes activities
that are not directly attributed to the identified lines of businesses and is comprised of the parent company and its special purpose trust subsidiary. Substantially all of the Companys assets are part of the community banking line of
business. Selected segment information is included in the following tables:



|                                   |  |                  |        |                               |   |                 |  |   |        |   |  |   |       
|---------------------------------- |  | ---------------- | ------ | ----------------------------- | - | --------------- |  | - | ------ | - |  | - | ------
|Three months ended March 31, 2004: |  | CommunityBanking |        | Investmentand FundsManagement |   | Parentand Other |  |   | Total 
|Net interest income (expense)      |  | $                | 19,477 |                               | $ | 4               |  | $ | (689   | ) |  | $ | 18,792
|Provision for loan losses          |  |                  | 1,000  |                               |   |                |  |   |       |   |  |   | 1,000 
|Non-interest income                |  |                  | 5,058  |                               |   | 1,956           |  |   |       |   |  |   | 7,014 
|Non-interest expense               |  |                  | 16,707 |                               |   | 1,460           |  |   | 3,247  |   |  |   | 21,414
|Income tax expense (benefit)       |  |                  | 2,348  |                               |   | 172             |  |   | (1,540 | ) |  |   | 980   
|                                   |  |                  |        |                               |   |                 |  |   |        |   |  |   |       
|Net income (loss)                  |  | $                | 4,480  |                               | $ | 328             |  | $ | (2,396 | ) |  | $ | 2,412 
|                                   |  |                  |        |                               |   |                 |  |   |        |   |  |   |       



|                                   |  |                  |        |                               |   |                 |  |   |       |   |  |   |       
|---------------------------------- |  | ---------------- | ------ | ----------------------------- | - | --------------- |  | - | ----- | - |  | - | ------
|Three months ended March 31, 2003: |  | CommunityBanking |        | Investmentand FundsManagement |   | Parentand Other |  |   | Total
|Net interest income (expense)      |  | $                | 21,823 |                               | $ | 6               |  | $ | (538  | ) |  | $ | 21,291
|Provision for loan losses          |  |                  | 1,269  |                               |   |                |  |   |      |   |  |   | 1,269 
|Non-interest income                |  |                  | 5,240  |                               |   | 1,712           |  |   |      |   |  |   | 6,952 
|Non-interest expense               |  |                  | 14,950 |                               |   | 1,365           |  |   | 395   |   |  |   | 16,710
|Income tax expense (benefit)       |  |                  | 3,405  |                               |   | 150             |  |   | (327  | ) |  |   | 3,228 
|                                   |  |                  |        |                               |   |                 |  |   |       |   |  |   |       
|Net income (loss)                  |  | $                | 7,439  |                               | $ | 203             |  | $ | (606  | ) |  | $ | 7,036 
|                                   |  |                  |        |                               |   |                 |  |   |       |   |  |   |       



8) LEGAL MATTERS:



In February of 2004, a lawsuit was filed by two of the Companys
shareholders in the Common Pleas Court of Stark County, Ohio against the Company, its directors and certain of its executive officers alleging breach of fiduciary duty in evaluating and approving the agreement to merge the Company with Huntington
Bancshares Incorporated (Huntington). The plaintiffs have requested the court to grant them class action status to bring the case on behalf of all shareholders. Among other things, the lawsuit seeks to prevent the Company from merging
with Huntington and requests unspecified monetary damages. Management believes the legal claims in the lawsuit are without merit and intends to vigorously defend the case.



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##### Table of Contents

ITEM 2:



MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

UNIZAN FINANCIAL CORP.



For a comprehensive understanding of the Companys financial condition and performance, this discussion should be considered in conjunction with the Companys Consolidated Financial Statements, accompanying
notes, and other information contained elsewhere herein.



This
discussion contains forward-looking statements defined in the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainties. Although the Company believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ
from the results discussed in the forward-looking statements include, but are not limited to: economic conditions (both generally and more specifically in the markets in which the Company and its subsidiaries operate); competition for the
Companys customers from other providers of financial services; government legislation and regulation (which changes from time to time and over which the Company has no control); changes in interest rates; pre-payments of loans and securities;
material unforeseen changes in the liquidity, results of operations, or financial position of the Companys customers, all of which are difficult to predict and many of which are beyond the control of the Company.



Overview



The reported results of the Company primarily reflect the operations of the Companys bank subsidiary, Unizan Bank,
National Association. The Companys results of operations are dependent on a variety of factors, including the general interest rate environment, competitive conditions in the industry, governmental policies and regulations and conditions in
the markets for financial assets. Like most financial institutions, the primary contributor to the Companys income is net interest income, which is defined as the difference between the interest the Company earns on interest-earning assets,
such as loans and securities, and the interest the Company pays on interest-bearing liabilities, such as deposits and borrowings. The Companys operations are also affected by non-interest income, such as checking account and trust fees and
gains from sales of loans. The Companys principal operating expenses, aside from interest expense, consist of salaries and employee benefits, occupancy costs, and other general and administrative expenses.



Average Balances and Yields



The following table presents, for each of the periods indicated, the total
dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and percentage rates, and the net interest margin. Net
interest margin is calculated by dividing net interest income on a fully tax equivalent basis (FTE) by total interest-earning assets. The net interest margin is influenced by the level and relative mix of interest-earning assets and interest-bearing
liabilities. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate. All average balances are daily average balances. Non-accruing loans are included in average loan balances.



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Unizan Financial Corp.

