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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Commission file Number 0-2525

HUNTINGTON BANCSHARES INCORPORATED
----------------------------------
(Exact name of registrant as specified in its charter)

MARYLAND 31-0724920
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

HUNTINGTON CENTER, 41 S. HIGH STREET, COLUMBUS, OH 43287
-------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (614) 480-8300
--------------

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK - WITHOUT PAR VALUE
--------------------------------
(Title of class)

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. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of voting stock held by non-affiliates of the
registrant as of December 31, 2001, was $4,019,925,610. As of January 31, 2002,
251,214,602 shares of common stock without par value were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates by reference certain information
from the registrant's definitive Proxy Statement for the 2002 Annual
Shareholders' Meeting.






HUNTINGTON BANCSHARES INCORPORATED

INDEX



Part I.

Item 1. Business 3

Item 2. Properties 13

Item 3. Legal Proceedings 13

Item 4. Submission of Matters to a Vote of Security Holders 13

Part II.

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters 13

Item 6. Selected Financial Data 14

Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40

Item 8. Financial Statements and Supplementary Data 40

Report of Management 40

Report of Independent Auditors 40

Consolidated Balance Sheets --
December 31, 2001 and 2000 41

Consolidated Statements of Income --
Twelve Months Ended December 31, 2001, 2000 and 1999 42

Consolidated Statements of Changes in Shareholders' Equity --
Twelve Months Ended December 31, 2001, 2000 and 1999 43

Consolidated Statements of Cash Flows --
Twelve Months Ended December 31, 2001, 2000 and 1999 44

Notes to Consolidated Financial Statements 45

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 74

Part III.

Item 10. Directors and Executive Officers of the Registrant 75

Item 11. Executive Compensation 75

Item 12. Security Ownership of Certain Beneficial Owners and Management 75

Item 13. Certain Relationships and Related Transactions 75

Part IV.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 75






HUNTINGTON BANCSHARES INCORPORATED
PART I

Item 1: Business

Huntington Bancshares Incorporated (Huntington), incorporated in
Maryland in 1966, is a multi-state bank holding company that also qualified as a
financial holding company in March 2000. Huntington is headquartered in
Columbus, Ohio. Its subsidiaries conduct a full-service commercial and consumer
banking business, engage in mortgage banking, merchant banking, lease financing,
trust services, discount brokerage services, underwriting credit life and
disability insurance, selling other insurance products, issuing commercial paper
guaranteed by Huntington, and provide other financial products and services. At
December 31, 2001, Huntington's subsidiaries had 155 banking offices in Ohio,
114 banking offices in Michigan, 143 banking offices in Florida, 30 banking
offices in West Virginia, 21 banking offices in Indiana, 12 banking offices in
Kentucky, and one foreign office in each of the Cayman Islands and Hong Kong.
The Huntington Mortgage Company, a wholly owned subsidiary, has loan origination
offices in the Midwest and on the East Coast. Foreign banking activities, in
total or with any individual country, are not significant to the operations of
Huntington. At December 31, 2001, Huntington and its subsidiaries had 9,743
full-time equivalent employees.

A brief discussion of Huntington's lines of business can be found in
its Management's Discussion and Analysis on beginning on page 32 of this report
and the financial statement results can be found in Note 21 of the Notes to
Consolidated Financial Statements beginning on page 68.

Competition in the form of price and service from other banks and
financial companies such as savings and loans, credit unions, finance companies,
and brokerage firms is intense in most of the markets served by Huntington and
its subsidiaries. Mergers between and the expansion of financial institutions
both within and outside Ohio have provided significant competitive pressure in
major markets. Since 1995, when federal interstate banking legislation became
effective that made it permissible for bank holding companies in any state to
acquire banks in any other state, and for banks to establish interstate branches
(subject to certain limitations by individual states), actual or potential
competition in each of Huntington's markets has been intensified. Internet
banking, offered both by established traditional institutions and by start-up
Internet-only banks, constitutes another significant form of competitive
pressure on Huntington's business. Finally, financial services reform
legislation enacted in November 1999 eliminates the long-standing Glass-Steagall
Act restrictions on securities activities of bank holding companies and banks.
The legislation permits bank holding companies that elect to become financial
holding companies to engage in a broad range of financial activities, including
defined securities and insurance activities, and to affiliate with securities
and insurance firms. Correspondingly, it permits securities and insurance firms
to engage in banking activities under specified conditions. The same legislation
allows banks to have financial subsidiaries that may engage in certain
activities not otherwise permissible for banks.

In July 2001, Huntington announced a comprehensive strategic and
financial restructuring plan designed to refocus its operations on core
activities in the Midwest. As part of the plan, in September 2001, Huntington
entered into an agreement for the sale of its Florida retail and commercial
operations. The sale closed on February 15, 2002. Immediately after the sale of
these Florida operations, Huntington's subsidiaries had a total of 332 domestic
banking offices, only two of which are located in Florida. After the sale,
Huntington had 8,552 full-time equivalent employees.

REGULATORY MATTERS

To the extent that the following information describes statutory or
regulatory provisions, it is qualified in its entirety by reference to such
statutory or regulatory provisions.

GENERAL

As a financial holding company, Huntington is subject to examination
and supervision by the Board of Governors of the Federal Reserve System (Federal
Reserve Board). Huntington is required to file with the Federal Reserve Board
reports and other information regarding its business operations and the business
operations of its subsidiaries. It is also required to obtain Federal Reserve
Board approval prior to acquiring, directly or indirectly, ownership or control
of voting shares of any bank, if, after such acquisition, it would own or
control more than 5% of the voting stock of such bank.


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Pursuant to the Gramm-Leach-Bliley Act of 1999 (GLB Act), however,
Huntington may engage in, or own or control companies that engage in, any
activities determined by the Federal Reserve Board to be financial in nature or
incidental to activities financial in nature, or complementary to financial
activities, provided that such complementary activities do not pose a
substantial risk to the safety or soundness of depository institutions or the
financial system generally. In addition, the GLB Act designated various other
lending, advisory, insurance underwriting, securities underwriting, dealing and
market-making, and merchant banking activities to those activities previously
approved for bank holding companies by the Federal Reserve Board, as financial
in nature, and authorized the Federal Reserve Board, in coordination with the
Office of the Comptroller of the Currency (OCC), to determine that additional
activities are financial in nature or incidental to activities that are
financial in nature. Except for the acquisition of a savings association,
Huntington may commence any new financial activity with only subsequent 30 day
notice to the Federal Reserve Board.

Huntington's national bank subsidiary is subject to examination and
supervision by the OCC. Its deposits are insured by the Bank Insurance Fund
(BIF) of the Federal Deposit Insurance Corporation (FDIC), although certain
deposits were acquired from savings associations and are insured by the Savings
Association Insurance Fund (SAIF) of the FDIC. Huntington's nonbank subsidiaries
are also subject to examination and supervision by the Federal Reserve Board
(or, in the case of nonbank subsidiaries of the national bank subsidiary, by the
OCC), and examination by other federal and state agencies, including, in the
case of certain securities activities, regulation by the Securities and Exchange
Commission.

In addition to the impact of federal and state regulation, the bank and
nonbank subsidiaries of Huntington are affected significantly by the actions of
the Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.

HOLDING COMPANY STRUCTURE

Huntington has one national bank subsidiary and numerous nonbank
subsidiaries. The national bank subsidiary is subject to affiliate transaction
restrictions under federal law which limit the transfer of funds by the
subsidiary bank to the parent and any nonbank subsidiaries of the parent,
whether in the form of loans, extensions of credit, investments, or asset
purchases. Such transfers by a subsidiary bank to its parent corporation or to
any individual nonbank subsidiary of the parent are limited in amount to 10% of
the subsidiary bank's capital and surplus and, with respect to such parent
together with all such nonbank subsidiaries of the parent, to an aggregate of
20% of the subsidiary bank's capital and surplus. Furthermore, such loans and
extensions of credit are required to be secured in specified amounts. In
addition, all affiliate transactions must be conducted on terms and under
circumstances that are substantially the same as such transactions with
unaffiliated entities. Under applicable regulations, at December 31, 2001,
approximately $288.2 million was available for loans to Huntington from its
subsidiary bank.

The Federal Reserve Board has a policy to the effect that a bank
holding company is expected to act as a source of financial and managerial
strength to each of its subsidiary banks and to commit resources to support each
such subsidiary bank. Under the source of strength doctrine, the Federal Reserve
Board may require a bank holding company to make capital injections into a
troubled subsidiary bank, and may charge the bank holding company with engaging
in unsafe and unsound practices for failure to commit resources to such a
subsidiary bank. This capital injection may be required at times when Huntington
may not have the resources to provide it. Any loans by a holding company to its
subsidiary banks are subordinate in right of payment to deposits and to certain
other indebtedness of such subsidiary bank. Moreover, in the event of a bank
holding company's bankruptcy, any commitment by such holding company to a
federal bank regulatory agency to maintain the capital of a subsidiary bank will
be assumed by the bankruptcy trustee and entitled to a priority of payment.

Federal law permits the OCC to order the pro rata assessment of
shareholders of a national bank whose capital stock has become impaired, by
losses or otherwise, to relieve a deficiency in such national bank's capital
stock. This statute also provides for the enforcement of any such pro rata
assessment of shareholders of such national bank to cover such impairment of
capital stock by sale, to the extent necessary, of the capital stock of any
assessed shareholder failing to pay the assessment. Huntington, as the sole
shareholder of its subsidiary bank, is subject to such provisions. Moreover, the
claims of a receiver of an insured depository institution for administrative
expenses and the claims of holders of deposit liabilities of such an institution
are accorded priority over the claims of general unsecured creditors of such an
institution, including the holders of the institution's note obligations, in the
event of a liquidation or other resolution of such institution. Claims of a
receiver for administrative expenses and claims of holders of deposit
liabilities of Huntington's depository subsidiary, including the FDIC, as the
subrogee of such holders, would receive priority over the holders of notes and
other senior debt of such subsidiary in the event of a liquidation or other
resolution and over the interests of Huntington as sole shareholder of its
subsidiary.


4



DIVIDEND RESTRICTIONS

Dividends from Huntington's subsidiary bank are a significant source of
funds for payment of dividends to Huntington's shareholders. In the year ended
December 31, 2001, Huntington declared cash dividends to its shareholders of
approximately $180.8 million. There are, however, statutory limits on the amount
of dividends that Huntington's subsidiary bank can pay to Huntington without
regulatory approval.

Huntington's subsidiary bank may not, without prior regulatory
approval, pay a dividend in an amount greater than such bank's undivided
profits. In addition, the prior approval of the OCC is required for the payment
of a dividend by a national bank if the total of all dividends declared by the
bank in a calendar year would exceed the total of its net income for the year
combined with its retained net income for the two preceding years. Under these
provisions and in accordance with the above-described formula, Huntington's
subsidiary bank could, without regulatory approval, declare dividends to
Huntington in 2002 of approximately $91.7 million plus an additional amount
equal to its net profits during 2002.

If, in the opinion of the applicable regulatory authority, a bank under
its jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice which, depending on the financial condition of the bank, could include
the payment of dividends, such authority may require, after notice and hearing,
that such bank cease and desist from such practice. The Federal Reserve Board
and the OCC have issued policy statements that provide that insured banks and
bank holding companies should generally only pay dividends out of current
operating earnings.

FDIC INSURANCE

Huntington's bank subsidiary is classified by the FDIC as a
well-capitalized institution in the highest supervisory subcategory, and is
therefore not obliged under current FDIC assessment practices to pay deposit
insurance premiums, either on its deposits insured by the BIF or on that portion
of its deposits acquired from savings and loan associations and insured by the
SAIF. Although not currently subject to FDIC assessments for insurance premiums,
the bank subsidiary is required to make payments for the servicing of
obligations of the Financing Corporation (FICO) that were issued in connection
with the resolution of savings and loan associations, so long as such
obligations remain outstanding. The FDIC may alter its assessment practices in
the future if required by developments affecting the resources of the BIF or the
SAIF. The FDIC is also conducting a comprehensive review of the deposit
insurance system to study alternatives for pricing, funding, and coverage.

CAPITAL REQUIREMENTS

The Federal Reserve Board has issued risk-based capital ratio and
leverage ratio guidelines for bank holding companies such as Huntington. The
risk-based capital ratio guidelines establish a systematic analytical framework
that makes regulatory capital requirements more sensitive to differences in risk
profiles among banking organizations, takes off-balance sheet exposures into
explicit account in assessing capital adequacy, and minimizes disincentives to
holding liquid, low-risk assets. Under the guidelines and related policies, bank
holding companies must maintain capital sufficient to meet both a risk-based
asset ratio test and a leverage ratio test on a consolidated basis. The
risk-based ratio is determined by allocating assets and specified off-balance
sheet commitments into four weighted categories, with higher weighting being
assigned to categories perceived as representing greater risk. A bank holding
company's capital is then divided by total risk weighted assets to yield the
risk-based ratio. The leverage ratio is determined by relating core capital to
total assets adjusted as specified in the guidelines. Huntington's subsidiary
bank is subject to substantially similar capital requirements.

Generally, under the applicable guidelines, a financial institution's
capital is divided into two tiers. Institutions that must incorporate market
risk exposure into their risk-based capital requirements may also have a third
tier of capital in the form of restricted short-term subordinated debt. "Tier
1", or core capital, includes common equity, noncumulative perpetual preferred
stock excluding auction rate issues, and minority interests in equity accounts
of consolidated subsidiaries, less goodwill and, with certain limited
exceptions, all other intangible assets. Bank holding companies, however, may
include cumulative preferred stock in their Tier 1 capital, up to a limit of 25%
of such Tier 1 capital. "Tier 2", or supplementary capital, includes, among
other things, cumulative and limited-life preferred stock, hybrid capital
instruments, mandatory convertible securities, qualifying subordinated debt, and
the allowance for loan and lease losses, subject to certain limitations. "Total
capital" is the sum of Tier 1 and Tier 2 capital.

The Federal Reserve Board and the other federal banking regulators
require that all intangible assets, with certain limited exceptions, be deducted
from Tier 1 capital. Under the Federal Reserve Board's rules, the only types of
intangible assets that may be included in (i.e., not deducted from) a bank
holding company's capital are originated or


5



purchased mortgage servicing rights, non-mortgage servicing assets, and
purchased credit card relationships, provided that, in the aggregate, the total
amount of these items included in capital does not exceed 100% of Tier 1
capital.

Under the risk-based guidelines, financial institutions are required to
maintain a risk-based ratio, which is total capital to risk-weighted assets, of
8%, of which 4% must be Tier 1 capital. The appropriate regulatory authority may
set higher capital requirements when an institution's circumstances warrant.

Under the leverage guidelines, financial institutions are required to
maintain a leverage ratio, which is Tier 1 capital to adjusted total assets, as
specified in the guidelines, of at least 3%. The 3% minimum ratio is applicable
only to financial institutions that meet certain specified criteria, including
excellent asset quality, high liquidity, low interest rate exposure, and the
highest regulatory rating. Financial institutions not meeting these criteria are
required to maintain a minimum Tier 1 leverage ratio of 4%.

In early 2002, bank regulatory agencies established special minimum
capital requirements for equity investments in nonfinancial companies. The
requirements consist of a series of marginal capital charges that increase
within a range from 8% to 25% as a financial institution's overall exposure to
equity investments increases as a percentage of its Tier 1 capital. At December
31, 2001, capital charges relating to Huntington's equity investments in
nonfinancial companies were immaterial.

Failure to meet applicable capital guidelines could subject the
financial institution to a variety of enforcement remedies available to the
federal regulatory authorities including limitations on the ability to pay
dividends, the issuance by the regulatory authority of a capital directive to
increase capital, and the termination of deposit insurance by the FDIC, as well
as to the measures described below under "Prompt Corrective Action" as
applicable to undercapitalized institutions.

As of December 31, 2001, the Tier 1 risk-based capital ratio, total
risk-based capital ratio, and Tier 1 leverage ratio for Huntington were 7.24%,
10.29%, and 7.41%, respectively. As of December 31, 2001, Huntington's bank
subsidiary also had capital in excess of the minimum requirements.

The risk-based capital standards of the Federal Reserve Board, the OCC,
and the FDIC specify that evaluations by the banking agencies of a bank's
capital adequacy will include an assessment of the exposure to declines in the
economic value of the bank's capital due to changes in interest rates. These
banking agencies issued a joint policy statement on interest rate risk
describing prudent methods for monitoring such risk that rely principally on
internal measures of exposure and active oversight of risk management activities
by senior management.

PROMPT CORRECTIVE ACTION

The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) requires federal banking regulatory authorities to take "prompt
corrective action" with respect to depository institutions that do not meet
minimum capital requirements. For these purposes, FDICIA establishes five
capital tiers: well-capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.

An institution is deemed to be "well-capitalized" if it has a total
risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of
6% or greater, and a Tier 1 leverage ratio of 5% or greater and is not subject
to a regulatory order, agreement, or directive to meet and maintain a specific
capital level for any capital measure. An institution is deemed to be
"adequately capitalized" if it has a total risk-based capital ratio of 8% or
greater, a Tier 1 risk-based capital ratio of 4% or greater, and, generally, a
Tier 1 leverage ratio of 4% or greater and the institution does not meet the
definition of a "well-capitalized" institution. An institution that does not
meet one or more of the "adequately capitalized" tests is deemed to be
"undercapitalized". If the institution has a total risk-based capital ratio that
is less than 6%, a Tier 1 risk-based capital ratio that is less than 3%, or a
Tier 1 leverage ratio that is less than 3%, it is deemed to be "significantly
undercapitalized". Finally, an institution is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%.

FDICIA generally prohibits a depository institution from making any
capital distribution, including payment of a cash dividend, or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized institutions are subject to
growth limitations and are required to submit a capital restoration plan. If any
depository institution subsidiary of a holding company is required to submit a
capital restoration plan, the holding company would be required to provide a
limited guarantee regarding compliance with the plan as a condition of approval
of such plan by the appropriate federal banking agency. If an undercapitalized
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized. Significantly undercapitalized institutions may
be subject to a number of requirements and restrictions, including orders to
sell sufficient voting stock


6



to become adequately capitalized, requirements to reduce total assets, and
cessation of receipt of deposits from correspondent banks. Critically
undercapitalized institutions may not, beginning 60 days after becoming
critically undercapitalized, make any payment of principal or interest on their
subordinated debt. In addition, critically undercapitalized institutions are
subject to appointment of a receiver or conservator within 90 days of becoming
critically undercapitalized.

Under FDICIA, a depository institution that is not well-capitalized is
generally prohibited from accepting brokered deposits and offering interest
rates on deposits higher than the prevailing rate in its market. Huntington
expects that the FDIC's brokered deposit rule will not adversely affect the
ability of its depository institution subsidiary to accept brokered deposits.
Under the regulatory definition of brokered deposits, Huntington's bank
subsidiary had $137.9 million of brokered deposits at December 31, 2001.

GRAMM-LEACH-BLILEY ACT OF 1999

Under the GLB Act enacted in 1999, banks are no longer prohibited by
the Glass-Steagall Act from associating with, or having management interlocks
with, a business organization engaged principally in securities activities. By
qualifying as a new entity known as a "financial holding company", a bank
holding company may acquire new powers not otherwise available to it. In order
to qualify, a bank holding company's depository subsidiaries must all be both
well-capitalized and well managed, and must be meeting their Community
Reinvestment Act obligations. The bank holding company must also declare its
intention to become a financial holding company to the Federal Reserve Board and
certify that its depository subsidiaries meet the capitalization and management
requirements. The repeal of the Glass-Steagall Act and the availability of new
powers both became effective on March 11, 2000, and Huntington became a
financial holding company on March 13, 2000.

Financial holding company powers relate to "financial activities" that
are determined by the Federal Reserve Board, in coordination with the Secretary
of the Treasury, to be financial in nature, incidental to an activity that is
financial in nature, or complementary to a financial activity, provided that the
complementary activity does not pose a safety and soundness risk. The statute
itself defines certain activities as financial in nature, including but not
limited to underwriting insurance or annuities; providing financial or
investment advice; underwriting, dealing in, or making markets in securities;
merchant banking, subject to significant limitations; insurance company
portfolio investing, subject to significant limitations; and any activities
previously found by the Federal Reserve Board to be closely related to banking.

National and state banks are permitted under the GLB Act, subject to
capital, management, size, debt rating, and Community Reinvestment Act
qualification factors, to have "financial subsidiaries" that are permitted to
engage in financial activities not otherwise permissible. However, unlike
financial holding companies, financial subsidiaries may not engage in insurance
or annuity underwriting; developing or investing in real estate; merchant
banking, for at least five years, or insurance company portfolio investing.
Other provisions of the GLB Act establish a system of functional regulation for
financial holding companies and banks involving the Securities and Exchange
Commission, the Commodity Futures Trading Commission, and state securities and
insurance regulators; deal with bank insurance sales and title insurance
activities in relation to state insurance regulation; prescribe consumer
protection standards for insurance sales; and establish minimum federal
standards of privacy to protect the confidentiality of the personal financial
information of consumers and regulate its use by financial institutions. Federal
bank regulatory agencies issued a variety of proposed, interim, and final rules
during the year 2001 for the implementation of the GLB Act.

RECENT REGULATORY DEVELOPMENTS

By the end of 2001, banking regulators had published for comment or had
under advanced consideration new regulations concerning money laundering in the
wake of the terrorist events of September 11, 2001, including possible authority
for financial holding companies to engage in real estate brokerage and property
management services; less burdensome capital requirements than had previously
been proposed for merchant banking investments entered into by financial holding
companies; and more stringent affiliate transaction restrictions that would
treat bank subsidiaries engaging in bank impermissible activities as affiliates
for purposes of the restrictions.

The federal budget for 2003, published in early 2002, indicates a
probable need for an increase in bank deposit insurance premiums in a form that
would affect the bank subsidiary, and draft legislation was introduced in the
Congress that proposed changes in both deposit insurance coverage and in
premiums charged to banks for such insurance was under initial Congressional
committee consideration. In March 2002, the FDIC announced that, on the basis of
current information, an increase in deposit insurance premium was likely in the
second half of 2002. It is not possible at present to assess the positive or
negative impact on Huntington of any of the foregoing proposals if adopted.


7



BUSINESS RISKS

Like all other financial companies, Huntington's business and results
of operations are subject to a number of risks, many of which are outside of
Huntington's control. In addition to the other information in this report,
readers should carefully consider that the following important factors, among
others, could materially impact Huntington's business and future results of
operations.

CHANGES IN INTEREST RATES COULD NEGATIVELY IMPACT HUNTINGTON'S FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

Huntington's results of operations depend substantially on its net
interest income, which results from the difference between interest earned on
interest-earning assets, such as investments, loans, and leases, and interest
paid on interest-bearing liabilities, such as deposits and borrowings. Interest
rates are highly sensitive to many factors, including governmental monetary
policies and domestic and international economic and political conditions.
Conditions such as inflation, recession, unemployment, money supply, and other
factors beyond management's control may also affect interest rates. If
Huntington's interest-earning assets mature or reprice more quickly than
interest-bearing liabilities in a given period, a decrease in market interest
rates could adversely affect net interest income. Likewise, if interest-bearing
liabilities mature or reprice more quickly than interest-earning assets in a
given period, an increase in market interest rates could adversely affect net
interest income.

At December 31, 2001, 48.6% of Huntington's earning assets, as measured
by the aggregate outstanding principal amount of loans, amortized cost of
securities available for sale, and the carrying value of other earning assets,
bore interest at adjustable rates and are expected to reprice within one year.
The remainder bore interest at fixed rates. Fixed rate loans increase
Huntington's exposure to interest rate risk in a rising rate environment because
interest-bearing liabilities would be subject to repricing before assets become
subject to repricing. Adjustable-rate loans decrease the risks to a lender
associated with changes in interest rates but involve other risks. As interest
rates rise, the payment by the borrower rises to the extent permitted by the
terms of the loan, and the increased payment increases the potential for
default. At the same time, for secured loans, the marketability of the
underlying collateral may be adversely affected by higher interest rates. In a
declining interest rate environment, there may be an increase in prepayments on
loans as the borrowers refinance their loans at lower interest rates. Under
these circumstances, Huntington's results of operations could be negatively
impacted.

The forward yield curve at December 31, 2001, implied a 150 basis point
increase in short-term interest rates by the end of 2002. The results of
Huntington's recent sensitivity analysis indicated that net interest income
would be 0.6% lower during the next twelve months than if interest rates were
100 basis points higher at the end of that period than implied by forward rates
at December 31, 2001, or 250 basis points from rates at this same date. Net
interest income was estimated to be 1.3% lower if rates were 200 basis points
higher than the yield curve, or 350 basis points overall. Conversely, if rates
were 100 and 200 basis points lower than the yield curve, net interest income
would be 0.3% and 0.9% higher, respectively. At the end of 2000, net interest
income was estimated to be 2.5% higher during the subsequent twelve months if
interest rates were 200 basis points lower than the level implied by forward
rates in twelve months. The decline in sensitivity over the past year was
primarily due to the previously mentioned sales of low margin fixed rate
investment securities. These sales were part of management's effort to
restructure the balance sheet and reduce sensitivity to interest rate changes in
order to stabilize Huntington's revenue base.

Changes in interest rates also can affect the value of loans and other
interest-earning assets, including retained interests in securitizations,
mortgage and non-mortgage servicing rights, and Huntington's ability to realize
gains on the sale or resolution of assets. A portion of Huntington's earnings
results from transactional income, such as accelerated interest income resulting
from loan prepayments, gains on sales of loans and leases, and gains on sales of
real estate. This type of income can vary significantly from quarter-to-quarter
and year-to-year based on a number of different factors, including the interest
rate environment. An increase in interest rates that adversely affects the
ability of borrowers to pay the principal or interest on loans may lead to an
increase in non-performing assets and a reduction of discount accreted into
income, which could have a material adverse effect on Huntington's results of
operations.

Although fluctuations in market interest rates are neither completely
predictable nor controllable, Huntington's Asset and Liability Management
Committee regularly monitors Huntington's interest rate sensitivity position and
oversees its financial risk management by establishing policies and operating
limits.


8



HUNTINGTON'S LOANS AND DEPOSITS ARE FOCUSED IN FIVE STATES AND ADVERSE ECONOMIC
CONDITIONS IN THOSE STATES, IN PARTICULAR, COULD NEGATIVELY IMPACT RESULTS FROM
OPERATIONS AND FINANCIAL CONDITION.

Excluding Florida loans and deposits, which were sold to SunTrust
Banks, Inc. on February 15, 2002, most of Huntington's loans and deposits at
December 31, 2001, were located in Ohio, Michigan, Indiana, West Virginia, and
Kentucky. Because of the focus of loans and deposits in these states, in the
event of adverse economic conditions in these states, Huntington could
experience more difficulty in attracting deposit liabilities and experience
higher rates of loss and delinquency on its loans than if the loans were more
geographically diversified. Adverse economic conditions and other factors can
affect real estate and other collateral values; interest rate levels, and the
availability of credit to refinance loans at or prior to maturity. Additionally,
loans in these five states may be subject to a greater risk of default than
other comparable loans in the event of adverse economic, political, or business
developments or natural hazards that may affect these states and the continued
financial stability of a borrower and the borrower's ability to make loan
principal and interest payments, which may be adversely affected by job loss,
recession, divorce, illness, or personal bankruptcy.

HUNTINGTON HAS SIGNIFICANT COMPETITION IN BOTH ATTRACTING AND RETAINING DEPOSITS
AND IN ORIGINATING LOANS.

Competition in the form of price and service from other banks and
financial companies such as savings and loans, credit unions, finance companies,
and brokerage firms is intense in most of the markets Huntington serves. Mergers
between and the expansion of financial institutions both within and outside Ohio
have provided significant competitive pressure in its major markets. Since 1997,
when federal interstate banking legislation became effective that made it
permissible for bank holding companies in any state to acquire banks in any
other state, and for banks to establish interstate branches subject to certain
limitations by individual states, actual or potential competition in each of
Huntington's markets has intensified. Internet banking, offered both by
established traditional institutions and by start-up Internet-only banks,
constitutes another significant form of competitive pressure.

Financial services reform legislation enacted in 1999 eliminated the
long-standing Glass-Steagall Act restrictions on securities activities of bank
holding companies and banks. The new legislation, among other things, permits
securities and insurance firms to engage in banking activities under specified
conditions. Huntington expects to see competition intensify from this relatively
new source of competition.

HUNTINGTON COULD EXPERIENCE LOSSES ON ITS RESIDUAL VALUES RELATED TO ITS
AUTOMOBILE LEASE PORTFOLIO.

Huntington has a $3 billion automobile lease portfolio, which
inherently has residual value risk. Residual value risk arises when a used car
market price at the end of the lease is below Huntington's recorded residual
value. This may occur as a result of a decline in used car prices, subsequent
changes in residual values published by Automotive Lease Guide (ALG), the
industry source Huntington utilizes to track used car values, or a combination
of both. Huntington's policy is to not enhance residual values.

In late 2000, Huntington purchased residual value insurance coverage.
This insurance covers the difference between the recorded residual value and the
fair value of the automobile at the end of the lease term, as evidenced by Black
Book valuations. The insurance provides first dollar loss coverage on the
portfolio at October 1, 2000 and has a cap on insured losses of $120 million.
Insured losses on new lease originations from October 2000 to March 31, 2002
have a cap of $50 million. The insurance coverage is subject to annual renewal.

Insurance does not cover residual losses below Black Book value. That
situation occurs usually when the automobile has excess wear and tear and/or
excess mileage that is not reimbursable by the lessor. Huntington has a reserve
of $34.9 million, which is available to cover this risk. There is no guarantee,
however, that the combined purchased insurance and this reserve are sufficient
to cover all potential residual losses associated with Huntington's automobile
lease portfolio.

NEW, OR CHANGES IN EXISTING, TAX, ACCOUNTING, AND REGULATORY LAWS, REGULATIONS,
RULES, AND STANDARDS COULD SIGNIFICANTLY IMPACT STRATEGIC INITIATIVES, RESULTS
OF OPERATIONS, AND FINANCIAL CONDITION.

The financial services industry is regulated extensively. Federal and
state regulation is designed primarily to protect the deposit insurance funds
and consumers, and not to benefit a financial company's shareholders. These
regulations may sometimes impose significant limitations on operations. These
limitations are described in this report under the heading "Regulatory Matters."
These regulations, along with the currently existing tax and accounting laws,
regulations, rules, and standards, control the methods by which financial
institutions conduct business; implement strategic initiatives, as well as past,
present, and contemplated tax planning; and govern financial disclosures. These
laws, regulations, rules, and standards are constantly evolving and may change
significantly over time. Current events that may not have a direct impact on
Huntington, such as the Enron Corporation bankruptcy and the September 11, 2001


9



terrorist attacks, may result in legislators, regulators, and authoritative
bodies, such as the Financial Accounting Standards Board, to respond by adopting
substantive revisions to the laws, regulations, rules, and standards. The
nature, extent, and timing of the adoption of significant new laws, changes in
existing laws, or repeal of existing laws may have a material impact on
Huntington's business, results of operations, and financial condition; however,
it is impossible to predict at this time the extent to which any such adoption,
change, or repeal would impact Huntington.

THE EXTENDED DISRUPTION OF VITAL INFRASTRUCTURE COULD NEGATIVELY IMPACT
HUNTINGTON'S BUSINESS, RESULTS OF OPERATIONS, AND FINANCIAL CONDITION.

Huntington's operations depend upon, among other things, its
infrastructure, including its equipment and facilities. Extended disruption of
its vital infrastructure by fire, power loss, natural disaster,
telecommunications failure, computer hacking and viruses, terrorist activity or
the domestic and foreign response to such activity, or other events outside of
Huntington's control could have a material adverse impact on the financial
services industry as a whole and on Huntington's business, results of
operations, and financial condition in particular.

HUNTINGTON'S FINANCIAL PERFORMANCE AND PROFITABILITY WILL DEPEND ON ITS ABILITY
TO EXECUTE ITS CORPORATE BUSINESS STRATEGIES, INCLUDING THE RECENTLY ANNOUNCED
COMPREHENSIVE RESTRUCTURING AND STRATEGIC REFOCUSING INITIATIVES.

In July 2001, Huntington announced a comprehensive restructuring and
strategic refocusing plan. This plan included the sale of Huntington's Florida
operations, the consolidation of numerous branch offices, and the taking of
credit related and other actions to strengthen Huntington's balance sheet to
attain more positive revenue and earnings for shareholders and to improve
capital efficiency. Although Huntington has made progress toward completing many
of the elements of this plan, it cannot guarantee the success of the entire plan
or other past, present, or future business plans or strategies. These plans and
strategies may in the future involve acquisitions or other banks or non-banking
businesses. The extent to which any such future businesses acquired by
Huntington are integrated may impact its results of operations.

