Exhibit 99.3
[COMPANY LOGO - HUNTINGTON]
Third Quarter Earnings Review
October 17, 2002
[LOGO]
MEETING PARTICIPANTS
Tom Hoaglin
- Chairman, President and Chief Executive Officer
Mike McMennamin
- Vice Chairman and Chief Financial Officer
Nick Stanutz
- Exec. Vice President - Dealer Sales Group Head
Jay Gould
- Sr. Vice President - Investor Relations
2
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BASIS OF PRESENTATION - OPERATING BASIS
Reported results since the 2001 second quarter have been significantly impacted
by a number of items, primarily related to the strategic restructuring announced
in July 2001 and the subsequent sale of the Florida banking operations in the
2002 first quarter. In addition, reported 2002 first quarter results included
Florida operations for only half the quarter versus a full quarter for each
prior quarter. Also, the 2002 third quarter included a gain from the
restructuring of the Merchant Services business.
Therefore, to better understand underlying trends, the following slides and
discussion are on an OPERATING basis, unless otherwise noted, which excludes the
effect of these items from all prior periods, including the impact of the
Florida operations.
Please refer to the schedules accompanying the 2002 third quarter earnings press
release, as well as the 2002 third quarter Quarterly Financial Review for
schedules reconciling reported earnings with operating earnings and additional
schedules excluding the impact of the Florida operations.
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THIRD QUARTER HIGHLIGHTS
Reported Results
- ----------------
- - EPS of $0.41
- Includes $24.5 mm pre-tax gain ($16.0 mm after tax) from restructuring
Merchant Services business.
Operating Results
- -----------------
- - EPS of $0.34
- Includes $6.6 mm pre-tax mortgage servicing rights impairment
- - 11% annualized growth in loans
- - 10% annualized growth in core deposits
- - Improved credit quality trends
- 2nd consecutive quarterly decline in NPAs...down 4%
- 4th consecutive quarterly decline in new NPAs...down 35%
- 3rd consecutive quarterly decline in net charge-offs...down 3%
- Loan loss provision exceeded net charge-offs by $16.5 mm, or 38%
- Maintained 2.00% loan loss reserve ratio
- Increased NPA coverage to 191%
- - Repurchased 6.2 million shares...15.0 million shares to date
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THIRD QUARTER - OTHER ACHIEVEMENTS
INVESTING IN THE BUSINESS
- - Appointed new head of small business banking
- - Purchased LeaseNet Group Inc. - net $60 million in receivables
- - Restructured ownership interest in Huntington Merchant Services, LLC
- - Sold J. Rolfe Davis Insurance Agency, Inc.
INVESTING IN OUR EMPLOYEES
- - Announced second employee stock option grant
INVESTING IN OUR CUSTOMERS
- - New teller technology now in 64% of the branches...completion by year end
- - Launched new commercial loan processing system (CLOS)
- - Launched new Situs small cap mutual fund
- - Added another 28 new companies to our new business 401(k) platform
5
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FINANCIAL PERFORMANCE
6
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2002 THIRD QUARTER PERFORMANCE HIGHLIGHTS (1)
- - Net income $82.2 mm
- - Earnings per share $0.34
- - Managed loan growth 11% annualized
- - Core deposit growth 10% annualized
- - Net interest margin 4.26%
- - Efficiency ratio 53.1%
- - Net charge-offs - adjusted (2) 0.83%
- - NPAs $214.1 mm
- - Loan loss reserve / loans 2.00%
- - Tangible common equity ratio 8.00%
- - Mortgage service rights impairment $6.6 mm
(1) Excludes after-tax impact of $16.0 MM gain on the restructuring of the
merchant services business
(2) Excludes impact of net charge-offs on exited portfolios
7
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THIRD QUARTER 2002 EARNINGS
($MM) Reported Adjustments Operating
-------- ------------ ---------
Net interest income $ 249.4 $ 249.4
Provision (60.2) (60.2)
Non-interest income 113.7 113.7
Merchant services gain 24.5 $ 24.5 --
Securities gains 1.1 1.1
Non-interest expense (193.7) (193.7)
------- ------- -------
Pretax income 134.8 24.5 110.3
------- ------- -------
Net income $ 98.1 $ 16.0 $ 82.2
------- ------- -------
EPS $ 0.41 $ 0.07 $ 0.34
======= ======= =======
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PERFORMANCE HIGHLIGHTS (1)
3Q02 2Q02 3Q01
---- ---- ----
EPS - operating $0.34 $0.33 $0.32
ROA 1.26 % 1.31% 1.30%
ROE 14.3 14.0 13.5
Efficiency ratio (2) 53.1 53.2 54.0
NIM 4.26 4.30 4.17
Tangible common equity/assets (3) 8.00 8.51 6.08
(1) Operating basis - Excludes after tax impact of restructuring and other
charges of $33.0 MM in 3Q01, after tax impact of $16.0 MM gain on the
restructuring of the merchant services business in 3Q02, the impact of
Florida banking operations sold in 1Q02 and Florida insurance agency sold
7/2/02
(2) Excludes intangible amortization of $0.2 MM in 3Q02 and 2Q02, and $2.6 MM
in 3Q01
(3) Period end
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2002 THIRD QUARTER EARNINGS (1)
Change B (W) vs.