Average Balance Sheet and Related Yields



|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|------------------------------------------------------------ |  | ---------------------------- | --------- | - | -------------- | - | -------- |  | ---- | -------------- |  | - | -------------- | - | -------- | - | ------ |  | ----- | -
|                                                             |  | Three Months Ended March 31, |          
|                                                             |  | 2004                         |           |   | 2003           |  
|(dollars in thousands)                                       |  | AverageBalance               |           |   | Income/Expense |   | Rate (1) |  |      | AverageBalance |  |   | Income/Expense |   | Rate (1) |  
|Interest-earning assets                                      |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |  
|Interest bearing deposits and federal funds sold             |  | $                            | 4,395     |   |                | $ | 8        |  | 0.73 | %              |  | $ | 3,099          |   |          | $ | 9      |  | 1.18  | %
|Securities                                                   |  |                              | 510,827   |   |                |   | 4,853    |  | 3.82 |                |  |   | 512,745        |   |          |   | 6,159  |  | 4.87  |  
|Total loans (2)                                              |  |                              | 1,971,090 |   |                |   | 27,687   |  | 5.65 |                |  |   | 1,954,108      |   |          |   | 31,414 |  | 6.52  |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Total interest-earning assets (3)                            |  |                              | 2,486,312 |   |                |   | 32,548   |  | 5.27 |                |  |   | 2,469,952      |   |          |   | 37,582 |  | 6.17  |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Nonearning assets:                                           |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |  
|Cash and due from banks                                      |  |                              | 57,353    |   |                |   |          |  |      |                |  |   | 58,476         |   |          |   |        |  |       |  
|Other nonearning assets                                      |  |                              | 209,843   |   |                |   |          |  |      |                |  |   | 213,572        |   |          |   |        |  |       |  
|Allowance for loan losses                                    |  |                              | (24,622   | ) |                |   |          |  |      |                |  |   | (25,280        | ) |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Total assets                                                 |  | $                            | 2,728,886 |   |                |   |          |  |      |                |  | $ | 2,716,720      |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Interest bearing liabilities:                                |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |  
|Demand deposits                                              |  | $                            | 258,295   |   |                | $ | 369      |  | 0.57 | %              |  | $ | 269,511        |   |          | $ | 553    |  | 0.83  | %
|Savings deposits                                             |  |                              | 531,844   |   |                |   | 1,296    |  | 0.98 |                |  |   | 425,462        |   |          |   | 1,032  |  | 0.98  |  
|Time deposits                                                |  |                              | 955,864   |   |                |   | 7,485    |  | 3.15 |                |  |   | 1,044,394      |   |          |   | 9,466  |  | 3.68  |  
|Subordinated note (5)                                        |  |                              | 20,619    |   |                |   | 505      |  | 9.85 |                |  |   |               |   |          |   |       |  |      |  
|Company obligated mandatorily redeemable trust preferred (5) |  |                              |          |   |                |   |         |  |     |                |  |   | 20,000         |   |          |   | 505    |  | 10.24 |  
|Other borrowings                                             |  |                              | 422,995   |   |                |   | 3,832    |  | 3.64 |                |  |   | 435,117        |   |          |   | 4,493  |  | 4.19  |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Total interest bearing liabilities                           |  |                              | 2,189,617 |   |                |   | 13,487   |  | 2.48 |                |  |   | 2,194,484      |   |          |   | 16,049 |  | 2.97  |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Noninterest bearing liabilities:                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |  
|Demand deposits                                              |  |                              | 208,704   |   |                |   |          |  |      |                |  |   | 182,218        |   |          |   |        |  |       |  
|Other liabilities                                            |  |                              | 24,437    |   |                |   |          |  |      |                |  |   | 37,830         |   |          |   |        |  |       |  
|Shareholders equity                                         |  |                              | 306,128   |   |                |   |          |  |      |                |  |   | 302,188        |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Total liabilities and equity                                 |  | $                            | 2,728,886 |   |                |   |          |  |      |                |  | $ | 2,716,720      |   |          |   |        |  |       |  
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Net interest income and interest rate spread (3)             |  |                              |           |   |                | $ | 19,061   |  | 2.79 | %              |  |   |                |   |          | $ | 21,533 |  | 3.20  | %
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  
|Net interest margin (4)                                      |  |                              |           |   |                |   |          |  | 3.08 | %              |  |   |                |   |          |   |        |  | 3.54  | %
|                                                             |  |                              |           |   |                |   |          |  |      |                |  |   |                |   |          |   |        |  |       |  

---

|(1) | Calculated on an annualized basis.
|--- | ----------------------------------

|(2) | Loan fees are included in interest income on loans.
|--- | ---------------------------------------------------

|(3) | Interest income is computed on a fully tax equivalent (FTE) basis, using a tax rate of 35%.
|--- | -------------------------------------------------------------------------------------------

|(4) | The net interest margin represents net interest income as a percentage of average interest-earning assets.
|--- | ----------------------------------------------------------------------------------------------------------

|(5) | As of December 31, 2003, based on new accounting guidance issued under FASB Interpretation No. 46, the amounts previously reported as company obligated mandatorily redeemable
trust preferred have been recaptioned subordinated note. The deconsolidation of the Trust increased the Companys balance sheet by $619, the difference representing the Companys common ownership in the Trust.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Comparison of Operating Results For The Three Months Ended March 31, 2004 and 2003



Net Income. Net income for the first quarter of 2004 was $2,412, or
$0.11 per diluted share. This compares with net income of $7,036, or $0.32 per diluted share for the first quarter of 2003. During the first quarter of 2004, an expense of $3,638 pre-tax, or $2,365 after-tax, was recognized in relation to the
exercise of certain stock options and $1,203 pre-tax, or $944 after-tax, of expense was recognized for merger-related professional fees. Net income for the first quarter of 2004, excluding the option expense and merger-related expenses, was $5,721,
or $0.26 per diluted share. During the first quarter of 2004, net interest income decreased by 11.7% and non-interest income increased by 0.9%, as compared to the same period in 2003. The net interest margin decreased to 3.08% for the first quarter
of 2004, compared to 3.54% for the same period in 2003. The decrease in the net interest margin was primarily due to the yields on interest-earning assets declining faster than the cost of interest-bearing liabilities. The Companys return on
average assets and return on average equity were 0.36% and 3.17%, respectively, in the first quarter of 2004, compared to 1.05% and 9.44%, respectively, for the first quarter of 2003.



Interest Income. Total interest income decreased 13.6% to $32,279 for the three months ended March 31, 2004, compared
to $37,340 for the first quarter of 2003. During the first quarter of 2004, the yield on interest-earning assets declined by 90 basis points from the same period in 2003. The Companys yield on average loans was 5.65% for the three months ended
March 31, 2004 and 6.52% for the comparable year ago period. The decrease in the yield on loans was primarily impacted by sustained lower market rates throughout 2003 and 2004. As a result, a large portion of the loan portfolio automatically
repriced or borrowers chose to refinance to lower rates.