THE OCC MAY IMPOSE DIVIDEND PAYMENT AND OTHER RESTRICTIONS ON THE HUNTINGTON
NATIONAL BANK, HUNTINGTON'S BANK SUBSIDIARY, WHICH WOULD IMPACT HUNTINGTON'S
ABILITY TO PAY DIVIDENDS TO ITS SHAREHOLDERS OR REPURCHASE ITS STOCK.

The OCC has the right to examine The Huntington National Bank (the
Bank) and its activities. Under certain circumstances, including any
determination that the Bank's activities constitute an unsafe and unsound
banking practice, the OCC has the authority to restrict the Bank's ability to
transfer assets, to make distributions to shareholders, or to redeem preferred
securities.

Under applicable statutes and regulations, all dividends by a national
bank must be paid out of current or retained net profits, after deducting
reserves for losses and bad debts. In addition, a national bank is prohibited
from declaring a cash dividend on its common shares out of net profits until the
surplus fund equals the amount of capital stock or, if the surplus fund does not
equal the amount of capital stock, until certain amounts from net profits are
transferred to the surplus fund. Moreover, the prior approval of the OCC is
required for the payment of a dividend if the total of all dividends declared by
a national bank in any calendar year would exceed the total of its net profits
for the year combined with its net profits for the two preceding years, less any
required transfers to surplus or a fund for the retirement of any preferred
securities.

Payment of dividends could also be subject to regulatory limitations if
the Bank became "undercapitalized" for purposes of the OCC prompt corrective
action regulations. "Undercapitalized" is currently defined as having a total
risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of
less than 4.0%, or a core capital, or leverage, ratio of less than 4.0%. The
Bank's inability to pay dividends to Huntington would negatively impact
Huntington's ability to pay dividends to its shareholders or to repurchase its
stock. In January 2002, the Bank received approval from the OCC to transfer
sufficient capital from undivided profits to surplus and from surplus to
Huntington to facilitate the repurchase of Huntington common stock.

At December 31, 2001, the Bank was in compliance with all regulatory
capital requirements. As of that date, total risk-based capital was 10.29%, Tier
1 risk-based capital was 6.34%, and Tier 1 leverage capital was 6.58%.
Huntington intends to maintain the Bank's capital ratios in excess of the
"well-capitalized" levels under the OCC's regulations. Huntington cannot
guarantee, however, that it will be able to keep the capital ratios for the Bank
in excess of "well-capitalized" levels.


10



THE FEDERAL RESERVE BOARD (FRB) MAY REQUIRE HUNTINGTON TO COMMIT CAPITAL
RESOURCES TO SUPPORT ITS BANK SUBSIDIARY, THE HUNTINGTON NATIONAL BANK.


The Federal Reserve Board has a policy to the effect that a bank
holding company is expected to act as a source of financial and managerial
strength to its subsidiary bank and to commit resources to support such
subsidiary bank. Under the source of strength doctrine, the Federal Reserve
Board may require a bank holding company to make capital injections into a
troubled subsidiary bank, and may charge the bank holding company with engaging
in unsafe and unsound practices for failure to commit resources to such a
subsidiary bank. This capital injection may be required at times when the
holding company may not have the resources to provide it, and therefore may be
required to borrow the funds. Any loans by a holding company to its subsidiary
bank are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. Moreover, in the event of a bank holding
company's bankruptcy, any commitment by the holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment. Thus, any
borrowing that must be done by the holding company in order to make the required
capital injection becomes more difficult and expensive and will adversely impact
the holding company's results of operations.

Management does not foresee the need to make capital injections to its
subsidiary bank under the source of strength doctrine in the foreseeable future.

IF HUNTINGTON IS UNABLE TO BORROW FUNDS THROUGH ACCESS TO CAPITAL MARKETS, IT
MAY NOT BE ABLE TO MEET THE CASH FLOW REQUIREMENTS OF ITS DEPOSITORS AND
BORROWERS, OR MEET THE OPERATING CASH NEEDS OF HUNTINGTON TO FUND CORPORATE
EXPANSION AND OTHER ACTIVITIES.

Effectively managing liquidity involves ensuring the cash flow
requirements of depositors and borrowers, as well as meeting the operating cash
needs of Huntington to fund corporate expansion and other activities. Funds are
available from a number of sources, including core deposits, and the ability to
acquire large deposits and issue notes and common and preferred securities in
the capital markets. Huntington's European bank note and bank subsidiary
domestic programs, along with a similar note program at the parent company, are
significant sources of wholesale funding. The proceeds from the parent's note
program are used from time to time to fund certain non-banking activities,
finance acquisitions, repurchase Huntington's common stock, and are used for
other general corporate purposes. Huntington has also issued capital securities
through two of its non-bank subsidiaries and obtains funding from the issuance
of commercial paper through Huntington Bancshares Financial Corporation, another
non-bank subsidiary. Significant liquidity is also available from Huntington's
securities available for sale and loan portfolios through the securitization and
sale of loans.

If Huntington were unable to access any of these funding sources when
needed, it might be unable to meet the needs of its customers, which could
adversely impact Huntington's financial condition, its results of operations,
and its level of regulatory-qualifying capital.

IF HUNTINGTON'S COMMON STOCK PRICE RISES SUBSTANTIALLY OR THE AVAILABILITY OF
SHARES IS LIMITED IN THE MARKETPLACE, MANAGEMENT MAY NOT BE ABLE TO REPURCHASE
COMMON STOCK AS INTENDED UNDER ITS STRATEGIC REFOCUSING PLAN.

Huntington's comprehensive restructuring and strategic refocusing plan
announced in July 2001, included several actions to strengthen its capital
position. On February 18, 2002, Huntington's Board of Director's terminated the
existing stock repurchase program, which had approximately 15.3 million shares
remaining, and authorized a new stock repurchase program. The new program
provides for the repurchase of up to 22 million shares in open market and
privately negotiated transactions. Huntington would be able to repurchase
approximately 8.8% of its outstanding common stock, if it is able to repurchase
the entire authorization, resulting in a minimum equity to asset ratio of 6.50%
and enhanced performance ratios. If the stock price rises substantially or if
the number of willing sellers of Huntington's common stock is limited,
management may be precluded from repurchasing the desired quantity of shares
which would negatively impact its ability to attain its targeted earnings per
share and return on equity ratios.

IF HUNTINGTON'S REAL ESTATE INVESTMENT TRUST (REIT) AFFILIATE FAILS TO QUALIFY
AS A REIT, HUNTINGTON WILL BE SUBJECT TO A HIGHER CONSOLIDATED EFFECTIVE TAX
RATE.

Huntington Preferred Capital, Inc. (HPCI), which is a second tier and
consolidated subsidiary of Huntington, was established to acquire, hold, and
manage mortgage assets and other authorized investments to generate net income
for distribution to its shareholders. It also operates in a manner so as to
qualify as a real estate investment trust (REIT) for federal income tax
purposes. Qualification as a REIT involves application of specific provisions of
the Internal Revenue Code. Two specific provisions are an income test and an
asset test. At least 75% of HPCI's gross income,


11



excluding gross income from prohibited transactions, for each taxable year must
be derived directly or indirectly from investments relating to real property or
mortgages on real property. Additionally, at least 75% of HPCI's total assets
must be represented by real estate assets. At December 31, 2001, HPCI had
qualifying income of 85.2% and qualifying assets of 84.5%.

If this REIT affiliate fails to meet any of the required provisions for
REITs, it will no longer qualify as a REIT and the resulting tax consequences
would increase Huntington's effective tax rate.

HUNTINGTON COULD BE HELD RESPONSIBLE FOR ENVIRONMENTAL LIABILITIES OF PROPERTIES
ACQUIRED THROUGH FORECLOSURE OF LOANS SECURED BY REAL ESTATE.

In the event that Huntington is forced to foreclose on a defaulted
commercial mortgage and/or residential mortgage loan to recover its investment
in the mortgage loan, Huntington may be subject to environmental liabilities in
connection with the underlying real property, which could exceed the value of
the real property. Although Huntington exercises due diligence to discover
potential environmental liabilities prior to the acquisition of any property
through foreclosure, hazardous substances or wastes, contaminants, pollutants,
or their sources may be discovered on properties during Huntington's ownership
or after a sale to a third party. There can be no assurance that Huntington
would not incur full recourse liability for the entire cost of any removal and
clean-up on an acquired property, that the cost of removal and clean-up would
not exceed the value of the property, or that Huntington could recover any of
the costs from any third party.

HUNTINGTON'S FINANCIAL STATEMENTS CONFORM WITH ACCOUNTING PRINCIPLES GENERALLY
ACCEPTED IN THE UNITED STATES, WHICH REQUIRE MANAGEMENT TO MAKE ESTIMATES AND
ASSUMPTIONS THAT AFFECT AMOUNTS REPORTED IN THE FINANCIAL STATEMENTS. ACTUAL
RESULTS COULD DIFFER FROM THOSE ESTIMATES.

Huntington's financial statements include estimates related to accruals
of income and expenses and determination of fair values or carry values of
certain, but not all, assets and liabilities. These estimates are based on
information available to management at the time the estimates are made. Factors
involved in these estimates could change in the future leading to a change of
those estimates, which could be material to Huntington's results of operations
or financial condition.

IF HUNTINGTON'S CREDIT RATING WERE TO BE DOWNGRADED, HUNTINGTON'S ABILITY TO
ACCESS FUNDING SOURCES MAY BE NEGATIVELY IMPACTED. ANY SUCH DOWNGRADE COULD
TRIGGER ACTIONS THAT COULD ADVERSELY IMPACT HUNTINGTON'S LIQUIDITY.

Certain funding sources, primarily wholesale, are sensitive to credit
ratings. Huntington's ability to issue bank notes or other debt, attract large
corporate deposits or public funds, or access federal funds and euro deposits
could be negatively impacted in the event Huntington's credit rating was
downgraded. Like other financial organizations, Huntington uses various types of
derivative financial instruments, primarily interest rate swaps, to manage its
exposure to changes in interest rates. In the event of a ratings downgrade below
a specified level, Huntington may be required to post additional collateral to
cover unsecured counterparty credit exposure in those agreements governing
derivative transactions.

In addition, a credit downgrade could prohibit Huntington from selling
additional loans to its securitization trusts. Huntington also provides letter
of credit support for marketable debt. These lines could be drawn upon in the
event of a credit downgrade. In any of these events, Huntington would need to
find alternative sources of funding.


12



GUIDE 3 INFORMATION

Information required by Industry Guide 3 relating to statistical
disclosure by bank holding companies is set forth in Items 7 and 8.

ITEM 2: PROPERTIES

The headquarters of Huntington and its lead subsidiary, The Huntington
National Bank, are located in the Huntington Center, a thirty-seven story office
building located in Columbus, Ohio. Of the building's total office space
available, Huntington leases approximately 39 percent. The lease term expires in
2015, with nine five-year renewal options for up to 45 years but with no
purchase option. The Huntington National Bank has an equity interest in the
entity that owns the building. Huntington's other major properties consist of a
thirteen-story and a twelve-story office building, both of which are located
adjacent to the Huntington Center; a twenty-one story office building, known as
the Huntington Building, located in Cleveland, Ohio; an eighteen-story office
building in Charleston, West Virginia; a three-story office building located in
Holland, Michigan; an office building in Lakeland, Florida; an eleven-story
office building in Sarasota, Florida; a 470,000 square foot Business Service
Center in Columbus, Ohio, which serves as Huntington's primary operations and
data center; The Huntington Mortgage Company's building, located in the greater
Columbus area; an office complex located in Troy, Michigan; and two data
processing and operations centers located in Ohio. Of these properties,
Huntington owns the thirteen-story and twelve-story office buildings, and the
Business Service Center. All of the other major properties are held under
long-term leases.

In 1998, Huntington entered into a sale/leaseback agreement that
included the sale of 59 properties. The transaction included a mix of branch
banking offices, regional offices, and operational facilities, including certain
properties described above, which Huntington will continue to operate under a
long-term lease.

The buildings in Lakeland and Sarasota, Florida, were sold in February,
2002 as part of the sale of Huntington's Florida operations.

ITEM 3: LEGAL PROCEEDINGS

Information required by this item is set forth in Item 8 in Note 17 of
Notes to Consolidated Financial Statements on page 64.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The common stock of Huntington Bancshares Incorporated is traded on the
NASDAQ Stock Market under the symbol "HBAN". The stock is listed as "HuntgBcshr"
or "HuntBanc" in most newspapers. As of January 31, 2002, Huntington had 30,744
shareholders of record.

Information regarding the high and low sale prices of Huntington Common
Stock and cash dividends declared on such shares, as required by this item, is
set forth in a table entitled "Market Prices, Key Ratios, and Statistics" on
page 39 in Item 7. Information regarding restrictions on dividends, as required
by this item, is set forth in Item 1 "Business-Regulatory Matters-Dividend
Restrictions" above and in Item 8 in Notes 10 and 22 of Notes to Consolidated
Financial Statements on pages 55 and 70, respectively.


13



ITEM 6: SELECTED FINANCIAL DATA




YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars,
except per share amounts) 2001 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------

SUMMARY OF OPERATIONS
Total interest income $ 1,939,519 $ 2,108,505 $ 2,026,002 $ 1,999,364 $ 1,981,473 $ 1,775,734
Total interest expense 943,337 1,166,073 984,240 978,271 954,243 880,648
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 996,182 942,432 1,041,762 1,021,093 1,027,230 895,086
- ------------------------------------------------------------------------------------------------------------------------------------
Provision for loan losses 308,793 90,479 88,447 105,242 107,797 76,371
Securities gains 723 37,101 12,972 29,793 7,978 17,620
Gains on sale of credit card portfolios --- --- 108,530 9,530 --- ---
Non-interest income 508,757 456,458 452,073 398,877 334,861 296,443
Non-interest expense 1,023,587 885,617 912,119 913,929 803,108 675,510
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 173,282 459,895 614,771 440,122 459,164 457,268
Income taxes (5,239) 131,449 192,697 138,354 166,501 152,999
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 178,521 $ 328,446 $ 422,074 $ 301,768 $ 292,663 $ 304,269
- ------------------------------------------------------------------------------------------------------------------------------------
Operating net income (1) $ 293,522 $ 360,946 $ 414,444 $ 362,068 $ 338,897 $ 304,269
- ------------------------------------------------------------------------------------------------------------------------------------

PER COMMON SHARE (2)
Net income
Basic $0.71 $1.32 $1.66 $1.18 $1.15 $1.19
Diluted $0.71 $1.32 $1.65 $1.17 $1.14 $1.18
Diluted--Operating (1) $1.17 $1.45 $1.62 $1.40 $1.32 $1.18
Cash dividends declared $0.72 $0.76 $0.68 $0.62 $0.56 $0.51
Book value at year-end $9.62 $9.43 $8.67 $8.43 $7.94 $7.11

BALANCE SHEET HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets at year-end $ 28,500,159 $ 28,599,377 $ 29,036,953 $ 28,296,336 $ 26,730,540 $ 24,371,946
Total long-term debt at year-end 944,330 870,976 697,677 707,359 498,889 550,531
Average long-term debt 879,642 823,555 702,974 620,688 526,379 515,664
Average shareholders' equity 2,381,820 2,279,230 2,146,735 2,064,241 1,893,788 1,776,151
Average total assets 28,137,172 28,720,508 28,739,450 26,891,558 25,150,659 23,374,490

KEY RATIOS AND STATISTICS
- ------------------------------------------------------------------------------------------------------------------------------------
MARGIN ANALYSIS--AS A %
OF AVERAGE EARNING ASSETS (3)
Interest Income 7.79 % 8.31 % 7.97 % 8.33 % 8.52 % 8.26 %
Interest Expense 3.77 4.58 3.86 4.05 4.08 4.07
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN 4.02 % 3.73 % 4.11 % 4.28 % 4.44 % 4.19 %
- ------------------------------------------------------------------------------------------------------------------------------------

RETURN ON
Average total assets 0.63 % 1.14 % 1.47 % 1.12 % 1.16 % 1.30 %
Average total assets--Operating (1) 1.04 1.26 1.44 1.35 1.35 1.30
Average shareholders' equity 7.50 14.41 19.66 14.62 15.45 17.13
Average shareholders' equity--
Operating (1) 12.32 15.84 19.31 17.54 17.90 17.13
Dividend payout ratio 101.41 57.55 41.53 53.15 49.67 42.22
Average shareholders' equity to
average total assets 8.47 7.94 7.47 7.68 7.53 7.60

Tier I risk-based capital ratio 7.24 7.19 7.52 7.10 8.83 8.11
Total risk-based capital ratio 10.29 10.46 10.72 10.73 11.68 11.29
Tier I leverage ratio 7.41 % 6.93 % 6.72 % 6.37 % 7.77 % 6.80 %

Full-time equivalent employees 9,743 9,693 9,516 10,159 9,485 9,467


(1) Excludes restructuring and special charges and the 1999 gain from the sale
of Huntington's credit card portfolio, net of related taxes.
(2) Adjusted for stock splits and stock dividends, as applicable.
(3) Presented on a fully tax equivalent basis assuming a 35% tax rate.



14




ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INTRODUCTION

Huntington Bancshares Incorporated (Huntington) is a multi-state financial
holding company headquartered in Columbus, Ohio. Its subsidiaries are engaged in
full-service commercial and consumer banking, mortgage banking, lease financing,
trust services, discount brokerage services, underwriting credit life and
disability insurance, issuing commercial paper guaranteed by Huntington, and
selling other insurance and financial products and services. Huntington's
subsidiaries operate domestically in offices located in Ohio, Michigan, Florida,
West Virginia, Indiana, and Kentucky. Huntington has a foreign office in each of
the Cayman Islands and Hong Kong.

FORWARD-LOOKING STATEMENTS
This report, including Management's Discussion and Analysis of Financial
Condition and Results of Operations, contains forward-looking statements about
Huntington. These include descriptions of products or services, plans, or
objectives of its management for future operations, and forecasts of its
revenues, earnings, or other measures of economic performance. Forward-looking
statements can be identified by the fact that they do not relate strictly to
historical or current facts.

By their nature, forward-looking statements are subject to numerous
assumptions, risks, and uncertainties. A number of factors, including but not
limited to, those set forth under the heading "Business Risks" included in Item
1 of this report and other factors described from time to time in Huntington's
other filings with the Securities and Exchange Commission, could cause actual
conditions, events, or results to differ significantly from those described in
the forward-looking statements.

The management of Huntington encourages readers of this report to
understand forward-looking statements to be strategic objectives rather than
absolute targets of future performance. Forward-looking statements speak only as
of the date they are made. Huntington does not update forward-looking statements
to reflect circumstances or events that occur after the date the forward-looking
statements are made or to reflect the occurrence of unanticipated events.

The following discussion and analysis, the purpose of which is to provide
investors and others with information that Huntington's management believes to
be necessary for an understanding of its financial condition, changes in
financial condition, and results of operations, should be read in conjunction
with the financial statements, notes, and other information contained in this
document.

SIGNIFICANT ACCOUNTING POLICIES
Note 1 to Huntington's consolidated financial statements lists significant
accounting policies used in the development and presentation of its financial
statements. This discussion and analysis, the significant accounting policies,
and other financial statement disclosures identify and address key variables and
other qualitative and quantitative factors that are necessary for an
understanding and evaluation of Huntington and its results of operations.

STRATEGIC REFOCUSING AND OTHER RESTRUCTURING
In July 2001, Huntington announced a strategic refocusing plan. This plan
included the sale of Huntington's Florida operations, the consolidation of
numerous non-Florida branch offices, credit related and other actions to
strengthen Huntington's balance sheet. These actions were designed to attain
more positive revenue and earnings for shareholders and to improve capital
efficiency. Huntington announced that it expected to record total restructuring
and special charges of approximately $215.0 million pre-tax ($140.0 million
after-tax) related to this refocusing plan. Through the end of 2001, these
pre-tax charges totaled $176.9 million ($115.0 million after-tax, or $0.46 per
share), and consisted of $71.7 million related to credit quality, $37.3 million
for asset impairment, $16.2 million for the exit or curtailment of certain
e-commerce activities, $13.3 million related to owned or leased facilities that
Huntington has or intends to vacate, and $38.4 million related to employee
severance or retention, non-recurring legal, accounting, consulting, reduction
of ATMs, and other operational costs. See note 11 to Huntington's consolidated
financial statements for more information.

In addition to the above, in the fourth quarter of 2001, Huntington
recorded a $50.0 million pre-tax charge to provision for loan losses to increase
its loan loss reserve in light of the higher charge-offs and non-performing
assets experienced in the second half of 2001. Huntington also issued $400.0
million in fixed and variable-rate preferred


15



securities of its Real Estate Investment Trust (REIT) subsidiary, of which $50.0
million was sold to the public and qualified for regulatory capital. This
issuance gave rise to a tax benefit of $32.5 million. The combined charges
related to the strategic refocusing plan and the items announced in the fourth
quarter amounted to $226.9 million on a pre-tax basis. Related income taxes were
$111.9 million, resulting in after-tax charges of $115.0 million.

By the end of the first quarter of 2002, Huntington expects to complete
its strategic refocusing plan. The final costs associated with the actions taken
could be 5% to 7% higher than the original pre-tax estimate of $215.0 million.
The increase relates primarily to higher Florida and other employee severance
and costs to exit certain e-commerce activities.

In 2000 and 1999, Huntington recorded special charges totaling $50.0
million ($32.5 million after-tax, or $0.13 per share) and $96.8 million ($62.9
million after-tax, or $0.25 per share), respectively. The entire charge in 2000
and $58.2 million of the 1999 special charges represent write-downs of residual
values related to Huntington's vehicle lease portfolio. The 1999 special charges
also included $38.6 million related to the company's "Huntington 2000+" program
as well as other one-time expenses, which included amounts paid for management
consulting and other professional services, as well as a special cash award to
employees for achievement of the program goals for 1999. "Huntington 2000+" was
a collaborative effort among all employees to evaluate processes and procedures
and the way Huntington conducts its business with a mission of maximizing
efficiency through all aspects of the organization.

OFF BALANCE SHEET ARRANGEMENTS, SPECIAL PURPOSE ENTITIES (SPES), DERIVATIVES,
AND RELATED PARTY TRANSACTIONS
Like other financial organizations, Huntington uses various commitments in
its ordinary course of business that, under accounting principles generally
accepted in the United States (GAAP), are not recorded in its financial
statements. Huntington makes various commitments to extend credit to customers
and to sell loans, and has obligations under operating-type noncancelable leases
for its facilities. More information related to these matters can be found in
note 17 to Huntington's consolidated financial statements.

Huntington utilized two securitization trusts, or SPEs, in 2000 as funding
sources. In the securitization transactions, loans that Huntington originated
were sold to these trusts in exchange for funding collateralized by these loans.
These trusts, under GAAP, are not consolidated in Huntington's financial
statements. As such, the loans originated by Huntington and the funding it
obtained are not included on the balance sheet. Please refer to note 5 to
Huntington's consolidated financial statements for more information regarding
loan securitizations.

Huntington uses a variety of derivatives, principally interest rate swaps,
in its asset and liability management activities to protect against the risk of
adverse interest rate movements on either cash flows or market value of certain
assets and liabilities. New accounting rules adopted by Huntington this year
require on-balance sheet recognition of the fair value of certain derivatives.
This, along with other information regarding derivatives, are discussed under
the "Interest Rate Risk and Liquidity Management" section of this report and
also in note 14 to Huntington's consolidated financial statements.

Various directors and executive officers of Huntington are customers of The
Huntington National Bank, Huntington's bank subsidiary, and other affiliates and
had transactions with these affiliates in the ordinary course of business.
Directors and executive officers of Huntington may also be affiliated with
entities that are customers of Huntington and its affiliates, which enter into
transactions with these affiliates in the ordinary course of business.
Transactions with directors, executive officers, and their affiliates have been
on substantially the same terms, including interest rates and collateral on
loans, as those prevailing at the time for comparable transactions with others
and did not involve more than the normal risk of collectibility or present other
unfavorable features. A summary of the indebtedness of management can be found
in note 4 to Huntington's consolidated financial statements and a discussion of
Huntington's transaction with The Huntington National Bank's Money Market Fund
can be found in the section entitled "Results of Operations". All other related
party transactions, including those reported in Huntington's Proxy Statement,
were considered immaterial to its financial condition and results of operations.


16



OVERVIEW

Huntington reported net income of $178.5 million, or $0.71 per common
share, in 2001, compared with $328.4 million, or $1.32 per common share, in
2000, and $422.1 million, or $1.65 per common share, in 1999. Return on average
common equity (ROE) and average assets (ROA) for 2001 were 7.50% and 0.63%,
respectively, versus 14.41% and 1.14%, respectively, in 2000, and 19.66% and
1.47%, respectively, in 1999.

"Operating earnings" for 2001 excluded the $176.9 million of pre-tax
restructuring and special charges related to the strategic refocusing plan
discussed above, the $50.0 million pre-tax charge to the provision for loan
losses, and the $32.5 million tax benefit related to the sale of REIT preferred
securities. Operating earnings for 2000 and 1999 excluded pre-tax restructuring
and special charges of $50.0 million and $96.8 million discussed above, and a
$108.5 million pre-tax gain ($70.6 million after-tax, or $0.42 per share) in
1999 on the sale of Huntington's credit card portfolio.

Operating earnings were $293.5 million, or $1.17 per common share, in 2001,
$360.9 million, or $1.45 per common share in 2000, and $414.4 million, or $1.62
per common share, in 1999. On this same basis, ROE totaled 12.32% for the recent
twelve months, compared with 15.84% and 19.31% in the two preceding years. ROA
was 1.04% in 2001, 1.26% in 2000, and 1.44% in 1999.

The following table reconciles Huntington's reported results with its
operating earnings for each of the most recent three years ended December 31 (in
thousands, except per share amounts):




- -----------------------------------------------------------------------------------------------------------------------------------
Twelve months ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
2001 2000
----------------------------------------------------- ---------------------------------------------------
Restructuring Restructuring
Reported and Special Operating Reported and Special Operating
Earnings Charges Earnings Earnings Charges Earnings
- ------------------------------------------------------------------------------ ---------------------------------------------------

Net interest income $ 996,182 $ --- $ 996,182 $ 942,432 $ --- $942,432
Provision for loan losses 308,793 121,718 187,075 90,479 --- 90,479
Non-interest income 509,480 (5,250) 514,730 493,559 --- 493,559
Non-interest expense 1,023,587 99,957 923,630 885,617 50,000 835,617
- ------------------------------------------------------------------------------ ---------------------------------------------------
Pre-tax income 173,282 (226,925) 400,207 459,895 (50,000) 509,895
Income taxes (5,239) (111,924) 106,685 131,449 (17,500) 148,949
- ------------------------------------------------------------------------------ ---------------------------------------------------
NET INCOME $ 178,521 $ (115,001) $ 293,522 $ 328,446 $ (32,500) $360,946
- ------------------------------------------------------------------------------ ---------------------------------------------------

NET INCOME PER COMMON
SHARE -- DILUTED $0.71 ($0.46) $1.17 $1.32 ($0.13) $1.45
- ------------------------------------------------------------------------------ ---------------------------------------------------



Twelve months ended December 31, 1999
- -----------------------------------------------------------------------------
Restructuring
and Special
Charges and
Reported Credit Card Operating
Earnings Sale Gain Earnings
- -----------------------------------------------------------------------------

Net interest income $1,041,762 $ --- $1,041,762
Provision for loan losses 88,447 --- 88,447
Non-interest income 573,575 108,530 465,045
Non-interest expense 912,119 96,791 815,328
- -----------------------------------------------------------------------------
Pre-tax income 614,771 11,739 603,032
Income taxes 192,697 4,109 188,588
- -----------------------------------------------------------------------------
NET INCOME $ 422,074 $ 7,630 $ 414,444
- -----------------------------------------------------------------------------

NET INCOME PER COMMON
SHARE -- DILUTED $1.65 $0.03 $1.62
- -----------------------------------------------------------------------------



17



Cash basis" earnings per share, which exclude the effect of amortization of
goodwill from operating earnings, were $1.29 per common share for 2001 compared
with $1.55 per common share for 2000 and $1.72 per common share for 1999. Cash
basis ROE and ROA, which are computed using cash basis operating earnings as a
percentage of average equity and average tangible assets, were 13.63% and 1.18%,
in 2001, 17.08% and 1.39%, in 2000, and 20.53% and 1.57%, in 1999, respectively.
Total assets were $28.5 billion at December 31, 2001, approximating asset levels
at the end of last year. During 2001, Huntington sold $107 million in
residential mortgages and $1.4 billion in available-for-sale investment
securities in continuation of its efforts to sell low-margin assets as part of
its balance sheet repositioning. Managed average total loans, which include
securitized loans (see note 5 to Huntington's consolidated financial statements
for further information regarding securitized loans), increased 7% over the
prior year, after adjusting for portfolio sales and the Empire Banc Corporation
purchase acquisition in 2000.

Average commercial loans showed modest growth of 2% during the recent year,
hindered by the weakening economy and continued slow-down in automobile floor
plan lending. Floor plan loans declined 20% versus last year due to reduced
dealer inventories and very aggressive financing offered by captive auto finance
companies. Excluding floor plan loans, commercial loans increased 4% for the
year. Commercial real estate loans increased 7% from a year ago, largely
reflecting the funding of previously existing commitments. Activity was
primarily within Huntington's footprint and with long-time customers.




- ----------------------------------------------------------------------------------------------------------------------------------
LOAN PORTFOLIO COMPOSITION
- ----------------------------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 2001 2000 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
(in millions of dollars) AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT %
- ----------------------------------------------------------------------------------------------------------------------------------

Commercial $ 6,439 29.9 $ 6,634 32.2 $ 6,300 30.5 $ 6,027 31.0 $ 5,271 29.7
Real Estate
Construction 1,479 6.8 1,319 6.4 1,237 6.0 919 4.7 864 4.9
Commercial 2,496 11.6 2,253 10.9 2,151 10.4 2,232 11.5 2,237 12.6
Consumer
Auto Leases 3,208 14.8 3,106 15.1 2,797 13.5 1,980 10.2 1,626 9.2
Auto Loans-Indirect 2,883 13.3 2,507 12.2 3,521 17.0 3,434 17.6 3,077 17.3
Home Equity Lines 2,536 11.7 2,168 10.5 1,710 8.3 1,434 7.4 1,245 7.0
Residential Mortgage 971 4.5 947 4.6 1,445 7.0 1,408 7.2 1,361 7.7
Other Loans 1,590 7.4 1,676 8.1 1,507 7.3 2,021 10.4 2,057 11.6
- ----------------------------------------------------------------------------------------------------------------------------------
Total Loans $ 21,602 100.0 $ 20,610 100.0 $ 20,668 100.0 $ 19,455 100.0 $ 17,738 100.0
- ----------------------------------------------------------------------------------------------------------------------------------


Note: There are no loans outstanding that would be considered a concentration of
lending, or 10% of shareholders' equity, in any particular industry or
group of industries.


- -------------------------------------------------------------------------------
MATURITY SCHEDULE OF SELECTED LOANS
- -------------------------------------------------------------------------------

(in millions of dollars) One Year One to After
AT DECEMBER 31, 2001 or Less Five Years Five Years Total
- -------------------------------------------------------------------------------

Commercial $ 2,993 $2,588 $ 858 $6,439
Real estate - construction 610 663 206 1,479
- -------------------------------------------------------------------------------
Total $ 3,603 $3,251 $1,064 $7,918
- -------------------------------------------------------------------------------

Variable interest rates $ 3,152 $2,515 $ 772 $6,439
Fixed interest rates 451 736 292 1,479
- -------------------------------------------------------------------------------
Total $ 3,603 $3,251 $1,064 $7,918
- -------------------------------------------------------------------------------

Note: Loan balances above are net of unearned income and there are no loans
outstanding that would be a concentration of lending, or 10% or more of
shareholders' equity, in any particular industry or group of industries.


Average consumer loans increased 9% during the recent twelve-month period,
driven by strong double-digit growth in home equity lines, an area of focus and
a strong source of growth for Huntington. Strong cross-selling success to first
mortgage customers during the heavy refinancing period in 2001 contributed to
this growth. First mortgage refinancing activity fueled by the falling interest
rate environment led to an 8% increase in residential real estate loans and an
increase in mortgage loans held for sale at year-end. Indirect automobile loan
and leases


18



increased 9%, although loan origination volumes slowed somewhat towards the
latter portion of 2001 due to the zero percent financing offered by many captive
finance companies.

Core deposits, which are total deposits exclusive of negotiable
certificates of deposits and Eurodollar deposits, were $19.8 billion and $19.1
billion at the end of 2001 and 2000, respectively. Average core deposits
increased slightly during the year due primarily to Huntington's sales
management process aimed at attracting more retail deposits and, to a lesser
extent, the uncertainties in the financial markets. When combined with other
core funding sources, these provided 81% of Huntington's funding needs.

