SUMMARY

This summary highlights material information from this document. We urge you to carefully read the entire document and the other documents to which we refer in order to fully understand the merger and the related transactions. See “Where You Can Find More Information” on page 172. Each item in this summary refers to the page of this document on which that subject is discussed in more detail.

The Merger and the Merger Agreement

The Merger (See page 24)

A copy of the merger agreement is attached as Appendix A to this document. Huntington and Sky encourage you to read the entire merger agreement carefully because it is the principal document governing the merger.

Form of Merger (See page 24)

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, Sky will be merged with and into Penguin Acquisition, LLC, a direct, wholly owned subsidiary of Huntington formed for the purposes of the merger. Huntington’s subsidiary will survive the merger as a direct, wholly owned subsidiary of Huntington.

Consideration to be Received in the Merger; Treatment of Stock Options (See page 54)

Sky shareholders will receive 1.098 shares of Huntington common stock and $3.023 in cash, without interest, for each share of Sky common stock they hold. The exchange ratio is fixed and will not be adjusted for changes in the market value of the common stock of Sky or Huntington. Because of this, the implied value of the consideration to Sky shareholders will fluctuate between now and the completion of the merger. Based on the closing price of Huntington common stock on the Nasdaq Stock Market on December 19, 2006, the last trading day before public announcement of the merger, the exchange ratio of the 1.098 shares and $3.023 in cash represented approximately $30.22 in value for each share of Sky common stock. Based on the closing price of Huntington common stock on the Nasdaq Stock Market on April 18, 2007, the latest practicable date before the date of this document, the exchange ratio represented approximately $27.70 in value for each share of Sky common stock. Huntington shareholders will continue to own their existing Huntington shares.

At the effective time of the merger, (i) each outstanding option to acquire Sky common stock will immediately vest and become exercisable and will be converted into an option to purchase a number of shares of Huntington common stock equal to the number of shares of Sky common stock underlying such option immediately prior to the merger multiplied by the exchange ratio, with an exercise price that equals the exercise price of such option immediately prior to the merger divided by the exchange ratio; (ii) each restricted share of Sky common stock will immediately vest and be converted into the right to receive the merger consideration, subject to applicable withholding tax; and (iii) each stock unit denominated in shares of Sky common stock (which are held in certain of Sky’s nonqualified deferred compensation plans) will immediately vest and be converted into the right to receive a number of shares of Huntington common stock equal to the number of shares of Sky common stock underlying such unit immediately prior to the merger multiplied by the exchange ratio. The exchange ratio for purposes of the stock options and stock units is the sum of (x) 1.098 and (y) the quotient of 3.023 divided by the average closing sale price of Huntington common stock over the five trading days immediately preceding the merger.

Material U.S. Federal Income Tax Consequences of the Merger (See page 64)

Huntington and Sky have structured the merger to qualify as a “reorganization” for United States federal income tax purposes, and it is a condition to their respective obligations to complete the merger that each of

 

Huntington and Sky receive a legal opinion to that effect. Accordingly, the merger will generally be tax-free to you, except to the extent of the cash you receive in the merger. The amount of gain that you recognize in the merger will generally be limited to the lesser of the amount of gain that you realize and the amount of cash that you receive in the merger (except for any cash you receive instead of fractional shares). The amount of gain that you realize is generally equal to the excess, if any, of the sum of the cash and the fair market value of the Huntington common stock that you receive over your tax basis in the Sky common stock you surrender in the merger. Huntington and Sky will generally not recognize gain or loss as a result of the merger.

The federal income tax consequences described above may not apply to all holders of Sky common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

Recommendations of the Boards of Directors

Huntington

The Huntington board of directors believes that the merger is in the best interests of Huntington and its shareholders and has unanimously approved and adopted the merger agreement and the transactions it contemplates. For the factors considered by the Huntington board of directors in reaching its decision to approve the merger agreement and the transactions it contemplates, see “The Merger—Huntington’s Reasons for the Merger; Recommendation of the Huntington Board of Directors.” The Huntington board of directors unanimously recommends that the Huntington shareholders vote “FOR” the proposal to issue shares of Huntington common stock in the merger and “FOR” each of the other proposals.