-----------------------
3Q01
2Q02 -------------
($MM) 3Q02 2Q02 3Q01 Amt. Amt. Pct.
---- ---- ---- ---- ---- ----
Net interest income $ 249.4 $ 241.9 $ 230.5 $ 7.6 $ 19.0 8.2%
Provision (60.2) (53.9) (46.0) (6.4) (14.2) (30.9)
Non-interest income 113.7 114.3 110.0 (0.6) 3.7 3.3
Securities gains 1.1 1.0 1.1 0.2 0.1 7.6
Non-interest expense (193.7) (190.2) (187.1) (3.5) (6.7) (3.6)
------- ------- ------- ------ ------ ---
Pretax income 110.3 113.1 108.5 (2.8) 1.8 1.7
------- ------- ------- ------ ------ ---
Net income $ 82.2 $ 81.7 $ 80.9 $ 0.5 $ 1.3 1.6%
------- ------- ------- ------ ------ ---
EPS $ 0.34 $ 0.33 $ 0.32 $ 0.01 $ 0.02 6.3%
======= ======= ======= ====== ====== ===
Revenue (FTE) (2) $ 364.2 $357.2 $ 341.9 $ 7.0 $ 22.3 6.5%
(1) Operating basis - Excludes after tax impact of restructuring and other
charges of $33.0 MM in 3Q01, after tax impact of $16.0 MM gain on the
restructuring of the merchant services business in 3Q02, the impact of
Florida banking operations sold in 1Q02 and Florida insurance agency sold
7/2/02
(2) Calculated assuming a 35% tax rate and excluding securities gains
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PERFORMANCE TRENDS (1)
EARNINGS PER SHARE
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
$0.30 $0.32 $0.32 $0.32 $0.33 $0.34
PRETAX INCOME BEFORE LLP AND SECURITIES GAINS
Y/Y% Chg
($MM) -------------------
15% 10%
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
$144 $153 $162 $159 $166 $169
(1) Operating basis - Excludes after tax impact of restructuring and other
charges of $33.0 MM in 3Q01, after tax impact of $16.0 MM gain on the
restructuring of the merchant services business in 3Q02, the impact of
Florida banking operations sold in 1Q02 and Florida insurance agency sold
7/2/02
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PERFORMANCE TRENDS (1)
Net Interest Income & Margin (FTE)
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
4.03% 4.17% 4.26% 4.21% 4.30% 4.26%
$227 $232 $237 $234 $243 $251
Earning Assets (Avg)
($B)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
$22.7 $22.2 $22.2 $22.4 $22.6 $23.4
(1) Excludes impact of Florida banking operations sold in 1Q02
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NET INTEREST MARGIN DRIVERS
- - Flattening of the yield curve
- - Auto loan and leases originations... higher quality... lower margin
- - Lower margin residential mortgages
- - Mortgage prepayment activity
- - "De facto" deposit repricing floors
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MANAGED LOAN GROWTH (1)
Average ($B) Annualized Growth
- ------- -----------------
3Q02 vs. 2Q02 vs. 3Q02 vs.
3Q02 2Q02 1Q02 3Q01
---- ---- ----- ----
Commercial $ 5.5 (8)% (3)% (8)%
Commercial real estate 3.7 10 6 13
------ ---- ----- ----
Total commercial/CRE 9.2 (1) -- --
------ ---- ----- ----
Auto loan / lease 7.1 14 (3) 2
Home equity 3.1 18 17 13
Residential real estate 1.3 81 75 138
Other consumer 0.4 (10) (10) (12)
----- ---- ----- ----
Total consumer 11.9 21 14 12
----- ---- ----- ----
Managed loans $21.1 11% 8% 7%
===== ==== ===== ====
(1) Growth percentages normalized for residential real estate loan
securitizations and impact of Florida banking operations sold in 1Q02
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CORE DEPOSIT TRENDS (1)
Average ($B) Annualized Growth
- ------- -----------------
3Q02 vs. 2Q02 vs. 3Q02 vs.