Short and medium-term borrowings continued to decline as a result of
efforts initiated last year in Huntington's balance sheet repositioning program.
Long-term debt increased over last year primarily due to Huntington's $50
million sale to the public of fixed-rate preferred securities of its REIT
subsidiary.

RESULTS OF OPERATIONS

NET INTEREST INCOME

One of Huntington's primary sources of revenue is net interest income. Net
interest income is the difference between interest income on earning assets,
primarily loans and securities, and interest expense on funding sources,
including interest-bearing deposits and borrowings. Net interest income is
impacted by changes in the level of interest rates, earning assets, and
interest-bearing liabilities. Changes in net interest income are measured
through interest spread and net interest margin. The difference between the
yields on earning assets and the rates paid for interest-bearing liabilities
represents the interest spread. The net interest margin is the percentage of net
interest income to average earning assets. Both the interest spread and net
interest margin are presented on a tax-equivalent basis, which means that
tax-free income and dividend income, generated primarily from Huntington's
investment security portfolio, are adjusted and expressed on the same basis as
other taxable income. Because non-interest bearing sources of funds, such as
demand deposits and stockholders' equity, also support earning assets, the net
interest margin exceeds the interest spread.



- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET INTEREST INCOME DUE TO CHANGES IN AVERAGE VOLUME AND INTEREST RATES
2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) From Increase (Decrease) From
Previous Year Due To: Previous Year Due To:
- -----------------------------------------------------------------------------------------------------------------------------------
Fully Tax Equivalent Basis (1) Yield/ Yield/
(in millions of dollars) Volume Rate Total Volume Rate Total
- -----------------------------------------------------------------------------------------------------------------------------------

Total loans $ 41.3 $(157.1) $(115.8) $ 49.8 $ 64.9 $ 114.7
Mortgages held for sale 17.6 (1.3) 16.3 (9.6) 2.0 (7.6)
Securities (83.9) 13.5 (70.4) (37.3) 7.1 (30.2)
Federal funds sold, security resale agreements,
and other investments 1.7 (2.7) (1.0) 4.1 0.4 4.5
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL EARNING ASSETS (23.3) (147.6) (170.9) 7.0 74.4 81.4
- -----------------------------------------------------------------------------------------------------------------------------------

Interest bearing demand deposits 21.8 (31.2) (9.4) 5.2 32.3 37.5
Savings deposits (3.4) (35.3) (38.7) (6.2) 26.6 20.4
Certificates of deposit (12.0) (15.6) (27.6) 5.3 44.8 50.1
Other domestic time deposits (20.2) (5.1) (25.3) 16.4 2.7 19.1
Foreign time deposits (12.7) (10.5) (23.2) 10.4 5.0 15.4
Short-term borrowings 18.4 (35.6) (17.2) (29.4) 28.2 (1.2)
Medium-term notes (53.3) (14.3) (67.6) (13.1) 32.4 19.3
Long-term debt and capital securities 3.9 (17.6) (13.7) 7.8 13.5 21.3
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES (57.5) (165.2) (222.7) (3.6) 185.5 181.9
- -----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME $ 34.2 $ 17.6 $ 51.8 $ 10.6 $ (111.1) $ (100.5)
- -----------------------------------------------------------------------------------------------------------------------------------


(1) Calculated assuming a 35% tax rate.

The table above shows changes in tax-equivalent interest income, interest
expense, and net interest income due to volume and rate variances for major
categories of earning assets and interest-bearing liabilities. The change in
interest not solely due to changes in volume or rates has been allocated in
proportion to the absolute dollar amounts of the change in volume and rate.


19



AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS



- ------------------------------------------------------------------------------------------------------------------------------------

Average Balance (in millions of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
Fully Tax Equivalent Basis (1) 2001 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------

ASSETS
Interest bearing deposits in banks $ 7 $ 6 $ 9 $ 10 $ 9 $ 14
Trading account securities 25 15 13 11 10 16
Federal funds sold and securities purchased
under resale agreements 107 87 22 229 44 67
Mortgages held for sale 360 109 232 289 131 113
Securities (2):
Taxable 3,144 4,316 4,885 4,896 5,351 5,194
Tax exempt 174 273 297 247 264 291
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities 3,318 4,589 5,182 5,143 5,615 5,485
- ------------------------------------------------------------------------------------------------------------------------------------
Loans:

Commercial 6,647 6,446 6,128 5,629 5,302 4,955
Real Estate
Construction 1,362 1,270 1,064 829 813 580
Commercial 2,340 2,187 2,235 2,304 2,251 2,129
Consumer
Auto leases 3,204 2,969 2,361 1,769 1,488 1,018
Auto loans - Indirect 2,697 2,982 3,432 3,249 3,081 3,065
Home equity lines 2,331 1,935 1,542 1,336 1,190 1,040
Residential mortgage 911 1,296 1,425 1,300 1,510 1,485
Other loans 1,657 1,584 1,902 2,018 1,946 1,707
- ------------------------------------------------------------------------------------------------------------------------------------
Total consumer 10,800 10,766 10,662 9,672 9,215 8,315
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans 21,149 20,669 20,089 18,434 17,581 15,979
- ------------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses/loan fees 344 303 301 280 252 231
- ------------------------------------------------------------------------------------------------------------------------------------
Net loans (3) 20,805 20,366 19,788 18,154 17,329 15,748
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets / total interest income / rates 24,966 25,475 25,547 24,116 23,390 21,674
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks 912 1,008 1,039 975 910 901
All other assets 2,603 2,541 2,454 2,081 1,103 1,031
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 28,137 $28,721 $28,739 $26,892 $25,151 $23,375
- ------------------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Core deposits
Non-interest bearing deposits $ 3,304 $ 3,421 $ 3,497 $ 3,287 $ 2,774 $ 2,664
Interest-bearing demand deposits 5,005 4,291 4,097 3,585 3,204 3,068
Savings deposits 3,478 3,563 3,740 3,277 3,056 2,836
Certificates of deposit 7,163 7,374 7,272 7,979 7,414 6,959
- ------------------------------------------------------------------------------------------------------------------------------------
Total core deposits 18,950 18,649 18,606 18,128 16,448 15,527
- ------------------------------------------------------------------------------------------------------------------------------------
Other domestic time deposits 128 502 238 182 365 28
Foreign time deposits 283 539 363 103 382 305
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits 19,361 19,690 19,207 18,413 17,195 15,860
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 2,325 1,966 2,549 2,084 2,826 2,883
Medium-term notes 2,024 2,894 3,122 2,903 1,983 1,835
Subordinated notes and other long-term debt,
including capital securities 1,180 1,124 1,003 876 739 516
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities / interest
expense / rates 21,586 22,253 22,384 20,989 19,969 18,430
- ------------------------------------------------------------------------------------------------------------------------------------
All other liabilities 865 768 711 552 514 505
Shareholders' equity 2,382 2,279 2,147 2,064 1,894 1,776
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 28,137 $28,721 $28,739 $26,892 $25,151 $23,375
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread
Impact of non-interest bearing funds on margin
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN
- ------------------------------------------------------------------------------------------------------------------------------------


(1) Fully tax equivalent yields are calculated assuming a 35% tax rate.

(2) Average rates computed using historical cost average balances and do not
give effect to changes in fair value of securities available for sale.

(3) Net loan rate includes loan fees, whereas individual loan components above
are shown exclusive of fees.


20





- -----------------------------------------------------------------------------------------------------------------------------------

Interest Income / Expense (in millions of dollars) Average Rate
- --------------------------------------------------------------------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996 2001 2000 1999 1998 1997 1996
- --------------------------------------------------------------------- -------------------------------------------------------------


$ 0.2 $ 0.3 $ 0.4 $ 1.0 $ 0.5 $ 0.8 3.43 % 5.03 % 4.04 % 5.22 % 5.47 % 5.85 %
1.3 1.1 0.8 0.6 0.6 0.9 5.13 7.11 5.89 5.71 5.70 5.66

4.4 5.5 1.2 12.9 2.4 3.8 4.19 6.33 5.58 5.64 5.50 6.03
25.0 8.7 16.3 20.2 10.1 8.7 6.95 7.96 7.03 6.99 7.75 7.74

206.9 269.5 297.0 308.8 339.8 333.7 6.58 6.24 6.08 6.31 6.35 6.42
13.0 20.8 23.5 21.9 25.3 27.9 7.49 7.61 7.90 8.83 9.55 9.59
- --------------------------------------------------------------------- -------------------------------------------------------------
219.9 290.3 320.5 330.7 365.1 361.6 6.63 6.33 6.18 6.43 6.50 6.59
- --------------------------------------------------------------------- -------------------------------------------------------------


472.1 553.2 483.4 469.0 456.6 396.9 7.10 8.58 7.89 8.33 8.61 8.01

93.8 110.7 86.1 71.7 73.8 50.7 6.89 8.72 8.09 8.65 8.85 8.75
178.5 185.7 181.6 199.6 200.6 189.3 7.63 8.49 8.13 8.66 8.91 8.89

215.0 201.1 159.2 126.1 113.0 79.9 6.71 6.76 6.74 7.13 7.60 7.84
230.3 251.9 271.2 269.4 259.6 245.9 8.54 8.45 7.90 8.29 8.43 8.02
174.7 164.9 119.7 116.8 107.4 97.7 7.50 8.52 7.76 8.75 9.02 9.40
69.0 99.6 107.0 104.6 126.3 123.0 7.58 7.69 7.51 8.04 8.36 8.28
151.6 142.4 180.1 201.7 201.5 179.7 9.15 9.01 9.47 9.99 10.35 10.52
- --------------------------------------------------------------------- -------------------------------------------------------------
840.6 859.9 837.2 818.6 807.8 726.2 7.78 7.99 7.85 8.46 8.77 8.73
- --------------------------------------------------------------------- -------------------------------------------------------------
1,585.0 1,709.5 1,588.3 1,558.9 1,538.8 1,363.1 7.49 8.27 7.91 8.46 8.75 8.53
- --------------------------------------------------------------------- -------------------------------------------------------------
110.1 101.4 107.9 85.4 75.8 49.2
- --------------------------------------------------------------------- -------------------------------------------------------------
1,695.1 1,810.9 1,696.2 1,644.3 1,614.6 1,412.3 8.01 8.76 8.44 8.92 9.18 8.84
- --------------------------------------------------------------------- -------------------------------------------------------------

1,945.9 2,116.8 2,035.4 2,009.7 1,993.3 1,788.1 7.79 % 8.31 % 7.97 % 8.33 % 8.52 % 8.26 %
- --------------------------------------------------------------------- -------------------------------------------------------------










134.6 144.0 106.5 96.4 84.4 80.2 2.69 % 3.36 % 2.60 % 2.69 % 2.64 % 2.61 %
107.7 146.4 126.0 114.0 100.4 86.3 3.10 4.11 3.37 3.48 3.28 3.04
398.2 425.8 375.7 445.6 417.3 394.3 5.56 5.78 5.17 5.58 5.63 5.67
- --------------------------------------------------------------------- -------------------------------------------------------------
640.5 716.2 608.2 656.0 602.1 560.8 3.38 4.70 4.03 4.42 4.40 4.36
- --------------------------------------------------------------------- -------------------------------------------------------------
6.6 31.9 12.8 10.5 21.8 1.5 5.12 6.35 5.40 5.82 5.97 5.36
10.8 34.0 18.6 5.9 22.2 18.4 3.82 6.31 5.14 5.66 5.81 6.03
- --------------------------------------------------------------------- -------------------------------------------------------------
657.9 782.1 639.6 672.4 646.1 580.7 3.40 4.81 4.07 4.44 4.48 4.40
- --------------------------------------------------------------------- -------------------------------------------------------------
95.9 113.1 114.3 97.7 146.4 149.1 4.12 5.75 4.48 4.69 5.18 5.17
121.7 189.3 170.0 164.6 116.2 120.2 6.01 6.54 5.45 5.67 5.86 6.55
67.9 81.6 60.3 43.6 45.5 30.7 5.75 7.26 6.01 4.98 6.16 5.96
- --------------------------------------------------------------------- -------------------------------------------------------------

943.4 1,166.1 984.2 978.3 954.2 880.7 4.37 % 5.24 % 4.40 % 4.66 % 4.78 % 4.78 %
- --------------------------------------------------------------------- -------------------------------------------------------------





$1,002.5 $ 950.7 $ 1,051.2 $ 1,031.4 $ 1,039.1 $ 907.4
- ---------------------------------------------------------------------
3.42 % 3.07 % 3.57 % 3.67 % 3.74 % 3.48 %
0.60 0.66 0.54 0.61 0.70 0.71
-------------------------------------------------------------
4.02 % 3.73 % 4.11 % 4.28 % 4.44 % 4.19 %
-------------------------------------------------------------




21



Tax-equivalent net interest income was $1,002.5 million in 2001, $950.7
million in 2000, and $1,051.2 million in 1999. The net interest margin was 4.02%
during the recent year, compared with 3.73% and 4.11% for 2000 and 1999,
respectively. The increase in the recent year was due to the continued
improvement in the earning asset mix, resulting from a reduction in lower margin
investment securities and reduction in residential mortgage loans. Additionally,
Huntington was slightly liability sensitive during the period and accordingly,
benefited from the decline in short-term rates during the year. The net interest
margin in 2000 was unfavorably impacted by higher funding costs due to rising
interest rates and changes in the mix of Huntington's core deposit base. The mix
of deposits shifted to higher-rate accounts during that year following the
introduction of new products designed to improve customer retention in the
intensely competitive market for retail deposits. The reduction in net interest
income and the margin in 2000 also reflect the impact of the 1999 credit card
sale and the automobile loan securitizations. Average earning assets declined
$509 million from $25.5 billion in 2000 to $25.0 billion while average
interest-bearing liabilities declined $667 million from $22.3 billion to $21.6
billion. Management expects the margin to continue to expand in 2002, especially
in light of the favorable impact expected from the sale of the Florida
operations, as discussed below. Huntington's average balance sheets and net
interest margin analysis can be found on pages 20 and 21.

Huntington regularly enters into various types of derivative financial
instruments, primarily interest rate swaps, to manage its exposure to changes in
interest rates. The cash flows generated by derivative instruments used to
manage risk associated with earning assets and interest bearing liabilities are
recorded along with the interest from the hedged item and consequently impact
the yields on those assets and liabilities. The impact of these derivatives
lowered the net interest margin by two basis points in 2001 and five basis
points in 2000, but increased the net interest margin by eight basis points in
1999. Huntington's interest rate risk position as well as the implementation of
a new accounting standard regarding derivatives is discussed further in the
"Interest Rate Risk Management" section of this report.

PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses is the expense necessary to maintain the
allowance for loan losses (ALL) at a level adequate to absorb management's
estimate of inherent losses in the loan portfolio. On a reported basis, the
provision expense was $308.8 million for 2001. On an operating basis, the
provision for loan losses was $187.1 million, up from $90.5 million in 2000 and
$88.4 million two years ago, representing significant increases in net
charge-offs and deteriorating economic conditions impacting credit quality. The
operating basis results for 2001 exclude the impact of an additional fourth
quarter provision for loan losses of $50 million to increase the ALL ratio to
1.90% of total loans, reflecting a deterioration in credit quality, and $71.7
million in the second quarter, which included $25.8 million for estimated
increased losses resulting from Huntington's decision to exit sub-prime
automobile and truck and equipment lending, $19.7 million to charge-off
delinquent consumer and small business loans more than 120 days past due, and
$21.2 million to increase reserves for consumer bankruptcies.

The ALL was $410.6 million at December 31, 2001, up from $297.9 million the
end of 2000 and $299.3 million at year-end 1999. This represents 1.90% of total
2001 loans compared with 1.45% of total loans at the end of the prior two years.
The reserve ratio is expected to increase in 2002 after the sale of loans in the
Florida operations. Non-performing loans in 2001 were covered by the ALL 1.9
times versus 3.2 times at the end of last year. Additional information regarding
the ALL and asset quality appears in the "Credit Risk" section.

Huntington allocates the ALL to each loan category based on an expected
loss ratio determined by continuous assessment of credit quality based on
portfolio risk characteristics and other relevant factors such as historical
performance, internal controls, and impacts from mergers and acquisitions. For
the commercial and industrial and commercial real estate credits, expected loss
factors are assigned by credit grade at the individual loan level. The
aggregation of these factors represents management's estimate of the inherent
loss. The portion of the allowance allocated to the more homogeneous consumer
loan segments is determined by developing expected loss ratios based on the risk
characteristics of the various segments and giving consideration to existing
economic conditions and trends.

Projected loss ratios incorporate factors such as trends in past due and
non-accrual amounts, recent loan loss experience, current economic conditions,
risk characteristics, and concentrations of various loan categories. Actual loss
ratios experienced in the future, however, could vary from those projected as a
loan's performance is a function of not only economic factors but also other
factors unique to each customer. The diversity in size of commercial and
commercial real estate loans can be significant as well. The dollar exposure
could significantly vary from estimated amounts due to diversity. Additionally,
the impact from recent economic events, including the recession and events


22



of September 11, 2001, on individual customers may not yet be known. To ensure
adequacy to a higher degree of confidence, a portion of the ALL is considered
unallocated. For analytical purposes, the allocation of the ALL is provided
below. While amounts are allocated to various portfolio segments, the total ALL,
excluding impairment reserves prescribed under provisions of Statement of
Financial Accounting Standard No. 114, is available to absorb losses from any
segment of the portfolio.



- ----------------------------------------------------------------------------------------------------------------------------------
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------

Commercial $174,713 $ 104,968 $ 94,978 $ 82,129 $ 86,439
Real estate
Construction 18,863 13,442 15,452 11,112 8,140
Commercial 38,177 33,909 32,073 35,206 35,051
Consumer
Auto Leases 41,240 32,951 25,378 17,823 6,631
Auto Loans - Indirect 38,799 28,877 40,043 40,792 29,516
Home Equity Lines 17,254 12,505 11,552 10,889 1,869
Residential Mortgage 4,835 3,575 4,804 4,864 3,547
Other Loans 26,557 29,257 27,060 52,517 44,020
- ---------------------------------------------------------------------------------------------------------------------------------
Total Allocated 360,438 259,484 251,340 255,332 215,213
Total Unallocated 50,134 38,396 47,969 35,616 42,958
- ---------------------------------------------------------------------------------------------------------------------------------
Total Allowance for Loan Losses $410,572 $ 297,880 $ 299,309 $290,948 $ 258,171
- ---------------------------------------------------------------------------------------------------------------------------------



Total net charge-offs in 2001 were 0.90%. Excluding 18 basis points of
losses charged against reserves established in the second quarter 2001 for
portfolios that Huntington exited, net charge-offs were 0.72%. Net charge-offs
were 0.40% in both 2000 and 1999. Commercial charge-offs, spread over a number
of companies in the retail trade, manufacturing, services, and communications
sectors, were 0.90% in the recent year versus 0.21% in 2000 and 0.18% in 1999.
Consumer charge-offs were 1.17% in 2001 compared with 0.63% in each of the two
preceding years. Excluding losses related to the exited businesses, commercial
and consumer net charge-offs were 0.76% and 0.91%, respectively. Indirect auto
loan net charge-offs were 1.36% in 2001 compared with 1.08% in 2000 and vehicle
lease net charge-offs were 1.28% and 0.72% for the same periods. The following
table reflects vintage performance for Huntington's managed indirect auto loan
and lease portfolios through December 31, 2001:




- -------------------------------------------------------------------------------------------------------------------
LOAN AND LEASE ORIGINATION PERIOD
----------------------------------------
4Q '98 TO 4Q '99 TO 4Q '00 TO
PRODUCT 3Q '99 3Q '00 4Q '01
- -------------------------------------------------------------------------------------------------------------------

Indirect auto loans - % of portfolio at December 31, 2000 24% 42% 12%
- % of portfolio at December 31, 2001 12% 25% 55%
- cumulative loss ratios after 5 quarters 0.65% 1.35% 1.00%

Indirect auto leases - % of portfolio at December 31, 2000 33% 42% 9%
- % of portfolio at December 31, 2001 22% 31% 41%
- cumulative loss ratios after 5 quarters 0.38% 1.30% 1.00%



For the fourth quarter of 1999 through the third quarter of 2000, in the
table above, the cumulative loss ratio is greatest for both loans and leases
originated by Huntington. The higher loss levels during this origination period
were the result of less rigorous underwriting standards, which were subsequently
improved. Although the relative portion of the portfolios is diminishing, these
loans and leases contributed to the higher losses in the recent year, along with
the economic slowdown, and an increase in the average loss per vehicle due to
lower used car prices.

Until general economic conditions begin to improve, Huntington's management
expects unfavorable trends in credit quality and net charge-offs to continue at
or above current levels in all portfolios, particularly in the first half of
2002.


23



The following table shows the activity in Huntington's ALL, along with
selected credit quality indicators.



- --------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF ALLOWANCE FOR LOAN LOSSES AND RELATED STATISTICS
(in thousands of dollars) 2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------

ALLOWANCE FOR LOAN LOSSES, BEGINNING OF YEAR $ 297,880 $ 299,309 $ 290,948 $ 258,171 $ 230,778
LOAN LOSSES
Commercial (65,743) (18,013) (16,203) (24,512) (23,276)
Real estate
Construction (845) (238) (638) (80) (375)
Commercial (3,676) (1,522) (2,399) (2,115) (728)
Consumer
Auto Leases (52,775) (25,020) (13,209) (13,755) (9,856)
Auto Loans - Indirect (71,638) (47,687) (42,783) (39,107) (36,442)
Home Equity Lines (8,744) (5,626) (5,461) (4,905) (1,191)
Residential Mortgage (879) (1,140) (1,404) (1,243) (1,935)
Other Loans (23,015) (11,599) (30,194) (40,638) (36,920)
- --------------------------------------------------------------------------------------------------------------------------------
Total loan losses (227,315) (110,845) (112,291) (126,355) (110,723)
- --------------------------------------------------------------------------------------------------------------------------------
RECOVERIES OF LOANS PREVIOUSLY CHARGED OFF
Commercial 6,175 4,201 5,303 4,546 4,373
Real estate
Construction 179 165 192 441 111
Commercial 613 268 1,260 1,800 315
Consumer
Auto Leases 9,597 3,578 2,652 1,631 1,088
Auto Loans - Indirect 16,567 15,407 14,201 14,979 10,234
Home Equity Lines 719 557 750 398 175
Residential Mortgage 94 133 268 367 304
Other Loans 3,924 3,447 7,579 7,686 5,942
- --------------------------------------------------------------------------------------------------------------------------------
Total recoveries 37,868 27,756 32,205 31,848 22,542
- --------------------------------------------------------------------------------------------------------------------------------
Net loan losses (189,447) (83,089) (80,086) (94,507) (88,181)
- --------------------------------------------------------------------------------------------------------------------------------
ALLOWANCE OF SECURITIZED LOANS (6,654) (16,719) --- --- ---
PROVISION FOR LOAN LOSSES (1) 308,793 90,479 88,447 105,242 107,797
ALLOWANCE ACQUIRED --- 7,900 --- 22,042 7,777
- --------------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES, END OF YEAR $ 410,572 $ 297,880 $ 299,309 $ 290,948 $ 258,171
- --------------------------------------------------------------------------------------------------------------------------------

AS A % OF AVERAGE TOTAL LOANS
Net loan losses 0.90% 0.40% 0.40% 0.51% 0.50%
Provision for loan losses 1.46% 0.44% 0.44% 0.57% 0.61%
Allowance for loan losses as a %
of total end of period loans 1.90% 1.45% 1.45% 1.50% 1.46%
Net loan loss coverage (2) 3.62x 7.23x 8.63x 6.72x 7.01x



(1) In 2001, includes special provisions for loan losses of $121.7 million
included in restructuring and special charges as discussed above.
(2) Income before taxes (excluding the impact of restructuring and special
charges and the 1999 gain from sale of credit card portfolio) and the
provision for loan losses to net loan losses.


NON-INTEREST INCOME

Non-interest income before gains from investment security and loan sales,
was $508.8 million in 2001, compared with $456.5 million for the same period
last year and $452.1 million in 1999. Service charges on deposit accounts
increased 2.1% from a year ago, primarily due to higher corporate maintenance
fees and, to a lesser extent, sales of cash management products. Brokerage and
insurance revenue increased $17.2 million, or 27.7%, driven by strong growth in
insurance and investment banking fees. Annuity sales reached record highs for
Huntington in 2001 contributing to a 10% increase in brokerage income
year-over-year despite a volatile equity market. Insurance-related revenue was
up 43% reflecting the full-year impact of a new insurance agency acquired in
2000. Trust income rose 12.5% as a result of increased revenue from the sales to
customers of Huntington's proprietary mutual funds as five new funds were added
during this year and certain price increases. Mortgage banking income for 2001
was up 55.6% over last year due to the refinancing activity resulting from the
lower interest rate environment. Origination volume totaled $3.5 billion, up
from $1.5 billion in the same period a year ago. Other service charges


24



and fees increased nearly 10% over the prior year due primarily to higher
customer usage of Huntington's check card product. New revenue from the sale of
interest rate derivative products to corporate customers and loan securitization
activity also helped to drive other non-interest income up over last year.

Investment security gains totaled $0.7 million for 2001, versus $37.1
million for 2000 and $13.0 million for 1999. Included in the 2001 net gains in
the table below is a $5.3 million loss realized from the sale of $15 million of
Pacific Gas & Electric commercial paper acquired from The Huntington National
Bank's Money Market Fund. Huntington sold certain equity investments that
generated gross gains of $66.5 million in 2000 and $31.0 million in 1999.
Substantially offsetting these gains in both prior years were losses from the
sale of lower yielding, fixed-income investment securities.



- -------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
- -------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------

Service charges on deposit accounts $ 164,052 $160,727 $156,315
Brokerage and insurance income 79,034 61,871 52,076
Trust services 60,298 53,613 52,030
Mortgage banking 59,148 38,025 56,890
Other service charges and fees 48,217 43,883 37,301
Bank Owned Life Insurance income 38,241 39,544 37,560
Other 59,767 58,795 59,901
- -------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME BEFORE SECURITIES GAINS AND
CREDIT CARD PORTFOLIO SALE GAINS 508,757 456,458 452,073
Securities gains 723 37,101 12,972
Gains on sale of credit card portfolio --- --- 108,530
- -------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME $ 509,480 $493,559 $573,575
- -------------------------------------------------------------------------------------------------------------------



NON-INTEREST EXPENSE
Non-interest expense, on an operating basis, was $923.6 million in 2001,
$835.6 million in 2000, and $815.3 million in 1999. A discussion of Huntington's
restructuring and special charges can be found in the beginning of Management's
Discussion and Analysis and in the notes to the consolidated financial
statements.

Higher personnel costs reflect increases in sales commissions related to
mortgage banking, capital markets, and private financial services activities,
offset by lower benefit expenses. Occupancy and equipment costs increased 2.5%
in 2001 due to higher depreciation and building maintenance. Other factors
contributing to the 10.5% increase in non-interest expense, included in Other,
was a $4.2 million impairment loss related to PG&E commercial paper, and $7.0
million of premium expense related to the purchase of automobile lease residual
value insurance.

The $4.2 million PG&E impairment loss reflected in non-interest expense
related to activities in The Huntington National Bank's Money Market Mutual Fund
(the Fund). The Fund owned $30 million of PG&E commercial paper at the end of
last year. During the first quarter of 2001, $15 million of the paper was sold
with a $4.2 million loss incurred. Although the Fund could have absorbed the
loss and still maintained the net asset value at $1.00 per share, Huntington
reimbursed the Fund for the $4.2 million loss. The remaining $15 million of
commercial paper was held by Huntington until the economic and political
ramifications of PG&E's April 2001 Chapter 11 bankruptcy filing became known.
The remaining PG&E commercial paper was sold in the third quarter of 2001, as
discussed above, at a loss of $5.3 million, which is included in restructuring
and special charges. The combined losses amounted to $9.5 million.

In late 2000, Huntington purchased residual value insurance coverage.
Residual values are established at the origination of the lease and represent
the estimated value of the automobiles at the end of the lease. The insurance
covers the difference between the recorded residual value and the fair market
value of the automobile at the end of the lease term as evidenced by Black Book
valuations. The insurance provides first dollar loss coverage on the portfolio
at October 1, 2000, and has a cap on insured losses of $120 million. Insured
losses on new lease originations from October 2000 to March 31, 2002 have a cap
of $50 million. The insurance coverage is subject to annual renewal. See note 1
to Huntington's consolidated financial statements for accounting policy
regarding residual values.


25





- -------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------

Personnel costs $ 478,640 $ 421,750 $ 419,901
Equipment 80,560 78,069 66,666
Net occupancy 77,184 75,882 62,169
Outside data processing and other services 69,692 62,011 62,886
Amortization of intangible assets 41,225 39,207 37,297
Marketing 31,057 34,884 32,506
Telecommunications 27,984 26,225 28,519
Professional services 23,879 20,819 21,169
Printing and supplies 18,367 19,634 20,227
Franchise and other taxes 9,729 11,077 14,674
Other 65,313 46,059 49,314
- -------------------------------------------------------------------------------------------------------------------------------

TOTAL NON-INTEREST EXPENSE BEFORE SPECIAL CHARGES 923,630 835,617 815,328
Special charges 99,957 50,000 96,791
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE $1,023,587 $ 885,617 $ 912,119
- -------------------------------------------------------------------------------------------------------------------------------



Amortization of intangible assets, which includes amortization of the
excess of fair value of assets involved in purchase acquisitions over book value
or "goodwill", increased to $41.2 million in 2001 from $39.2 million in 2000.
This increase reflects the full year impact of the year 2000 purchase
acquisitions of Empire Banc Corporation and the J. Rolfe Davis Insurance Agency,
Inc. In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets, which requires that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead be tested for impairment at
least annually. Huntington will apply the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of 2002. The majority
of Huntington's goodwill and other intangible assets relate to its operations
located in Florida, which Huntington sold in February 2002. The application of
the nonamortization provisions of the new standard to goodwill not impacted by
the sale is expected to result in an increase in net income of $8.9 million, or
$0.04 per common share per year.

Huntington's efficiency ratio, which expresses expense as a percentage of
revenue on a tax-equivalent basis, was 58.4% for 2001, compared with 56.2% and
51.8% in 2000 and 1999, respectively. This ratio is expected to improve in 2002
as a result of the sale of the Florida operations.

INCOME TAXES
Huntington recorded an income tax benefit of $5.2 million in 2001, compared
with expense of $131.4 million, and $192.7 million in each of the previous two
years. Huntington's effective tax rate on operating earnings was 26.7% in 2001
versus 28.6% in 2000 and approximately 31.0% in 1999. The effective rate was
lower in 2001 due to asset securitization and subsidiary capital activities.
Based on information currently available, Huntington expects its 2002 effective
tax rate to remain below 30%. See note 18 to Huntington's consolidated financial
statements regarding income taxes.


INTEREST RATE RISK AND LIQUIDITY MANAGEMENT

INTEREST RATE RISK MANAGEMENT
Huntington seeks to achieve consistent growth in net interest income and
net income while managing volatility arising from shifts in interest rates. The
Asset and Liability Management Committee (ALCO) oversees financial risk
management by establishing broad policies and specific operating limits that
govern a variety of financial risks inherent in Huntington's operations,
including interest rate, liquidity, counterparty, settlement, and market risks.
Market risk is the risk of loss arising from the adverse changes in the fair
value of financial instruments due to changes in interest rates, exchange rates,
and equity prices. Interest rate risk is Huntington's primary market risk and
results from the timing differences in the repricing of assets and liabilities,
changes in relationships between rate indices and the potential exercise of
explicit or embedded options. ALCO regularly monitors Huntington's interest rate
sensitivity position to ensure consistency with approved risk tolerances.


26



Interest rate risk management is a dynamic process, encompassing business
flows onto the balance sheet, wholesale investment and funding, and the changing
market and business environment. Effective management of interest rate risk
begins with appropriately diversified investments and funding sources. To
accomplish its overall balance sheet objectives, Huntington regularly accesses a
variety of global markets--money, bond, futures, and options--as well as
numerous trading exchanges. In addition, dealers in over-the-counter financial
instruments provide availability of interest rate swaps as needed.

Measurement and monitoring of interest rate risk is an ongoing process. Two
key elements used in this process are Huntington's income simulation model and
its net present value model. The income simulation model estimates the amount
that net interest income will change over a twelve to twenty-four month period
given adverse changes in interest rates. The net present value model, or
Economic Value of Equity (EVE), is used to discern levels of risk in
Huntington's balance sheet that may not be determined in its income simulation
model. These two models have limitations but complement each other and together
these models portray the magnitude of exposure to interest rate risk.
Assumptions used in these models are inherently uncertain, but management
believes that these models provide a reasonably accurate estimate of
Huntington's interest rate risk exposure. Management's reporting of this
information is regularly shared with the Board of Directors.