Yields on the securities portfolio decreased from 4.87% during the first quarter of 2003 to 3.82% during the first quarter of 2004. The decrease in the yield on securities was also primarily impacted by sustained lower market rates
throughout 2003 and 2004. During 2003, the securities portfolio experienced significant pre-payments on collateralized mortgage obligations and mortgage backed securities resulting in more cash flows being reinvested at lower market rates.



Interest Expense. Total interest expense decreased
16.0% to $13,487 for the three months ended March 31, 2004, compared to $16,049 for the three months ended March 31, 2003. The Companys cost of interest-bearing liabilities decreased to 2.48% in the three months ended March 31, 2004 compared
to 2.97% in the same period of 2003. The decrease in the cost of funds was primarily from lower market rates affecting the rates paid on all deposit products and the cost of borrowings. Based on the current historically low level of rates, the
Company will have limited opportunities to further decrease rates on deposits.



Provision for Loan Losses. The provision for loan losses was $1,000 for the three months ended March 31, 2004, compared to $1,269 in the first quarter of 2003. The provision expense is based on the
Companys review of the adequacy of the allowance for loan losses which includes a review of general economic conditions and uncertainties and charge-offs. The provision for loan losses was considered sufficient by management for maintaining an
appropriate allowance for loan losses. Additional information regarding the allowance for loan losses and non-performing assets is included in the section captioned Asset Quality.



Management analyzes the appropriateness of the allowance for loan losses
regularly through reviews of historical loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. The allowance for loan
losses is a material estimate that is particularly susceptible to significant changes in the near term and is established through a provision for loan losses based on managements evaluation of the risk in the Companys loan portfolio and
the general economy. Loan losses are charged against the allowance when the uncollectibility of a loan balance is confirmed. Management believes that the allowance for loan losses was appropriate at March 31, 2004.



Non-Interest Income.Total non-interest income increased by $62, to
$7,014 for the three months ended March 31, 2004, compared to $6,952 in the three months ended March 31, 2003.



Trust, brokerage and insurance sales income increased by $158, or 9.2%, to $1,870 in the first quarter of 2004 from $1,712 in the first quarter of 2003.
Brokerage and insurance sales revenue increased by $116 due to the hiring of additional brokers and due to more favorable market conditions.



Customer service fees, representing service charges on deposits and fees for other banking services, increased by $291, or 18.7%, to $1,844 in the first
quarter of 2004 from $1,553 in the first quarter of 2003. The increase was mainly attributed to increased activity and charges within demand deposit accounts.



Gains on sales of loans totaled $1,245 for the first quarter of 2004 compared to $2,130 for the same period in 2003. During the first quarter of 2004,
the Company sold $7,746 of the guaranteed portion of its SBA (Small Business Association) and other government guaranteed loan originations in the secondary market compared to $6,951 during the first quarter of 2003, realizing gains of $797 in 2004
and $760 in 2003. Also, in the first quarter of 2004, the Company sold $10,473 of residential loans originated for sale compared to $43,884 during the same period in 2003, realizing gains of



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$189 in 2004 and $514 in 2003. In addition, in the first quarter of 2004, the Company sold $7,082 of loans from the
residential loan portfolio compared to $23,516 during the same period in 2003, realizing gains of $259 in 2004 and $856 in 2003. During the first quarter of 2004, $7,082 of construction loans that became eligible for sale upon conversion to
permanent financing, were sold from the residential real estate loan portfolio as part of a strategy to manage the interest rate risk and the prepayment risk profile of the portfolio. In 2003, residential loan sale activity had been impacted by an
increase in origination volumes in the favorable interest rate environment. However, due to the recent increase in rates, the trend of mortgage refinancing has slowed. As a result, fees associated with the mortgage related business have declined as
refinancing activity slowed.



The Company intends to continue
to place emphasis on its small business lending activities. The nature of the political climate in Washington, D.C. may periodically subject many existing government programs to much scrutiny and possible cutbacks. At the beginning of the first
quarter of 2004 the SBA released a policy notice reducing the maximum loan size of regular 7(a) loans to $750 from $2,000. On April 5, 2004, legislation was signed into law, which temporarily extends programs under the Small Business Act. This law
lifts the 7(a) loan cap from $750 to gross amount of $2,000 and temporarily increases the loan guaranty limit from $1,000 to $1,500. Several changes to the fee structure were also enacted. Management believes that any future cutbacks could
negatively affect the Companys activities in the SBA lending programs as well as the planned expansion of such activities.



Other income increased by $427, or 27.4%, to $1,984 for the first quarter of 2004 from $1,557 in the first quarter of 2003. The increase in other
operating income was mainly attributed to a reduction in the impairment charge recognized on the mortgage servicing right (MSR) portfolio. During the first quarter of 2004, a temporary impairment charge of $123 was recognized compared with a $390
impairment charge that was recognized in the first quarter of 2003 as a reduction to servicing income. The value of the MSR portfolio is analyzed quarterly by considering critical assumptions for pre-payment speeds, the targeted investor yield to a
buyer of MSRs, and float on escrows. Market interest rates are an external factor that can have a material influence on this valuation process, as interest rates influence pre-payment speeds and targeted investor yield. Management believes that the
estimated aggregate fair value of the MSRs was fairly stated at March 31, 2004. Future impairment could be realized if pre-payment speeds increase beyond the assumption rates. If rates continue to rise and pre-payment activity slows, the value of
the servicing rights should be positively impacted.



Non-Interest Expense.Total non-interest expense increased $4,704 to $21,414 in the three months ended March 31, 2004, compared to $16,710 in the three months ended March 31, 2003. Excluding the expense of $3,638 recognized in
relation to the exercise of certain stock options and $1,203 of expense recognized for merger-related professional fees, total non-interest expense decreased $137, or 0.8%.