3Q02 2Q02 1Q02 3Q01
---- ---- ---- ----
Demand $ 2.9 19% --% 4%
Interest bearing 5.3 28 51 43
Savings 2.8 (6) (3) (5)
CD's 4.1 (5) 12 1
----- -- -- --
Total $15.1 10% 19% 12%
===== == == ==
(1) Growth percentages normalized for impact of Florida banking operations sold
in 1Q02
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NON-INTEREST INCOME (1)
($MM) Better or (Worse) vs.
---------------------
3Q02 2Q02 2Q02(2) 3Q01
---- ---- ---- ----
Deposit service charges $ 37.5 $ 2.1 6% 12%
Mortgage banking 6.3 (4.4) (41) (55)
Brokerage / insurance 13.9 (1.0) (7) --
Trust income 15.0 (1.3) (8) 1
Bank Owned Life Ins 11.4 -- -- 20
Other service charges 10.8 0.3 3 14
Other 18.7 3.7 24 27
-------- ------ --- ---
Total $ 113.7 $ (0.6) (1)% 3%
======== ====== === ===
Total excl mortgage banking $ 107.4 $ 3.8 4% 12%
(1) Excludes securities gains, gain on restructuring of Merchant Services
business in 3Q02, and Florida insurance agency sold 7/2/02
(2) Linked quarter percentage growth is not annualized.
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MORTGAGE SERVICING
3Q02 2Q02
---- ----
Mortgage servicing portfolio $5.2 B $5.4 B
Investor servicing portfolio $3.2 B $2.7 B
Mortgage servicing rights $27.9 MM $26.9 MM
MSR % of investor servicing portfolio 0.88 % 1.00 %
MSR % of equity 1.19 % 1.25%
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NON-INTEREST EXPENSE (1)
($MM) Better or (Worse) vs.
---------------------
3Q02 2Q02 2Q02(2) 3Q01
---- ---- ---- ---
Personnel costs $107.5 $(3.9) (4)% (6)%
Occupancy & equipment 32.2 (0.9) (3) --
Outside services 15.1 1.5 9 (3)
Marketing 7.5 (0.3) (4) (31)
Amortization of intangibles 0.2 -- -- nmv
Other 31.2 0.1 -- (3)
------ ----- --- --
Total $193.7 $(3.5) (2)% (4)%
====== ===== === ===
(1) Excludes pretax impact of restructuring charges and other charges of $50.8
MM in 3Q01 and Florida insurance agency sold 7/2/02
(2) Linked quarter percentage growth is not annualized
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EFFICIENCY RATIO (1)
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
59.5% 56.0% 54.0% 52.7% 54.1% 53.2% 53.1%
(1) FTE Revenue excluding securities gains and gain on sale of Florida
operations/non-interest expense excludes intangible amortization and
restructuring and other charges. Excludes impact of Florida banking
operations sold in 1Q02 and Florida insurance agency sold 7/2/02
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CREDIT REVIEW
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CREDIT QUALITY OVERVIEW (1)
3Q02 2Q02 3Q01
---- ---- ----
NPAs / total loans + OREO 1.05% 1.14% 1.06%
Net charge-offs - adjusted (2) 0.83 0.88 0.62
90+ days past due 0.33 0.30 0.42
Consumer 0.42 0.41 0.55
Commercial 0.22 0.15 0.13
Commercial RE 0.25 0.20 0.54
Reserve / total loans 2.00 2.00 1.77
Reserve / NPAs 191 176 166
(1) Excludes impact of Florida banking operations sold in 1Q02.
(2) Excludes impact of net charge-offs on exited portfolios.
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NON-PERFORMING ASSET COMPOSITION (1)
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
0.85% 1.06% 1.16% 1.17% 1.14% 1.05%
$156.9 $201.2 $219.6 $225.5 $223.2 $214.1
(1) Excludes impact of Florida banking operations sold in 1Q02.
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NON-PERFORMING ASSET FLOW ANALYSIS - REPORTED BASIS(1)
Period End ($MM)
3Q02 2Q02 1Q02 4Q01 3Q01
---- ---- ---- ---- ----
NPA beginning of period $223.2 $225.5 $227.5 $210.1 $166.0
New NPAs 47.2 73.0 74.4 86.0 95.0
Loan losses (25.5) (28.3) (26.1) (34.6) (12.5)
Payments (26.3) (44.3) (37.7) (28.3) (34.2)
Sales (2) (4.2) (2.4) (8.9) (4.1) (3.3)
Acquired 0.1 -- -- -- --
Other (0.4) (0.3) (3.7) (1.5) (0.9)
----- ------ ------ ----- ------
NPA end of period $214.1 $223.2 $225.5 $227.5 $210.1
(1) Impact of Florida not material.