The income simulation model used by Huntington incorporates a gradual
change in the shape of the forward yield curve and captures all major assets,
liabilities, and off-balance sheet financial instruments, accounting for
significant variables that are believed to be affected by interest rates. These
include prepayment speeds on mortgages and consumer installment loans, cash
flows of loans and deposits, principal amortization on revolving credit
instruments, and balance sheet growth assumptions. The model also captures
embedded options, e.g. interest rate caps/floors or call options, and accounts
for changes in rate relationships, as various rate indices lead or lag changes
in market rates.

The forward yield curve at December 31, 2001, implied a 150 basis point
increase in short-term interest rates by the end of 2002. The results of
Huntington's recent sensitivity analysis indicated that net interest income
would be 0.6% lower during the next twelve months than if interest rates were
100 basis points higher at the end of that period than implied by forward rates
at December 31, 2001, or 250 basis points from rates at this same date. Net
interest income was estimated to be 1.3% lower if rates were 200 basis points
higher than the yield curve, or 350 basis points overall. Conversely, if rates
were 100 and 200 basis points lower than the yield curve, net interest income
would be 0.3% and 0.9% higher, respectively. These measures of the sensitivity
of net interest income to changes in interest rates incorporate the effects of
the sale of the Florida franchise. The sale of selected assets and liabilities
in the Florida region increased the interest rate sensitivity of net interest
income modestly, but repositioning of the balance sheet in anticipation of the
sale ensured that the resulting level remained below the management limit of 2%.

At the end of 2000, net interest income was estimated to be 2.5% higher
during the subsequent twelve months if interest rates were 200 basis points
lower than the level implied by forward rates in twelve months. The decline in
sensitivity over the past year was primarily due to the previously mentioned
sales of low margin fixed rate investment securities. These sales were part of
management's effort to restructure the balance sheet and reduce sensitivity to
interest rate changes in order to stabilize Huntington's revenue base.

The EVE simulation model used by Huntington measures the level of risk in
the balance sheet that might not have been accounted for in the income
simulation model due to that model's limited time horizon. The EVE is defined as
the discounted present value of asset cash flows and derivative cash flows,
minus the discounted value of liability cash flows. The timing and variability
of balance sheet cash flows are critical assumptions, along with assumptions
regarding the speed of loan and security prepayments and the assumed behavior of
zero-maturity deposits.

The sensitivity of the EVE to changes in interest rates is estimated by
calculating the EVE under alternative interest rate scenarios. Unlike the
analysis of net interest income at risk, which is based on assumed changes in
interest rates over time, the EVE analysis is based on assumed immediate shifts
in interest rates. In addition, the EVE analysis does not reflect assumed
changes to the balance sheet that would arise from new business. At December 31,
2001, an immediate increase of 100 basis points was estimated to reduce the EVE
by 1.1%. A 200 basis point increase was estimated to reduce the EVE by 2.9%. The
EVE was estimated to increase by 0.5% in response to a 100 basis point decrease
in rates and decrease by 0.1% in response to a 200 basis point decrease. These
estimates reflect the characteristics of the balance sheet at December 31, 2001,
which included selected assets and liabilities in Florida that were sold in
2002. Separate analysis indicates that the risk to the EVE after the sale of
those


27



assets and liabilities from an immediate 200 basis point increase in rates was
close to but less than one percentage point greater than the 2.9% risk for the
organization including those assets and liabilities.

The difference between the sensitivity to rate increases and decreases of
the same amount is a measure of the convexity of the balance sheet. In the case
of a 100 basis point shift, for example, the balance sheet is estimated to be
negatively convex, because the EVE would decrease by more in response to an
increase in rates than it would increase in response to a decrease in rates. The
source of the negative convexity is primarily the asymmetric prepayment rates of
mortgage loans and mortgage-backed securities in increasing and decreasing
interest rate environments and the greater latitude to raise than lower some
deposit rates, given the already very low level of interest rates.

Active interest rate risk management necessitates the use of various types
of derivative financial instruments, such as interest rate swaps, interest rate
caps and floors, exchange-traded futures and option contracts, and forward rate
agreements. Risk that is created by different indices on products, by unequal
terms to maturity of assets and liabilities, and by products that are appealing
to customers but incompatible with current risk limits can be eliminated or
decreased in a cost efficient manner by utilizing interest rate swaps. Often,
the swap strategy has enabled Huntington to lower the overall cost of raising
wholesale funds.

Interest rate derivatives have characteristics similar to securities but
possess the advantages of customization of the risks and rewards in the
instrument, minimizing the balance sheet leverage and improving liquidity. On
January 1, 2001, Huntington implemented a new accounting standard, SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133, as
amended, requires recognition of derivatives at their fair value as either
assets or liabilities in the balance sheet. The accounting for gains or losses
resulting from changes in fair value depends on the intended use of the
derivatives. For derivatives designated as hedges of changes in the fair value
of recognized assets or liabilities, gains or losses on the derivatives are
recognized in earnings together with the offsetting losses or gains on the
hedged items. This results in earnings only being impacted to the extent that
the hedge is ineffective in achieving offsetting changes in fair value. For
derivatives used to hedge changes in cash flows associated with forecasted
transactions, gains or losses on the effective portion of the derivatives are
deferred, and reported as accumulated other comprehensive income (AOCI), a
component of shareholders' equity, until the period in which the hedged
transactions affect earnings. Changes in the fair value of derivative
instruments not designated as hedges are recognized in current earnings. The
after-tax transition adjustment for the implementation of this new standard was
immaterial to net income and reduced AOCI by $9.1 million. See note 14 to
Huntington's consolidated financial statements for more information regarding
derivative financial instruments and note 16 regarding comprehensive income.




- -----------------------------------------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS
YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS

Balance at year-end $1,913,607 $ 1,822,480 $2,065,192
Weighted average interest rate at year-end 2.24% 5.91% 4.69%
Maximum amount outstanding at month-end during the year $3,094,647 $ 2,093,546 $3,033,277
Average amount outstanding during the year $2,258,860 $ 1,831,228 $2,417,032
Weighted average interest rate during the year 4.11% 5.68% 4.50%



28



LIQUIDITY MANAGEMENT
Effectively managing liquidity involves ensuring the cash flow requirements
of depositors and borrowers, as well as meeting the operating cash needs of
Huntington to fund corporate expansion and other activities. ALCO regularly
monitors the overall liquidity position of the business and ensures that various
alternative strategies exist to cover unanticipated events. At the end of the
recent year, management believes sufficient liquidity was available to meet
estimated short-term and long-term funding needs.

Funding is available from a number of sources, including core deposits, the
investment securities portfolio, the securitization and sale of loans, and the
ability to acquire large deposits and the issuance of notes and common and
preferred securities in the capital markets. One of Huntington's chief sources
of liquidity is derived from the large retail deposit base accessible by its
network of banking offices. Certificates of deposit of $100,000 or more totaled
nearly $1.4 billion at December 31, 2001, of which $377.9 million mature within
three months, $119.2 million mature within three to six months, $175.9 million
mature within six months to one year, and $689.7 million mature beyond one year.
This funding is supplemented by Huntington's demonstrated ability to raise funds
in capital markets and to access funds nationwide. The bank subsidiary's $6
billion domestic bank note program as well as Huntington's and its parent
company's combined $2 billion Euronote program are significant sources of
wholesale funding. Under these sources, unsecured senior and subordinated notes
are issuable with maturities ranging from one month to thirty years. Huntington
is also a member of the Federal Home Loan Bank (FHLB), which provides funding
through advances to its members that are collateralized with mortgage-related
assets that carry maturities from one month to twenty years. At the end of 2001,
Huntington had $17.0 million of outstanding borrowings with the FHLB.

Huntington's parent company obtains its funding from dividends, subsidiary
capital activities, and from the issuance of commercial paper through Huntington
Bancshares Financial Corporation, a non-bank subsidiary. The parent company
accesses the capital markets through issuance of medium-term notes via its $750
million note program. The proceeds from these sources are used from time to time
to fund certain non-banking activities, finance acquisitions, repurchase
Huntington's common stock, or for other general corporate purposes. An $85
million line of credit with a group of unaffiliated financial services companies
serves as a backup liquidity facility to support commercial paper borrowings. No
borrowings have occurred under this facility. Parent company liquidity
significantly improved in early 2002 through the sale of Huntington's Florida
operations.

At December 31, 2001, approximately $3 billion of funds were available
under the combined note programs to fund Huntington's future activities.
Huntington also has $300 million of capital securities outstanding through its
non-bank subsidiaries, Huntington Capital I and II.

In early 2002, Huntington increased its wholesale borrowings by $1.2
billion in connection with the sale of Florida loans and deposits. Huntington is
also in the process of closing a new $6 billion domestic bank note program and
expects to draw on this note program in 2002.

The table below represents Huntington's contractual cash obligations,
excluding short-term borrowings, at December 31, 2001:



- ----------------------------------------------------------------------------------------------------------------------
Payments Due by Period
--------------------------------------------------------------------------------
2007 &
(in millions of dollars) 2002 2003 2004 2005 2006 After Total
- ----------------------------------------------------------------------------------------------------------------------

Medium-term notes $782.2 $480.0 $255.0 $285.0 $ --- $ --- $ 1,802.2
Subordinated notes 150.0 250.0 --- --- --- 450.0 850.0
Capital securities --- --- --- --- --- 300.0 300.0
Preferred securities --- --- --- --- --- 50.0 50.0
Federal Home Loan Bank advances 4.0 10.0 3.0 --- --- --- 17.0
Operating leases 47.5 43.5 40.4 36.0 33.2 298.0 498.6
- ----------------------------------------------------------------------------------------------------------------------
Total $983.7 $783.5 $298.4 $321.0 $33.2 $1,098.0 $ 3,517.8
- ----------------------------------------------------------------------------------------------------------------------



29



While liability sources are many, significant liquidity is also available
from Huntington's securities available for sale and loan portfolios.




- --------------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
DECEMBER 31,
- --------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------

U.S. Treasury and Federal Agencies $2,322,079 $ 3,284,031 $ 4,165,342
Other 527,500 806,494 704,861
- --------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES AVAILABLE FOR SALE $2,849,579 $ 4,090,525 $ 4,870,203
- --------------------------------------------------------------------------------------------------------------------------

Amortized Fair
Cost Value Yield (1)
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury
Under 1 year $ 696 $ 711 5.50%
1-5 years 31,399 31,563 3.16%
6-10 years 6,420 6,833 5.72%
Over 10 years 413 433 6.25%
- -------------------------------------------------------------------------------------------------------
Total U.S. Treasury 38,928 39,540
- -------------------------------------------------------------------------------------------------------
Federal Agencies
Mortgage-backed
1-5 years 77,975 77,734 5.24%
6-10 years 99,049 100,954 6.26%
Over 10 years 651,187 662,674 6.56%
- -------------------------------------------------------------------------------------------------------
Total Mortgage-backed 828,211 841,362
- -------------------------------------------------------------------------------------------------------
Other agencies
1-5 years 918,023 940,845 5.19%
6-10 years 77,515 78,925 5.99%
Over 10 years 414,485 421,407 6.27%
- -------------------------------------------------------------------------------------------------------
Total Other 1,410,023 1,441,177
- -------------------------------------------------------------------------------------------------------
Total U.S. Treasury and Federal Agencies 2,277,162 2,322,079
- -------------------------------------------------------------------------------------------------------
Other
Under 1 year 11,315 11,374 8.48%
1-5 years 38,986 40,022 8.34%
6-10 years 35,832 35,823 7.08%
Over 10 years 176,524 174,715 6.38%
Retained interest in securitizations 159,790 159,790 18.64%
Marketable equity securities 104,395 105,776
- -------------------------------------------------------------------------------------------------------
TOTAL OTHER 526,842 527,500
- -------------------------------------------------------------------------------------------------------
TOTAL SECURITIES AVAILABLE FOR SALE AT DECEMBER 31, 2001 $2,804,004 $ 2,849,579
- -------------------------------------------------------------------------------------------------------


At December 31, 2001, Huntington had no concentrations of securities by a
single issuer in excess of 10% of shareholders' equity.

(1) Weighted average yields were calculated using amortized cost and on a
fully tax equivalent basis assuming a 35% tax rate.
Marketable equity securities are excluded.

CREDIT RISK

Huntington's exposure to credit risk is managed through the use of
consistent underwriting standards that emphasize "in-market" lending while
avoiding highly leveraged transactions as well as excessive industry and other
concentrations. The credit administration function employs extensive risk
management techniques, including forecasting, to ensure that loans adhere to
corporate policy and problem loans are promptly identified. These procedures
provide executive management with the information necessary to implement policy
adjustments where necessary, and take corrective actions on a proactive basis.


30



Non-performing assets (NPAs) consist of loans that are no longer accruing
interest, loans that have been renegotiated based upon financial difficulties of
the borrower, and real estate acquired through foreclosure. Commercial and real
estate loans are placed on non-accrual status and stop accruing interest when
collection of principal or interest is in doubt or generally when the loan is 90
days past due. When interest accruals are suspended, accrued interest income is
reversed with current year accruals charged to earnings and prior year amounts
generally charged off as a credit loss. Consumer loans are not placed on
non-accrual status; rather they are charged off in accordance with regulatory
statutes, which is generally no more than 120 days.

Total NPAs were $227.5 million at December 31, 2001, compared with $105.4
million the end of 2000. As of the same dates, NPAs as a percent of total loans
and other real estate were 1.05% and 0.51%. Certain industries have been
identified as being particularly vulnerable to the weakening economic
environment such as hotels, restaurants, amusements/recreation, insurance, and
airlines. At December 31, 2001, these industries comprised 6.2% of the total
commercial and commercial real estate portfolios. Given the weakened economic
conditions, Huntington expects that NPAs may increase in 2002, particularly in
the first half of the year. This increase may be offset by reduced NPAs
associated with the Florida operations. However, the ratio of NPAs to total
loans is expected to increase subsequent to the sale.

Loans past due ninety days or more but continuing to accrue interest
increased to $91.6 million at December 31, 2001, versus $80.3 million last year.
This represented 0.42% and 0.39% of total loans, respectively.



- -----------------------------------------------------------------------------------------------------------------------------------
NON-PERFORMING ASSETS AND PAST DUE LOANS
DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------

Non-accrual loans
Commercial $159,637 $ 55,804 $ 42,958 $34,586 $ 36,459
Real Estate
Construction 13,885 8,687 10,785 10,181 5,916
Commercial 34,475 18,015 16,131 13,243 10,212
Residential 11,836 10,174 11,866 14,419 13,394
- -----------------------------------------------------------------------------------------------------------------------------------
Total Non-accrual Loans 219,833 92,680 81,740 72,429 65,981
Renegotiated loans 1,276 1,304 1,330 4,706 5,822
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-PERFORMING LOANS 221,109 93,984 83,070 77,135 71,803
- -----------------------------------------------------------------------------------------------------------------------------------
Other real estate, net 6,384 11,413 15,171 18,964 15,343
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-PERFORMING ASSETS $ 227,493 $ 105,397 $ 98,241 $96,099 $ 87,146
- -----------------------------------------------------------------------------------------------------------------------------------

Accruing loans past due 90 days or more $ 91,635 $ 80,306 $ 61,287 $ 51,037 $ 49,608
- -----------------------------------------------------------------------------------------------------------------------------------

Non-performing loans as a % of total loans 1.02% 0.46% 0.40% 0.40% 0.40%

Non-performing assets as a % of total
loans and other real estate 1.05% 0.51% 0.47% 0.49% 0.49%

Allowance for loan losses as a % of non-
performing loans 185.69% 316.95% 360.31% 377.19% 359.55%

Allowance for loan losses and other real
estate as a % of non-performing assets 180.13% 279.16% 299.85% 301.00% 294.32%

Accruing loans past due 90 days or more to
total loans 0.42% 0.39% 0.30% 0.26% 0.28%


Note: For 2001, the amount of interest income which would have been recorded
under the original terms for total loans classified as non-accrual or
renegotiated was $10.3 million. Amounts actually collected and recorded as
interest income for these loans totaled $4.9 million.


31



CAPITAL AND DIVIDENDS

Capital is managed at each subsidiary based upon the respective risks and
growth opportunities, as well as regulatory requirements. Huntington places
significant emphasis on the maintenance of strong capital, which promotes
investor confidence, provides access to the national markets under favorable
terms, and enhances business growth and acquisition opportunities. Huntington
also recognizes the importance of managing capital and continually strives to
maintain an appropriate balance between capital adequacy and returns to
shareholders.

Shareholders' equity at December 31, 2001, was flat year over year despite
the reduced earnings due to the restructuring and special charges but was
positively impacted by the reduced dividends and the appreciation in the
unrealized fair value of the available-for-sale securities portfolio in 2001.
Cash dividends declared were $0.72 a share in 2001, down from $0.76 a share in
2000. Beginning with the dividends declared in the third quarter of this year,
Huntington reduced its cash dividend to shareholders by 20%.

Average shareholders' equity was $2.4 billion for 2001, compared with $2.3
billion and $2.1 billion for 2000 and 1999, respectively. Huntington's ratio of
average equity to average assets in the recent year was 8.47% versus 7.94% one
year ago. The ratios were 8.48% and 8.27% on a period-end basis. Tangible equity
to assets, which excludes the unrealized losses on securities available for sale
and intangible assets, was 6.04% and 5.87% at the two recent year-ends. The sale
of the Florida operations in early 2002 is expected to temporarily increase
Huntington's tangible equity to asset ratio to approximately 9%. This ratio is
expected to decline as Huntington utilizes the excess capital to repurchase its
common stock. Huntington intends to maintain a minimum ratio of 6.50%.

Risk-based capital guidelines established by the Federal Reserve Board set
minimum capital requirements and require institutions to calculate risk-based
capital ratios by assigning risk weightings to assets, to notional values of
certain financial instruments such as interest rate swaps, and to off-balance
sheet items such as loan commitments and securitizations. These guidelines
further define "well-capitalized" levels for financial institutions. Both
Huntington and its bank subsidiary had regulatory capital ratios in excess of
the levels established for well-capitalized institutions. See note 22 in the
notes to Huntington's consolidated financial statements for more detailed
information regarding regulatory matters.

During 2000, Huntington's Board of Directors authorized the purchase of an
additional 11 million shares under Huntington's common stock repurchase program,
which brought the total shares available under this authorization to 24.1
million shares. Huntington repurchased approximately 8.8 million shares of its
common stock through open market and privately negotiated transactions.
Approximately 7.2 million of these shares were reissued in connection with the
acquisitions of Empire Banc Corporation in June 2000 and the J. Rolfe Davis
Insurance Agency, Inc. in August 2000. As of December 31, 2001, approximately
15.3 million shares remained available under this authorization. Huntington had
not repurchased any shares since September 30, 2000.

In February 2002, Huntington's Board of Directors authorized a new share
repurchase program for up to 22 million shares and cancelled the earlier
authorization. Repurchased shares will be reserved for reissue in connection
with Huntington's dividend reinvestment and employee benefit plans as well as
for acquisitions and other corporate purposes.


LINES OF BUSINESS

Below is a brief description of each line of business and a discussion of
the business segment results. The financial information by line of business for
the years ended December 31, 2001, 2000, and 1999 can be found in Note 21 to the
consolidated financial statements. Retail Banking, Corporate Banking, Dealer
Sales, and the Private Financial Group are Huntington's major business lines. A
fifth segment includes the impact of Huntington's Treasury function and other
unallocated assets, liabilities, revenue, and expense. Line of business results
are determined based upon Huntington's business profitability reporting system
which assigns balance sheet and income statement items to each of the business
segments. This process is designed around Huntington's organizational and
management structure and, accordingly, the results are not necessarily
comparable with similar information published by other financial institutions.
Huntington's management reviews financial results on an operating basis, which
excludes the impact of restructuring and special charges and the 1999 gain on
sale of its credit card portfolio.


32



Operating earnings (loss) for each year, by line of business, reconciled to
net income for Huntington was as follows:



- -------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------

Retail Banking $112,410 $160,526 $ 170,750
Corporate Banking 93,256 114,793 124,294
Dealer Sales 72,822 82,189 76,070
Private Financial Group 27,130 22,905 22,957
Treasury / Other (12,096) (19,467) 20,373
- -------------------------------------------------------------------------------------------------------------------------
Consolidated operating earnings, net of tax 293,522 360,946 414,444
Gain on sale of credit card portfolio, net of tax --- --- 70,545
Restructuring and special charges, net of tax (115,001) (32,500) (62,915)
- -------------------------------------------------------------------------------------------------------------------------
Consolidated net income $178,521 $328,446 $ 422,074
- -------------------------------------------------------------------------------------------------------------------------



RETAIL BANKING
Retail Banking provides products and services to retail and business
banking customers. This segment's products include home equity loans, first
mortgage loans, installment loans, business loans, personal and business deposit
products, as well as investment and insurance services. These products and
services are offered through Huntington's traditional banking network, Direct
Bank, and Web Bank.

Retail Banking's operating earnings, net of tax, was $112.4 million in
2001. This compares with $160.5 million for 2000 and $170.8 million for 1999.
Excluding revenue and expenses related to the sale of Huntington's credit card
portfolio in 1999, net income for that year was $155.4 million. The lower
interest rate environment in 2001 coupled with high runoff of higher-rate loans
in the portfolio offset by strong deposit growth, especially in the second half
of this year, pushed net interest income down nearly 8%. This trend in interest
rates, however, positively impacted mortgage banking income by $21 million over
last year, which helped drive total non-interest income up 15%. The refinancing
activity in residential mortgage loans helped provide cross-selling
opportunities for this segment that resulted in high growth in home equity loans
and personal lines of credit. As noted above, credit quality continued to
deteriorate and as a result, the Retail Banking segment experienced net
charge-offs for 2001 that were more than double that of a year ago, which also
resulted in a significant increase in the provision for loan losses.
Non-interest expense increased $46.3 million due to higher commissions in
relation to the increased mortgage and other fee income as well as increases in
other personnel related costs.

This segment contributed 38% of Huntington's operating earnings for 2001
and comprised 30% of its total loan portfolio and 84% of its core deposits.

CORPORATE BANKING
Customers in this segment represent the middle-market and large corporate
banking relationships which use a variety of banking products and services
including, but not limited to, commercial loans, international trade, and cash
management. Huntington's capital markets division also provides alternative
financing solutions for larger business clients, including privately placed
debt, syndicated commercial lending, and the sale of interest rate protection
products.

Operating earnings for Corporate Banking was $93.3 million for the recent
twelve months, compared with $114.8 million for the same period last year and
$124.3 million for 1999. Increased net loan charge-offs of 54 basis points along
with loan growth of 4% contributed to an increase in the provision for loan
losses of $37.5 million over last year. The segment experienced strong growth in
commercial loans in the first half of 2001 but significantly less in the second
half, while construction and commercial real estate loans showed consistent
growth all year long. This loan growth helped offset the negative impact of
falling interest rates as net interest income increased 5% over the prior year.
Non-interest income for 2001 increased 2% from 2000, driven by a 22% increase in
deposit account services charges, which resulted from higher demand deposit
balances during the year. Also, investment banking fees were up $2.7 million and
letter of credit fees increased $1.6 million. A portion of this fee revenue
increase was offset by lower trust income as institutional fiduciary operations
were reported in to the Private Financial Group during 2001. Non-interest
expense increased 8.6% compared with last year due to increases in outside
services expense, equipment and occupancy expenses, marketing expense, and
professional fees.


33



Corporate Banking contributed 32% of Huntington's operating earnings for
the recent year and comprised 35% of its total loan portfolio and 11% of its
core deposits.

DEALER SALES
Dealer Sales product offerings pertain to the automobile lending sector and
include indirect consumer loans and leases, as well as floor plan financing. The
consumer loans and leases comprise the vast majority of the business and
involves the financing of vehicles purchased or leased by individuals through
dealerships.

Operating earnings for this segment were $72.8 million for the twelve
months ended December 31, 2001, versus $82.2 million and $76.1 million in each
of the prior two annual periods. Higher bankruptcies, a softer used car market
and overall economic conditions, resulted in higher net charge-offs in the auto
lease and indirect lending portfolios. See Huntington's discussion above of
losses involved in certain origination vintages under Provision and Allowance
for Loan Losses. Charge-offs nearly doubled on a combined basis in 2001 versus
2000, increasing the provision for loan losses $28.6 million for 2001. However,
net interest margins on these products widened year over year. Non-interest
income dropped 31% as income from securitization related activities declined
versus the prior year. Non-interest expense included premium expense relating to
policies covering auto lease residual values.

Dealer Sales contributed 25% of Huntington's operating earnings for 2001
and comprised 31% of its outstanding loans.

PRIVATE FINANCIAL GROUP
Huntington's Private Financial Group (PFG) provides an array of products
and services designed to meet the needs of Huntington's higher wealth customers.
Revenue is derived through the sale of personal trust, asset management,
investment advisory, brokerage, insurance, and deposit and loan products and
services.

Operating earnings for this segment for the year were $27.1 million, up
from $22.9 million and $23.0 million reported for 2000 and 1999. Net interest
income grew $6.2 million in 2001, primarily as a result of significant loan
growth (23%) over 2000 combined with wider margins on loan balances. The loan
growth was most notable in consumer loans--personal credit lines and residential
mortgage loans, as declining interest rates incented refinancing activity.
Spreads improved as market rates declined more rapidly than effective rates. The
increase in the provision for loan losses in 2001 was the result of this loan
growth. The overall credit quality in this line of business improved during the
year as charge-offs actually declined from ten basis points in 2000 to nine
basis points in 2001. Non-interest income increased 56% in the most recent year
due largely to higher insurance revenue and higher trust income primarily from
Huntington's proprietary mutual funds. Assets in five new funds that were
introduced during the year grew to over $100 million by the end of this year.
Growth in insurance revenue, along with the increase in non-interest expense,
was largely reflective of the full year contribution from the J. Rolfe Davis
Agency acquisition that occurred in late August 2000. Included in non-interest
expense is the PG&E impairment loss related to activities in The Huntington
National Bank's Money Market Mutual Fund as discussed previously under
Non-Interest Expense above. This segment represented 9% of Huntington's annual
operating earnings and 4% of total loans.

TREASURY / OTHER
The Treasury/Other segment absorbs unassigned assets, liabilities, equity,
revenue, and expense that cannot be directly assigned or allocated to one of
Huntington's lines of business. Furthermore, Huntington uses a match-funded
transfer pricing system to allocate interest income and interest expense to its
business segments. This approach consolidates the interest rate risk management
of Huntington into its Treasury Group. As part of its overall interest rate risk
and liquidity management strategy, the Treasury Group administers an investment
portfolio of approximately $2.8 billion. Revenue and expense associated with
these activities remain within the Treasury Group. Additionally, amortization
expense of intangible assets is also a significant component of Treasury/Other.

This segment reflected a net operating loss of $12.1 million for the
period. This segment showed an operating loss of $19.5 million in 2000, compared
with operating income of $20.4 million for 1999. The effects from the balance
sheet repositioning mentioned earlier offset the widening of spreads, which
favorably affected net interest income for the recent twelve-month period.
Non-interest income was significantly lower, particularly due to security gains
in the two prior years related to the sale of a portion of Huntington's equity
investments. Income taxes included the reconciling items to the statutory tax
rate of 35% in this segment.


34






SELECTED ANNUAL INCOME STATEMENT DATA



- -------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars, YEAR ENDED DECEMBER 31,
except per share amounts) ---------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------

TOTAL INTEREST INCOME $ 1,939,519 $ 2,108,505 $ 2,026,002 $1,999,364 $1,981,473 $1,775,734
TOTAL INTEREST EXPENSE 943,337 1,166,073 984,240 978,271 954,243 880,648
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 996,182 942,432 1,041,762 1,021,093 1,027,230 895,086
Provision for loan losses 308,793 90,479 88,447 105,242 107,797 76,371
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 687,389 851,953 953,315 915,851 919,433 818,715
- -------------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts 164,052 160,727 156,315 126,403 117,852 107,669
Brokerage and insurance income 79,034 61,871 52,076 36,710 27,084 20,856
Trust services 60,298 53,613 52,030 50,754 48,102 42,237
Mortgage banking 59,148 38,025 56,890 60,006 55,715 43,942
Other service charges and fees 48,217 43,883 37,301 29,202 22,705 12,013
Bank Owned Life Insurance income 38,241 39,544 37,560 28,712 --- ---
Other 59,767 58,795 59,901 67,090 63,403 69,726
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME BEFORE SECURITIES
AND CREDIT CARD PORTFOLIO SALE GAINS 508,757 456,458 452,073 398,877 334,861 296,443
- -------------------------------------------------------------------------------------------------------------------------------
Securities gains 723 37,101 12,972 29,793 7,978 17,620
Gains on sale of credit card portfolios --- --- 108,530 9,530 --- ---
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 509,480 493,559 573,575 438,200 342,839 314,063
- -------------------------------------------------------------------------------------------------------------------------------
Personnel costs 478,640 421,750 419,901 428,539 392,793 360,865
Equipment 80,560 78,069 66,666 62,040 57,867 50,887
Net occupancy 77,184 75,882 62,169 54,123 49,509 49,676
Outside data processing and other services 69,692 62,011 62,886 74,795 66,683 58,367
Amortization of intangible assets 41,225 39,207 37,297 25,689 13,019 10,220
Marketing 31,057 34,884 32,506 32,260 32,782 20,331
Telecommunications 27,984 26,225 28,519 29,429 21,527 16,567
Professional services 23,879 20,819 21,169 25,160 24,931 20,313
Printing and supplies 18,367 19,634 20,227 23,673 21,584 19,602
Franchise and other taxes 9,729 11,077 14,674 22,103 19,836 20,359
Other 65,313 46,059 49,314 46,118 51,414 48,323
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE BEFORE SPECIAL
CHARGES 923,630 835,617 815,328 823,929 751,945 675,510
- -------------------------------------------------------------------------------------------------------------------------------
Special charges 99,957 50,000 96,791 90,000 51,163 ---
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 1,023,587 885,617 912,119 913,929 803,108 675,510
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 173,282 459,895 614,771 440,122 459,164 457,268
Income taxes (5,239) 131,449 192,697 138,354 166,501 152,999
- -------------------------------------------------------------------------------------------------------------------------------

NET INCOME $ 178,521 $ 328,446 $ 422,074 $ 301,768 $ 292,663 $ 304,269
- -------------------------------------------------------------------------------------------------------------------------------

PER COMMON SHARE (1)
Net income
Basic $0.71 $1.32 $1.66 $1.18 $1.15 $1.19
Diluted $0.71 $1.32 $1.65 $1.17 $1.14 $1.18
Cash dividends declared $0.72 $0.76 $0.68 $0.62 $0.56 $0.51

FULLY TAX EQUIVALENT MARGIN:
Net Interest Income $ 996,182 $ 942,432 $ 1,041,762 $1,021,093 $1,027,230 $ 895,086
Tax Equivalent Adjustment (2) 6,352 8,310 9,423 10,307 11,864 12,363
- -------------------------------------------------------------------------------------------------------------------------------
Tax Equivalent Net Interest Income $ 1,002,534 $ 950,742 $ 1,051,185 $1,031,400 $1,039,094 $ 907,449
- -------------------------------------------------------------------------------------------------------------------------------


(1) Adjusted for stock dividends and stock splits, as applicable.
(2) Calculated assuming a 35% tax rate.


35



RESULTS FOR THE FOURTH QUARTER

For the fourth quarter 2001, Huntington's net income was $65.6 million
compared with $76.2 million for the same period a year ago. Diluted earnings per
share was $0.26 versus $0.30 for the same respective three month periods. The
fourth quarter 2001 results include $9.8 million of after-tax restructuring and
special charges ($15.1 million pre-tax) associated with the strategic refocusing
plan discussed above, a $50.0 million pre-tax addition to the allowance for loan
losses, increasing the reserve ratio to 1.90% from 1.67% at September 30, and
from 1.45% a year ago, and a $32.5 million reduction in income taxes resulting
from the sale of preferred securities of its REIT subsidiary. Operating
earnings, which excludes these charges and tax benefit, were $75.7 million, or
$0.30 per share, compared with $76.2 million, or $0.30 per share, last year.

On an operating basis, ROE and ROA were 12.68% and 1.07% for the recent
quarter, compared with the 12.89% and 1.06% ratios reported for the fourth
quarter a year ago. "Cash basis" earnings per share was $0.33 per share for both
periods while ROE and ROA, also on a cash basis, was 13.99% and 1.21%,
respectively, for the current period, versus 14.20% and 1.19% for last year's
three-month period.

Fully tax-equivalent net interest income was up 9.1% from $235.1 million a
year ago to $256.5 for the fourth quarter 2001 despite a 2% decline in earning
assets. The net interest margin increased from 3.70% to 4.11% reflecting lower
wholesale funding costs, tighter controls on branch and ATM cash and increased
demand deposits, greater pricing discipline on both loans and deposits, and a
slightly liability-sensitive balance sheet in a period of declining interest
rates.