Including an expense of $3,638 recognized in relation to the exercise of certain stock options, salaries and employee
benefits increased to $12,774 for the three months ended March 31, 2004 compared to $8,932 for the same period in 2003. The $3,638 of expense was recognized as a result of the settlement of options for cash or with shares held for less than six
months. Excluding the $3,638 option expense, salaries and employee benefits increased to $9,136 and represented approximately 53.9% of total operating expenses (non-interest expense less amortization of intangibles) for the three months ended March
31, 2004 compared to $8,932, or 56.3% of total operating expenses in the first quarter of 2003.



Other non-interest expenses increased $850, to $5,784 during the first quarter of 2004 compared to $4,934 in the first quarter of 2003. The increase was
mainly due to $1,203 of expense that was recognized in the first quarter of 2004 for merger-related professional fees. The increase was partially offset by a decline in loan and legal related expenses.



Provision for Income Taxes. The Companys provision for federal
income taxes was $980, or 28.9% of pre-tax income, for the three months ended March 31, 2004 compared to $3,228, or 31.4% for pretax income, for the same period in 2003. The effective tax rate differed from the federal statutory rate principally as
a result of tax-exempt income from obligations of states and political subdivisions, loans and earnings on bank owned life insurance. Also, the first quarter of 2004 effective tax rate was impacted by the non-deductible nature of a portion of the
merger-related professional fees.



Asset Quality



Non-performing Assets. To maintain the loan portfolios level of
credit risk at an appropriate level, management sets underwriting standards and internal lending limits and provides for proper diversification of the portfolio by placing constraints on the concentration of credits within the portfolio. In
monitoring the level of credit risk within the loan portfolio, management utilizes a formal loan review process to monitor, review, and consider relevant factors in evaluating specific credits in determining the appropriateness of the allowance for
loan losses. The Company formally documents its evaluation of the appropriateness of the allowance for loan losses on a quarterly basis and the evaluation is approved by its board of directors.





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Failure to receive principal and interest payments when due on a loan results in efforts by the Company
to restore such loan to current status. Loans are classified as non-accrual when, in the opinion of management, full collection of principal and accrued interest is in doubt. Continued unsuccessful collection efforts generally lead to initiation of
foreclosure or other legal proceedings. Property acquired by the Company as a result of foreclosure, or by deed in lieu of foreclosure, is classified as other assets owned until such time as it is sold or otherwise disposed of. The
Company owned $1,793 of such property at March 31, 2004 compared to $2,143 at December 31, 2003.



Non-performing loans totaled $28,640, or 1.45% of total loans, at March 31, 2004, compared to $25,899, or 1.32% of total loans, at December 31, 2003.
Non-performing assets totaled $30,433, or 1.54% of loans and other assets owned at March 31, 2004, compared to $28,042, or 1.42%, at December 31, 2003. Non-performing loans were mainly comprised of $8,713 of residential mortgage loans, $1,294 of
commercial loans, $5,713 of commercial real estate loans, $2,003 of aircraft loans and $9,334 of SBA and other government guaranteed loans, of which $6,965 is guaranteed by the government. Non-performing loans, excluding the $6,965 of non-performing
loans guaranteed by the government, totaled $21,675, or 1.10% of total loans, at March 31, 2004 compared to 0.98%, excluding $6,537 of non-performing loans guaranteed by the government, at December 31, 2003. The liquidation of the guaranteed portion
of government guaranteed loans has been slow nationally due to the volume of loans in liquidation and the transition to the centralization of the processing of purchases and liquidation by the SBA. While this has increased delinquencies and
non-performing assets, management believes there is little risk of loss as these submissions are eventually processed. The remaining increase in non-performing loans resulted primarily from delinquency trends in general. Residential delinquency
trends are consistent with Ohio and national trends; bankruptcies have increased, and are a significant part of non-performing loans. While this has caused increased delinquencies and non-performing assets, there continues to be little translation
into losses. Management continues to remain cautious as the economic uncertainty extends and high levels of bankruptcies continue. Management of the Company is not aware of any material amounts of loans outstanding, not disclosed in the tables
below, for which there is significant uncertainty as to the ability of the borrower to comply with present payment terms. The following is an analysis of the composition of non-performing assets and restructured loans:



|                                                             |  |               |        |   |                  |   |        |  
|------------------------------------------------------------ |  | ------------- | ------ | - | ---------------- | - | ------ | -
|                                                             |  | March 31,2004 |        |   | December 31,2003 |  
|Non-accrual                                                  |  | $             | 23,152 |   |                  | $ | 20,566 |  
|Accruing loans 90 days or more past due                      |  |               | 5,488  |   |                  |   | 5,333  |  
|                                                             |  |               |        |   |                  |   |        |  
|Total non-performing loans                                   |  |               | 28,640 |   |                  |   | 25,899 |  
|Other assets owned and other non-performing assets           |  |               | 1,793  |   |                  |   | 2,143  |  
|                                                             |  |               |        |   |                  |   |        |  
|Total non-performing assets                                  |  | $             | 30,433 |   |                  | $ | 28,042 |  
|                                                             |  |               |        |   |                  |   |        |  
|Restructured loans                                           |  | $             | 2,530  |   |                  | $ | 2,565  |  
|                                                             |  |               |        |   |                  |   |        |  
|Non-performing loans to total loans                          |  |               | 1.45   | % |                  |   | 1.32   | %
|Non-performing assets to total assets                        |  |               | 1.10   | % |                  |   | 1.03   | %
|Non-performing assets to total loans plus other assets owned |  |               | 1.54   | % |                  |   | 1.42   | %



Restructured loans
consist of one loan that was restructured in May 1999 and has been performing in accordance with its restructured terms since such time. The restructured loan is not included in non-performing assets.



As of March 31, 2004, impaired loans were $8,548 compared with $7,476 at
December 31, 2003. Commercial, commercial real estate and aircraft loans are classified as impaired if full collection of principal and interest in accordance with the terms of the loan documents is not probable. Impaired loans and non-performing
loans have been considered in managements analysis of the appropriateness of the allowance for loan losses.