Sky

The Sky board of directors believes that the merger is in the best interests of Sky and its shareholders and has unanimously approved and adopted the merger agreement and the transactions it contemplates. For the factors considered by the Sky board of directors in reaching its decision to approve the merger agreement and the transactions it contemplates, see “The Merger—Sky’s Reasons for the Merger; Recommendation of the Sky Board of Directors.” The Sky board of directors unanimously recommends that the Sky shareholders vote “FOR” the proposal to approve and adopt the merger agreement.

Opinions of Financial Advisors

Huntington (See page 33)

In deciding to approve the merger, the Huntington board of directors considered the respective opinions of its financial advisors, Lehman Brothers Inc., which we refer to as Lehman Brothers, and Bear, Stearns & Co. Inc., which we refer to as Bear Stearns, provided to the Huntington board of directors on December 20, 2006, that as of the date of the opinions, and based on and subject to the qualifications, assumptions and limitations set forth therein, the merger consideration to be paid by Huntington was fair from a financial point of view to Huntington. The full text of the written opinions of Lehman Brothers and Bear Stearns are attached to this document as Appendix B and Appendix C, respectively. Huntington shareholders should read the opinions completely and carefully to understand the assumptions made, matters considered and limitations of the review undertaken by Lehman Brothers and Bear Stearns. Pursuant to engagement letters with each of Lehman Brothers and Bear Stearns, Huntington agreed to pay each of Lehman Brothers and Bear Stearns a transaction fee in connection with the merger, the principal portion of which is payable upon completion of the merger. The Lehman Brothers and Bear Stearns opinions are not recommendations as to how any shareholder of Huntington should vote with respect to the merger or any other matter.

 

Sky (See page 45)

In deciding to approve the merger, the Sky board of directors considered the opinion of its financial advisor, Sandler O’Neill & Partners, L.P., provided to the Sky board of directors on December 19, 2006, that as of the date of the opinion, and based on and subject to the considerations in its opinion, the merger consideration was fair from a financial point of view to holders of Sky common stock. A copy of the opinion is attached to this document as Appendix D. Sky shareholders should read the opinion completely and carefully to understand the assumptions made, matters considered and limitations of the review undertaken by Sandler O’Neill in providing its opinion. Pursuant to an engagement letter with Sandler O’Neill, Sky agreed to pay Sandler O’Neill a transaction fee in connection with the merger, the principal portion of such fee is payable upon completion of the merger. The Sandler O’Neill opinion is not a recommendation as to how any shareholder of Sky should vote with respect to the merger or any other matter.

Interests of Certain Persons in the Merger (See page 58)

Some of the members of Huntington’s and Sky’s management and certain members of their boards have economic interests in the merger that are different from, or in addition to, the interests of Huntington and Sky shareholders generally. These interests include the right of certain of Sky’s executive officers to receive severance payments and benefits under the terms of existing severance agreements and the acceleration of vesting of Sky stock options and other equity-based awards as a result of the merger. As more fully described under “The Merger—Interests of Certain Persons in the Merger,” in connection with the merger, it was agreed that Messrs. Adams, Thompson, Souder and Koch would receive the severance payments under their employment agreements upon completion of the merger with an aggregate value of approximately $12.4 million (with respect to Mr. Adams, approximately $4.37 million is payable pursuant to a restricted stock grant). If Mr. Starr’s employment is terminated under certain circumstances following the merger, he will be entitled to a severance payment of approximately $1.03 million. The aggregate number of stock options to acquire Sky common stock held by Sky’s 14 executive officers that will vest as a result of the merger is 207,225 shares. These options will be converted into options to acquire Huntington common stock, adjusted for the exchange ratio as described on page 1 above. The aggregate value of the acceleration of these options, calculated as the difference between the merger consideration and the exercise price of the 207,225 options being accelerated is approximately $420,934.80, assuming a stock price of $22.47 per share of Huntington common stock. In addition, in connection with the merger, new employment agreements were entered into between Huntington and each of Mr. Thomas Hoaglin and Mr. Marty Adams that will become effective upon the completion of the merger. Pursuant to his new employment agreement, Mr. Adams will be entitled to receive an amount in a value of approximately $8,371,311, as more fully described on page 59.