Loan loss provision expense in the fourth quarter 2001, excluding the $50.0
million addition discussed above, was $58.3 million, up $8.7 million from the
third quarter 2001, and up $25.8 million over the fourth quarter last year.
Provision expense covered net charge-offs and provided for increases in loan
balances. Net charge-offs were $56.1 million in the fourth quarter 2001. This
represented 1.04% of average loans, up from 0.74% in the third quarter 2001 and
0.50% in the fourth quarter last year. Excluding losses on businesses Huntington
exited and for which reserves were established in the second quarter 2001,
adjusted net charge-offs were 0.98%, up from 0.61% in the third quarter 2001.
Commercial net charge-offs increased to 1.39% from 0.56% in the third quarter
from losses over a number of companies in the retail trade, manufacturing,
services, and communications sectors. Total consumer net charge-offs were 1.05%,
up from 0.85% in the third quarter. This increase was driven by net charge-offs
on indirect auto loans, which increased 34 basis points from 1.17% to 1.51%
resulting from seasonality and adverse economic conditions.

Average managed loans, adjusted for the impact of acquisitions,
securitizations, and asset sales, increased 5%, with home equity and commercial
real estate up 18% and 10%, respectively, and auto loans and leases up 5%,
compared with the same quarter a year ago. Total consumer loans increased 6%.

Non-performing assets at December 31, 2001, were $227.5 million, up $17.4
million, or 8%, from September 30, and represented 1.05% of total loans and
other real estate, up from 0.97%. This increase reflects the weakened economy
spread across a number of credits with some concentration in the manufacturing
and services sectors.

Average core deposits increased 7% on an annualized basis from the third
quarter 2001, following an 11% annualized increase in the third quarter. This
was driven by increases in interest bearing and demand deposits, only partially
offset by declines in savings and certificates of deposits. Average core
deposits were up 3% from the fourth quarter a year ago, led by a 23% increase in
interest-bearing demand deposits.

Non-interest income, excluding securities gains, increased $3.3 million, or
2.5%, from the year-ago period. Securitization-related income was particularly
strong in the fourth quarter last year. Excluding this income from both periods,
non-interest income was up 9%. Mortgage banking revenue led all fee categories
with a 32% increase over the prior year's fourth quarter as origination volume
increased to $1.2 billion over volumes of $455 million a year ago and $737
million in the immediately preceding quarter. Brokerage and insurance fees were
up 23%. Annuity sales reached $180 million during the fourth quarter, which was
27% higher than the third quarter and more than double that of last year.
Service charges on deposit accounts and other service charges and fees were both
up 9%.


36



SELECTED QUARTERLY INCOME STATEMENT DATA





- ------------------------------------------------------------------------------------------------------------------------------------

2001 2000
(in thousands of dollars, --------------------------------------------- ---------------------------------------------
except per share amounts) Fourth Third Second First Fourth Third Second First
- ------------------------------------------------------------------------------------------------------------------------------------

TOTAL INTEREST INCOME $ 443,751 $ 478,834 $ 498,959 $ 517,975 $ 537,661 $ 535,791 $ 519,496 $ 515,557
TOTAL INTEREST EXPENSE 188,513 229,047 250,926 274,851 304,595 299,922 286,690 274,866
--------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 255,238 249,787 248,033 243,124 233,066 235,869 232,806 240,691
Provision for loan losses 108,275 49,559 117,495 33,464 32,548 26,396 15,834 15,701
--------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES (1) 146,963 200,228 130,538 209,660 200,518 209,473 216,972 224,990
--------------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts 42,753 41,719 40,673 38,907 39,248 39,722 40,097 41,660
Brokerage and insurance income 20,966 19,912 19,388 18,768 17,078 15,564 13,945 15,284
Mortgage banking 15,768 14,616 18,733 10,031 11,976 9,412 8,122 8,515
Trust services 15,321 15,485 15,178 14,314 14,404 13,181 13,165 12,863
Other service charges and fees 12,552 12,350 12,217 11,098 11,546 11,238 11,250 9,849
Bank Owned Life Insurance income 9,560 9,560 9,561 9,560 11,086 9,786 9,486 9,186
Other 16,088 15,755 14,956 12,968 24,366 11,370 19,485 3,574
--------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME BEFORE
SECURITIES GAINS (LOSSES) 133,008 129,397 130,706 115,646 129,704 110,273 115,550 100,931
Securities gains (losses) 89 1,059 (2,503) 2,078 845 11,379 114 24,763
--------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 133,097 130,456 128,203 117,724 130,549 121,652 115,664 125,694
--------------------------------------------------------------------------------------------------------------------------------
Personnel costs 118,143 120,767 122,068 117,662 105,810 109,463 104,133 102,344
Equipment 20,593 20,151 19,844 19,972 20,811 18,983 18,863 19,412
Net occupancy 19,950 19,266 18,188 19,780 18,614 19,520 18,613 19,135
Outside data processing and other
services 17,992 17,375 17,671 16,654 16,142 15,531 15,336 15,002
Amortization of intangible assets 10,100 10,114 10,435 10,576 10,494 10,311 9,206 9,196
Telecommunications 6,793 6,859 7,207 7,125 6,524 6,480 6,472 6,749
Marketing 6,345 6,921 7,852 9,939 10,592 8,557 7,742 7,993
Professional services 6,235 5,912 6,763 4,969 6,785 4,719 4,815 4,500
Printing and supplies 4,293 4,450 4,565 5,059 5,212 4,849 4,956 4,617
Franchise and other taxes 2,893 2,470 2,246 2,120 3,163 2,841 2,635 2,438
Other 14,017 14,605 16,457 20,234 19,703 12,331 5,305 8,720
--------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE BEFORE
SPECIAL CHARGES 227,354 228,890 233,296 234,090 223,850 213,585 198,076 200,106
Special charges 15,143 50,817 33,997 --- --- 50,000 --- ---
--------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 242,497 279,707 267,293 234,090 223,850 263,585 198,076 200,106
--------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 37,563 50,977 (8,552) 93,294 107,217 67,540 134,560 150,578
Income taxes (28,086) 8,348 (10,929) 25,428 30,995 17,010 37,039 46,405
--------------------------------------------------------------------------------------------------------------------------------

NET INCOME $ 65,649 $ 42,629 $ 2,377 $ 67,866 $ 76,222 $ 50,530 $ 97,521 $ 104,173
--------------------------------------------------------------------------------------------------------------------------------

PER COMMON SHARE (2)
Net income--Diluted $ 0.26 $ 0.17 $ 0.01 $ 0.27 $ 0.30 $ 0.20 $ 0.40 $ 0.42
Cash Dividends Declared $ 0.16 $ 0.16 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.18 $ 0.18

OPERATING RESULTS (3)
Operating income $ 75,492 $ 75,660 $ 74,504 $ 67,866 $ 76,222 $ 83,030 $ 97,521 $ 104,173
Operating income per common share
Diluted $ 0.30 $ 0.30 $ 0.30 $ 0.27 $ 0.30 $ 0.33 $ 0.40 $ 0.42
Diluted - Cash Basis (4) $ 0.33 $ 0.33 $ 0.33 $ 0.30 $ 0.32 $ 0.35 $ 0.42 $ 0.44



(1) Includes $50.0 million charge in the fourth quarter 2001 to increase its
loan loss reserve and $71.7 million charge in the second quarter 2001
included in Huntington's restructuring and special charges associated with
its strategic refocusing plan. See the discussion of these charges above.

(2) Adjusted for stock splits and stock dividends, as applicable.

(3) Excludes restructuring and special charges, net of related taxes, discussed
above.

(4) "Cash Basis" net income excludes amortization of goodwill.


37



RESULTS FOR THE FOURTH QUARTER -- CONTINUED

Excluding restructuring and special charges discussed above, non-interest
expense increased $3.5 million, or 1.6%, over the same period last year, but
declined $1.5 million from the third quarter 2001 following a $4.4 million
decrease in that quarter. Sales commissions were up and consistent with the
associated revenue generation in mortgage banking, private financial services,
and capital markets. The efficiency ratio improved to 55.77%, down from 57.48%
in the third quarter 2001 and 58.48% in the fourth quarter 2000. This was the
third consecutive quarterly improvement from a peak of 62.0% in the first
quarter 2001.


SUBSEQUENT EVENTS

SALE OF FLORIDA OPERATIONS
On February 15, 2002, Huntington sold its Florida operations to SunTrust
Banks, Inc. These operations included 143 banking offices and 456 ATMs with
approximately $2.8 billion in loans and other tangible assets, and $4.8 billion
in deposits and other liabilities. Huntington received a 15% premium on the
deposits sold. This sale resulted in Huntington increasing its wholesale
borrowings by $1.2 billion. The transaction slightly improves Huntington's
earnings sensitivity to rising interest rates. In addition, the net interest
margin, tangible equity to assets, and efficiency ratios will be favorably
impacted. The dollar value of NPAs was reduced but the NPA ratios increased with
the sale. The impact of the sale is discussed in the sections entitled "Results
of Operations", "Interest Rate Risk and Liquidity Management", "Credit Risk",
and Capital and Dividends".

ACQUISITION OF HABERER INVESTMENT ADVISOR, INC.
On February 21, 2002, Huntington announced that it signed a definitive
agreement to purchase Haberer Investment Advisor, Inc. (Haberer), a
Cincinnati-based registered investment advisory firm. Haberer has $500 million
in assets under management and will become part of Huntington's Private
Financial Group line of business as a wholly-owned subsidiary of Huntington.


38




MARKET PRICES, KEY RATIOS, AND STATISTICS



- ----------------------------------------------------------------------------------------------------------------------------------
QUARTERLY COMMON STOCK SUMMARY (1)
- ----------------------------------------------------------------------------------------------------------------------------------

2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ----------------------------------------------------------------------------------------------------------------------------------

High $17.490 $19.280 $17.000 $18.000 $16.375 $18.813 $21.307 $21.818
Low 14.510 15.150 13.850 12.625 12.516 14.375 14.091 16.136
Close 17.190 17.310 16.350 14.250 16.188 14.688 14.375 20.341
Cash dividends declared $ 0.16 $0.16 $0.20 $ 0.20 $0.20 $0.20 $0.18 $0.18


Note: Stock price quotations were obtained from NASDAQ.

- ------------------------------------------------------------------------------------------------------------------------------
QUARTERLY KEY RATIOS AND STATISTICS (1)
- ------------------------------------------------------------------------------------------------------------------------------

2001 2000
- ------------------------------------------------------------------------------------------------------------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ------------------------------------------------------------------------------------------------------------------------------
MARGIN ANALYSIS - AS A %
OF AVERAGE EARNING ASSETS (2)
Interest Income 7.12% 7.70% 7.98% 8.39% 8.47% 8.43% 8.27% 8.08%
Interest Expense 3.01% 3.66% 4.01% 4.46% 4.77% 4.69% 4.55% 4.30%
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Margin 4.11% 4.04% 3.97% 3.93% 3.70% 3.74% 3.72% 3.78%
- ------------------------------------------------------------------------------------------------------------------------------

RETURN ON (3)
Average total assets 1.07% 1.07% 1.05% 0.97% 1.06% 1.15% 1.37% 1.45%
Average total
assets - cash basis 1.21% 1.21% 1.19% 1.11% 1.21% 1.30% 1.51% 1.58%

Average shareholders' equity 12.68% 12.64% 12.43% 11.53% 12.89% 14.04% 17.79% 18.99%
Average shareholders'
equity - cash basis 13.99% 13.93% 13.72% 12.86% 14.20% 15.33% 18.97% 20.17%

Efficiency ratio (3) 55.77% 57.48% 58.59% 61.95% 58.48% 58.38% 53.90% 53.93%

Effective tax rate (3) 26.50% 25.67% 27.25% 27.26% 28.91% 29.36% 27.53% 30.82%


- ----------------------------------------------------------------------------------------------------------------------------------
QUARTERLY REGULATORY CAPITAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
(in millions of dollars) FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
- ----------------------------------------------------------------------------------------------------------------------------------

Total Risk-Adjusted Assets $ 27,896 $ 27,764 $27,375 $27,230 $26,880 $26,370 $25,900 $25,251

Ratios:
Tier 1 Risk-Based Capital 7.24% 6.97% 7.01% 7.19% 7.19% 7.20% 7.40% 7.23%
Total Risk-Based Capital 10.29% 10.13% 10.20% 10.31% 10.46% 10.64% 10.90% 10.90%
Tier 1 Leverage 7.41% 7.10% 6.96% 7.12% 6.93% 6.80% 6.89% 6.45%



- ----------------------------------------------------------------------
(1) Adjusted for stock splits and stock dividends, as applicable.
(2) Presented on a fully tax equivalent basis assuming a 35% tax rate.
(3) Excludes restructuring and special charges, net of related taxes, discussed
above.


39



ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information required by this item is set forth in Item 7 on pages 26
through 28 under the caption "Interest Rate Risk and Liquidity Management."

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF MANAGEMENT

The management of Huntington is responsible for the financial information
and representations contained in the consolidated financial statements and other
sections of this report. The consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States. In all material respects, they reflect the substance of
transactions that should be included based on informed judgments, estimates, and
currently available information.
Huntington maintains accounting and other control systems that, in the
opinion of management, provide reasonable assurance that (1) transactions are
properly recorded on the books and records, and (2) that the assets are properly
safeguarded. The systems of internal accounting controls include the careful
selection and training of qualified personnel, appropriate segregation of
responsibilities, communication of written policies and procedures, and a broad
program of internal audits. The costs of the controls are balanced against the
expected benefits. During 2001, the Audit Committee of the Board of Directors
met regularly with management, Huntington's internal auditors, and the
independent auditors, Ernst & Young LLP, to review the scope of the audits and
to discuss the evaluation of internal accounting controls and financial
reporting matters. The independent and internal auditors have free access to and
meet confidentially with the Audit Committee to discuss appropriate matters.
The independent auditors are responsible for expressing an informed
judgment as to whether the consolidated financial statements present fairly, in
accordance with accounting principles generally accepted in the United States,
the financial position, results of operations and cash flows of Huntington. They
obtained an understanding of Huntington's internal accounting controls and
conducted such tests and related procedures as they deemed necessary to provide
reasonable assurance, giving due consideration to materiality, that the
consolidated financial statements contain neither misleading nor erroneous data.
Their report appears below.

/s/ Thomas E. Hoaglin /s/ Michael J. McMennamin
- ------------------------------------ -----------------------------------
Thomas E. Hoaglin Michael J. McMennamin
Chairman, President and Chief Vice Chairman, Chief Financial Officer,
Executive Officer and Treasurer

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Shareholders, Huntington Bancshares Incorporated

We have audited the accompanying consolidated balance sheets of Huntington
Bancshares Incorporated and Subsidiaries as of December 31, 2001 and 2000, and
the related consolidated statements of income, changes in shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Huntington
Bancshares Incorporated and Subsidiaries at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.

/s/ Ernst & Young, LLP

Columbus, Ohio

January 18, 2002, except for note 24 "Sale of Florida Operations", as to which
the date is February 15, 2002


40



CONSOLIDATED BALANCE SHEETS



- -------------------------------------------------------------------------------------------------------------------------------
December 31,
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars, except share information) 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------

ASSETS
Cash and due from banks $ 1,138,366 $ 1,322,700
Interest bearing deposits in banks 21,205 4,970
Trading account securities 13,392 4,723
Federal funds sold and securities purchased under resale agreements 83,275 133,183
Mortgages held for sale 629,386 155,104
Securities available for sale - at fair value 2,849,579 4,090,525
Investment securities - fair value of $12,499 in 2001 and $16,414 in 2000 12,322 16,336
Total loans, net of unearned income 21,601,873 20,610,191
Less allowance for loan losses 410,572 297,880
- -------------------------------------------------------------------------------------------------------------------------------
Net loans 21,191,301 20,312,311
- -------------------------------------------------------------------------------------------------------------------------------
Bank owned life insurance 843,183 804,941
Goodwill and other intangibles, net of accumulated amortization 716,054 755,270
Premises and equipment 452,036 454,844
Customers' acceptance liability 13,670 17,366
Accrued income and other assets 536,390 527,104
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 28,500,159 $ 28,599,377
- -------------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Interest bearing $ 16,446,241 $ 16,272,279
Non-interest bearing 3,741,063 3,504,966
- -------------------------------------------------------------------------------------------------------------------------------
Total Deposits 20,187,304 19,777,245
- -------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 1,955,926 1,987,759
Bank acceptances outstanding 13,670 17,366
Medium-term notes 1,795,002 2,467,150
Subordinated notes and other long-term debt 944,330 870,976
Company obligated mandatorily redeemable preferred capital securities of subsidiary
trusts holding solely the junior subordinated debentures of the parent company 300,000 300,000
Accrued expenses and other liabilities 887,487 812,834
- -------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 26,083,719 26,233,330
- -------------------------------------------------------------------------------------------------------------------------------

Shareholders' Equity
Preferred stock - authorized 6,617,808 shares; none issued or outstanding --- ---
Common stock - without par value; authorized 500,000,000 shares;
issued 257,866,255 shares in 2001 and 2000; outstanding 251,193,814
shares in 2001 and 250,859,470 shares in 2000 2,490,724 2,493,645
Less treasury shares of 6,672,441 in 2001 and 7,006,785 in 2000 (123,849) (129,432)
Accumulated other comprehensive income (loss) 25,488 (24,520)
Retained earnings 24,077 26,354
- -------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 2,416,440 2,366,047
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 28,500,159 $ 28,599,377
- -------------------------------------------------------------------------------------------------------------------------------


See notes to consolidated financial statements.


41





CONSOLIDATED STATEMENTS OF INCOME

- ---------------------------------------------------------------------------------------------------------------------------------
TWELVE MONTHS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars, except share amounts) 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------

Interest and fee income
Loans $1,692,311 $1,808,254 $1,693,379
Securities 216,215 284,719 314,061
Other 30,993 15,532 18,562
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 1,939,519 2,108,505 2,026,002
- ---------------------------------------------------------------------------------------------------------------------------------
Interest expense
Deposits 657,892 782,076 639,605
Short-term borrowings 95,859 113,134 114,289
Medium-term notes 121,701 189,311 170,061
Subordinated notes and other long-term debt 67,885 81,552 60,285
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 943,337 1,166,073 984,240
- ---------------------------------------------------------------------------------------------------------------------------------

NET INTEREST INCOME 996,182 942,432 1,041,762
Provision for loan losses 308,793 90,479 88,447
- ---------------------------------------------------------------------------------------------------------------------------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 687,389 851,953 953,315
- ---------------------------------------------------------------------------------------------------------------------------------

Non-interest income
Service charges on deposit accounts 164,052 160,727 156,315
Brokerage and insurance income 79,034 61,871 52,076
Trust services 60,298 53,613 52,030
Mortgage banking 59,148 38,025 56,890
Other service charges and fees 48,217 43,883 37,301
Bank Owned Life Insurance income 38,241 39,544 37,560
Securities gains 723 37,101 12,972
Gains on sale of credit card portfolio --- --- 108,530
Other 59,767 58,795 59,901
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 509,480 493,559 573,575
- ---------------------------------------------------------------------------------------------------------------------------------

Non-interest expense
Personnel costs 478,640 421,750 419,901
Equipment 80,560 78,069 66,666
Net occupancy 77,184 75,882 62,169
Outside data processing and other services 69,692 62,011 62,886
Amortization of intangible assets 41,225 39,207 37,297
Marketing 31,057 34,884 32,506
Telecommunications 27,984 26,225 28,519
Professional services 23,879 20,819 21,169
Printing and supplies 18,367 19,634 20,227
Franchise and other taxes 9,729 11,077 14,674
Special charges 99,957 50,000 96,791
Other 65,313 46,059 49,314
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 1,023,587 885,617 912,119
- ---------------------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES 173,282 459,895 614,771
Income taxes (5,239) 131,449 192,697
- ---------------------------------------------------------------------------------------------------------------------------------

NET INCOME $ 178,521 $ 328,446 $ 422,074
- ---------------------------------------------------------------------------------------------------------------------------------

PER COMMON SHARE
Net income
Basic $0.71 $1.32 $1.66
Diluted $0.71 $1.32 $1.65

Cash dividends declared $0.72 $0.76 $0.68

AVERAGE COMMON SHARES
Basic 251,078,025 248,708,965 253,559,501
Diluted 251,715,849 249,570,098 255,646,520



See notes to consolidated financial statements.


42



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY



- -----------------------------------------------------------------------------------------------------------------------------------

ACCUMULATED
COMMON TREASURY OTHER
-------------------------------------- COMPREHENSIVE RETAINED
(in thousands, except per share amounts) SHARES STOCK SHARES STOCK INCOME EARNINGS TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------

BALANCE -- DECEMBER 31, 1998 212,596 $2,137,915 (1,850) $ (49,271) $ 24,693 $ 35,458 $ 2,148,795

Comprehensive Income:
Net income 422,074 422,074
Unrealized net holding losses on securities
available for sale arising during the period,
net of reclassification adjustment for net
gains included in net income (118,786) (118,786)
------------
Total comprehensive income 303,288
------------
Cash dividends declared ($0.68 per share) (175,836) (175,836)
Stock options exercised (5,543) 329 9,251 3,708
10% stock dividend 21,249 152,584 (304) (152,935) (351)
Treasury shares purchased (3,156) (97,957) (97,957)
Treasury shares sold to employee benefit plans 24 709 709
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE -- DECEMBER 31, 1999 233,845 2,284,956 (4,957) (137,268) (94,093) 128,761 2,182,356
- ------------------------------------------------------------------------------------------------------------------------------------

Comprehensive Income:
Net income 328,446 328,446
Unrealized net holding gains on securities
available for sale arising during the period,
net of reclassification adjustment for net
gains included in net income 69,573 69,573
------------
Total comprehensive income 398,019
------------
Stock issued for acquisitions (29,399) 7,175 171,781 142,382
Cash dividends declared ($0.76 per share) (189,191) (189,191)
Stock options exercised (3,395) 115 3,751 356
10% stock dividend 24,021 241,483 (1,182) (241,662) (179)
Treasury shares purchased (8,188) (168,395) (168,395)
Treasury shares sold to employee benefit plans 30 699 699
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE -- DECEMBER 31, 2000 257,866 2,493,645 (7,007) (129,432) (24,520) 26,354 2,366,047
- ------------------------------------------------------------------------------------------------------------------------------------

COMPREHENSIVE INCOME:
NET INCOME 178,521 178,521
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE FOR DERIVATIVES (9,113) (9,113)
UNREALIZED NET HOLDING GAINS ON SECURITIES
AVAILABLE FOR SALE ARISING DURING THE PERIOD,
NET OF RECLASSIFICATION ADJUSTMENT FOR NET
GAINS INCLUDED IN NET INCOME 53,989 53,989
UNREALIZED GAINS ON DERIVATIVE INSTRUMENTS
USED IN CASH FLOW HEDGING RELATIONSHIPS 5,132 5,132
------------
TOTAL COMPREHENSIVE INCOME 228,529
------------
CASH DIVIDENDS DECLARED ($0.72 PER SHARE) (180,798) (180,798)
STOCK OPTIONS EXERCISED (2,921) 264 4,378 1,457
TREASURY SHARES SOLD TO EMPLOYEE BENEFIT PLANS 71 1,205 1,205
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE -- DECEMBER 31, 2001 257,866 $2,490,724 (6,672) $(123,849) $ 25,488 $ 24,077 $ 2,416,440
- ------------------------------------------------------------------------------------------------------------------------------------


See notes to consolidated financial statements.

43



CONSOLIDATED STATEMENTS OF CASH FLOWS



- -------------------------------------------------------------------------------------------------------------------------------
TWELVE MONTHS ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
Net Income $ 178,521 $ 328,446 $ 422,074
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan losses 308,793 90,479 88,447
Provision for depreciation and amortization 101,233 110,908 112,491
Deferred income tax expense 118,025 237,336 84,748
(Increase) decrease in trading account securities (8,669) 3,252 (4,136)
(Increase) decrease in mortgage loans held for sale (474,282) (13,381) 324,941
Net gains on sales of securities available for sale (723) (37,101) (12,972)
Gains on sales of loans and loan securitizations (9,464) (4,853) (108,623)
Increase in accrued income receivable (421) (24,811) (27,590)
Decrease in accrued expenses (131,291) (68,150) (46,610)
Decrease in other assets / other liabilities (41,397) (96,203) (93,098)
Special charges 99,957 50,000 96,791
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 140,282 575,922 836,463
- -------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
(Increase) decrease in interest bearing deposits in banks (16,235) 1,588 96,006
Proceeds from:
Maturities and calls of investment securities 4,009 2,408 6,132
Maturities and calls of securities available for sale 1,021,766 415,571 651,716
Sales of securities available for sale 1,410,304 1,758,473 1,771,589
Purchases of securities available for sale (1,056,840) (239,084) (2,685,503)
Proceeds from sales of loans held for sale and loan securitizations 514,897 1,556,093 686,548
Net loan originations, excluding sales (1,788,889) (2,230,489) (1,853,343)
Proceeds from sale of premises and equipment 3,714 3,504 17,111
Purchases of premises and equipment (63,177) (65,160) (76,063)
Proceeds from sales of other real estate 15,733 13,766 12,570
Net cash received in purchase acquisitions --- 12,004 ---
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 45,282 1,228,674 (1,373,237)
- -------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Increase (decrease) in total deposits 423,157 (443,921) 69,880
Decrease in short-term borrowings (31,833) (144,230) (94,655)
Proceeds from issuance of long-term debt 50,000 150,000 ---
Maturity of long-term debt (8,000) --- (10,000)
Proceeds from issuance of medium-term notes 665,000 580,000 2,332,000
Payment of medium-term notes (1,330,000) (1,367,000) (1,617,750)
Dividends paid on common stock (190,792) (185,103) (171,858)
Repurchases of common stock --- (168,395) (97,957)
Net proceeds from issuance of common stock 2,662 1,055 4,417
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (419,806) (1,577,594) 414,077
- -------------------------------------------------------------------------------------------------------------------------------
CHANGE IN CASH AND CASH EQUIVALENTS (234,242) 227,002 (122,697)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,455,883 1,228,881 1,351,578
- -------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,221,641 $ 1,455,883 $ 1,228,881
- -------------------------------------------------------------------------------------------------------------------------------


See notes to consolidated financial statements.


44




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS: Huntington Bancshares Incorporated (Huntington) is a
multi-state bank holding company organized under Maryland law in 1966 and
headquartered in Columbus, Ohio. Through its subsidiaries, Huntington is engaged
in full-service commercial and consumer banking, mortgage banking, lease
financing, trust services, discount brokerage services, underwriting credit life
and disability insurance, issuing commercial paper guaranteed by Huntington, and
selling other insurance and financial products and services. Huntington's
subsidiaries operate domestically in offices located in Florida, Georgia,
Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, South
Carolina, and West Virginia. Huntington also has a foreign office in the Cayman
Islands and a foreign office in Hong Kong.

BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of Huntington and its subsidiaries and are presented in conformity with
accounting principles generally accepted in the United States (GAAP). All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain prior period amounts have been reclassified to conform to
the current year's presentation.

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect amounts reported in the
financial statements. Actual results could differ from those estimates.

SECURITIES: Securities purchased with the intention of recognizing
short-term profits are classified as trading account securities and reported at
fair value. Unrealized gains or losses on trading securities are reported in
earnings. Debt securities that Huntington has both the positive intent and
ability to hold to maturity are classified as investment securities and are
reported at amortized cost. Securities not classified as trading or investments
are designated available for sale and reported at fair value. Unrealized gains
or losses on securities available for sale are reported as a separate component
of accumulated other comprehensive income in shareholders' equity. The amortized
cost of specific securities sold is used to compute realized gains and losses.

LOANS AND LEASES: Loans are reported net of unearned income at the
principal amounts outstanding. Interest income is accrued as earned based on
unpaid principal balances. Net direct loan origination costs/fees, when
material, are deferred and amortized over the term of the loan as a yield
adjustment.

Leases, primarily involving automobiles, are stated at the sum of all
minimum lease payments and estimated residual values less unearned income.
Unearned income is recognized in interest income on a basis to achieve a
constant periodic rate of return on the outstanding investment. Residual values
are established at the inception of the lease and represent the estimated value
of the automobiles at lease maturity based on an industry guide published by
Automotive Lease Guide (ALG).

In late 2000, Huntington purchased residual value insurance coverage. The
insurance covers the difference between the recorded residual value and the fair
value of the automobile at the end of the lease term as evidenced by Black Book
valuations. The insurance provides first dollar loss coverage on the portfolio
at October 1, 2000 and has a cap on insured losses of $120 million. Insured
losses on new lease originations from October 2000 to March 31, 2002 have a cap
of $50 million. The insurance coverage is subject to annual renewal.

Insurance does not cover residual losses below Black Book value. That
situation occurs usually when the automobile has excess wear and tear and/or
excess mileage not reimbursable by the lessor. Huntington has a reserve of $34.9
million, which is available to cover these losses. This reserve is based on
management's periodic evaluation of several factors including types of
automobiles, lease terms and assumptions concerning automobile supply and
demand, new product offerings and prices charged by manufacturers.

Commercial loans and leases and loans secured by real estate are placed on
non-accrual status and stop accruing interest when principal or interest
payments are 90 days or more past due, terms are renegotiated below market
levels, or the borrower's creditworthiness is in doubt. A loan or lease may
remain in accruing status when it is sufficiently collateralized, which means
the collateral covers the full repayment of principal and interest, and is in
the process of collection. When interest accruals are suspended, accrued
interest income is reversed with current year accruals charged to earnings and
prior year amounts generally charged off as a credit loss.


45



Commercial and commercial real estate loans are evaluated for impairment in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 114, Accounting by Creditors for Impairment of a Loan. This Statement
requires an allowance to be established as a component of the allowance for loan
losses when it is probable that all amounts due pursuant to the contractual
terms of the loan will not be collected and the recorded investment in the loan
exceeds its fair value. Fair value is measured using either the present value of
expected future cash flows discounted at the loan's effective interest rate, the
observable market price of the loan or the fair value of the collateral if the
loan is collateral dependent. All loans considered impaired are included in
nonperforming assets.

Consumer loans and leases are subject to mandatory charge-off at a
specified delinquency date and are not classified as nonperforming prior to
being charged off. Consumer loans and leases, which include those secured by
automobiles, are generally charged off in full no later than when the loan
becomes 120 days past due.

Huntington uses the cost recovery method in accounting for cash received on
nonperforming loans. Under this method, cash receipts are applied entirely
against principal until the loan has been collected in full, after which time
any additional cash receipts are recognized as interest income.

SECURITIZED LOANS: Securitized loans are accounted for in accordance with
SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, which was fully adopted by Huntington in 2001.
Asset securitization involves the sale of a pool of loan receivables, generally
to a trust, in exchange for funding collaterized by these loans. The trust then
sells undivided interests in the trust to investors, while Huntington retains
the remaining undivided interests, referred to as retained interest. While the
loans are removed at the time of sale, this retained interest is recorded as an
asset equal to its estimated fair value. An asset is also established for the
servicing of the loans sold, which Huntington retained at the time of sale,
equal to the fair value of the servicing rights. Gains and losses on the loans
sold, retained interest, and servicing rights associated with loan
securitizations are determined when the related loans are sold based on the
present value of expected future cash flows from the underlying loans, net of
interest payments to security holders. The present value of expected future cash
flows is determined using assumptions for market interest rates, loan losses,
and prepayment rates. Management also uses these assumptions to determine
subsequent fair value and impairment of the retained interest and the servicing
rights. The retained interest is included in securities available for sale and
the servicing rights are recorded in other assets in the consolidated balance
sheets.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses reflects
management's judgment as to the level considered appropriate to absorb inherent
losses in the loan portfolio. This judgment is based on the size and current
risk characteristics of the loan portfolio, a review of individual loans,
historical and anticipated loss experience, general economic conditions,
economic conditions in the relevant geographic areas and specific industries,
portfolio trends, regulatory guidelines and other factors.

The allowance is determined subjectively, requiring significant estimates,
including the timing and amounts of expected future cash flows on impaired
loans, consideration of current economic conditions and historical loss
experience pertaining to pools of homogeneous loans, all of which may be
susceptible to change. The allowance is increased through a provision that is
charged to earnings, based on management's periodic evaluation of the factors
previously mentioned and is reduced by charge-offs, net of recoveries, and the
allowance associated with securitized loans.