(2) 1Q02 includes $6.5 MM related to the sale of Florida banking operations and
2Q01 includes $14.9 MM related to PG & E.
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NON-PERFORMING ASSETS - BY SECTOR
Manufacturing 30%
F.I.R.E. 13%
Construction 7%
Retail Trade 2%
Agriculture 3%
Trans./Comm. 1%
Wholesale Trade 1%
Energy 0%
Other 9%
% OF $109 MM CHANGE VS 12/31/00
Services 40%
Manufacturing 53%
F.I.R.E. 16%
Construction 4%
Retail Trade 0%
Agriculture 2%
Trans./Comm. -1%
Wholesale Trade 0%
Energy 0%
Other -14%
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NET CHARGE-OFFS - ADJUSTED (1)
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
0.74% 0.62% 0.99% 0.97% 0.88% 0.83%
$34 $29 $47 $46 $43 $42
3Q02 2Q02 3Q01
---- ---- ----
Commercial 1.21% 1.53% 0.58%
Commercial real estate 0.43 0.22 0.00
---- ---- ----
Total commercial 0.90 1.02 0.38
---- ---- ----
Consumer
Auto loans - indirect 1.01 0.92 0.93
Auto lease 1.27 1.08 1.27
---- ---- ----
Indirect 1.15 1.01 1.13
Other direct 0.91 1.22 0.48
Home equity 0.38 0.43 0.55
Residential real estate 0.04 0.18 0.06
---- ---- ----
Total consumer 0.78 0.75 0.86
---- ---- ----
Total 0.83% 0.88% 0.62%
(1) Excludes impact of net charge-offs on exited portfolios. Reported total
consumer net charge-offs were 0.84% in 3Q02, 0.83% in 2Q02, and 1.11%
in 3Q01. Reported total net charge-offs were 0.87% in 3Q02, 0.92% in 2Q02
and 0.76% in 3Q01. Excludes impact of Florida banking operations sold
in 1Q02.
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VINTAGE PERFORMANCE
AUTO LOANS - INDIRECT
Cumulative Charge-off Rate
% of Portfolio @
-----------------
12/00 12/01 3/02 6/02 9/02
----- ----- ---- ---- ----
Pre - 4Q98 22% 8% 4% 3% 2%
- - 4Q98-3Q99 24% 12% 11% 9% 7%
- - 4Q99-3Q00 42% 25% 24% 20% 17%
- - 4Q00-4Q01 12% 55% 61% 43% 39%
- - 1Q02-3Q02 -- -- -- 25% 35%
--- --- --- --- ---
100% 100% 100% 100% 100%
# Quarters After Origination
AUTO LEASES
Cumulative Charge-off Rate
% of Portfolio @
-----------------
12/00 12/01 3/02 6/02 9/02
----- ----- ---- ---- ----
Pre - 4Q98 16% 6% 4% 3% 2%
- - 4Q98-3Q99 33% 22% 19% 16% 14%
- - 4Q99-3Q00 42% 31% 30% 27% 21%
- - 4Q00-4Q01 9% 41% 47% 38% 34%
- - 1Q02-3Q02 -- -- -- 16% 29%
--- --- --- --- ---
100% 100% 100% 100% 100%
# Quarters After Origination
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CONSUMER DELINQUENCY TRENDS (1)
30+ Days
3Q01 4Q01 1Q02 2Q02 3Q02
3.10% 3.32% 2.36% 2.26% 2.10%
90+ Days
3Q01 4Q01 1Q02 2Q02 3Q02
0.55% 0.60% 0.44% 0.41% 0.42%
(1) % of related outstandings at EOP. Excludes impact of Florida banking
operations sold in 1Q02
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LOAN LOSS RESERVE (1)
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
1.76% 1.77% 2.05% 2.00% 2.00% 2.00%
$326 $335 $387 $386 $393 $408
LOAN LOSS RESERVE FLOW ANALYSIS
($M) 3Q02 2Q02 1Q02
-------- -------- --------
LLR- beginning $ 393.0 $ 386.1 $ 387.0
Charge-offs (56.6) (57.5) (60.2)
Recoveries 12.9 12.6 10.9
-------- -------- --------
Net charge-offs (43.7) (44.9) (49.3)
Provision exp. 60.2 53.9 50.6
Assets purchased 1.3 -- --
Loans securitized (2.4) (2.0) (2.2)
-------- -------- --------
LLR-ending $ 408.4 $ 393.0 $ 386.1
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(1) Excludes impact of Florida banking operations sold in 1Q02
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CAPITAL REVIEW
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CAPITAL TRENDS - REPORTED BASIS (1)
3Q02 2Q02 3Q01
---- ---- ----