The Huntington and Sky boards of directors were aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by the merger agreement.

Board of Directors and Management of Huntington Following Completion of the Merger (See page 54)

After the merger, the board of directors of Huntington will consist of fifteen members comprised of (i) Mr. Hoaglin, the current chairman and chief executive officer of Huntington, plus nine current non-employee directors of Huntington designated by Huntington, and (ii) Mr. Adams, the current chairman and chief executive officer of Sky, plus four current non-employee directors of Sky designated by Sky. Mr. Hoaglin will continue to serve as Huntington’s chief executive officer and the chairman of the Board of Directors, and Mr. Adams will become Huntington’s president and chief operating officer. Mr. Adams will be the successor to Mr. Hoaglin as chief executive officer of Huntington on December 31, 2009 or such earlier date as of which Mr. Hoaglin ceases for any reason to serve as chief executive officer of Huntington. The above provisions will be contained in a bylaw provision that until December 31, 2009 can only be amended by an affirmative vote of at least 75% of the directors that constitute the entire Board of Directors of Huntington. A copy of the bylaw amendment is attached

 

to this document as Appendix E. In addition, pursuant to the employment agreement entered into between Huntington and Mr. Hoaglin mentioned above, Mr. Hoaglin is entitled to serve as Huntington’s chairman from the date he ceases to be chief executive officer until Huntington’s annual shareholders meeting in 2011.

Commitments to Sky’s Communities (See page 73)

Huntington has agreed to use its reasonable best efforts in light of business and market conditions to maintain employment for at least 100 employees in Bowling Green, Ohio and 100 employees in Salineville, Ohio. In addition, Huntington has agreed to contribute $5 million over 5 years to the Sky Foundation, which will be used to maintain Sky’s charitable commitments to the communities in Sky’s market areas at substantially the same levels as maintained prior to the merger.

Regulatory Approvals Required for the Merger (See page 61)

We have agreed to use our reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. These approvals include approval from the Federal Reserve Board and various other federal and state regulatory authorities. Huntington and Sky have completed, or will complete, the filing of applications and notifications to obtain the required regulatory approvals.

Although we do not know of any reason why we cannot obtain these regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them.

Conditions That Must Be Satisfied or Waived for the Merger to Occur (See page 73)

Currently, we expect to complete the merger early in the third quarter of 2007. However, as more fully described in this document and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include, among others, obtaining the required approvals from the holders of Huntington common stock and Sky common stock, the absence of any legal prohibition on consummation of the merger, obtaining required governmental and regulatory approvals (such as approval by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency), approval of Huntington’s common stock to be issued in the merger for listing on the Nasdaq Stock Market, the accuracy of the representations and warranties of the parties to the merger agreement (subject to the materiality standards set forth in the merger agreement), material performance of all the covenants of the parties to the merger agreement, and the delivery of customary legal opinions as to the U.S. federal income tax treatment of the merger. In addition, Huntington’s obligation to close is subject to the condition that none of the required governmental or regulatory approvals results in the imposition of conditions that would reasonably be expected to have a material adverse effect on Huntington and Sky taken as a whole after the merger.

We cannot be certain when, or if, the conditions to the merger will be satisfied or waived.

Termination of the Merger Agreement (See page 74)

We may agree to terminate the merger agreement before completing the merger, even after shareholder approval, as long as the termination is approved by each of our boards of directors.