The allowance for loan losses consists of an allocated portion and an
unallocated portion. The components of the allowance for loan losses represent
estimates developed pursuant to SFAS No. 5, Accounting for Contingencies, and
SFAS No. 114. The allocated portion of the allowance for loan losses reflects
expected losses resulting from analyses developed through historical loss
experience and specific credit allocations at the individual loan level for
commercial and commercial real estate loans. The specific credit allocations are
based on a regular analysis of all loans by credit rating. The historical loan
loss element is determined quantitatively using a loss migration analysis that
examines both the likelihood of default and the loss factor in event of default
by loan category and internal credit rating. The loss migration analysis is
performed periodically and loss factors are updated regularly based on actual
experience. The allocated component of the allowance for loan losses also
includes management's determination of the amounts necessary for concentrations
and changes in portfolio mix and volume. The portion of the allowance allocated
to homogeneous consumer loans is determined by applying expected loss ratios to
various segments of the loan portfolio giving consideration to existing economic
conditions and trends. The unallocated portion of the allowance is determined
based on management's assessment of general economic conditions, as well as
specific economic conditions in the individual markets in which Huntington
operates. This determination inherently involves a higher


46



degree of uncertainty and considers current risk factors that may not have yet
manifested themselves in Huntington's historical loss factors used to determine
the allocated portion of the allowance.

RESELL AND REPURCHASE AGREEMENTS: Securities purchased under agreements to
resell and securities sold under agreements to repurchase are generally treated
as collateralized financing transactions and are recorded at the amounts at
which the securities were acquired or sold plus accrued interest. Securities,
generally U.S. government and Federal agency securities, pledged as collateral
under these financing arrangements cannot be sold or repledged by the secured
party. The fair value of collateral either received from or provided to a third
party is continually monitored and additional collateral is obtained or is
requested to be returned to Huntington as deemed appropriate.

GOODWILL AND OTHER INTANGIBLE ASSETS: Net assets of entities acquired, for
which the purchase method of accounting was used by Huntington, were recorded at
their estimated fair value at the date of acquisition. Goodwill, which
represents the excess of cost over the fair value of net assets acquired, is
being amortized over periods generally up to 25 years. Core deposits and other
identifiable acquired intangible assets are amortized over their estimated
useful lives. Management reviews goodwill and other intangible assets arising
from business combinations for impairment annually or whenever a significant
event occurs that adversely affects operations or when changes in circumstances
indicate that the carrying value may not be recoverable. See the discussion in
note 2 regarding the new accounting pronouncements for goodwill that will become
effective for Huntington on January 1, 2002.

MORTGAGE BANKING ACTIVITIES: Loans held for sale are primarily composed of
performing 1-to-4-family residential mortgage loans originated for resale and
are carried at the lower of cost or market as determined on an aggregate basis.
Market value is determined primarily by outstanding commitments from investors.

Huntington recognizes the rights to service mortgage loans as separate
assets, which are included in other assets in the consolidated balance sheets.
The total cost of loans when sold is allocated between loans and servicing
rights based on the relative fair values of each. Purchased mortgaged servicing
rights are initially recorded at cost. All servicing rights are subsequently
carried at the lower of the initial carrying value, adjusted for amortization,
or fair value. Servicing rights are evaluated for impairment based on the fair
value of those rights, using a disaggregated approach. The fair value of the
servicing rights is determined by estimating the present value of future net
cash flows, taking into consideration market loan prepayment speeds, discount
rates, servicing costs, and other economic factors. Servicing rights are
amortized over the estimated period of net servicing revenue. As of December 31,
2001 and 2000, mortgage servicing assets had carrying values of $35.3 million
and $29.2 million, respectively.

PREMISES AND EQUIPMENT: Premises and equipment are stated at cost, less
accumulated depreciation and amortization. Depreciation is computed principally
by the straight-line method over the estimated useful lives of the related
assets. Buildings and building improvements are depreciated over an average of
30 years and 10 to 20 years, respectively. Land improvements and furniture and
fixtures are depreciated over 10 years while equipment is depreciated over a
range of 3 to 7 years. Leasehold improvements are amortized over the lives of
the related leases. Maintenance and repairs are charged to expense as incurred,
while improvements that extend the useful life of an asset are capitalized and
depreciated over the remaining useful life.

OTHER REAL ESTATE: Other real estate acquired through partial or total
satisfaction of loans, is included in other assets and carried at the lower of
cost or fair value less estimated costs of disposition. At the date of
acquisition, any losses are charged to the allowance for loan losses. Subsequent
write-downs are included in non-interest expense. Realized losses from
disposition of the property and declines in fair value that are considered
permanent are charged to the reserve for other real estate, as applicable.

DERIVATIVE FINANCIAL INSTRUMENTS: Derivative financial instruments,
primarily interest rate swaps, are accounted for in accordance with SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities, as amended.
This Statement requires every derivative instrument to be recorded in the
balance sheet as either an asset or liability measured at its fair value and
that Huntington formally document, designate, and assess the effectiveness of
transactions for which hedge accounting is applied. Depending on the nature of
the hedge and the extent to which it is effective, the changes in fair value of
the derivative recorded through earnings will either be offset against the
change in the fair value of the hedged item in earnings or recorded in
comprehensive income and subsequently recognized in earnings in the period the
hedged item affects earnings. The portion of a hedge that is ineffective and all
changes in the fair value of derivatives not designated as hedges, referred to
as trading instruments, are recognized immediately in earnings. Trading
instruments are carried at fair value with changes in fair value included in
other non-interest income. Trading instruments are executed primarily with the
Huntington's customers to


47



facilitate their interest rate and foreign currency risk management strategies.
Derivative instruments used for trading purposes typically include interest rate
swaps, including callable swaps, interest rate caps and floors, and interest
rate and foreign exchange futures, forwards and options.

Upon adoption of SFAS No. 133, as amended, Huntington designated its
portfolio of derivative financial instruments used for risk management purposes
into fair value or cash flow hedges. Derivatives used to hedge changes in fair
value of assets and liabilities due to changes in interest rates or other
factors were designated as fair value hedges and those used to hedge changes in
forecasted cash flows, due generally to interest rate risk, were designated as
cash flow hedges. The impact of implementing the new standard required
transition adjustments to be recorded and reflected as cumulative effect
adjustments in the 2001 Consolidated Financial Statements, as promulgated by
Accounting Principles Board Opinion No. 20, Accounting Changes. The after-tax
transition adjustment was immaterial to net income and reduced other
comprehensive income (OCI) $9.1 million.

Prior to adoption of SFAS No. 133, Huntington employed deferral accounting
when the market value of the hedging instrument, primarily an interest rate
swap, met the objectives of its asset and liability management strategy. The
hedged item was reported at other than fair value. In such cases, gains and
losses associated with futures and forwards were deferred as an adjustment to
the carrying value of the related asset or liability and were recognized in the
corresponding interest income or expense accounts over the remaining life of the
hedged item. If the hedged item were sold or its outstanding balance otherwise
declined below that of the related hedging instrument, the hedging instrument
was marked to market and the resulting gain or loss was included in earnings.
There was no recognition on the balance sheet for changes in the fair value of
the hedging instrument, except for interest rate swaps designated as hedges of
securities available for sale, for which changes in fair values were reported in
accumulated OCI. Premiums paid for interest rate options were deferred as a
component of other assets and amortized to interest income or expense over the
contract term. Gains and losses on terminated hedging instruments were also
deferred and amortized to interest income or expense generally over the
remaining life of the hedged item. Hedging instruments not meeting the
objectives of its asset and liability management strategy were carried on the
balance sheet at fair value with realized and unrealized changes in fair value
recognized in earnings.

INCOME TAXES: Income taxes are accounted for under the asset and liability
method. Accordingly, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are determined
using enacted tax rates expected to apply in the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income at the
time of enactment of such change in tax rates.

SEGMENT RESULTS: Accounting policies for the lines of business are the same
as those used in the preparation of the consolidated financial statements with
respect to activities specifically attributable to each business line. However,
the preparation of business line results requires management to establish
methodologies to allocate funding costs and benefits, expenses, and other
financial elements to each line of business.

STATEMENT OF CASH FLOWS: Cash and cash equivalents are defined as "Cash and
due from banks" and "Federal funds sold and securities purchased under resale
agreements." Interest payments made by Huntington were $986.1 million, $1.2
billion, and $987.6 million, in 2001, 2000, and 1999, respectively. Federal
income tax payments were $175,000 in 2001, $1.2 million in 2000, and $80.8
million in 1999.

2. NEW ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business Combinations, and No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Any other intangible assets
would continue to be amortized over their useful lives. Huntington will apply
the new rules on accounting for goodwill and other intangible assets beginning
in the first quarter of 2002.


48



The amortization of goodwill, net of applicable income taxes, was $31.0
million, $28.3 million, and $26.4 million for the years ended December 31, 2001,
2000, and 1999, respectively. The majority of Huntington's goodwill and other
intangible assets relate to its operations located in Florida, which was sold as
disclosed in note 24. The application of the nonamortization provisions of the
Statement to the goodwill not impacted by the sale of the Florida operations is
expected to result in an increase in net income of $8.9 million ($0.04 per
share) per year.

In June 2001, the Financial Accounting Standards Board also issued SFAS No.
143, Accounting for Asset Retirement Obligations, effective for fiscal years
beginning after June 15, 2002. This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development, and/or the normal operation of a
long-lived asset, except for certain obligations of lessees.

In August 2001, the Financial Accounting Standards Board also issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
effective for fiscal years beginning after December 15, 2001. This Statement
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets and supersedes related, previously issued pronouncements. This
Statement establishes a single accounting model, based on the framework
established in Statement 121, for long-lived assets to be disposed of by sale,
including accounting for a segment of a business accounted for as a discontinued
operation. The Statement also resolves significant implementation issues related
to previously issued Statement 121.

The adoption of SFAS No. 143 and No. 144 are not expected to have a
material impact on Huntington's results of operations or financial condition.

3. SECURITIES

Securities available for sale at December 31 were as follows:



UNREALIZED
------------------------------
AMORTIZED GROSS GROSS FAIR
(in thousands of dollars) COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------------------------------------------------------

2001
U.S. Treasury $ 38,928 $ 612 $ --- $ 39,540
Federal Agencies
Mortgage-backed securities 828,211 14,351 1,200 841,362
Other agencies 1,410,023 32,521 1,367 1,441,177
- --------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury and Federal Agencies 2,277,162 47,484 2,567 2,322,079
Other Securities 526,842 5,873 5,215 527,500
- --------------------------------------------------------------------------------------------------------------------------------

Total securities available for sale $2,804,004 $53,357 $ 7,782 $2,849,579
- --------------------------------------------------------------------------------------------------------------------------------

2000
U.S. Treasury $ 10,282 $ 446 $ --- $ 10,728
Federal Agencies
Mortgage-backed securities 1,538,640 7,072 13,811 1,531,901
Other agencies 1,762,209 1,167 21,974 1,741,402
- --------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury and Federal Agencies 3,311,131 8,685 35,785 3,284,031
Other Securities 817,352 9,892 20,750 806,494
- --------------------------------------------------------------------------------------------------------------------------------

Total securities available for sale $4,128,483 $18,577 $56,535 $4,090,525
- --------------------------------------------------------------------------------------------------------------------------------



49



Contractual maturities of securities available for sale as of December 31
were:



- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
AMORTIZED FAIR AMORTIZED FAIR
(in thousands of dollars) COST VALUE COST VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

Under 1 year $ 12,011 $ 12,085 $ 42,553 $ 42,205
1 - 5 years 1,066,383 1,090,164 1,112,956 1,102,691
6 - 10 years 218,816 22,535 264,412 261,421
Over 10 years 1,242,609 1,259,229 2,486,786 2,458,037
Retained interest in securitizations 159,790 159,790 134,102 134,102
Marketable equity securities 104,395 105,776 87,674 92,069
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities available for sale $ 2,804,004 $ 2,649,579 $4,128,483 $ 4,090,525
- ------------------------------------------------------------------------------------------------------------------------------------



At December 31, 2001, the carrying value of securities pledged to secure
public and trust deposits, trading account liabilities, U.S. Treasury demand
notes and security repurchase agreements totaled $2.4 billion. There were no
securities of a single issuer that exceeded ten percent of shareholders' equity
at December 31, 2001.

Gross gains from sales of securities of $9.2 million, $66.5 million, and
$37.0 million were realized in 2001, 2000, and 1999, respectively. Gross losses
totaled $8.5 million in 2001, $29.4 million in 2000, and $24.0 million in 1999.


Investment securities at December 31, 2001 and 2000, were comprised of
investments in obligations of states and political subdivisions. The amortized
cost, unrealized gains and losses, and fair values of investment securities at
December 31 were:



- ------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- ------------------------------------------------------------------------------

Amortized cost $ 12,322 $ 16,336
Unrealized gross gains 215 140
Unrealized gross losses 38 62
- ------------------------------------------------------------------------------
Fair Value $ 12,499 $ 16,414
- ------------------------------------------------------------------------------

Contractual maturities of investment securities at December 31 were:




- --------------------------------------------------------------------------------------------------------------------------------
2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
AMORTIZED FAIR AMORTIZED FAIR
(in thousands of dollars) COST VALUE YIELD COST VALUE YIELD
- --------------------------------------------------------------------------------------------------------------------------------

Under 1 year $ 3,997 $ 4,016 7.54% $ 3,139 $ 3,115 7.95%
1 - 5 years 6,369 6,508 7.78% 10,536 10,578 7.66%
6 - 10 years 1,713 1,726 8.48% 2,193 2,234 8.34%
Over 10 years 243 249 8.18% 468 487 8.28%
- ------------------------------------------------------------------------ -----------------------------
Total investment securities $12,322 $12,499 $16,336 $16,414
- ------------------------------------------------------------------------ -----------------------------



50



4. LOANS

At December 31, loans were comprised of the following:



- -----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- -----------------------------------------------------------------------------------------------------------------------

Commercial (unearned income of $2,859 and $1,538) $ 6,439,372 $ 6,633,985
Real Estate
Commercial 2,496,690 2,253,477
Construction 1,478,872 1,318,899
- -----------------------------------------------------------------------------------------------------------------------
Total commercial and commercial real estate 10,414,934 10,206,361
- -----------------------------------------------------------------------------------------------------------------------
Consumer
Auto Leases (unearned income $500,430 and $519,519) 3,207,514 3,105,689
Auto Loans - Indirect (unearned income $19 and $35) 2,883,279 2,507,454
Home Equity Lines 2,535,885 2,167,865
Residential Mortgage 970,704 946,584
Other Loans (unearned income $24 and $41) 1,589,557 1,676,238
- -----------------------------------------------------------------------------------------------------------------------
Total Consumer 11,186,939 10,403,830
- -----------------------------------------------------------------------------------------------------------------------
Total loans $ 21,601,873 $ 20,610,191
- -----------------------------------------------------------------------------------------------------------------------



RELATED PARTY TRANSACTIONS
Huntington has made loans to its officers, directors, and their associates.
These loans were made in the ordinary course of business under normal credit
terms, including interest rate and collateralization, and to not represent more
than the normal risk of collection. These loans to related parties are
summarized as follows:



- ---------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------

Balance, beginning of year $ 145,761 $ 130,090
Loans made 236,260 418,088
Repayments (234,011) (412,809)
Changes due to status of executive officers and directors (14,166) 10,392
- ---------------------------------------------------------------------------------------------------------------------------
Balance, end of year $ 133,844 $ 145,761
- ---------------------------------------------------------------------------------------------------------------------------


5. LOAN SECURITIZATIONS

During 2001 and 2000, Huntington sold automobile loans in securitization
transactions totaling $439.1 million and $1.7 billion, respectively. Huntington
retained the interest rate risk and the rights to future cash flows arising
after the investors in the securitization trusts have received their contractual
return. These cash flows arise from cash reserve accounts, loan collateral in
excess of the note amounts issued by the securitization trusts, and excess
interest collections. Huntington's interests are subordinate to investors'
interests. The investors and the securitization trusts have no recourse to
Huntington's other assets for failure of debtors to pay when due. At December
31, 2001 and 2000, the fair value of Huntington's retained interest in
automobile loan securitizations was $159.8 million and $134.1 million,
respectively. Management periodically reviews the assumptions underlying these
values. If these assumptions change, the related asset and income would be
affected.

Huntington has retained servicing responsibilities and receives annual
servicing fees of 1.0% of the outstanding loan balances, which amounted to $3.6
million in 2001 and $2.0 million in 2000. The related servicing asset had a
value of $17.6 million at the end of 2001 and $22.7 million at the end of 2000.

Huntington recorded net pre-tax gains of $6.6 million and $4.9 million in
2001 and 2000, respectively, from automobile loan securitizations. Gains or
losses from securitizations depend in part on the previous carrying amount of
the financial assets involved, which are allocated between the assets sold and
the retained interests based on their relative fair value at the date of
transfer. Quoted market prices are generally not available for retained
interest in automobile loan securitizations.


51


The key economic assumptions used to measure the fair value of the retained
interest at the time of securitization during 2001 included: a monthly
prepayment rate of 1.54%, a weighted-average loan life of 24 months, and
expected annual credit losses of 1.30%. Additionally, in both 2001 and 2000, the
interest rate paid to transferees on variable rate securities was estimated
based on the forward one-month London Interbank Offered Rate (LIBOR) yield plus
the average contractual spread over LIBOR of 34 basis points.

At December 31, 2001, the assumptions and the sensitivity of the current
fair value of the retained interest to immediate 10% and 20% adverse changes in
those assumptions were:



- --------------------------------------------------------------------------------------------------------------------
Decline in fair value
due to
-----------------------
10% 20%
- ---------------------------------------------------------------------------------------- adverse adverse
(in millions of dollars) Actual change change
- --------------------------------------------------------------------------------------------------------------------

Monthly prepayment rate 1.54% $ 1.5 $ 2.9
Expected annual credit losses 1.30% 2.5 5.1
Discount rate 10.00% 2.6 5.1
Interest rate on variable securities -
Forward one-month LIBOR yield plus 34 basis points 4.1 8.2



Caution should be used when reading these sensitivities as a change in an
individual assumption and its impact on fair value is shown independent of
changes in other assumptions. Economic factors are dynamic and may counteract or
magnify sensitivities. Certain cash flows received from and paid to
securitization trusts were:



- -------------------------------------------------------------------------------
TWELVE MONTHS ENDED
DECEMBER 31,
- -------------------------------------------------------------------------------
(in million of dollars) 2001 2000
- -------------------------------------------------------------------------------


Proceeds from new securitizations $ --- $ 1,056
Collections used by the trusts to purchase new
balances in revolving securitizations 439 597
Servicing fees received 14 7
Other cash flows received on retained interest 32 4
Servicing advances (3) (3)
Repayments of servicing advances 3 3




Managed Automobile Loans

Quantitative information about delinquencies, net loan losses, and
components of managed automobile loans at December 31 follows:



- --------------------------------------------------------------------------------------------------------------------
(in millions of dollars) 2001 2000
- --------------------------------------------------------------------------------------------------------------------

Loans held in portfolio $2,883 $2,508
Loans securitized 1,225 1,371
- --------------------------------------------------------------------------------------------------------------------
Total managed automobile loans $4,108 $3,879
- --------------------------------------------------------------------------------------------------------------------

Net loan losses as a % of average managed loans 1.67% 0.97%
Delinquencies (30 days or more) as a percent of year-end managed loans 3.64% 3.64%



During 2000, Huntington securitized $780 million of residential mortgage
loans. Huntington initially retained all of the resulting securities and
accordingly, reclassified the securitized amount from loans to securities
available for sale.


52



6. ALLOWANCE FOR LOAN LOSSES

A summary of the transactions in the allowance for loan losses and details
regarding impaired loans follows for the three years ended December 31:



- -------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------

BALANCE, BEGINNING OF YEAR $297,880 $ 299,309 $ 290,948
Allowance of assets acquired --- 7,900 ---
Loan losses (227,315) (110,845) (112,291)
Recoveries of loans previously charged off 37,868 27,756 32,205
Allowance of securitized loans (6,654) (16,719) ---
Provision for loan losses 308,793 90,479 88,447
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF YEAR $410,572 $ 297,880 $ 299,309
- -------------------------------------------------------------------------------------------------------------------------

RECORDED BALANCE OF IMPAIRED LOANS, AT END OF YEAR (1):
With related allowance for loan losses $168,753 $ 51,693 $ 8,897
With no related allowance for loan losses 2,557 5,261 30,594
- -------------------------------------------------------------------------------------------------------------------------
Total $171,310 $ 56,954 $ 39,491
- -------------------------------------------------------------------------------------------------------------------------

AVERAGE BALANCE OF IMPAIRED LOANS FOR THE YEAR (1) $111,921 $ 33,705 $30,663
----------------------------------------------------------------

ALLOWANCE FOR LOAN LOSS RELATED TO IMPAIRED LOANS (1) $ 65,125 $ 12,944 $ 4,523
----------------------------------------------------------------


(1) Includes impaired Commercial and Commercial Real Estate loans with
outstanding balances of greater than $500,000.

In conjunction with the automobile loan securitizations in 2001 and 2000,
an allowance for loan losses attributable to the associated loans was included
as a component of the loan's carrying value upon their sale.

7. PREMISES AND EQUIPMENT

At December 31, premises and equipment stated at cost were comprised of the
following:



- ------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- ------------------------------------------------------------------------------------------------------------------------

Land and land improvements $ 78,272 $ 77,710
Buildings 271,452 273,974
Leasehold improvements 132,267 114,416
Equipment 496,163 463,227
- ------------------------------------------------------------------------------------------------------------------------
Total premises and equipment 978,154 929,327
Less accumulated depreciation and amortization 526,118 474,483
- ------------------------------------------------------------------------------------------------------------------------
NET PREMISES AND EQUIPMENT $ 452,036 $ 454,844
- ------------------------------------------------------------------------------------------------------------------------


Depreciation and amortization charged to expense and rental income
credited to occupancy expense for the year ended December 31 were:



- ------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------

Total depreciation and amortization of premises and equipment $ 53,805 $ 49,117 $ 42,733
- ------------------------------------------------------------------------------------------------------------------------

Rental income credited to occupancy expense $ 17,662 $ 16,030 $ 12,896
- ------------------------------------------------------------------------------------------------------------------------



53



8. SHORT-TERM BORROWINGS

At December 31, short-term borrowings were comprised of the following:



- -----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- -----------------------------------------------------------------------------------------------------------------------

Federal funds purchased and securities sold under agreements to repurchase $ 1,913,607 $ 1,822,480
Commercial paper 2,876 98,186
Other 39,443 67,093
- -----------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM BORROWINGS $ 1,955,926 $ 1,987,759
- -----------------------------------------------------------------------------------------------------------------------

Information concerning securities sold under agreements to repurchase at December 31 is summarized as
follows:
- -----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- -----------------------------------------------------------------------------------------------------------------------

Average balance during the year $ 1,490,209 $ 1,203,281
Average interest rate during the year 3.58% 5.34%
Maximum month-end balance during the year $ 1,620,479 $ 1,328,677



Commercial paper is issued by Huntington Bancshares Financial Corporation,
a non-bank subsidiary, with principal and interest guaranteed by Huntington.
Huntington has the ability to borrow under a line of credit totaling $85 million
from a group of unaffiliated financial services companies to support commercial
paper borrowings or other short-term working capital needs. Under the terms of
the agreement, a quarterly facility fee must be paid and there are no
compensating balances required. The line is cancelable by Huntington upon
written notice and terminates November 28, 2002. There were no borrowings in
2001.

9. CAPITAL SECURITIES

Company obligated mandatorily redeemable preferred capital securities of
subsidiary trusts holding solely the junior subordinated debentures of the
parent company (Capital Securities) were issued by two business trusts,
Huntington Capital I and II (the Trusts). Huntington Capital I was formed in
January 1997 while Huntington Capital II was formed in June 1998. The proceeds
from the issuance of the Capital Securities and common securities were used to
purchase debentures of the parent company. The Trusts hold junior subordinated
debentures of the parent company, which and are the only assets of the Trusts.
Both the debentures and related income statement effects are eliminated in
Huntington's consolidated financial statements.

The parent company has entered into contractual arrangements that, taken
collectively and in the aggregate, constitute a full and unconditional guarantee
by the parent company of the Trusts' obligations under the capital securities
issued. The contractual arrangements guarantee payment of (a) accrued and unpaid
distributions required to be paid on the Capital Securities; (b) the redemption
price with respect to any capital securities called for redemption by Huntington
Capital I or II; and (c) payments due upon voluntary or involuntary liquidation,
winding-up, or termination of Huntington Capital I or II. The Capital Securities
and common securities, and related debentures are summarized as follows:



- ------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Interest Rate of Maturity of
Capital Common Amount of Securities and Capital Securities
(in thousands of dollars) Securities Securities Debentures Debentures and Debentures
- ------------------------------------------------------------------------------------------------------------------------------------

Huntington Capital I $ 200,000 $ 6,186 $ 206,186 LIBOR + .70%(1) 02/01/2027
Huntington Capital II 100,000 3,093 103,093 LIBOR + .625%(2) 06/15/2028
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 300,000 $9,279 $ 309,279
- ------------------------------------------------------------------------------------------------------------------------------------


(1) Variable effective rate at December 31, 2001 and 2000, of 2.97% and 7.46%,
respectively.
(2) Variable effective rate at December 31, 2001 and 2000, of 2.50% and 7.21%,
respectively.



54



10. MEDIUM AND LONG-TERM DEBT

At December 31, Huntington's medium and long-term debt consisted of the
following:



- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------

Medium-term
Subsidiary bank (maturing through 2005) $1,755,002 $ 2,442,150
Parent company 40,000 25,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL MEDIUM-TERM DEBT 1,795,002 2,467,150
- ----------------------------------------------------------------------------------------------------------------------------------

LONG-TERM
Parent company:
7 7/8% subordinated notes due 2002 149,888 149,760

Subsidiary bank:
7 5/8 % subordinated notes due 2003 157,494 149,860

6 3/4% subordinated notes due 2003 104,942 99,919

6 3/5% subordinated notes due 2018 198,153 198,455

Floating rate subordinated notes due 2008 100,000 100,000

8% subordinated notes due 2010 166,853 147,982
- ----------------------------------------------------------------------------------------------------------------------------------
Total subordinated notes 877,330 845,976
- ----------------------------------------------------------------------------------------------------------------------------------

7 7/8% Class C preferred securities of REIT subsidiary 50,000 ---

Federal Home Loan Bank notes 17,000 25,000
- ----------------------------------------------------------------------------------------------------------------------------------

TOTAL LONG-TERM DEBT 944,330 870,976
- ----------------------------------------------------------------------------------------------------------------------------------

TOTAL MEDIUM AND LONG-TERM DEBT $2,739,332 $ 3,338,126
- ----------------------------------------------------------------------------------------------------------------------------------



Amounts above are reported net of unamortized discounts and include values
related to hedging with derivative financial instruments. Huntington uses these
derivative instruments, principally interest rate swaps, to match the funding
rates on certain assets by hedging the cash flow variability associated with
certain variable-rate debt by converting the debt to fixed rate and hedging the
fair values of certain fixed-rate debt by converting the debt to variable rate.
The swap-adjusted weighted average interest rate for medium-term notes at
December 31, 2001, and 2000, was 3.94% and 6.68%, respectively. The
swap-adjusted weighted average interest rate for subordinated notes was 4.58% at
December 31, 2001, and 7.15% at the end of 2000. The subsidiary bank's floating
rate subordinated notes were issued in 1998 and are based on three-month LIBOR.
At December 31, 2001, these notes carried an interest rate of 2.53%.

The parent company medium-term notes issued in 2000 matured in 2001. The
parent company issued medium-term notes in 2001, which will mature in the first
quarter of 2003. The parent company 7 7/8% subordinated notes carry a fixed rate
of interest which is payable semi-annually. They mature in 2002 and do not
provide for any sinking fund.

In 2001, Huntington issued $50 million of noncumulative preferred
securities of Huntington Preferred Capital, Inc., a real estate investment trust
subsidiary, which qualify for regulatory capital. Dividends are payable
quarterly at a fixed rate of 7 7/8% and the shares are not redeemable prior to
December 31, 2021.

Long-term advances from the Federal Home Loan Bank are at fixed interest
rates ranging from 5.76% to 6.71% and have maturities ranging from 2002 to 2004.
The weighted average interest rate of these advances at December 31, 2001, was
6.02%. Advances from the Federal Home Loan Bank are collateralized by qualifying
securities.

The terms of Huntington's medium and long-term debt obligations contain
various restrictive covenants including limitations on the acquisition of
additional debt in excess of specified levels, dividend payments, and the
disposition of subsidiaries. As of December 31, 2001, Huntington was in
compliance with all such covenants.

Medium and long-term debt maturities for the next five years are as
follows: $936.2 million in 2002; $740.0 million in 2003; $258.0 million in 2004;
$285.0 million in 2005; none in 2006; and, $500.0 million in 2007 and
thereafter.


55



11. RESTRUCTURING AND SPECIAL CHARGES

In July 2001, Huntington announced a strategic refocusing plan (the Plan).
The Plan includes the sale of Huntington's Florida operations, the consolidation
of numerous non-Florida branch offices, credit related and other actions to
strengthen Huntington's balance sheet. In 2001, pre-tax restructuring and
special charges associated with the Plan totaled $176.9 million.

Credit quality charges of $71.7 million included $25.8 million to recognize
the estimated increased losses resulting from Huntington's decision to exit
certain lending businesses. These businesses consisted of sub-prime automobile
lending and truck and equipment leasing. In addition, $19.7 million was
recognized to charge-off delinquent consumer and small business loans more than
120 days past due reflecting a more conservative interpretation of regulatory
guidelines for charge-offs, and $21.2 million to increase reserves for consumer
bankruptcies.

Asset impairment charges of $37.3 million represented a $5.3 million loss
included in securities gains related to the sale of the $15.0 million in Pacific
Gas & Electric commercial paper acquired from The Huntington National Bank's
Money Market Mutual Fund. These charges also include $20.0 million to increase
the reserve for auto lease residual values, due to declines in used car prices
and increased average losses per auto, and $12.0 million to write-down the value
of assets representing Huntington's retained interest in automobile loans
securitized in 2000. Credit losses on these loans have increased beyond the
levels anticipated when the retained interest assets were recorded.

Exit costs of $16.2 million included charges for the exit or curtailment of
certain e-commerce activities and facilities charges represented $13.3 million
related to owned or leased facilities that Huntington has or intends to vacate
along with costs related to the completed branch and ATM consolidation. Other
costs represented $17.8 million for legal, consulting, and other professional
services, $6.1 million for various employee severance or retention, and $14.5
million related to non-recurring operational costs.

At December 31, 2001, Huntington had $8.5 million accrued in relation to
these charges, of which $6.5 million related to facilities and the remainder
related to employee severance.

During the fourth quarter of 1999 and in the third quarter of 2000,
Huntington recorded special charges of $58.2 million and $50.0 million,
respectively, to write-down residual values related to its $3.0 billion vehicle
lease portfolio. Of these charges, combined with those recorded in 2001, $34.9
million remained available at December 31, 2001, to cover estimated losses
inherent in the portfolio.

In addition to the lease residual charges in 1999, Huntington recorded
$38.6 million of additional costs, which included $21.0 million related to the
company's "Huntington 2000+" program and other one-time expenses, including
amounts paid for management consulting and other professional services as well
as $11.0 million for a special cash award to employees for achievement of the
program goals for 1999. "Huntington 2000+" was a collaborative effort among all
employees to evaluate processes and procedures and the way Huntington conducts
its business with a mission of maximizing efficiency throughout all aspects of
the organization.


56



12. BENEFIT PLANS

Huntington sponsors a non-contributory defined benefit pension plan
covering substantially all employees. The plan provides benefits based upon
length of service and compensation levels. The funding policy of Huntington is
to contribute an annual amount which is at least equal to the minimum funding
requirements but not more than that deductible under the Internal Revenue Code.
Plan assets, held in trust, primarily consist of mutual funds.

Huntington's unfunded defined benefit post-retirement plan provides certain
health care and life insurance benefits to retired employees who have attained
the age of 55 and have at least 10 years of service. For any employee retiring
on or after January 1, 1993, post-retirement healthcare and life insurance
benefits are based upon the employee's number of months of service and are
limited to the actual cost of coverage.