Tier 1 risk-based capital 9.13% 9.72% 6.97%
Total risk-based capital 12.09 12.75 10.13
Tier 1 leverage 9.41 9.94 7.10
Tangible equity / assets 8.00(2) 8.51 6.08
Double leverage (3) 86 83 110
(1) Period end
(2) Estimated at 7.5%-7.8% by 12/31/02 assuming continuation of share
repurchase program
(3) (Parent company investments in subsidiaries + goodwill) / equity
30
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SHARE REPURCHASE PROGRAM
Commitment to repurchase $300 - 400 MM
- - Program commenced February 21
- - Repurchased 15.0 million shares through September 30...$294 million
- - Committed to continued repurchase at reasonable prices and volumes
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FOCUS ON DEALER SALES
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DEALER SALES - A SIGNIFICANT BUSINESS
- - A Huntington core business since the early 1950's
- - 34% of Huntington's managed loan portfolio - 9/30/02
- - 550 employees
- - 3,500 dealer relationships
Avg. Managed Balances
---------------------
($MM) Loans Leases
1Q01 3,856 3,082
2Q01 3,891 3,189
3Q01 4,084 3,214
4Q01 4,138 3,204
1Q02 3,935 3,145
2Q02 3,766 3,094
3Q02 3,937 3,172
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DEALER SALES - BUSINESS MODEL
- - Local market presence - sales and underwriting
- - Provider of core products - loan, lease, floor plan
- - Ancillary products and services - treasury, cash management, investments
- - Tenure of staff
- - Customer service - efficient and effective
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DEALER SALES - GEOGRAPHIC PROFILE
9 Month Production
- -------------------
($MM)
2002 2001 % Chg.
---- ---- ------
Ohio $994 $992 2.0%
Florida 483 481 0.4
Michigan 340 393 (13.5)
Kentucky 221 213 3.8
Indiana 202 219 (7.8)
W. Virginia 116 156 (25.6)
Other 239 178 34.3
----- ------ ----
Total $2,595 $2,635 (1.5)%
[STATES MAP]
Ohio 38%
Florida 19
Michigan 13
Kentucky 9
Indiana 8
West Virginia 4
Arizona 3 - Entered market June 2001
Pennsylvania 2
Georgia 0 - Entered market August 2002
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DEALER SALES - MARKET SHARE IN MAJOR MARKETS
2000 2001 2002 YTD
---- ---- --------
OHIO
- ----
GMAC 12.3% 15.0% 13.1%
Ford Motor Credit 14.4 14.3 10.3
- -------------------------------------------------------------------------------
Huntington 7.8 6.3* 6.5
- -------------------------------------------------------------------------------
Fifth Third 4.8 4.7 5.9
National City 6.1 4.9 5.3
Chase 1.9 4.2 4.8
MICHIGAN
- --------
GMAC n/a 37.5 31.8
Ford Motor Credit n/a 17.1 10.4
Chrysler Finance Corp. n/a 8.3 9.4
Fifth Third n/a 3.2 5.3
Chase n/a 2.9 4.8
- -------------------------------------------------------------------------------
Huntington n/a 2.4* 3.2
- -------------------------------------------------------------------------------
FLORIDA
- -------
GMAC 9.5 11.3 11.4
Ford Motor Credit 15.8 15.1 11.0
SunTrust 8.0 7.6 9.9
- -------------------------------------------------------------------------------
Huntington 4.3 4.1* 4.0
- -------------------------------------------------------------------------------
Chase 2.1 4.1 3.5
*Market erosion caused by heavy 4Q01 GM incentives
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DEALER SALES - AUTO INDUSTRY VEHICLE SALES
(000's of units) 3Q02 3Q01 %
---- ---- ----
Change
------
New and used vehicle sales* (retail) 18,649 17,976 3.7%
Huntington vehicles financed 53 49 8.9%
* Source: JD Powers and Wall Street Journal