Allowance for Loan Losses. The Company records a provision necessary to maintain the allowance for loan losses at a level sufficient to provide for
probable incurred credit losses. The provision is charged against earnings when it is established. An allowance for loan losses is established based on managements best judgment, which involves an ongoing review of prevailing national and
local economic conditions, changes in the size and composition of the portfolio and review of individual problem credits. Growth of the loan portfolio, loss experience, economic conditions, delinquency levels, credit mix, and an evaluation of
selected credits are factors that affect judgments concerning the appropriateness of the allowance. Actual losses on loans are charged against the allowance.



The allowance for loan losses totaled $24,611 at March 31, 2004 and December 31, 2003, representing 1.25% of total loans outstanding for both periods. Net
charge-offs for the three months ended March 31, 2004 were $1,000,



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compared to net charge-offs of $1,259 for the same period in 2003. Charge-offs were made in accordance with the
Companys standard policy and, for the three months ended March 31, 2004, occurred primarily in the commercial real estate, SBA and consumer loan portfolios.



The allowance for loan losses as a percentage of non-performing loans (coverage ratio) was 85.9% at March 31,
2004, compared to 95.0% at December 31, 2003. Although used as a general indicator, the coverage ratio is not a primary factor in the determination of the appropriateness of the allowance by management, particularly given the extent to which the
Companys non-performing loans consist of single-family residential mortgage loans and that $6,965 of non-performing loans are guaranteed by the government. The allowance for loan losses as a percentage of non-performing loans, excluding the
$6,965 of non-performing loans that are guaranteed by the government, was 113.6% at March 31, 2004 compared to 127.1%, excluding the $6,537 of non-performing loans that are guaranteed by the government, at December 31, 2003.



As of March 31, 2004, the aircraft portfolio of $134,889 represented 6.8% of
the total loan portfolio. Management continues to carefully analyze the aircraft portfolio and the risk profile of the portfolio especially in light of decreasing collateral values in certain classes of aircraft. As of March 31, 2004, the aircraft
portfolio consisted of $93,224 of non-jet aircraft and values of non-jet aircrafts have historically been more stable than jet aircrafts. The remainder of the portfolio consists of loans secured by jets. These loans are predominately to businesses
that use their planes as a business tool and not actually within the aircraft industry, i.e. charters or flight schools, thus reducing the Banks exposure to the aircraft industry as a whole. The Banks sales activity and marketing efforts
continue to be on non-jet aircraft, such as single engine and piston twin aircraft with values predominately under $500.



Comparison of March 31, 2004 and December 31, 2003 Financial Condition



Total assets were $2.76 billion at March 31, 2004, an increase of $33,935 from December 31, 2003. Total securities increased by $12,680, or 2.7%, to
$487,316 from December 31, 2003. The Companys general investment strategy is to manage the portfolio to include rate sensitive assets, matched against interest sensitive liabilities to reduce interest rate risk. In recognition of this
strategy, as well as to provide a secondary source of liquidity to accommodate loan demand and possible deposit withdrawals, the Company has chosen to classify the majority of its securities as available-for-sale. At March 31, 2004, 99.5% of the
total securities portfolio was classified as available-for-sale, while those securities that the Company intends to hold to maturity represented the remaining 0.5%. This compares to 99.4% and 0.6% classified as available-for-sale and
held-to-maturity, respectively, at December 31, 2003.



Management periodically reviews the securities portfolio for possible impairment. Within the securities portfolio, an impairment charge of $1,410 was recognized during 2003 on a $2,000 trust preferred security issued by North Country
Financial Corporation. On April 11, 2003, North Country Financial Corporation disclosed that a Cease and Desist Order had been entered pertaining to North Country Financial Corporations principal subsidiary, North Country Bank and Trust. North
Country has suspended quarterly interest payments to security holders as allowed by the terms of the indenture. Management believes that the decline in value of this trust preferred security was directly related to credit issues and is other than
temporary in nature. As a result of these circumstances and the current indicated market value of the security, the book value of this asset was written down in 2003. Except for the impairment charge recorded on the North Country trust preferred
security, management believes that the unrealized losses on securities available for sale are temporary in nature and due primarily to changes in interest rates and not a result of credit related issues. Management believes that the Company has the
ability to hold securities with unrealized losses to maturity or until such time as the unrealized losses reverse.



Total loans remained relatively stable at $1.97 billion at March 31, 2004 compared to December 31, 2003. Within the loan portfolio, commercial real estate
loans increased by $3,590, or 0.5%, aircraft loans increased by $1,612, or 1.2% and home equity loans increased by $5,493, or 1.8%, from December 31, 2003. These increases were partially offset by a decline of $2,490, or 1.0%, in commercial loans
and $1,341, or 0.3%, in residential real estate loans.



Total
deposits decreased $29,649, or 1.5%, to $1.95 billion at March 31, 2004 from $1.98 billion at December 31, 2003. Non-interest bearing demand deposits increased by $8,343, or 4.0% and money market deposits increased by $6,552, or 1.7%, which was
offset by a decline of $19,025, or 6.9%, in interest-bearing demand deposits and a decline of $25,060 in brokered certificate of deposits from December 31, 2003. Management maintains an overall strategy to raise lower cost core deposits as funding
sources.



Short-term borrowings, which include sweep repurchase
agreements and federal funds purchased, increased by $2,951 to $59,364 at March 31, 2004, compared to $56,413 at December 31, 2003. Other borrowings increased by $58,257 to $403,110 at March 31, 2004, compared to $344,853 at December 31, 2003.
During the first quarter of 2004, brokered certificates of deposits of $25,060 were paid off at maturity and replaced with overnight borrowings.





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Critical Accounting Policies



The Company follows financial accounting and reporting policies that are in accordance with generally accepted accounting
principles in the United States of America. These policies are presented in Note 1 to the consolidated audited financial statements in Unizan Financial Corp.s annual report on Form 10-K for the year ended December 31, 2003. Some of these
accounting policies, as discussed below, are considered to be critical accounting policies. Critical accounting policies are those policies that require managements most difficult, subjective or complex judgments, often as a result of the need
to make estimates about the effect of matters that are inherently uncertain. The Company has identified two accounting policies that are critical accounting policies and an understanding of these policies is necessary to understand the financial
statements. These policies relate to determining the appropriateness of the allowance for loan losses and the valuation of the MSR. Additional information regarding these policies is included in the sections captioned Provision for Loan
Losses and Non-Interest Income, respectively.