In addition, the merger agreement can be terminated by either party in the following circumstances:

 

•

if any of the required regulatory approvals are denied (and the denial is final and nonappealable);

 

•

if the merger has not been completed on or before December 31, 2007, unless the failure to complete the merger by that date is due to the actions of the party seeking to terminate the agreement;

 

•

if there is a breach by the other party that would cause the failure of the closing conditions described above, unless the breach is capable of being, and is, cured within 45 days of notice of the breach;

 

•

if either requisite shareholder vote is not obtained;

 

•

if the other party fails to recommend the approval of the relevant proposal to its shareholders, modifies its recommendation in a manner adverse to the other party or recommends an alternative transaction; or

 

•

if the other party fails to substantially comply with its obligations relating to soliciting its shareholder vote or relating to not soliciting alternative transactions.

Expenses and Termination Fees (See pages 73 and 74)

Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses, subject to the specific exceptions discussed in this document. Upon termination of the merger agreement under specified circumstances, Huntington or Sky may be required to pay the other party a termination fee of $125 million. See “The Merger Agreement—Termination Fee” beginning on page 74 for a complete discussion of the circumstances under which termination fees will be required to be paid.

The Rights of Sky Shareholders Will Be Governed by Maryland Law and by the Huntington Governing Documents after the Merger (See page 87)

The rights of Sky shareholders will change as a result of the merger due to differences in Huntington’s and Sky’s governing documents and due to the fact that the companies are incorporated in different states (Sky in Ohio and Huntington in Maryland). This document contains descriptions of shareholder rights under each of the Huntington and Sky governing documents and applicable state law, and describes the material differences between them.

Dissenter’s Rights (See page 56)

If a Sky shareholder does not vote in favor of the transaction and delivers a written demand for payment of the fair cash value of his shares of Sky common stock not later than ten days after the Sky special meeting, he will be entitled, if and when the merger is completed, to receive the fair cash value of his shares of Sky common stock. The shareholder’s right to receive the fair cash value of his Sky common stock, however, is contingent upon his strict compliance with the procedures set forth in 1701.85 of the Ohio General Corporation Law, a copy of which is attached to this document as Appendix F. If a Sky shareholder wishes to submit a written demand for payment of the fair cash value of his shares of Sky common stock, he must deliver his demand no later than June 14, 2007 to W. Granger Souder, Jr., Executive Vice President, General Counsel and Secretary of Sky, P.O. Box 428, 221 South Church Street, Bowling Green, Ohio 43402.

Comparative Market Prices and Share Information (See page 55)

Huntington common stock is quoted on the Nasdaq Stock Market under the symbol “HBAN.” Sky common stock is quoted on the Nasdaq Stock Market under the symbol “SKYF.” The following table shows the closing sale prices of Huntington common stock and Sky common stock as reported on the Nasdaq Stock Market on December 19, 2006, the last trading day before we announced the merger, and on April 18, 2007, the last practicable trading day before the distribution of this document. This table also shows the implied value of the merger consideration proposed for each share of Sky common stock, which we calculated by multiplying the closing price of Huntington common stock on those dates by 1.098 and then adding $3.023 in cash, the exchange ratio.

 

		Huntington Common Stock			Sky Common Stock			Implied Value of One Share of Sky Common Stock
At December 19, 2006		$	24.77		$	24.17		$	30.22
At April 18, 2007		$	22.47		$	27.49		$	27.70

The market price of Huntington common stock and Sky common stock will fluctuate prior to the merger. You should obtain current market quotations for the shares.

 

Comparative Market Prices and Dividends (See page 77)

Huntington common stock and Sky common stock are listed on the Nasdaq Stock Market. The following table sets forth the high and low closing prices of shares of Huntington common stock and Sky common stock as reported on the Nasdaq Stock Market, and the quarterly cash dividends declared per share for the periods indicated.