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INDIRECT AUTO - QUARTERLY PRODUCTION
($MM) 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Loans
Production $388 $489 $651 $454 $426 $613 $667 $504 $486 $498 $715
% new vehicles 36% 41% 46% 45% 43% 47% 50% 39% 47% 58% 57%
Avg. FICO 696 702 707 712 716 722 721 723 730 732 737
% less than 640 19.9% 16.9% 14.0% 9.2% 5.8% 4.7% 4.7% 3.1% 1.8% 1.4% 1.2%
Risk expected loss 1.40% 1.28% 1.18% 1.07% 0.91% 0.82% 0.84% 0.83% 0.67% 0.61% 0.55%
Leases
Production $375 $308 $352 $302 $271 $340 $318 $255 $213 $292 $391
% new vehicles 71% 68% 75% 79% 78% 80% 83% 83% 85% 90% 91%
Avg. residual 48% 45% 43% 44% 38% 38% 37% 36% 37% 38% 40%
Avg. FICO 699 699 703 712 713 712 710 717 727 732 735
% less than 640 13.2% 14.7% 12.4% 8.7% 6.7% 6.2% 6.4% 3.6% 0.9% 0.7% 0.6%
Risk expected loss 1.06% 1.15% 1.11% 0.89% 0.88% 0.84% 0.86% 0.79% 0.65% 0.57% 0.50%
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INDIRECT AUTO - CREDIT UNDERWRITING
Auto Loans
FICO - new production Risk expected loss
1Q00 696 1.40%
2Q00 702 1.28%
3Q00 707 1.18%
4Q00 712 1.07%
1Q01 716 0.91%
2Q01 722 0.82%
3Q01 721 0.84%
4Q01 723 0.83%
1Q02 730 0.67%
2Q02 732 0.61%
3Q02 737 0.55%
Auto Leases
FICO - new production Risk expected loss
1Q00 699 1.06%
2Q00 699 1.15%
3Q00 703 1.11%
4Q00 712 0.89%
1Q01 713 0.88%
2Q01 712 0.84%
3Q01 710 0.86%
4Q01 717 0.79%
1Q02 727 0.65%
2Q02 732 0.57%
3Q02 735 0.50%
[LOGO]
INDIRECT AUTO - CREDIT TRENDS
Auto Loans
3Q01 4Q01 1Q02 2Q02 3Q02
- -30 day Delinq. 3.43% 4.09% 2.23% 2.29% 2.13%
- -90 day Delinq. 0.55% 0.66% 0.42% 0.35% 0.37%
Net Charge-offs 0.93% 1.43% 1.47% 0.92% 1.01%
Auto Leases
3Q01 4Q01 1Q02 2Q02 3Q02
- -30 day Delinq. 2.89% 3.17% 2.42% 2.24% 2.09%
- -90 day Delinq. 0.46% 0.49% 0.33% 0.35% 0.34%
Net Charge-offs 1.27% 1.55% 1.64% 1.08% 1.27%
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AUTO LEASE RESIDUAL VALUE RISK MITIGATION
- - Residual value insurance
- - Reserve fund - $30 million at September 2002
- - Additional reserve funding of 1% of booked residuals on new production
- - Quarterly mark-to-market of residual values and assessment of
reserve adequacy
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DEALER SALES - PRIORITIES GOING FORWARD
REVENUE GROWTH
- - Increased penetration at existing "low market share" dealerships through
leveraging value proposition
- - Selected market expansion outside of core footprint
- - Increased penetration of Huntington products and services at "high
market share" dealerships
COST CONTROL / REDUCTION
- - Leverage existing infrastructure and recent investment in technological
capabilities
- - Pursue emerging workflow technology
- - Managing product profitability components... dealer commissions, fees
collected, etc.
42
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PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
FORWARD LOOKING STATEMENT DISCLOSURE
This presentation and discussion, including related questions and answers,
may contain forward-looking statements, including certain plans,
expectations, goals, and projections which 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 Huntington's Annual Report
on Form 10-K for the year ended December 31, 2001, 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.
All forward-looking statements included in this discussion, including related
questions and answers, are based on information available at the
time of the discussion. Huntington assumes no obligation to
update any forward-looking statement.
