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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2004

OR

For the transition period from              to             

Commission File Number 0-13270

Unizan Financial Corp.

(Exact name of registrant as specified in its charter)

220 Market Avenue South, Canton, Ohio 44702

(Address of principal executive offices)

(Zip Code)

(330) 438-1118

(Registrant’s telephone number, including area code)

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

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

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

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INDEX

UNIZAN FINANCIAL CORP.

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Unizan Financial Corp.

CONSOLIDATED BALANCE SHEETS

See Notes to the Consolidated Financial Statements

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Unizan Financial Corp.

CONSOLIDATED STATEMENTS OF INCOME

See Notes to the Consolidated Financial Statements

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Unizan Financial Corp.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See Notes to the Consolidated Financial Statements

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Unizan Financial Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS

See the Notes to the Consolidated Financial Statements

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UNIZAN FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2004 (Unaudited)

(In thousands, except per share data)

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

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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

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

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

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

2) PENDING MERGER

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

3) COMPUTATION OF EARNINGS PER SHARE

The computation of earnings per share is as follows.

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4) SECURITIES

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

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

5) OTHER BORROWINGS:

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

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

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

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

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

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

6) STOCK INCENTIVE PLAN:

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

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

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

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

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7) SEGMENT REPORTING:

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

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