The following table reconciles the funded status of the pension plan and
the post-retirement benefit plan at the applicable September 30 measurement
dates with the amounts recognized in the consolidated balance sheet at December
31:



- -----------------------------------------------------------------------------------------------------------------------------------
PENSION POST-RETIREMENT
BENEFITS BENEFITS
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------

Projected benefit obligation at
beginning of measurement year $ 209,954 $ 210,894 $46,119 $ 48,414
Changes due to:
Service cost 8,394 10,241 1,060 1,544
Interest cost 14,675 15,509 3,435 3,506
Benefits paid (16,008) (15,959) (3,810) (2,904)
Plan amendments 1,785 --- --- ---
Actuarial assumptions (5,865) (10,731) 4,626 (4,441)
- -----------------------------------------------------------------------------------------------------------------------------------
Total changes 2,981 (940) 5,311 (2,295)
- -----------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation at end of measurement year 212,935 209,954 51,430 46,119
- -----------------------------------------------------------------------------------------------------------------------------------

Fair value of plan assets at beginning
of measurement year 206,936 177,694 --- ---
Changes due to:
Actual return on plan assets (5,969) 5,201 --- ---
Employer contribution 42,000 40,000 --- ---
Benefits paid (16,008) (15,959) --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Total changes 20,023 29,242 --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of measurement year 226,959 206,936 --- ---
- -----------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation less (greater)
than plan assets 14,024 (3,018) (51,430) (46,119)
Unrecognized net actuarial (gain) loss 26,068 879 (399) (4,955)
Unrecognized prior service cost 183 114 6,450 7,143
Unrecognized transition (asset) liability,
net of amortization (540) (831) 13,868 15,129
- -----------------------------------------------------------------------------------------------------------------------------------

Prepaid (accrued) liability at end of year $ 39,735 $ (2,856) $ (31,511) $(28,802)
- -----------------------------------------------------------------------------------------------------------------------------------

Weighted-average assumptions at September 30:
Discount rate 7.50% 7.75% 7.50% 7.75%
Expected return on plan assets 9.75% 9.25% N/A N/A
Rate of compensation increase 5.00% 5.00% N/A N/A



57



The following table shows the components of pension cost recognized in the
most recent three years:



- ---------------------------------------------------------------------------------------------------------------------------------
PENSION BENEFITS POST-RETIREMENT BENEFITS
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------

Service cost $ 8,394 $10,241 $ 11,081 $ 1,060 $1,544 $ 1,494
Interest cost 14,675 15,509 13,622 3,435 3,506 3,249
Expected return on plan assets (22,821) (18,947) (16,906) --- --- ---
Amortization of transition asset (291) (325) (389) 1,261 1,261 1,261
Amortization of prior service cost (69) (318) (1,326) 693 693 694
Recognized net actuarial gain (268) 158 (1,336) (31) --- ---
- ---------------------------------------------------------------------------------------------------------------------------------

Benefit cost $(380) $ 6,318 $ 4,746 $ 6,418 $ 7,004 $6,698
- ---------------------------------------------------------------------------------------------------------------------------------



The 2002 health care cost trend rate was projected to be 6.50% for pre-65
participants and 6.00% for post-65 participants compared with estimates of 7.00%
and 6.50% in 2001. These rates are assumed to decrease gradually until they
reach 4.75% in the year 2006 and remain at that level thereafter.

The assumed health care cost trend rate has a significant effect on the
amounts reported. A one-percentage point increase would increase service and
interest costs and the post-retirement benefit obligation by $122,000 and $1.1
million, respectively. A one-percentage point decrease would reduce service and
interest costs by $111,000 and the post-retirement benefit obligation by $1.1
million.

Huntington also sponsors an unfunded Supplemental Executive Retirement
Plan, a nonqualified plan that provides certain key officers of Huntington and
its subsidiaries with defined pension benefits in excess of limits imposed by
federal tax law. At December 31, 2001 and 2000, the accrued pension liability
for this plan totaled $14.2 million and $12.9 million, respectively. Pension
expense for the plan was $2.1 million in 2001, $2.5 million in 2000, and $1.1
million in 1999.

Huntington has a defined contribution plan that is available to eligible
employees. Matching contributions by Huntington equal 100% on the first 3% and
50% on the next 2% of participant elective deferrals. The cost of providing this
plan was $8.7 million in 2001, $7.9 million in 2000, and $7.5 million in 1999.

13. STOCK-BASED COMPENSATION

Huntington's stock option activity and related information for each of the
recent three years ended December 31 is summarized below:




- ----------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
OPTIONS EXERCISE Options Exercise Options Exercise
(in 000'S) PRICE (in 000's) Price (in 000's) Price
- ----------------------------------------------------------------------------------------------------------------------------

Outstanding at beginning of year 9,482 $ 19.26 7,719 $ 20.07 6,245 $ 16.36

Granted /Acquired 6,820 17.46 2,526 16.10 2,356 27.66
Exercised (606) 9.30 (298) 8.15 (612) 9.56
Forfeited/Expired (1,047) 21.13 (465) 22.69 (270) 24.35
- ----------------------------------------------------------------------------------------------------------------------------

Outstanding at end of year 14,649 $ 18.70 9,482 $19.26 7,719 $ 20.07
- ----------------------------------------------------------------------------------------------------------------------------

Exercisable at end of year 7,346 $ 19.34 5,399 $ 18.18 4,331 $ 15.35
- ----------------------------------------------------------------------------------------------------------------------------

Weighted-average fair value of
options granted during the year $ 4.55 $ 5.58 $ 10.20
- ----------------------------------------------------------------------------------------------------------------------------



58



Additional information regarding options outstanding as of December 31,
2001, is as follows:




- -----------------------------------------------------------------------------------------------------------------------
Options Outstanding Exercisable Options
- -----------------------------------------------------------------------------------------------------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Shares Contractual Exercise Shares Exercise
Exercise Prices (in 000's) Life (Years) Price (in 000's) Price
- ----------------------------------------------------------------------------------------------------------------------

$6.64 to $10.50 430 0.8 $ 9.07 430 $ 9.07
$10.51 to $15.50 4,246 6.8 14.43 2,924 14.18
$15.51 to $20.50 6,841 9.0 18.26 1,226 18.71
$20.51 to $25.50 457 6.2 23.81 457 23.81
$25.51 to $28.35 2,675 7.1 27.27 2,309 27.23
- ----------------------------------------------------------------------------------------------------------------------
Total 14,649 7.7 $ 18.70 7,346 $ 19.34
- ----------------------------------------------------------------------------------------------------------------------



Huntington sponsors nonqualified and incentive stock option plans. These
plans provide for the granting of stock options to officers and other employees.
All of the plans were approved by Huntington's Board of Directors and
shareholders. Approximately 16.4 million shares have been authorized under the
plans, 10.6 million of which were available at December 31, 2001 for future
grants. Options that were granted in the most recent four years vest ratably
over three years or when other conditions are met while those granted in 1994
through 1997 vest ratably over four years. All grants preceding 1994 became
fully exercisable after one year. All options granted have a maximum term of ten
years.

Huntington has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under SFAS No. 123, Accounting
for Stock-Based Compensation, requires use of option valuation models that were
not developed for use in valuing employee stock options. Under APB 25, because
the exercise price of Huntington's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

As permissible under SFAS No. 123, Huntington is presenting the following
pro forma disclosures for net income and earnings per diluted common share as if
the fair value method of accounting had been applied in measuring compensation
costs for stock options. The Black-Scholes option pricing model assumes that the
estimated fair value of the options is amortized over the options' vesting
periods and the compensation costs would be included in personnel expense on the
income statement. The fair value of the options granted, as presented in the
table above, was estimated at the date of grant using a Black-Scholes
option-pricing model. The following weighted-average assumptions were used in
the option pricing model for options granted in each of the last three years: a
risk-free rate of 5.05%, 6.14%, and 5.60% for 2001, 2000, and 1999,
respectively; an expected dividend yield of 4.99% for 2001, 4.37% for 2000, and
2.63% for 1999; an expected volatility factor of Huntington's common stock of
41.0% for 2001, 45.1% for 2000, and 39.7% for 1999; and an expected option life
of six years in all three periods. Pro forma net income was $166.4 million, or
$0.66 per share, for 2001; $318.1 million, or $1.27 per share, for 2000; and
$414.7 million, or $1.62 per share for 1999.

14. DERIVATIVE FINANCIAL INSTRUMENTS

Huntington uses a variety of derivative financial instruments, principally
interest rate swaps, in its asset and liability management activities to protect
against the risk of adverse price or interest rate movements on the value of
certain assets and liabilities and on future cash flows. These instruments
provide Huntington with flexibility in adjusting its sensitivity to changes in
interest rates without exposure to loss of principal and higher funding
requirements. By using derivatives to manage interest rate risk, the effect is a
smaller, more efficient balance sheet, with a lower wholesale funding
requirement and a higher net interest margin, but with a comparable level of net
interest revenue and return on equity. All derivatives are recorded in
accordance with SFAS No. 133 on Huntington's 2001 balance sheet at their fair
value at December 31, 2001.


59



Derivatives manage exposure to market risk, which is the possibility that
economic value or net interest income will be adversely affected by changes in
interest rates or other economic factors. Derivatives also meet customers'
financing needs but, like other financial instruments, contain an element of
credit risk, which is the possibility that Huntington will incur a loss because
a counterparty fails to meet its contractual obligations. Notional values of
interest rate swaps and other off-balance sheet financial instruments
significantly exceed the credit risk associated with these instruments and
represent contractual balances on which calculations of amounts to be exchanged
are based. Credit exposure is limited to the sum of the aggregate fair value of
positions that have become favorable to Huntington, including any accrued
interest receivable due from counterparties. Potential credit losses are
minimized through careful evaluation of counterparty credit standing, selection
of counterparties from a limited group of high quality institutions, collateral
agreements, and other contract provisions.

ASSET AND LIABILITY MANAGEMENT

Beginning in 2001, derivatives that are used in asset and liability
management are classified under SFAS No. 133 as fair value hedges or cash flow
hedges and are required to meet specific criteria. To qualify as a hedge, the
hedge relationship is designated and formally documented at inception, detailing
the particular risk management objective and strategy for the hedge. This
includes identifying the item and risk being hedged, the derivative being used,
and how effectiveness of the hedge is being assessed. A derivative must be
highly effective in accomplishing the objective of offsetting either changes in
fair value or cash flows for the risk being hedged. Correlation is evaluated on
a retrospective and prospective basis using quantitative measures. If a hedge
relationship is found to be ineffective, it no longer qualifies as a hedge and
any excess gains or losses attributable to ineffectiveness, as well as
subsequent changes in fair value, are recognized in other income.

For fair value hedges, Huntington effectively converts specified fixed-rate
deposits, short-term borrowings and long-term debt to variable rate obligations
by entering into interest rate swap contracts whereby fixed-rate interest is
received in exchange for variable-rate interest without the exchange of the
contract's underlying notional amount. Forward contracts, used primarily by
Huntington in connection with its mortgage banking activities, settle in cash at
a specified future date based on the differential between agreed interest rates
applied to a notional amount. The changes in fair value of the hedged item and
the hedging instrument are reflected in current earnings. Huntington recognized
no gain or loss during 2001 in connection with the ineffective portion of its
fair value hedging instruments. Furthermore, there were no gains or losses on
derivatives designated as fair value hedges that were excluded from the
assessment of effectiveness during 2001.

For cash flow hedges, Huntington also entered into interest rate swap
contracts that pay fixed-rate interest in exchange for the receipt of
variable-rate interest without the exchange of the contract's underlying
notional amount, which effectively converted a portion of its floating-rate debt
to fixed-rate. This reduced the potentially adverse impact of increases in
interest rates on future interest expense. In like fashion, Huntington converted
certain prime-based and LIBOR-based commercial loans to fixed-rate by entering
into contracts that swap variable-rate interest for fixed-rate interest over the
life of the contracts.

Huntington also used interest rate contracts to swap fixed-rate interest
for variable to manage the interest rate risk associated with
sales/securitizations of certain automobile loans. These swaps protect against
the change in cash flows pertaining to the retained interests resulting from
auto loan sales/securitizations. Huntington generally sells or securitizes these
loans within one month of their origination and hedges the retained interest
that is classified in Huntington's available-for-sale securities portfolio over
a period which these loans are serviced.

To the extent these derivatives are effective in offsetting the variability
of the hedged cash flows, changes in the derivatives' fair value will not be
included in current earnings but are reported as a component of Accumulated
Other Comprehensive Income in Shareholders' Equity. These changes in fair value
will be included in earnings of future periods when earnings are also affected
by the changes in the hedged cash flows. To the extent these derivatives are not
effective, changes in their fair values are immediately included in earnings.
During 2001, Huntington recognized a net gain in connection with the ineffective
portion of its cash flow hedging instruments. The amount was classified in other
non-interest income and was insignificant. No amounts have been excluded from
the assessment of effectiveness during 2001 for derivatives designated as cash
flow hedges.


60


Derivatives used to manage Huntington's interest rate risk at December 31,
2001, are shown in the table below.



- ----------------------------------------------------------------------------------------------------------------------
Weighted-Average
Average Rate
Notional Maturity Fair ------------------------
(in thousands of dollars) Value (years) Value Receive Pay
- ----------------------------------------------------------------------------------------------------------------------

Asset conversion swaps
Receive fixed - generic $ 750,000 1.0 $ 16,984 5.91% 2.66%
Pay fixed - generic 300,000 1.6 (3,590) 1.93% 4.22%
- ----------------------------------------------------------------------------------------------------------------------
Total asset conversion swaps 1,050,000 1.2 13,394 4.77% 3.11%
- ----------------------------------------------------------------------------------------------------------------------

Liability conversion swaps
Receive fixed - generic 400,000 6.9 11,838 6.97% 2.81%
Receive fixed - callable 115,000 10.0 (2,085) 5.98% 2.01%
Pay fixed - generic 895,000 0.9 (19,438) 2.20% 5.74%
- ----------------------------------------------------------------------------------------------------------------------
Total liability conversion swaps 1,410,000 3.3 (9,685) 3.57% 4.80%
- ----------------------------------------------------------------------------------------------------------------------
TOTAL SWAP PORTFOLIO $2,460,000 2.4 $ 3,709 4.28% 4.15%
- ----------------------------------------------------------------------------------------------------------------------



The fair value of the swap portfolio used for asset and liability
management at December 31, 2000, was $8.4 million. These values must be viewed
in the context of the overall financial structure of Huntington, including the
aggregate net position of all on- and off-balance sheet financial instruments.

As is the case with cash securities, the market value of interest rate
swaps is largely a function of the financial market's expectations regarding the
future direction of interest rates. Accordingly, current market values are not
necessarily indicative of the future impact of the swaps on net interest income.
This will depend, in large part, on the shape of the yield curve as well as
interest rate levels. Management made no assumptions regarding future changes in
interest rates with respect to the variable rate information presented in the
table above.

The table below represents the gross notional value of derivatives used to
manage interest rate risk at December 31, 2001, identified by the underlying
interest rate-sensitive instruments. The notional amounts shown in the tables
above and below should be viewed in the context of Huntington's overall interest
rate risk management activities to assess the impact on the net interest margin.




- -----------------------------------------------------------------------------------------------------------------
Fair Value Cash Flow
(in thousands of dollars) Hedges Hedges
- -----------------------------------------------------------------------------------------------------------------

Instruments associated with:
Loans $ -- $ 750,000
Securities available for sale -- 300,000
Deposits 115,000 25,000
Short-term borrowings -- 200,000
Medium-term notes -- 670,000
Subordinated notes and other long-term debt 400,000 --
- -----------------------------------------------------------------------------------------------------------------
TOTAL NOTIONAL VALUE $ 515,000 $1,945,000
- -----------------------------------------------------------------------------------------------------------------



The estimated net amount of the existing unrealized gains and losses expected to
be reclassified into earnings from Accumulated Other Comprehensive Income within
the next twelve months is $9.3 million.

At December 31, 2001 and 2000, Huntington's credit risk from interest rate
swaps used for asset and liability management purposes was $42.1 million and
$41.7 million, respectively. The credit risk associated with interest rate swaps
is calculated after considering master netting agreements.


61



Huntington entered into these derivative financial instruments to alter
the interest rate risk embedded in its assets and liabilities. Consequently, net
amounts receivable or payable on contracts hedging either interest earning
assets or interest bearing liabilities were accrued as an adjustment to either
interest income or interest expense. The net amount resulted in interest expense
exceeding interest income by $6.2 million in 2001, $12.7 million in 2000, and
interest income exceeding interest expense by $20.5 million in 1999.

Derivatives Used in Trading Activities
- --------------------------------------

Huntington offers various derivative financial instruments to enable
customers to meet their financing and investing objectives and for risk
management purposes. Derivative financial instruments held in Huntington's
trading portfolio during 2001 and 2000 consisted predominately of interest rate
swaps, but also included interest rate caps, floors, and futures, as well as
foreign exchange options. Interest rate options grant the option holder the
right to buy or sell an underlying financial instrument for a predetermined
price before the contract expires. Interest rate futures are commitments to
either purchase or sell a financial instrument at a future date for a specified
price or yield and may be settled in cash or through delivery of the underlying
financial instrument. Interest rate caps and floors are option-based contracts
which entitle the buyer to receive cash payments based on the difference between
a designated reference rate and a strike price, applied to a notional amount.
Written options, primarily caps, expose Huntington to market risk but not credit
risk. Purchased options contain both credit and market risk. They are used to
manage fluctuating interest rates as exposure to loss from interest rate
contracts changes.

Supplying these derivatives to customers provides Huntington with fee
income. These instruments are carried at fair value with gains and losses
reflected in other non-interest income. Total trading revenue for customer
accommodation was $8.4 million in 2001 and $854,000 in 2000.

The total notional value of derivative financial instruments used by
Huntington on behalf of customers (for which the related interest rate risk is
offset by third parties) was $2.0 billion at the end of 2001 and $0.7 billion at
the end of the prior year. Huntington's credit risk from interest rate swaps
used for trading purposes was $35.0 million and $6.7 million at the same dates.
In connection with its securitization activities, Huntington purchased interest
rate caps with a national value totaling $1 billion. These purchased caps were
assigned to the securitization trust for the benefit of the security holders.
Interest rate caps were also sold totaling $1 billion outside the
securitization structure. Both the purchased and sold caps are marked to market
through income in accordance with SFAS No. 133.

15. EARNINGS PER SHARE

Basic earnings per share is the amount of earnings for the period
available to each share of common stock outstanding during the reporting period.
Diluted earnings per share is the amount of earnings available to each share of
common stock outstanding during the reporting period adjusted for the potential
issuance of common shares for stock options. The calculation of basic and
diluted earnings per share for each of the three years ended December 31 is as
follows:



- ---------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts) 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------


Net income $178,521 $ 328,446 $ 422,074
- ---------------------------------------------------------------------------------------------------------------

Average common shares outstanding 251,078 248,709 253,560
Dilutive effect of stock options 638 861 2,087
- ---------------------------------------------------------------------------------------------------------------
Diluted common shares outstanding 251,716 249,570 255,647
- ---------------------------------------------------------------------------------------------------------------

Earnings per share
Basic $0.71 $1.32 $1.66
Diluted $0.71 $1.32 $1.65



Average common shares outstanding and the dilutive effect of stock options
have been adjusted for subsequent stock dividends and stock splits, as
applicable. Approximately 9.9 million, 7.6 million, and 3.5 million stock
options were outstanding at the end of each respective period but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares
for the period and, therefore, the effect would be antidilutive.


62



16. COMPREHENSIVE INCOME

Currently, Huntington's components of Other Comprehensive Income are the
unrealized gains (losses) on securities available for sale and unrealized gains
(losses) on derivative instruments used in cash flow hedging relationships. The
related before and after tax amounts in each of the three years ended December
31 are as follows:



- ------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------

Cumulative effect of change in accounting
method for derivatives used in cash
flow hedging relationships:
Unrealized net losses $ (14,020) $ -- $ --
Related tax benefit 4,907 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net (9,113) -- --
- ------------------------------------------------------------------------------------------------------------------------------

Unrealized holding gains on securities available
for sale arising during the period:
Unrealized net gains (losses) 84,256 145,011 (171,093)
Related tax (expense) benefit (29,796) (51,323) 60,738
- ------------------------------------------------------------------------------------------------------------------------------
Net 54,460 93,688 (110,355)
- ------------------------------------------------------------------------------------------------------------------------------

Unrealized holding gains on derivatives used
in cash flow hedging relationships
arising during the period:
Unrealized net gains 7,895 -- --
Related tax expense (2,763) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net 5,132 -- --
- ------------------------------------------------------------------------------------------------------------------------------

Less: Reclassification adjustment for net gains
from sales of securities available for sale
realized during the period:
Realized net gains 723 37,101 12,972
Related tax expense (252) (12,986) (4,541)
- ------------------------------------------------------------------------------------------------------------------------------
Net 471 24,115 8,431
- ------------------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss) $ 50,008 $ 69,573 $(118,786)
- ------------------------------------------------------------------------------------------------------------------------------




Activity in Accumulated Other Comprehensive Income for the most recent
three years is as follows:




- ---------------------------------------------------------------------------------------------------------------------
UNREALIZED GAINS
(LOSSES) ON DERIVATIVE
UNREALIZED GAINS (LOSSES) INSTRUMENTS USED IN
ON SECURITIES CASH FLOW HEDGING
(in thousands of dollars) AVAILABLE FOR SALE RELATIONSHIPS
- ---------------------------------------------------------------------------------------------------------------------


Balance, December 31, 1998 $ 24,693 $ --
Period change (118,786) --
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 (94,093) --
Period change 69,573 --
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000 (24,520) --
Change in accounting method -- (9,113)
Current-period change 53,989 5,132
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001 $ 29,469 $ (3,981)
- ---------------------------------------------------------------------------------------------------------------------






63



17. COMMITMENTS AND CONTINGENT LIABILITIES

In the ordinary course of business, Huntington makes various commitments to
extend credit that are not reflected in the financial statements. The contract
amount of these financial agreements at December 31 were:



- ------------------------------------------------------------------------------------------------------------------------
(in millions of dollars) 2001 2000
- ------------------------------------------------------------------------------------------------------------------------

CONTRACT AMOUNT REPRESENTS CREDIT RISK
Commitments to extend credit
Commercial $ 4,345 $4,279
Consumer 4,283 3,069
Commercial Real Estate 715 500
Standby letters of credit 939 859
Commercial letters of credit 175 197



Commitments to extend credit generally have short-term, fixed expiration
dates, are variable rate, and contain clauses that permit Huntington to
terminate or otherwise renegotiate the contracts in the event of a significant
deterioration in the customer's credit quality. These arrangements normally
require the payment of a fee by the customer, the pricing of which is based on
prevailing market conditions, credit quality, probability of funding, and other
relevant factors. Since many of these commitments are expected to expire without
being drawn upon, the contract amounts are not necessarily indicative of future
cash requirements. The interest rate risk arising from these financial
instruments is insignificant as a result of their predominantly short-term,
variable rate nature.

Standby letters of credit are conditional commitments issued by Huntington
to guarantee the performance of a customer to a third party. These guarantees
are primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing, and similar transactions. Most of
these arrangements mature within two years. Approximately 54% of standby letters
of credit are collateralized, and nearly 97% are expected to expire without
being drawn upon.

Commercial letters of credit represent short-term, self-liquidating
instruments that facilitate customer trade transactions and have maturities of
no longer than ninety days. The merchandise or cargo being traded normally
secures these instruments.

COMMITMENTS TO SELL LOANS
Huntington entered into forward contracts, relating to its mortgage banking
business. At December 31, 2001 and 2000, Huntington had commitments to sell
residential real estate loans of $677.4 million and $189.9 million,
respectively. These contracts mature in less than one year. In addition,
Huntington had a commitment to sell automobile loans of $35.0 million and $42.4
million at December 31, 2001 and 2000, respectively, under the terms of its
securitization agreement.

LITIGATION
In the ordinary course of business, there are various legal proceedings
pending against Huntington and its subsidiaries. In the opinion of management,
the aggregate liabilities, if any, arising from such proceedings are not
expected to have a material adverse effect on Huntington's consolidated
financial position.

OPERATING LEASES
At December 31, 2001, Huntington and its subsidiaries were obligated under
noncancelable leases for land, buildings, and equipment. Many of these leases
contain renewal options, and certain leases provide options to purchase the
leased property during or at the expiration of the lease period at specified
prices. Some leases contain escalation clauses calling for rentals to be
adjusted for increased real estate taxes and other operating expenses, or
proportionately adjusted for increases in the consumer or other price indices.

The future minimum rental payments required under operating leases that
have initial or remaining noncancelable lease terms in excess of one year as of
December 31, 2001 were $47.5 million in 2002, $43.5 million in 2003, $40.4
million in 2004, $36.0 million in 2005, $33.2 million in 2006, and $298.0
million thereafter. Total minimum lease payments have not been reduced by
minimum sublease rentals of $120.5 million due in the future under noncancelable
subleases. The rental expense for all operating leases was $47.5 million for
2001 compared with $49.6 million for 2000 and $39.1 million in 1999.


64



18. INCOME TAXES

The following is a summary of the provision for income taxes:



- --------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------

Currently (receivable) payable
Federal $ (123,264) $ (106,354) $ 106,932
State -- 467 1,017
- --------------------------------------------------------------------------------------------------------------------------
Total current (123,264) (105,887) 107,949
- --------------------------------------------------------------------------------------------------------------------------

Deferred tax expense
Federal 118,025 237,336 83,555
State -- -- 1,193
- --------------------------------------------------------------------------------------------------------------------------
Total deferred 118,025 237,336 84,748
- --------------------------------------------------------------------------------------------------------------------------

INCOME TAXES $ (5,239) $ 131,449 $ 192,697
- --------------------------------------------------------------------------------------------------------------------------


Tax expense associated with securities transactions included in the above
amounts were $0.3 million in 2001, $15.9 million in 2000, and $5.7 million in
1999.


The following is a reconcilement of income tax expense to the amount
computed at the statutory rate of 35%:



- --------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------


Income tax expense computed at the statutory rate $ 60,649 $ 160,962 $ 215,170
Increases (decreases):
Tax-exempt interest income (17,477) (18,619) (18,677)
Asset securitization activities (21,527) (10,970) --
Subsidiary capital activities (32,500) -- --
Amortization of goodwill 5,729 5,223 3,706
Other, net (113) (5,147) (7,502)
- --------------------------------------------------------------------------------------------------------------------------
INCOME TAXES $ (5,239) $ 131,449 $ 192,697
- --------------------------------------------------------------------------------------------------------------------------


The significant components of deferred tax assets and liabilities at December
31, are as follows:


- -------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- -------------------------------------------------------------------------------------------------------


Deferred tax assets:
Allowance for loan losses $ 127,606 $ 101,346
Pension and other employee benefits 13,641 9,787
Alternative minimum tax 28,784 --
Other 75,282 41,317
- -------------------------------------------------------------------------------------------------------
Total deferred tax assets 245,313 152,450
- -------------------------------------------------------------------------------------------------------

Deferred tax liabilities:
Lease financing 531,062 512,548
Undistributed income of subsidiary 174,528 70,766
Mortgage servicing rights 12,967 10,526
Unrealized gains (losses) on securities available for sale 15,868 (13,203)
Other 118,755 32,584
- -------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 853,180 613,221
- -------------------------------------------------------------------------------------------------------

Net deferred tax liability $ 607,867 $ 460,771
- -------------------------------------------------------------------------------------------------------



At December 31, 2001, Huntington had an alternative minimum tax credit
carryforward for income tax purposes of $28.8 million. During 2001, the net
deferred tax liability was increased by $29.1 million for the tax effect of
unrealized gains on securities available for sale.


65



19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations
for the years ended December 31, 2001 and 2000:



- -------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars, except per share data) FIRST SECOND THIRD FOURTH
- -------------------------------------------------------------------------------------------------------------------------------


2001
Interest income $ 517,975 $ 498,959 $ 478,834 $ 443,751
Interest expense 274,851 250,926 229,047 188,513
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 243,124 248,033 249,787 255,238
- -------------------------------------------------------------------------------------------------------------------------------
Provision for loan losses (1) 33,464 117,495 49,559 108,275
Securities gains (losses) 2,078 (2,503) 1,059 89
Non-interest income 115,646 130,706 129,397 133,008
Non-interest expense 234,090 233,296 228,890 227,354
Special charges (1) -- 33,997 50,817 15,143
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 93,294 (8,552) 50,977 37,563
Income taxes 25,428 (10,929) 8,348 (28,086)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 67,866 $ 2,377 $ 42,629 $ 65,649
- -------------------------------------------------------------------------------------------------------------------------------

Net income per common share (2)
Basic $ 0.27 $ 0.01 $ 0.17 $ 0.26
Diluted $ 0.27 $ 0.01 $ 0.17 $ 0.26


- -------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars, except per share data) FIRST SECOND THIRD FOURTH
- -------------------------------------------------------------------------------------------------------------------------------


2000
Interest income $ 515,557 $ 519,496 $ 535,791 $ 537,661
Interest expense 274,866 286,690 299,922 304,595

- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 240,691 232,806 235,869 233,066
- -------------------------------------------------------------------------------------------------------------------------------
Provision for loan losses 15,701 15,834 26,396 32,548
Securities gains 24,763 114 11,379 845
Non-interest income 100,931 115,550 110,273 129,704
Non-interest expense 200,106 198,076 213,585 223,850
Special charges (1) -- -- 50,000 --
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 150,578 134,560 67,540 107,217
Income taxes 46,405 37,039 17,010 30,995
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 104,173 $ 97,521 $ 50,530 $ 76,222
- -------------------------------------------------------------------------------------------------------------------------------

Net income per common share (2)
Basic $ 0.42 $ 0.40 $ 0.20 $ 0.30
Diluted $ 0.42 $ 0.40 $ 0.20 $ 0.30


(1) See discussion of restructuring and special charges in note 11.
(2) Adjusted for stock dividends and stock splits, as applicable.





66



20. PARENT COMPANY FINANCIAL STATEMENTS



- -----------------------------------------------------------------------------------------------------------------
BALANCE SHEETS DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000
- -----------------------------------------------------------------------------------------------------------------


ASSETS
Cash and cash equivalents $ 155,618 $ 227,964
Securities available for sale 50,850 60,952
Due from subsidiaries
Bank subsidiary 250,759 232,517
Non-bank subsidiaries 83,084 53,095
Investment in subsidiaries on the equity method
Bank subsidiary 2,034,622 2,080,701
Non-bank subsidiaries 462,805 449,598
Excess of cost of investment in subsidiaries over net assets acquired 9,877 10,452
Other assets 56,427 60,492
- -----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,104,042 $ 3,175,771
- -----------------------------------------------------------------------------------------------------------------

LIABILITIES AND EQUITY
Short-term borrowings $ 9,576 $ 98,669
Medium-term notes 40,000 25,000
Subordinated notes
Subsidiary trusts 309,279 309,279
Unaffiliated companies 149,888 149,760
Dividends payable 40,191 50,173
Accrued expenses and other liabilities 138,668 176,843
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 687,602 809,724
- -----------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY 2,416,440 2,366,047
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,104,042 $ 3,175,771
- -----------------------------------------------------------------------------------------------------------------



STATEMENTS OF INCOME YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------

Income
Dividends from
Bank subsidiary $159,404 $ 222,330 $ 190,255
Non-bank subsidiaries 14,498 3,000 4,000
Interest from
Bank subsidiary 20,343 20,749 19,748
Non-bank subsidiaries 4,454 2,741 1,194
Securities (losses) gains and other (4,852) 66,134 31,918
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 193,847 314,954 247,115
- -----------------------------------------------------------------------------------------------------------------------

EXPENSE
Interest on debt 29,673 36,687 31,109
Other 21,160 6,756 --
- -----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE 50,833 43,443 31,109
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in undistributed net
income of subsidiaries 143,014 271,511 216,006
Income taxes (10,738) 12,592 9,271
- -----------------------------------------------------------------------------------------------------------------------
Income before equity in undistributed net income of subsidiaries 153,752 258,919 206,735
Equity in undistributed net income (loss) of
Bank subsidiary 25,351 66,387 212,613
Non-bank subsidiaries (582) 3,140 2,726
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $178,521 $ 328,446 $ 422,074
- -----------------------------------------------------------------------------------------------------------------------





67




- -------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
Net Income $ 178,521 $ 328,446 $ 422,074
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in undistributed net income of subsidiaries (24,769) (69,527) (215,339)
Provision for amortization and depreciation 2,674 2,987 2,987
Losses (Gains) on sales of securities available for sale
and other assets 5,251 (62,140) (30,546)
(Increase) decrease in other assets and liabilities (20,866) 73,227 59,427
Special charges 5,604 -- --
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 146,415 272,993 238,603
- -------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Decrease (Increase) in investments in subsidiaries 110,019 (5,397) (5)
(Advances to) Repayments from subsidiaries (62,419) 67,154 (4,050)
Purchases of securities available for sale (15,027) (47,000) --
Proceeds from sales of securities available for sale 10,889 68,106 30,990
Proceeds from sales of other assets -- 11,405 --
- -------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 43,462 94,268 26,935
- -------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings (89,093) 87,342 (19,317)
Proceeds from issuance of medium-term notes 40,000 25,000 --
Payment of medium-term notes (25,000) -- (60,000)
Dividends paid on common stock (190,792) (185,103) (171,858)
Acquisition of treasury stock -- (168,395) (97,957)
Proceeds from issuance of treasury stock 2,662 1,055 4,417
- -------------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR FINANCING ACTIVITIES (262,223) (240,101) (344,715)
- -------------------------------------------------------------------------------------------------------------------------
CHANGE IN CASH AND CASH EQUIVALENTS (72,346) 127,160 (79,177)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 227,964 100,804 179,981
- -------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 155,618 $ 227,964 $ 100,804
- -------------------------------------------------------------------------------------------------------------------------

Supplemental disclosure:
Interest paid $ 31,067 $ 36,262 $ 31,662
- -------------------------------------------------------------------------------------------------------------------------




21. SEGMENT REPORTING

Huntington views its operations as five distinct segments. Retail Banking,
Corporate Banking, Dealer Sales, and the Private Financial Group (PFG) are
Huntington's major business lines. The fifth segment includes Huntington's
Treasury function and other unallocated assets, liabilities, revenue, and
expense. Line of business results are determined based upon Huntington's
business profitability reporting system, which assigns balance sheet and income
statement items to each of the business segments. The process is designed around
Huntington's organizational and management structure and accordingly, the
results below are not necessarily comparable with similar information published
by other financial institutions.