43
[LOGO]
APPENDIX
44
[LOGO]
HUNTINGTON
[LOGO]
MANAGING INTEREST RATE RISK
NET INTEREST INCOME AT RISK
FORWARD CURVE +/- 2%
GRADUAL CHANGE IN RATES
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
- -2% Rate Fall 1.8% 1.5% 0.8% 1.4% 0.9% -0.2%
2% Rate Rise -2.1% -1.7% -1.2% -1.6% -1.3% -0.8%
ECONOMIC VALUE AT RISK
PARALLEL YIELD CURVE SHIFT +/- 2%
INSTANTANEOUS CHANGE IN RATES
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
- -2% Rate Shock 3.6% 0.7% -0.7% 0.8% 0.1% -1.4%
+2% Rate Shock -6.2% -3.7% -2.4% -3.8% -3.0% -3.4%
46
[LOGO]
LOAN PORTFOLIO - 9/30/02
BY TYPE OF LOAN - MANAGED
($B) Amt Pct
------ -----
Commercial $ 5.7 26.3%
Commercial RE 3.8 17.5
------ ----
Total commercial 9.5 43.8
------ ----
Auto leases 3.2 14.8
Auto loans 4.0 18.7
Home equity 3.1 14.5
Residential real estate 1.4 6.3
Other consumer 0.4 1.8
------ ----
Total consumer 12.1 56.2
------ ----
Total loans $21.6 100.0%
BY REGION OR LOB - MANAGED
Central OH/WV 18%
Northern Ohio 13%
W. Michigan 8%
S. Ohio/KY 7%
E. Michigan 5%
Indiana 3%
Auto 36%
PFG 4%
Mortgage 5%
47
[LOGO]
COMMERCIAL LOAN PORTFOLIO - 9/30/02
$9.5 B BY INDUSTRY SECTOR
Services 24%
Manufacturing 14%
F.I.R.E. 29%
Retail Trade 12%
Construction 7%
Wholesale Trade 6%
Trans./Comm. 4%
Agriculture 2%
Energy 1%
Other 1%
# OF LOANS BY SIZE
less than $5MM 18,947
98.2%
$5+MM 345
1.8%
$5 MM - Less than $10 MM 224
$10 MM - Less than $25 MM 110
$25 MM - Less than $50 MM 91
$50+ MM 2
----
Total 345
48
[LOGO]
COMMERCIAL REAL ESTATE PORTFOLIO - 9/30/02
$3.8 Billion
----------------
By Property Type
Retail 23%
Industrial 18%
Office 16%
Land Devel. 7%
Single-family 5%
Hotel 5%
Health Care 3%
Raw Land 2%
Other 8%
[chart]
49
[LOGO]
COMMERCIAL REAL ESTATE PORTFOLIO - 9/30/02
$3.8 BILLION
By Region
E. Michigan 14%
W. Virginia 8%
Indiana 6%
Florida 1%
Columbus 21%
Cleveland 21%
Cincinnati 15%
W. Michigan 14%
[chart]
By Loan Type
Mini-perm 12%
Permanent 16%
Construction 37%
Owner occupied 34%
[chart]
50
[LOGO]
HOME EQUITY - QUARTERLY PRODUCTION
($MM) 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Loans
Production $ 70.7 $ 87.2 $ 79.8 $ 74.2 $ 70.5 $ 93.6 $ 72.8 $ 83.2 $ 76.2 $ 81.8 $ 63.7
Avg. LTV 79% 80% 79% 79% 80% 80% 78% 77% 79% 75% 72%
Avg. FICO 684 687 686 684 689 692 695 697 697 699 698
% less than 640 24.0% 22.0% 23.5% 23.0% 19.3% 18.8% 16.6% 15.6% 14.5% 14.5% 16.3%
Risk expected loss 0.74% 0.76% 0.64% 0.68% 0.55% 0.49% 0.49% 0.63% 0.41% 0.41% 0.45%
Lines
Production $ 199.3 $ 222.9 $ 220.0 $ 194.7 $ 211.1 $ 328.0 $ 285.0 $ 297.1 $ 314.3 $ 366.1 $ 347.0
Avg. LTV 80% 80% 80% 79% 79% 79% 78% 77% 78% 78% 78%
Avg. FICO 707 710 708 712 711 714 714 720 722 722 722
% less than 640 13.4% 12.1% 13.7% 11.0% 11.0% 10.4% 9.3% 7.3% 6.3% 6.4% 6.2%
Risk expected loss 0.62% 0.55% 0.59% 0.55% 0.53% 0.50% 0.60% 0.65% 0.52% 0.54% 0.48%
51
[LOGO]
HOME EQUITY - CREDIT UNDERWRITING
LOANS
[chart]
FICO - new production Risk expected loss
1Q00 684 0.74%
2Q00 687 0.76%
3Q00 686 0.64%
4Q00 684 0.68%
1Q01 689 0.55%
2Q01 692 0.49%
3Q01 695 0.49%
4Q01 697 0.63%
1Q02 697 0.41%
2Q02 699 0.41%
3Q02 698 0.45%
Lines
[chart]
FICO - new production Risk expected loss
1Q00 707 0.62%
2Q00 710 0.55%
3Q00 708 0.59%
4Q00 712 0.55%
1Q01 711 0.53%
2Q01 714 0.50%
3Q01 714 0.60%
4Q01 720 0.65%
1Q02 722 0.52%
2Q02 722 0.54%
3Q02 722 0.48%
52
[LOGO]
TOTAL DEPOSIT TRENDS (1)
Average ($B) Annualized Growth
- ------- -----------------
3Q02 vs 2Q02 vs. 3Q02 vs.