 

		Huntington Common Stock									Sky Common Stock
		High			Low			Dividend			High			Low			Dividend
2005
First Quarter		$	24.65		$	22.30		$	.20		$	28.70		$	25.89		$	.22
Second Quarter			24.68			22.72			.215			29.00			25.83			.22
Third Quarter			25.40			22.47			.215			29.14			27.57			.22
Fourth Quarter			24.50			21.19			.215			29.81			26.44			.23
2006
First Quarter			24.64			22.71			.25			28.48			25.44			.23
Second Quarter			24.27			23.25			.25			26.67			23.31			.23
Third Quarter			24.73			23.13			.25			25.00			23.80			.23
Fourth Quarter			24.91			22.96			.25			28.54			24.17			.25
2007
First Quarter			24.05			21.85			.265			29.07			26.75			.25
Second Quarter (through April 18, 2007)			22.47			21.42			—			27.49			26.25			—

Sky shareholders are advised to obtain current market quotations for Huntington common stock and Sky common stock. The market price of Huntington common stock and Sky common stock will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger. No assurance can be given concerning the market price of Huntington common stock before or after the effective date of the merger.

The Shareholder Meetings

The Huntington Annual Meeting (See page 17)

The Huntington annual meeting will be held at the King Arts Complex, 867 Mt. Vernon Avenue, Columbus, Ohio, on May 30, 2007 at 2:00 p.m., local time. At the Huntington annual meeting, shareholders will be asked to:

 

•

consider and vote upon a proposal to approve the issuance of Huntington common stock, without par value, in connection with the merger contemplated by the Agreement and Plan of Merger, dated as of December 20, 2006, by and among Huntington, Penguin Acquisition, LLC, a Maryland limited liability company and wholly owned subsidiary of Huntington, and Sky;

 

•

elect three directors to serve as Class II Directors until the 2010 Annual Meeting of Shareholders and until the successors are elected and qualify;

 

•

consider and vote upon a proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for Huntington Bancshares Incorporated for the year 2007;

 

•

consider and vote upon a proposal to approve the 2007 Stock and Long-Term Incentive Plan;

 

•

consider and vote upon a proposal to approve the First Amendment to the Management Incentive Plan;

 

•

consider and vote upon a proposal to amend Huntington’s charter to increase the authorized common stock of Huntington from 500,000,000 to 1,000,000,000 shares;

 

•

consider and vote upon a proposal to approve the adjournment of the annual meeting, including, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the annual meeting for any of the foregoing proposals; and

 

•

transact any other business that may properly be brought before the Huntington annual meeting or any adjournments or postponements thereof.

 

Only holders of record at the close of business on March 15, 2007 will be entitled to vote at the Huntington annual meeting. Each share of Huntington common stock is entitled to one vote for each matter presented at the meeting. As of the record date of March 15, 2007, there were 235,687,651 shares of Huntington common stock entitled to vote at the Huntington annual meeting.

The stock issuance proposal requires the affirmative vote of a majority of all votes cast by the holders of common stock at a meeting at which a quorum is present. Because approval is based on the affirmative vote of a majority of shares cast, a Huntington shareholder’s failure to vote, a broker non-vote or an abstention will have no effect on the proposal, assuming a quorum is present.

The proposals to elect directors, to ratify the appointment of Deloitte & Touche LLP as Huntington’s independent registered accounting firm for 2007, to approve the 2007 Stock and Long-Term Incentive Plan, to approve the First Amendment to the Management Incentive Plan and to approve the amendment to Huntington’s charter are described in detail under “Other Matters To Be Considered at Huntington’s Annual Meeting” on page 103. No proposal is conditioned upon shareholder approval of any other proposal at the Huntington annual meeting.

As of the Huntington record date, directors and executive officers of Huntington and their affiliates had the right to vote 4,194,635 shares of Huntington common stock, or approximately 1.78% of the outstanding Huntington common stock entitled to be voted at the Huntington annual meeting.