Management believes that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate given the factual circumstances at the time.



Liquidity and Capital Resources



The objective of liquidity management is to ensure the availability of funds
to accommodate customer loan demand as well as deposit withdrawals while continuously seeking higher yields from longer-term lending and investing opportunities. This is accomplished principally by maintaining sufficient cash flows and liquid assets
along with consistent stable core deposits and the capacity to maintain immediate access to funds. These immediately accessible funds may include federal funds sold, unpledged marketable securities, reverse repurchase agreements or available lines
of credit from the Federal Reserve Bank, FHLB, or other financial institutions. An important factor in the preservation of liquidity is the maintenance of public confidence, as this facilitates the retention and growth of a large, stable supply of
core deposits.



The Companys principal source of funds to
satisfy short-term liquidity needs comes from cash, due from banks, federal funds sold and borrowing capabilities through the FHLB, Federal Reserve Bank primary credit as well as other sources. Changes in the balance of cash and due from banks are
due to changes in volumes of federal funds sold, and the float and reserves related to deposit accounts, which may fluctuate significantly on a day-to-day basis. As of March 31, 2004, cash, due from banks and federal funds sold totaled $77,004
compared with $58,500 at December 31, 2003. The securities portfolio serves as an additional source of liquidity for the Company. Securities with a market value of $484,760 were classified as available-for-sale as of March 31, 2004, representing
99.5% of the total securities portfolio. Classification of securities as available-for-sale provides for flexibility in managing net interest margin, interest rate risk, and liquidity. Securities with a market value of $390,095 at March 31, 2004
were pledged to secure public funds and other obligations.



The
Companys bank subsidiary is a member of the FHLB. Membership provides an opportunity to control the banks cost of funds by providing alternative funding sources, to provide flexibility in the management of interest rate risk through the
wide range of available funding sources, to manage liquidity via immediate access to such funds, and to provide flexibility through utilization of customized funding products to fund various loan and investment products and strategies.



Shareholders equity at March 31, 2004 was $306,686, compared to
shareholders equity at December 31, 2003 of $302,823, an increase of $3,863. During the three month period ended March 31, 2004, additional paid-in capital increased by $5,193 and treasury stock increased by $2,877. The increase in additional
paid-in capital was mainly attributed to the option activity during the first quarter of 2004. During the first quarter of 2002, the Companys Board of Directors approved a stock repurchase program authorizing management to repurchase up to
550,000 common shares of which 368,389 have been repurchased.



Under the risk-based capital guidelines, a minimum capital to risk-weighted assets ratio of 8.0% is required, of which, at least 4.0% must consist of Tier 1 capital (equity capital net of goodwill). Additionally, a minimum leverage ratio
(Tier 1 capital to total assets) of 3.0% must be maintained. At March 31, 2004, the Company had a total risk-based capital ratio of 11.53%, of which 10.37% consisted of Tier 1 capital. The leverage ratio for the Company at March 31, 2004, was 8.35%.



Cash dividends declared and paid to shareholders of the
Company totaled $2,935, or $0.135 per share, during the first three months of 2004. This compares to dividends of $2,917, or $0.135 per share, for the same period in 2003.





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The Companys ability to obtain funds for the payment of dividends and for other cash requirements
is largely dependent on the amount of dividends which may be declared by the Bank and other subsidiaries. However, the Federal Reserve Board expects the Company to serve as a source of strength to its subsidiary Bank, which may require the Company
to retain capital for further investment in its subsidiary bank, rather than pay dividends to shareholders. Payment of dividends by the Bank may be restricted at any time at the discretion of its applicable regulatory authorities, if they deem such
dividends to constitute an unsafe and/or unsound banking practice. These provisions could have the effect of limiting the ability to pay dividends on its common shares.



In addition, bank regulators limit the amount of dividends a subsidiary bank can declare in any calendar year without
obtaining prior approval. Banks must have the approval of its regulatory authority if a dividend in any year would cause the total dividends for that year to exceed the sum of the Banks current years net profits (or net
income, less dividends declared during the period based on regulatory accounting principles) and the retained net profits for the preceding two years, less required transfers to surplus. As of March 31, 2004, $10,640 was available to pay as
dividends to the holding company. Dividends in excess of this amount require regulatory approval prior to being paid.



Considering the Companys capital adequacy, profitability, available liquidity sources and funding sources, the Companys liquidity is
considered by management to be adequate to meet current and projected needs.



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Item 3:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



In the normal course of business, the Company is exposed to interest rate
risk caused by the differences in cash flows and repricing characteristics that occur in various assets and liabilities as a result of changes in interest rates. The asset and liability management process is designed to measure and manage that risk
to maintain consistent levels of net interest income and net present value of equity under any interest rate scenario.



The Company uses a dynamic computer model to generate earnings simulations, duration and net present value forecasts and gap analyses, each of which
measures interest rate risk from a different perspective. The model incorporates a large number of assumptions, including the absolute level of future interest rates, the slope of the yield curve, various spread relationships, pre-payment speeds,
repricing opportunities, cash flow characteristics of instruments without contractual maturity dates and changes in the volumes of multiple loan, investment and deposit categories. Management believes that individually and in the aggregate these
assumptions are reasonable, but the complexity of the simulation modeling process results in a sophisticated estimate, not a precise calculation of exposure.



One of the most significant assumptions is the assignment of deposit balances without a stated maturity date to specific time frames. Since these deposits
are subject to withdrawal on demand, and have rates that can be changed at any time, they could be considered immediately repriceable and assigned to the shortest maturity, resulting in a significant level of liability sensitivity. However, actual
practice indicates that balances are withdrawn and replaced over a much longer time frame, and rates are modified less frequently and in smaller increments than changes which occur in financial market rates. The Company uses an estimated average
decay rate to approximate deposit behavior over the simulation time horizon. As more data is developed over time, a statistical analysis of historical deposit behavior will replace the estimated average decay rates.