3Q02 2Q02 1Q02 3Q01
---- ---- ---- ----
Central Region $ 5.1 6% 6% 9%
No. Ohio Region 3.5 15 15 11
Cincinnati / Dayton Region 1.3 2 17 7
Indiana Region 0.7 37 22 17
E. Michigan Region 2.0 11 10 5
W. Michigan Region 2.5 (3) 58 9
----- -- --- --
Total Regions $15.1 8% 18% 9%
===== == === ==
(1) Excludes deposits attributable to Dealer Sales and PFG lines of business,
brokered deposits, and negotiable CDs. Normalized sale of Florida.
53
[LOGO]
PERFORMANCE TRENDS (1)
REVENUE (FTE)
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
$338 $342 $351 $349 $357 $364
(1) Excludes security gains and gain on restructuring of merchant services
business in 3Q02, gain on sale of the Florida banking operations in 1Q02,
impact of Florida banking operations sold in 1Q02 and Florida insurance
agency sold 7/2/02
54
[LOGO]
PERFORMANCE TRENDS (1)
LOAN LOSS PROVISION
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
$42 $46 $54 $51 $54 $60
NET INCOME
($MM)
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
$76 $81 $80 $80 $82 $82
(1) Operating basis - Excludes after tax impact of restructuring and other
charges, gain on sale of Florida operations in 1Q02, impact of Florida
banking operations sold in 1Q02 and Florida insurance agency sold 7/2/02
55
[LOGO]
PERFORMANCE TRENDS (1)
RETURN ON AVERAGE ASSETS
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
1.20% 1.30% 1.28% 1.30% 1.31% 1.26%
RETURN ON AVERAGE EQUITY
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
12.6% 13.5% 13.4% 13.6% 14.0% 14.3%
(1) Operating basis - Excludes after tax impact of restructuring and other
charges of $33.0 MM in 3Q01, after tax impact of $16.0 MM gain on the
restructuring of the merchant services business in 3Q02, the impact of
Florida banking operations sold in 1Q02 and Florida insurance agency sold
7/2/02
56
[LOGO]
PRIVATE FINANCIAL GROUP
57
[LOGO]
PFG - BUSINESS OVERVIEW - 3Q02
BUSINESS LINES 9/30/02 ASSETS
- - Asset Management / Investment Advisory Mngd Total
---- -----
- Personal trust $ 4.7 B $7.4B
- Huntington Funds 2.7 2.7
- Institutional trust 0.5 12.9
- Corporate trust 0.2 2.7
- Haberer Registered Investment Advisor 0.4 0.4
--- -----
$8.5 B $26.1B
- - Brokerage 3Q02 2Q02
---- ----
- Mutual fund sales $ 32.4 MM $ 54.6 MM
- Annuity sales 151.8 152.6
------ ------
$184.2 $ 207.2
- - Private Banking (Avg. balances)
- Deposits $ 821 MM $ 776 MM
- Loans $ 919 $ 851
58
[LOGO]
PFG - FEE BASED REVENUE (1)
3Q02 REVENUE ($MM) VS. 3Q01
Trust fees $15.0 1.2%
Brokerage & Insurance 12.6 32.8
Other (2) 1.0 (9.1)
----- -----
Total $28.6 11.3%
(1) Excludes impact of Florida sale and sale of J Rolfe Davis
(2) Misc. banking fees on loans/deposits
REVENUE TRENDS
<Table>
Trust fees $13.7 $14.4 $14.8 $14.7 $15.1 $16.2 $15.0
Brokerage & Insurance $10.9 $11.1 $9.5 $12.7 $12.2 $13.1 $12.6
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
</Table>
59
[LOGO]
PFG - HUNTINGTON FUNDS
- - Lipper 1 Year (9/30/02) rankings...
- New Economy Fund #3 of 387
- Dividend Capture Fund #8 of 472
- Mid Cap Fund Top 6% of 218
- - All equity funds in top quartile for 2002 YTD
60
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PFG - RETAIL INVESTMENT SALES SUCCESS (1)
2001 2001 Industry
Huntington Average Top Quartile
---------- --------- -------------
Sales penetration (2) 5.3% 3.4% 4.6%
Revenue penetration (3) $2,855 $3,081 $2,821
Profit penetration (4) $1,323 $ 679 $ 958
9 Mo. 2002 2001 Industry
Average monthly (5) Huntington Average Top Quartile
- ---------------- ---------- ------- ------------
Sales per licensed banker $70,996 $35,215 $61,158
Revenue per licensed banker $ 3,195 $ 1,585 $ 2,905
3Q02 3Q01
Huntington Fund sales % total funds sold 31% 5%
(1) Ken Kehrer & Associates survey
(2) Sales (dollars invested) of mutual funds and annuities divided by bank's
retail deposits
(4) Contribution of investment program to pretax profit per million of the
bank's retail deposits. Contribution is difference between program revenue
and program expenses
(5) Annualized
61