The Sky Special Meeting (See page 21)

The Sky Special meeting will be held at the Marriott Cleveland East, 26300 Harvard Road, Warrensville Heights, Ohio, on June 4, 2007 at 1:00 p.m., local time. At the Sky special meeting, shareholders will be asked to:

 

•

approve and adopt the Agreement and Plan of Merger, dated as of December 20, 2006, by and among Huntington, Penguin Acquisition, LLC, a Maryland limited liability company and wholly owned subsidiary of Huntington, and Sky;

 

•

vote upon an adjournment of the special meeting, including if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting for the foregoing proposal; and

 

•

transact any other business that may properly be brought before the Sky special meeting or any adjournments or postponements thereof.

Only holders of record at the close of business on April 18, 2007 will be entitled to vote at the Sky special meeting. Each share of Sky common stock is entitled to one vote on each matter presented at the meeting. As of the record date of April 18, 2007, there were 117,878,914 shares of Sky common stock entitled to vote at the Sky special meeting.

In order to complete the merger, an affirmative vote of the holders of a majority of the outstanding shares of Sky common stock entitled to vote on such proposal at such meeting at which a quorum is present must vote to approve and adopt the merger agreement. Because approval is based on the affirmative vote of a majority of shares outstanding, a Sky shareholder’s failure to vote, a broker non-vote or an abstention will have the same effect as a vote against the merger.

As of the Sky record date, directors and executive officers of Sky and their affiliates had the right to vote 3,226,250 shares of Sky common stock, or approximately 2.74% of the outstanding Sky common stock entitled to be voted at the Sky special meeting.

 

The Companies

Huntington (See page 76)

Huntington Bancshares Incorporated

Huntington Center

41 South High Street

Columbus, Ohio 43287

(614) 480-8300

Huntington Bancshares Incorporated is a $35.3 billion multi-state diversified financial holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through our subsidiaries, we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, equipment leasing, investment management, trust services, brokerage services, private mortgage insurance, reinsuring credit life and disability insurance, and other insurance and financial products and services. Our banking offices are located in Ohio, Michigan, West Virginia, Indiana, and Kentucky. Certain activities are also conducted in Arizona, Florida, Georgia, Maryland, Nevada, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, and Vermont. We have a foreign office in the Cayman Islands and another in Hong Kong. The Huntington National Bank, organized in 1866, is our only bank subsidiary. The company is located on the web at www.huntington.com .

Sky (See page 76)

Sky Financial Group, Inc.

P.O. Box 428

221 South Church Street

Bowling Green, Ohio 43402

(419) 327-6300

Sky Financial Group, Inc. is a $17.7 billion diversified financial holding company. Sky’s asset size places it among the 40 largest publicly-held bank holding companies in the nation. Committed to providing clients with personal attention and professional advice from over 330 financial centers and over 400 ATMs, Sky serves communities in Ohio, Pennsylvania, Indiana, Michigan and West Virginia. Sky’s financial service affiliates include: Sky Bank, commercial and retail banking; Sky Trust, asset management services; and Sky Insurance, retail and commercial insurance agency services. The company is located on the web at www.skyfi.com .

Penguin Acquisition, LLC (See page 76)

Penguin Acquisition, LLC

Huntington Center

41 South High Street

Columbus, Ohio 43287

(614) 480-8300

Penguin Acquisition, LLC is a newly formed Maryland limited liability company and a wholly owned subsidiary of Huntington. Penguin Acquisition, LLC is formed solely for the purpose of effecting the proposed merger with Sky and has not carried on any activities other than in connection with the proposed merger.

 

SELECTED HISTORICAL FINANCIAL DATA OF HUNTINGTON

Set forth below are highlights from Huntington’s consolidated financial information as of and for the five-year period ended December 31, 2006, which is derived from the audited consolidated financial statements. The selected historical financial data is only a summary, and you should read this information in conjunction with Huntington’s audited consolidated financial statements and related notes included in Huntington’s Annual Report on Form 10-K for the year ended December 31, 2006, which has been filed with the SEC and is incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page 172.