The model then applies a predetermined immediate parallel increase or
decrease in the level of interest rates to forecast the impact on both net interest income and capital one year forward. While this methodology provides a comprehensive appraisal of interest rate risk, it is not necessarily indicative of actual or
expected financial performance. Changes in interest rates that affect the entire yield curve equally at a single point in time are not typical, and the Company makes assumptions regarding the magnitude of changes that are applied to various deposit
products. The residential mortgage pre-payment assumptions are based on industry medians and could differ from the Companys actual results due to non-financial pre-payment incentives and other local factors. The behavior of depositors is based
on an analysis of historical changes in balances and might not fully reflect current attitudes toward other investment alternatives. Moreover, the model does not include any interim changes in strategy the Company might instate in response to shifts
in interest rates.



At March 31, 2004, assuming an immediate,
parallel 100 basis point shift in market yields, the Companys net interest income for the next twelve months was calculated to decrease by 4.2% if rates decline and to increase by 0.4% if rates increase. At December 31, 2003, assuming an
immediate, parallel 100 basis point shift in market yields, the Companys net interest income for the next twelve months was calculated to decrease by 3.5% if rates declined and to increase by 1.0% if rates increased. Since interest rates on
deposit products are very low, the Company would not realize any significant future benefit from lower rates, but could see a continuing decrease in earning asset rates. The net present value of equity is defined as the difference between the
present value of the Companys assets and liabilities. In general, the present value of fixed rate financial instruments declines as market rates increase and increases as rates fall. Using the yield scenario defined above, the net present
value of equity was forecasted to decline in a rising rate environment and to rise in a falling rate scenario.



Interest rate risk can be managed by using a variety of techniques, including but not limited to, selling existing assets or repaying liabilities, pricing
loans and deposits to attract preferred maturities and developing alternative sources of funding or structuring new products to hedge existing exposures. In addition to these balance sheet strategies, the Company can also use derivative financial
instruments such as interest rate swaps, caps, and floors to manage the potential impact of adverse changes in interest rates.



The Company has interest rate swaps on which it pays fixed rates and receives variable rates. Two of the swaps, which have a total notional principal of
$30,000, were executed to convert variable rate borrowings to fixed rates to reduce the risk of increased interest expense in a rising rate environment. They are recorded at a fair value of ($3,149) with changes recognized in other comprehensive
income. Also, the Company initiated a program to provide long-term fixed rate loans to commercial borrowers without incurring interest rate risk by executing simultaneous interest rate swaps. Each swap is structured to have the same amortization and
rate reset schedule as its underlying loan, which results in an effective fair value hedge. At March 31, 2004, the notional value of swaps in this program totaled $13,355 at a fair value of ($296).



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Changes in the market value of the swap and the loan are included in earnings. For the three months ended March 31, 2004,
$415 has been recognized in interest expense related to the interest rate swaps compared with $449 for the same period in 2003.



The Company also has a notional balance of $3,000 of options on the S & P 500 which offsets the equivalent risk of certificate of deposit liabilities
that have a return contractually linked to the index. The effective portion of the options and the embedded derivative are carried at a fair value of ($291). For the year-to-date, the Company has recognized $1 in current expense for the ineffective
portion of the derivative.



Item 4:

CONTROLS AND PROCEDURES



The management of the Company is responsible for establishing and maintaining effective disclosure controls and procedures as defined under
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of the end of the period covered by this quarterly report, an evaluation was performed under the supervision and with the participation of management, including the Chief
Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based on that evaluation, management concluded the Companys disclosure controls and
procedures as of March 31, 2004, were effective in ensuring material information required to be disclosed in this Quarterly Report on Form 10-Q was recorded, processed, summarized, and reported on a timely basis. Additionally, there were no changes
in the Companys internal control over financial reporting that occurred during the quarter ended March 31, 2004 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial
reporting.



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##### Table of Contents

PART II -
OTHER INFORMATION



Item 1. Legal Proceedings



In
February of 2004, a lawsuit was filed by two of the Companys shareholders in the Common Pleas Court of Stark County, Ohio against the Company, its directors and certain of its executive officers alleging breach of fiduciary duty in evaluating
and approving the agreement to merge the Company with Huntington Bancshares Incorporated (Huntington). The plaintiffs have requested the court to grant them class action status to bring the case on behalf of all shareholders. Among other
things, the lawsuit seeks to prevent the Company from merging with Huntington and requests unspecified monetary damages. Management believes the legal claims in the lawsuit are without merit and intends to vigorously defend the case.



Item 2. Changes in Securities and Use of Proceeds



|                                     |  |                               |  |                           |  |                                                                 |  |                                                             
|------------------------------------ |  | ----------------------------- |  | ------------------------- |  | --------------------------------------------------------------- |  | ------------------------------------------------------------
|                                     |  | TotalNumber ofSharesPurchased |  | AveragePricePaid perShare |  | Total Number ofSharesPurchased asPart of PubliclyAnnounced Plan |  | MaximumNumber ofShares that MayYet BePurchasedUnder the Plan
|January 1, 2004  January 31, 2004   |  | 70,435                        |  | 23.34                     |  |                                                                |  |                                                             
|February 1, 2004  February 29, 2004 |  | 343,871                       |  | 25.48                     |  |                                                                |  |                                                             
|March 1, 2004  March 31, 2004       |  | 11,618                        |  | 25.76                     |  |                                                                |  |                                                             
|                                     |  |                               |  |                           |  |                                                                 |  |                                                             
|Total                                |  | 425,924                       |  | 25.14                     |  |                                                                |  |                                                             
|                                     |  |                               |  |                           |  |                                                                 |  |                                                             



In addition to the
share purchases, a total of 497,811 of treasury shares were issued in connection with stock option activity during the first quarter of 2004.