The chief decision-makers for Huntington rely on results of operations
excluding restructuring and special charges (operating earnings) for review of
performance and for critical decision making purposes. See note 11 to the
consolidated financial statements for further discussions regarding
restructuring and special charges. Net interest income is presented on a fully
tax equivalent (FTE) basis using a 35% tax rate.


68



Listed below is certain reported financial information reconciled to
Huntington's 2001, 2000, and 1999 operating results by line of business.



- -----------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENTS Retail Corporate Dealer Treasury/ Huntington
(in thousands of dollars) Banking Banking Sales PFG Other Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------


2001
Net interest income (FTE) $ 497,268 $ 271,418 $ 232,605 $ 38,056 $ (36,813) $1,002,534
Provision for loan losses 66,441 81,765 151,019 9,568 -- 308,793
Non-Interest income 307,855 64,140 21,651 89,120 26,714 509,480
Non-Interest expense 594,450 134,396 103,502 87,512 103,727 1,023,587
Income taxes/FTE adjustment 50,480 41,788 (93) 10,534 (101,596) 1,113
- ----------------------------------------------------------------------------------------------------------------------------------
Net income, as reported 93,752 77,609 (172) 19,562 (12,230) 178,521
Restructuring and special
charges, net of tax 18,658 15,647 72,994 7,568 134 115,001
- ----------------------------------------------------------------------------------------------------------------------------------

Operating earnings $ 112,410 $ 93,256 $ 72,822 $ 27,130 $ (12,096) $ 293,522
- ----------------------------------------------------------------------------------------------------------------------------------



2000
Net interest income (FTE) $ 539,919 $ 257,799 $ 197,042 $ 31,842 $ (75,860) $ 950,742
Provision for loan losses 21,558 21,432 46,113 1,376 -- 90,479
Non-Interest income 268,763 62,909 31,266 60,619 70,002 493,559
Non-Interest expense 540,161 122,672 105,751 55,847 61,186 885,617
Income taxes/FTE adjustment 86,437 61,811 26,755 12,333 (47,577) 139,759
- ----------------------------------------------------------------------------------------------------------------------------------
Net income, as reported 160,526 114,793 49,689 22,905 (19,467) 328,446
Restructuring and special
charges, net of tax -- -- 32,500 -- -- 32,500
- ----------------------------------------------------------------------------------------------------------------------------------

Operating earnings $ 160,526 $ 114,793 $ 82,189 $ 22,905 $ (19,467) $ 360,946
- ----------------------------------------------------------------------------------------------------------------------------------


1999
Net interest income (FTE) $ 573,888 $ 247,621 $ 195,013 $ 33,452 $ 1,211 $1,051,185
Provision for loan losses 34,607 8,465 42,562 2,813 -- 88,447
Non-Interest income 393,285 59,819 7,251 51,933 61,287 573,575
Non-Interest expense 601,212 108,066 106,856 47,357 48,628 912,119
Income taxes/FTE adjustment 115,144 66,615 14,606 12,258 (6,503) 202,120
- ----------------------------------------------------------------------------------------------------------------------------------
Net income, as reported 216,210 124,294 38,240 22,957 20,373 422,074
Restructuring and special
charges and gain from
credit card portfolio sale (45,460) -- 37,830 -- -- (7,630)
- ----------------------------------------------------------------------------------------------------------------------------------

Operating earnings $ 170,750 $ 124,294 $ 76,070 $ 22,957 $ 20,373 $ 414,444
- ----------------------------------------------------------------------------------------------------------------------------------


- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEETS AVERAGE ASSETS AVERAGE DEPOSITS
-------------------------------------------- --------------------------------------------------
(in millions of dollars) 2001 2000 1999 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------


Retail Banking $ 7,162 $ 6,992 $ 7,501 $ 16,162 $ 16,283 $ 16,884
Corporate Banking 7,609 7,063 6,824 2,173 1,692 1,003
Dealer Sales 7,547 6,811 6,304 82 76 65
PFG 771 626 599 661 636 610
Treasury / Other 5,048 7,229 7,511 283 1,003 645
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 28,137 $ 28,721 $ 28,739 $ 19,361 $ 19,690 $ 19,207
- ----------------------------------------------------------------------------------------------------------------------------------








69



The following provides a brief description of the five operating segments of
Huntington:


RETAIL BANKING: provides products and services to retail and business
banking customers. This segment's products include home equity loans, first
mortgage loans, installment loans, business loans, personal and business deposit
products, as well as investment and insurance services. These products and
services are offered through Huntington's traditional banking network, Direct
Bank, and Web Bank.

CORPORATE BANKING: customers in this segment represent the middle-market
and large corporate banking relationships which use a variety of banking
products and services including, but not limited to, commercial loans,
international trade, and cash management. Huntington's capital markets division
also provides alternative financing solutions for larger business clients,
including privately placed debt, syndicated commercial lending, and the sale of
interest rate protection products.

DEALER SALES: product offerings pertain to the automobile lending sector
and include indirect consumer loans and leases, as well as floor plan financing.
The consumer loans and leases comprise the vast majority of the business and
involve the financing of vehicles purchased or leased by individuals through
dealerships.

PRIVATE FINANCIAL GROUP: this segment's array of products and services are
designed to meet the needs of Huntington's higher wealth customers. Revenue is
derived through the sale of personal trust, asset management, investment
advisory, brokerage, insurance, and deposit and loan products and services.

TREASURY / OTHER: this segment absorbs unassigned assets, liabilities,
equity, revenue, and expense that cannot be directly assigned or allocated to
one of Huntington's lines of business. Furthermore, Huntington uses a
match-funded transfer pricing system to allocate interest income and interest
expense to its business segments. This approach consolidates the interest rate
risk management of Huntington into its Treasury Group. As part of its overall
interest rate risk and liquidity management strategy, the Treasury Group
administers an investment portfolio of approximately $2.8 billion. Revenue and
expense associated with these activities remain within the Treasury Group.
Additionally, amortization expense of intangible assets is also a significant
component of Treasury/Other.

22. REGULATORY MATTERS

Huntington and The Huntington National Bank, Huntington's bank subsidiary,
are subject to various regulatory capital requirements administered by federal
and state banking agencies. These requirements involve qualitative judgments and
quantitative measures of assets, liabilities, capital amounts, and certain
off-balance sheet items as calculated under regulatory accounting practices.
Failure to meet minimum capital requirements can initiate certain actions by
regulators that, if undertaken, could have a material effect on Huntington's and
The Huntington National Bank's financial statements. Applicable capital adequacy
guidelines require minimum ratios of 4.00% for Tier 1 Risk-based Capital, 8.00%
for Total Risk-based Capital, and 4.00% for Tier 1 Leverage Capital. To be
considered well capitalized under the regulatory framework for prompt corrective
action, the ratios must be at least 6.00%, 10.00%, and 5.00%, respectively.

As of December 31, 2001 and 2000, Huntington and The Huntington National
Bank have met all capital adequacy requirements and had regulatory capital
ratios in excess of the levels established for well-capitalized institutions.
The period-end capital amounts and capital ratios of Huntington and its bank
subsidiary are as follows:



- -------------------------------------------------------------------------------------------------------------------------------
TIER 1 TOTAL CAPITAL TIER 1 LEVERAGE
------------------------- ------------------------ -------------------------
(in millions of dollars) 2001 2000 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------

HUNTINGTON BANCSHARES INCORPORATED


Amount $ 2,021 $ 1,933 $ 2,870 $ 2,811 $ 2,021 $ 1,933
Ratio 7.24% 7.19% 10.29% 10.46% 7.41% 6.93%

THE HUNTINGTON NATIONAL BANK

Amount $ 1,776 $ 1,781 $ 2,882 $ 2,858 $ 1,776 $ 1,781
Ratio 6.34% 6.60% 10.29% 10.60% 6.58% 6.43%

- -------------------------------------------------------------------------------------------------------------------------------










70


Tier 1 Risk-Based Capital consists of total equity plus qualifying capital
securities and minority interest, less unrealized gains and losses accumulated
in other comprehensive income, and non-qualifying intangible and servicing
assets. Total Risk-Based Capital is Tier 1 Risk-Based Capital plus qualifying
subordinated notes and allowance for loan losses. Tier 1 Leverage Capital is
equal to Tier 1 Capital. Both Tier 1 Capital and Tier 1 Leverage Capital ratios
are derived by dividing the respective capital amounts by net risk-weighted
assets, which are calculated as prescribed by Huntington's and The Huntington
National Bank's regulatory agency. Tier 1 Leverage Capital ratio is calculated
by dividing the capital amount by average adjusted total assets for the fourth
quarter of 2001 and 2000, less non-qualifying intangibles and other adjustments.

Huntington and its subsidiaries are also subject to various regulatory
requirements that impose restrictions on cash, debt, and dividends. The
Huntington National Bank is required to maintain non-interest bearing cash
balances with the Federal Reserve Bank. During 2001 and 2000, the average
balance of these deposits were $363.6 million and $412.0 million, respectively.

Under current Federal Reserve regulations, The Huntington National Bank is
limited as to the amount and type of loans it may make to the parent company and
non-bank subsidiaries. At December 31, 2001, The Huntington National Bank could
lend $288.2 million to a single affiliate, subject to the qualifying collateral
requirements defined in the regulations.

Dividends from The Huntington National Bank are one of the major sources of
funds for Huntington. These funds aid the parent company in the payment of
dividends to shareholders, expenses, and other obligations. Payment of dividends
to the parent company is subject to various legal and regulatory limitations.
Regulatory approval is required prior to the declaration of any dividends in
excess of available retained earnings. The amount of dividends that may be
declared without regulatory approval is further limited to the sum of net income
for the current year and retained net income for the preceding two years, less
any required transfers to surplus or common stock. The Huntington National Bank
could declare, without regulatory approval, dividends in 2002 of approximately
$91.7 million plus an additional amount equal to its net income through the date
of declaration in 2002.

23. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of Huntington's financial
instruments at December 31 are presented in the following table:



- -----------------------------------------------------------------------------------------------------------------------------------
2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
(in thousands of dollars) AMOUNT VALUE AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------

FINANCIAL ASSETS:
Cash and short-term assets $ 1,242,846 $ 1,242,846 $ 1,460,853 $ 1,460,853
Trading account securities 13,392 13,392 4,723 4,723
Mortgages held for sale 629,386 629,386 155,104 155,104
Securities 2,861,901 2,862,348 4,106,861 4,107,319
Loans 21,191,301 21,635,280 20,312,311 20,487,837
Customers' acceptance liability 13,670 13,670 17,366 17,366

FINANCIAL LIABILITIES:
Deposits (20,187,304) (20,317,155) (19,777,245) (19,811,808)
Short-term borrowings (1,955,926) (1,955,926) (1,987,759) (1,987,759)
Bank acceptances outstanding (13,670) (13,670) (17,366) (17,366)
Medium-term notes (1,795,002) (1,802,381) (2,467,150) (2,489,406)
Subordinated notes and other long-term debt (944,330) (1,002,830) (870,976) (877,127)
Capital Securities (300,000) (299,048) (300,000) (300,359)


The terms and short-term nature of certain assets and liabilities result in
their carrying value approximating fair value. These include cash and due from
banks, interest bearing deposits in banks, trading account securities, federal
funds sold and securities purchased under resale agreements, customers'
acceptance liabilities, short-term borrowings, and bank acceptances outstanding.
Loan commitments and letters of credit generally have short-term, variable rate
features and contain clauses that limit Huntington's exposure to changes in
customer credit quality. Accordingly, their carrying values, which are
immaterial at the respective balance sheet dates, are reasonable estimates of
fair value.


71

Certain assets, the most significant being Bank Owned Life Insurance and
premises and equipment, do not meet the definition of a financial instrument and
are excluded from this disclosure. Similarly, mortgage and non-mortgage
servicing rights, deposit base, and other customer relationship intangibles are
not considered financial instruments and are not discussed below. Accordingly,
this fair value information is not intended to, and does not, represent
Huntington's underlying value. Many of the assets and liabilities subject to the
disclosure requirements are not actively traded, requiring fair values to be
estimated by management. These estimations necessarily involve the use of
judgment about a wide variety of factors, including but not limited to,
relevancy of market prices of comparable instruments, expected future cash
flows, and appropriate discount rates.

The following methods and assumptions were used by Huntington to estimate
the fair value of the remaining classes of financial instruments:

Mortgages held for sale - valued at the lower of aggregate cost or market value
primarily as determined using outstanding commitments from investors.

Securities available for sale and investment securities - based on quoted market
prices, where available. If quoted market prices are not available, fair values
are based on quoted market prices of comparable instruments. Retained interests
in securitized assets are valued using a discounted cash flow analysis. The
carrying amount and fair value of securities exclude the fair value of
asset/liability management interest rate contracts designated as hedges of
securities available for sale.

Loans and leases - variable rate loans that reprice frequently are based on
carrying amounts, as adjusted for estimated credit losses. The fair values for
other loans are estimated using discounted cash flow analyses and employ
interest rates currently being offered for loans with similar terms. The rates
take into account the position of the yield curve, as well as an adjustment for
prepayment risk, operating costs, and profit. This value is also reduced by an
estimate of probable losses in the loan portfolio. Although not considered
financial instruments, lease financing receivables have been included in the
loan totals at their carrying amounts.

Deposits - demand deposits, savings accounts, and money market deposits are, by
definition, equal to the amount payable on demand. The fair values of fixed rate
time deposits are estimated by discounting cash flows using interest rates
currently being offered on certificates with similar maturities.

Debt - fixed rate long-term debt, as well as medium-term notes and Capital
Securities, are based upon quoted market prices or, in the absence of quoted
market prices, discounted cash flows using rates for similar debt with the same
maturities. The carrying amount of variable rate obligations approximates fair
value.

24. SALE OF FLORIDA OPERATIONS

On September 26, 2001, Huntington signed a definitive agreement to sell its
Florida operations to SunTrust Banks, Inc. The transaction closed on February
15, 2002. Pro forma financial information reflecting the effect of the sale is
presented and described below.

The following unaudited pro forma consolidated balance sheet is presented
as of December 31, 2001, giving effect to the sale of the Florida operations as
if it had occurred on that date. The unaudited pro forma consolidated income
statement is presented for the year ended December 31, 2001, giving effect to
the sale as if it had occurred on January 1, 2001, and does not include the gain
realized on the sale of Huntington's Florida operations. These pro forma
financial statements do not include any assumptions as to future share
repurchases pursuant to the previously announced significant share repurchase
program anticipated to follow the sale.

The pro forma consolidated financial statements may not be indicative of
the financial position or results of operations that would have actually
occurred had the transaction been consummated during the period or as of the
date indicated. This pro forma financial information is also not intended to be
an indication of the financial position or results of operations that may be
attained in the future. These pro forma consolidated financial statements should
be read in conjunction with Huntington's historical financial statements.


72




- --------------------------------------------------------------------------------------------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2001
- --------------------------------------------------------------------------------------------------------------------------
Florida Related Huntington
(in thousands of dollars) Huntington Operations Transactions Pro Forma
- --------------------------------------------------------------------------------------------------------------------------

Cash and due from banks $ 1,138,366 $ (28,091) $ 1,110,275
Total investment securities 2,861,901 --- 2,861,901
Net loans 21,191,301 (2,794,781) 18,396,520
Other assets 3,308,591 (86,262) $(506,029) 2,716,300
- --------------------------------------------------------------------------------------------------------------------------
Total Assets $ 28,500,159 $(2,909,134) $(506,029) $25,084,996
- --------------------------------------------------------------------------------------------------------------------------

Total deposits $ 20,187,304 $(4,789,741) $15,397,563
Total borrowings 4,995,258 --- 4,995,258
Additional funding --- 1,881,580 $(718,461) 1,163,119
Accrued expenses and other liabilities 901,157 (973) 147,316 1,047,500
- --------------------------------------------------------------------------------------------------------------------------
Total Liabilities 26,083,719 (2,909,134) (571,145) 22,603,440
- --------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 2,416,440 --- 65,116 2,481,556
- --------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 28,500,159 $(2,909,134) $(506,029) $25,084,996
- --------------------------------------------------------------------------------------------------------------------------


The balance sheet column entitled Florida Operations represents the
specific assets and liabilities sold, primarily $2.8 billion of net loans and
$4.8 billion of total deposits, if the sale had occurred on December 31, 2001.
Because the Florida operation was a net funds provider to Huntington, that
column also includes $1.9 billion of additional funding needed by Huntington,
prior to receipt of the deposit premium, to replace funds being provided by
Florida. The balance sheet column entitled Related Transactions reflects the
$506.0 million write-off of intangible assets, the $718.5 million premium (15%)
received on deposits sold, the $147.3 million estimated income taxes and other
accrued expenses, and the $65.1 million estimated after-tax gain on the sale.



- -------------------------------------------------------------------------------------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2001
- -------------------------------------------------------------------------------------------------------------------
Florida Related Huntington
(in thousands of dollars) Huntington Operations Transactions Pro Forma
- -------------------------------------------------------------------------------------------------------------------


Net interest income $ 996,182 $(108,522) $ 26,152 $ 913,812
Provision for loan losses 308,793 (15,120) --- 293,673
- -------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 687,389 (93,402) 26,152 620,139
- -------------------------------------------------------------------------------------------------------------------

Non-interest income 509,480 (76,149) --- 433,331
Non-interest expense 1,023,587 (130,671) (29,267) 863,649
- -------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES 173,282 (38,880) 55,419 189,821
Income taxes (5,239) (13,316) 17,165 (1,390)
- -------------------------------------------------------------------------------------------------------------------
NET INCOME $ 178,521 $(25,564) $ 38,254 $ 191,211
- -------------------------------------------------------------------------------------------------------------------

NET INCOME PER COMMON
SHARE -- DILUTED $0.71 ($0.10) $0.15 $0.76
- -------------------------------------------------------------------------------------------------------------------

OPERATING NET INCOME (1) $ 293,522 $(25,564) $ 38,254 $ 306,212
- -------------------------------------------------------------------------------------------------------------------

OPERATING NET INCOME PER COMMON
SHARE -- DILUTED (1) $1.17 ($0.10) $0.15 $1.22
- -------------------------------------------------------------------------------------------------------------------


(1) Excludes restructuring and special charges.




73


The income statement column entitled Florida Operations includes all direct
revenue and expenses for Florida for the year ended December 31, 2001, and any
indirect revenue and expenses that management expects will cease with the sale.
In addition, net interest income in that column includes a funding credit of
$68.5 million related to the $1.9 billion of funding that Florida provided to
Huntington. That funding credit is based on the average one-year LIBOR rate for
2001 of 3.64%. The income statement column entitled Related Transactions
reflects the $26.2 million interest that would have been earned on the $718.5
million deposit premium over a one-year period at the same LIBOR rate of 3.64%,
the $29.3 million of amortization expense on intangibles related to Florida, and
the applicable income taxes.

The sale of the Florida operations occurred subsequent to December 31,
2001. Accordingly, the actual results of the sale, including the deposit premium
and after-tax gain on sale appearing in Huntington's first quarter 2002
consolidated financial statements will differ from those presented in the above
pro forma financial statements.





Supplemental data required for this item is set forth in Item 7 on page 37 under
the caption "Selected Quarterly Income Statement Data."

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.



74

Part III


ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


Information required by this item is set forth under the captions
"Class I Directors," "Class II Directors," and "Class III Directors" on pages 1
through 3 under the caption "Executive Officers of the Corporation" on page 19,
and under the caption "Section 16(a) Beneficial Ownership Reporting Compliance"
on page 20, of Huntington's 2002 Proxy Statement, and is incorporated herein by
reference.


ITEM 11: EXECUTIVE COMPENSATION

Information required by this item is set forth under the caption
"Executive Compensation" on pages 8 through 18, and under the caption
"Compensation of Directors" on page 4, of Huntington's 2002 Proxy Statement, and
is incorporated herein by reference.


ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this item is set forth under the caption
"Ownership of Voting Stock" on pages 6 and 7, of Huntington's 2002 Proxy
Statement, and is incorporated herein by reference.


ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item is set forth under the caption
"Transactions With Directors and Executive Officers" on pages 5 and 6, and under
the caption "Compensation Committee Interlocks and Insider Participation" on
page 14 of Huntington's 2002 Proxy Statement, and is incorporated herein by
reference.


Part IV


ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

(1) The report of independent auditors and consolidated financial
statements appearing in Item 8.

(2) Huntington is not filing separately financial statement schedules
because of the absence of conditions under which they are required or
because the required information is included in the consolidated
financial statements or the notes thereto.

(3) The exhibits required by this item are listed in the Exhibit Index
on pages 77 through 79 of this Form 10- K. The management contracts
and compensation plans or arrangements required to be filed as
exhibits to this Form 10-K are listed as Exhibits 10(a) through 10(t)
in the Exhibit Index.

(b) During the quarter ended December 31, 2001, Huntington filed two Current
Report on Form 8-K. The first report, dated October 22, 2001, was filed
under Items 5 and 7, concerning Huntington's results of operations for the
quarter ended September 30, 2001. The second report, dated December 20,
2001 was filed under Items 5 and 7, and reaffirmed the fourth quarter,
2001 operating earnings guidance.

(c) The exhibits to this Form 10-K begin on page 77.

(d) See Item 14(a)(2) above.


75

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on the 7th day of
March, 2002.

HUNTINGTON BANCSHARES INCORPORATED
(Registrant)






By: /s/ Thomas E. Hoaglin By: /s/ Michael J. McMennamin
--------------------------------------- -------------------------------------------
Thomas E. Hoaglin Michael J. McMennamin
Chairman, President, Chief Executive Vice Chairman, Chief Financial Officer,
Officer, and Director (Principal Executive and Treasurer (Principal Financial Officer)
Officer)


By: /s/ John D. Van Fleet
-------------------------------------------
John D. Van Fleet
Senior Vice President and Controller
(Principal Accounting Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 7th day of March, 2002.





Don M. Casto, III * Robert H. Schottenstein *
- -------------------------------------------- --------------------------------------------
Don M. Casto, III Robert H. Schottenstein
Director Director


Don Conrad * George A Skestos *
- -------------------------------------------- --------------------------------------------
Don Conrad George A. Skestos
Director Director


John B. Gerlach, Jr. *
- -------------------------------------------- --------------------------------------------
John B. Gerlach, Jr. Lewis R. Smoot, Sr.
Director Director


Patricia T. Hayot * Timothy P. Smucker *
- -------------------------------------------- --------------------------------------------
Patricia T. Hayot Timothy P. Smucker
Director Director


Wm. J. Lhota *
- --------------------------------------------
Wm. J. Lhota
Director


* /s/ Michael J. McMennamin
- ---------------------------------------------
Michael J. McMennamin
Attorney-in fact for each of the persons indicated




76


EXHIBIT INDEX

3(i)(a). Articles of Restatement of Charter, Articles of Amendment to
Articles of Restatement of Charter, and Articles
Supplementary -- previously filed as Exhibit 3(i) to Annual
Report on Form 10-K for the year ended December 31, 1993, and
incorporated herein by reference.

(i)(b). Articles of Amendment to Articles of Restatement of Charter
-- previously filed as Exhibit 3(i)(c) to Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, and
incorporated herein by reference.

(ii). Amended and Restated Bylaws as of August 15, 2001 -
previously filed as Exhibit 3(ii) to Quarterly Report on Form
10-Q for the quarter ended September 30, 2001, and
incorporated herein by reference.

4(a). Instruments defining the Rights of Security Holders --
reference is made to Articles Fifth, Eighth, and Tenth of
Articles of Restatement of Charter, as amended and
supplemented. Instruments defining the rights of holders of
long-term debt will be furnished to the Securities and
Exchange Commission upon request.

(b). Rights Plan, dated February 22, 1990, between Huntington
Bancshares Incorporated and The Huntington National Bank (as
successor to The Huntington Trust Company, National
Association) -- previously filed as Exhibit 1 to Registration
Statement on Form 8-A, filed with the Securities and Exchange
Commission on February 22, 1990, and incorporated herein by
reference.

(c). Amendment No. 1 to the Rights Agreement, dated August 16,
1995-- previously filed as Exhibit 4(b) to Form 8-K, dated
August 16, 1995, and incorporated herein by reference.

10. Material contracts:

(a). * Employment Agreement, dated February 15, 2001, between
Huntington Bancshares Incorporated and Frank Wobst -
previously filed as Exhibit 10(a) to Annual Report on Form
10-K for the year ended December 31, 2000, and incorporated
herein by reference.

(b). * Form of Tier I Executive Agreement for certain executive
officers -- previously filed as Exhibit 10(b) to Annual
Report on Form 10-K for the year ended December 31, 1998, and
incorporated herein by reference.

(c). * Form of Tier II Executive Agreement for certain executive
officers -- previously filed as Exhibit 10(c) to Annual
Report on Form 10-K for the year ended December 31, 1998, and
incorporated herein by reference.

(d). * Schedule identifying material details of Executive
Agreements, substantially similar to Exhibits 10(b) and
10(c).

(e). * Huntington Bancshares Incorporated Amended and Restated
Incentive Compensation Plan, effective for performance cycles
beginning on or after January 1, 1999 -- previously filed as
Exhibit 10(e) to Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated herein by
reference.

(f)(1). * Amended and Restated Long-Term Incentive Compensation Plan,
effective for performance cycles beginning on or after
January 1, 1999 -- previously filed as Exhibit 10(f) to
Annual Report on Form 10-K for the year ended December 31,
1998, and incorporated herein by reference.

(f)(2). * Amended and Restated Long-Term Incentive Compensation Plan,
effective for performance cycles beginning on or after
January 1, 1999 - reference is made to Form S-8, Registration
No. 33-52394, filed with the Securities and Exchange
Commission on December 21, 2000, and incorporated herein by
reference.

77

(g)(1). * Supplemental Executive Retirement Plan with First and Second
Amendments -- previously filed as Exhibit 10(g) to Annual
Report on Form 10-K for the year ended December 31, 1987, and
incorporated herein by reference.

(g)(2). * Third Amendment to Supplemental Executive Retirement Plan --
previously filed as Exhibit 10(k)(2) to Annual Report on Form
10-K for the year ended December 31, 1997, and incorporated
herein by reference.

(g)(3). * Fourth Amendment to Supplemental Executive Retirement Plan --
previously filed as Exhibit 10(g)(3) to Annual Report on Form
10-K for the year ended December 31, 1999, and incorporated
herein by reference.

(h). * Deferred Compensation Plan and Trust for Directors --
reference is made to Exhibit 4(a) of Post-Effective Amendment
No. 2 to Registration Statement on Form S-8, Registration No.
33-10546, filed with the Securities and Exchange Commission
on January 28, 1991, and incorporated herein by reference.

(i)(1). * 1983 Stock Option Plan -- reference is made to Exhibit 4A of
Registration Statement on Form S-8, Registration No. 2-89672,
filed with the Securities and Exchange Commission on February
27, 1984, and incorporated herein by reference.

(i)(2). * 1983 Stock Option Plan -- Second Amendment -- previously
filed as Exhibit 10(j)(2) to Annual Report on Form 10-K for
the year ended December 31, 1987, and incorporated herein by
reference.

(i)(3). * 1983 Stock Option Plan -- Third Amendment -- previously filed
as Exhibit 10(j)(3) to Annual Report on Form 10-K for the
year ended December 31, 1987, and incorporated herein by
reference.

(i)(4). * 1983 Stock Option Plan -- Fourth Amendment -- previously
filed as Exhibit (m)(4) to Annual Report on Form 10-K for the
year ended December 31, 1993, and incorporated herein by
reference.

(i)(5). * 1983 Stock Option Plan -- Fifth Amendment -- previously filed
as Exhibit (m)(5) to Annual Report on Form 10-K for the year
ended December 31, 1996, and incorporated herein by
reference.

(i)(6). * 1983 Stock Option Plan -- Sixth Amendment -- previously filed
as Exhibit 10(c) to Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000, and incorporated herein by
reference.

(j)(1). * 1990 Stock Option Plan -- reference is made to Exhibit 4(a)
of Registration Statement on Form S-8, Registration No.
33-37373, filed with the Securities and Exchange Commission
on October 18, 1990, and incorporated herein by reference.

(j)(2). * First Amendment to Huntington Bancshares Incorporated 1990
Stock Option Plan -- previously filed as Exhibit 10(q)(2) to
Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.

(j)(3). * Second Amendment to Huntington Bancshares Incorporated 1990
Stock Option Plan -- previously filed as Exhibit 10(n)(3) to
Annual Report on Form 10-K for the year ended December 31,
1996, and incorporated herein by reference.

(j)(4). * Third Amendment to Huntington Bancshares Incorporated 1990
Stock Option Plan -- previously filed as Exhibit 10(b) to
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000, and incorporated herein by reference.

(k)(1). * The Huntington Supplemental Stock Purchase and Tax Savings
Plan and Trust (as amended and restated as of February 9,
1990) -- previously filed as Exhibit 4(a) to Registration
Statement on Form S-8, Registration No. 33-44208, filed with
the Securities and Exchange Commission on November 26, 1991,
and incorporated herein by reference.


78

(k)(2). * First Amendment to The Huntington Supplemental Stock Purchase
and Tax Savings Plan and Trust Plan -- previously filed as
Exhibit 10(o)(2) to Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference.

(l). * Deferred Compensation Plan and Trust for Huntington
Bancshares Incorporated Directors -- reference is made to
Exhibit 4(a) of Registration Statement on Form S-8,
Registration No. 33-41774, filed with the Securities and
Exchange Commission on July 19, 1991, and incorporated herein
by reference.

(m). * Huntington Bancshares Incorporated Retirement Plan For
Outside Directors -- previously filed as Exhibit 10(t) to
Annual Report on Form 10-K for the year ended December 31,
1992, and incorporated herein by reference.

(n). * Restated Huntington Supplemental Retirement Income Plan --
previously filed as Exhibit 10(n) to Annual Report on Form
10-K for the year ended December 31, 1999, and incorporated
herein by reference.

(o)(1). * Amended and Restated 1994 Stock Option Plan -- previously
filed as Exhibit 10(r) to Annual Report on Form 10-K for the
year ended December 31, 1996, and incorporated herein by
reference.

(o)(2). * Third Amendment to Huntington Bancshares Incorporated 1994
Stock Option Plan -- previously filed as Exhibit 10(a) to
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000, and incorporated herein by reference.

(p) * Employment Agreement, dated February 15, 2001, between
Huntington Bancshares Incorporated and Thomas E. Hoaglin -
previously filed as Exhibit 10(p) on Form 10-K for the year
ended December 31, 2000, and incorporated herein by
reference.

(q) * First Amendment to Huntington Bancshares Incorporated
Deferred Compensation Plan and Trust for Huntington
Bancshares Incorporated Directors - previously filed as
Exhibit 10(q) to Quarterly Report 10-Q for the quarter ended
March 31, 2001, and incorporated herein by reference.

(r) * Huntington Bancshares Incorporated 2001 Stock and Long-Term
Incentive Plan -- previously filed as Exhibit 10(r) to
Quarterly Report 10-Q for the quarter ended March 31, 2001,
and incorporated herein by reference.

(s) * Severance Agreement and Release and Waiver of All Claims made
by and between Huntington Bancshares Incorporated and Peter
E. Geier -- previously filed as Exhibit 10(s) to Quarterly
Report 10-Q for the quarter ended June 30, 2001, and
incorporated herein by reference.

(t) * Retirement Agreement between Frank Wobst and Huntington
Bancshares Incorporated -- previously filed as Exhibit 10(t)
to Quarterly Report 10-Q for the quarter ended June 30, 2001,
and incorporated herein by reference.

(u) Purchase and Assumption Agreement, dated September 25, 2001,
among Huntington Bancshares Incorporated, The Huntington
National Bank, and SunTrust Banks, Inc. - previously filed as
Exhibit 2 to Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001, and incorporated herein by
reference.

21. Subsidiaries of the Registrant.

23. Consent of Ernst & Young LLP, Independent Auditors.

24. Power of Attorney

99. Ratio of Earnings to Fixed Charges
- --------------------------
*Denotes management contract or compensatory plan or arrangement.

79