Huntington’s historical financial data may not be indicative of the results of operations or financial position to be expected in the future.

 

(dollars in thousands, except per share amounts)		2006				2005				2004				2003				2002
Statements of Income:
Interest income		$	2,070,519			$	1,641,765			$	1,347,315			$	1,305,756			$	1,293,195
Interest expense			1,051,342				679,354				435,941				456,770				543,621
Net interest income			1,019,177				962,411				911,374				848,986				749,574
Provision for loan and lease losses			65,191				81,299				55,062				163,993				194,426
Net interest income after provision for loan and lease losses			953,986				881,112				856,312				684,993				555,148
Non-interest income			561,069				632,282				818,598				1,069,153				1,341,704
Non-interest expense			1,000,994				969,820				1,122,244				1,230,159				1,374,147
Income before taxes			514,061				543,574				552,666				523,987				522,705
Provision for income taxes			52,840				131,483				153,741				138,294				198,974
Income before cumulative effect of change in accounting principle			461,221				412,091				398,925				385,693				323,731
Cumulative effect of change in accounting principle, net of tax			—				—				—				(13,330	)			—
Net income		$	461,221			$	412,091			$	398,925			$	372,363			$	323,731
Per Common Share:
Income before cumulative effect of change in accounting principle
Basic			$1.95				$1.79				$1.74				$1.68				$1.34
Diluted			1.92				1.77				1.71				1.67				1.33
Net income
Basic			1.95				1.79				1.74				1.62				1.34
Diluted			1.92				1.77				1.71				1.61				1.33
Weighted average shares outstanding
Basic			236,699,000				230,142,000				229,913,000				229,401,000				242,279,000
Diluted			239,920,000				233,475,000				233,856,000				231,582,000				244,012,000
Book value			$12.80				$11.41				$10.96				$9.93				$9.40
Dividends declared			1.00				0.845				0.75				0.67				0.64
Financial Ratios:
Return on average assets			1.31	%			1.26	%			1.27	%			1.29	%			1.24	%
Return on average shareholders’ equity			15.7				16.0				16.8				17.0				14.5
Net interest margin			3.29				3.33				3.33				3.49				3.62
Efficiency ratio			59.4				60.0				65.0				63.9				65.6
Effective tax rate			10.3				24.2				27.8				26.4				38.1
Net charge-offs to average loans			0.32				0.33				0.35				0.81				1.13
Allowance for loan and lease losses as a percentage of total loans and leases			1.04				1.10				1.15				1.42				1.62
Tier 1 risk-based capital			8.93				9.13				9.08				8.53				8.34
Total risk-based capital			12.79				12.42				12.48				11.95				11.25
Tangible equity to tangible assets			6.87				7.19				7.18				6.79				7.22
Balance Sheet Information:
Average loans and leases		$	25,943,554			$	24,309,768			$	22,126,894			$	20,028,779			$	17,417,455
Average earning assets			31,451,041				29,307,603				27,697,075				24,592,170				20,846,090
Average total assets			35,111,236				32,639,011				31,432,746				28,990,899				26,063,281
Average total deposits			24,183,624				22,011,445				19,494,418				18,158,056				17,184,661
Average shareholders’ equity			2,945,597				2,582,721				2,374,137				2,196,348				2,238,761
Period-end loans and leases			26,153,425				24,472,166				23,560,277				21,075,118				18,587,403
Period-end allowance for loan losses			272,068				268,347				271,211				299,732				300,503
Period-end assets			35,329,019				32,764,805				32,565,497				30,519,326				27,539,753
Period-end shareholders’ equity			3,014,326				2,557,501				2,537,638				2,275,002				2,189,793

 

SELECTED HISTORICAL FINANCIAL DATA OF SKY

Set forth below are highlights from Sky’s consolidated financial information as of and for the five-year period ended December 31, 2006, which is derived from the audited consolidated financial statements. The selected historical financial data is only a summary, and you should read this information in conjunction with Sky’s audited consolidated financial statements and related notes included in Sky’s Annual Report on Form 10-K for the year ended December 31, 2006, which has been filed with the SEC and is incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page 172.