Item 3. Defaults upon Senior Securities



Not Applicable



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



Unizan Financial Corp. will hold a special meeting of stockholders at the Marriott McKinley Grand Hotel, 320 Market Avenue South, Canton, Ohio, at 10:00 a.m., local time, on May 25, 2004 to consider and vote upon the
following matters:



| |  | a proposal to adopt the Agreement and Plan of Merger, dated as of January 27, 2004, by and between Huntington Bancshares Incorporated and Unizan Financial Corp., pursuant to which
Unizan will merge with and into Huntington; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the
special meeting to adopt the merger agreement.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The Unizan board of directors has fixed the close of business on April 6, 2004 as the record date for the Unizan special meeting. Only Unizan stockholders
of record at that time are entitled to notice of, and to vote at, the Unizan special meeting, or any adjournment or postponement of the Unizan special meeting. In order for the merger agreement to be approved, the holders of two-thirds of the Unizan
shares outstanding and entitled to vote thereon must vote in favor of adoption of the merger agreement.



Item 5. Other Information



None



Item 6. Exhibits and Reports on Form 8-K



| | (a) | Exhibits Required by Item 601 of Regulation S-K
| | --- | -----------------------------------------------



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##### Table of Contents

Exhibit 2(a)  Agreement and plan of merger by and between Unizan Financial Corp. and Huntington
Bancshares Incorporated dated January 27, 2004, incorporated by reference to Form 10-K for the year ended December 31, 2003, Exhibit 2(a).



Exhibit 3(a)  Articles of Incorporation, as amended incorporated by reference to Appendix A to UNB Corp.s Form S-4 dated October 15, 2001.





Exhibit 3(b)  Code of Regulations, incorporated by reference to Exhibit (4)B to UNB Corp.s registration statement on Form S-3 (No. 33-27471).



Exhibit 10.2  Indenture of the Company relating to the Junior Subordinated Debentures incorporated by reference to
Exhibit 4.1 to the Companys Registration Statement on Form S-4, Registration Statement (No. 333-30570).



Exhibit 10.3  Amended and Restated Trust Agreement of BFOH Capital Trust I incorporated by reference to the Companys Registration Statement of
Form S-4, Registration Statement (No. 333-30570).



Exhibit
10.e  UNB Corp. 1997 Stock Option Plan, filed on February 28, 1998, is incorporated herein by reference to Form Definitive 14-A, dated April 15, 1997, Appendix A, as amended by Form S-8 filed on July 11, 2003.



Exhibit 10.y  Split Dollar Agreement for Salary Continuation Agreement
Roger L. Mann and Scott E. Dodds, dated May 1, 2001, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.y.



Exhibit 10.z  Key Man Split Dollar Agreement for Roger L. Mann, dated July 18, 2001, is incorporated herein by reference to Form 10-Q for quarter
ended September 30, 2001, Exhibit 10.z.



Exhibit 10.aa 
Group Term Carve Out Plan, dated June 19, 2003, is incorporated herein by reference to Form 10-K for the year ended December 31, 2003, Exhibit 10.aa.



Exhibit 10.ab  Unizan Financial Corp. Severance Agreement for Roger L. Mann entered into as of August 1, 2002, is incorporated herein by reference
to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.ab.



Exhibit 10.ac  Unizan Bank, National Association Amended Salary Continuation Agreement for Roger L. Mann entered into as of August 1, 2002, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit
10.ac.



Exhibit 10.af  Unizan Financial Corp. Severance
Agreement for Scott E. Dodds entered into as of August 1, 2002, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.af.



Exhibit 10.ag  Unizan Bank, National Association Amended Salary Continuation Agreement for Scott E. Dodds entered into
as of August 1, 2002, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.ag.



Exhibit 10.ah  Unizan Financial Corp. Severance Agreement for James H. Nicholson entered into as of August 1, 2002, is incorporated herein by
reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.ah.



Exhibit 10.ai  Unizan Financial Corp. Severance Agreement for Edward N. Cohn entered into as of August 1, 2002, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit
10.ai.



Exhibit 10.aj  Unizan Financial Corp. Severance
Agreement for Robert J. Blackburn entered into as of August 1, 2002, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.aj.



Exhibit 10.ak  Unizan Financial Corp. Severance Agreement for James B. Baemel entered into as of August 1, 2002, is
incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.ak.



Exhibit 10.al  Unizan Financial Corp. Severance Agreement for Gary L. McGlaughlin entered into as of August 1, 2002, is incorporated herein by
reference to Form 10-Q for quarter ended September 30, 2001, Exhibit 10.al.



Exhibit 10.am  Unizan Financial Corp. Severance Agreement for Thomas J. Selock entered into as of August 1, 2002, is incorporated herein by reference to Form 10-Q for quarter ended September 30, 2001, Exhibit
10.am.



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Exhibit 10.an  Consulting and Noncompetition Agreement for James J. Pennetti entered into as of
December 1, 2003, is included herein by reference to Form 10-K for the year ended December 31, 2003, Exhibit 10.an.



Exhibit 31.1  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Roger L. Mann, President and Chief Executive Officer.



Exhibit 31.2  Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 by James H. Nicholson, Executive Vice President, Chief Operating Officer and Principal Financial Officer.



Exhibit 32.1  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Roger L.
Mann, President and Chief Executive Officer.



Exhibit 32.2
 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by James H. Nicholson, Executive Vice President, Chief Operating Officer and Principal Financial Officer.



| | (b) | Reports on Form 8-K filed during the quarter ended March 31, 2004:
| | --- | ------------------------------------------------------------------



Report on Form 8-K dated January 28, 2004 announced Huntington Bancshares Incorporated and Unizan Financial Corp. signed a definitive agreement to merge
the two organizations.



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 thereunto duly authorized.



|                    |  |                                                        
|------------------- |  | -------------------------------------------------------
|                    |  | Unizan Financial Corp. (Registrant)                    
|                    | 
|Date    May 7, 2004 |  | /s/ Roger L. Mann                                      
|                    |  | Roger L. Mann                                          
|                    |  | President and Chief Executive Officer                  
|                    | 
|Date    May 7, 2004 |  | /s/ James H. Nicholson                                 
|                    |  | James H. Nicholson                                     
|                    |  | Executive Vice President,                              
|                    |  | Chief Operating Officer and Principal Financial Officer





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