Sky’s historical financial data may not be indicative of the results of operations or financial position to be expected in the future.

 

(dollars in thousands, except per share amounts)		2006				2005				2004				2003				2002
Statements of Income:
Interest income		$	1,013,491			$	830,224			$	661,943			$	594,063			$	576,397
Interest expense			471,945				315,572				210,632				202,820				235,162
Net interest income			541,546				514,652				451,311				391,243				341,235
Provision for loan and lease losses			36,854				52,249				37,660				34,125				37,659
Net interest income after provision for loan and lease losses			504,692				426,403				413,651				357,118				303,576
Non-interest income			218,870				211,382				203,417				178,898				147,984
Non-interest expense			438,555				400,047				356,524				307,186				253,700
Income before taxes			285,007				273,738				260,544				228,830				197,860
Provision for income taxes			94,669				91,547				85,344				76,150				65,712
Income from continuing operations			190,338				182,191				175,200				152,680				132,148
Income (loss) from discontinued operations, net of tax			—				372				19,155				3,937				(4,341	)
Net income		$	190,338			$	182,563			$	194,355			$	156,617			$	127,807
Per Common Share:
Income from continuing operations
Basic			$1.73				$1.71				$1.76				$1.70				$1.58
Diluted			1.72				1.69				1.74				1.69				1.57
Net income
Basic			1.73				1.71				1.95				1.75				1.53
Diluted			1.72				1.69				1.93				1.73				1.52
Weighted average shares outstanding
Basic			110,107,000				106,796,000				99,461,000				89,630,000				83,439,000
Diluted			110,954,000				107,973,000				100,568,000				90,404,000				84,096,000
Book value			$16.08				$14.35				$13.77				$10.80				$9.54
Dividends declared			0.94				0.89				0.85				0.81				0.77
Financial Ratios:
Return on average assets			1.18	%			1.21	%			1.43	%			1.29	%			1.29	%
Return on average shareholders’ equity			11.6				12.3				15.8				17.2				17.7
Net interest margin			3.69				3.73				3.69				3.70				3.90
Efficiency ratio (1)			53.9				53.1				53.7				52.5				51.6
Effective tax rate			33.2				33.4				32.7				33.3				33.2
Net charge-offs to average loans			0.34				0.57				0.37				0.40				0.47
Allowance for loan and lease losses as a percentage of total loans and leases			1.35				1.30				1.43				1.45				1.45
Tier 1 risk-based capital			9.98				9.32				9.27				9.00				8.39
Total risk-based capital			12.07				11.53				11.73				11.83				11.02
Tangible equity to tangible assets			6.38				6.39				6.42				5.99				6.24
Balance Sheet Information:
Average loans and leases		$	11,523,336			$	10,766,796			$	9,462,682			$	8,103,732			$	6,532,756
Average earning assets			14,770,157				13,876,315				12,327,954				10,653,006				8,835,842
Average assets			16,192,790				15,145,698				13,571,916				12,166,747				9,915,710
Average total deposits			11,493,468				10,626,218				9,504,848				8,400,743				7,016,506
Average shareholders’ equity			1,646,132				1,487,624				1,229,933				908,756				723,242
Period-end loans and leases			12,826,817				11,149,222				10,616,118				8,644,645				7,347,988
Period-end allowance for loan losses			172,990				144,461				151,389				124,943				106,675
Period-end assets			17,726,094				15,683,291				14,944,423				12,946,978				11,050,120
Period-end shareholders’ equity			1,880,648				1,553,877				1,470,955				998,576				832,433

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(1)	For comparison purposes, Sky’s efficiency ratio has been calculated using the same definition used by Huntington and as a result may differ from efficiency ratios included in previous Sky public filings.