UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission File No. 1-14473
Sky Financial Group, Inc.
(Exact Name of Registrant as Specified in its Charter)
Ohio 34-1372535
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
221 South Church Street, Bowling Green, Ohio 43402
(Address of Principal Executive Offices) (Zip Code)
(419) 327-6300
(Registrant's Telephone Number)
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 [ ]
The number of shares outstanding of the Registrant's common stock, without
par value was 77,129,199 at July 31, 2000.
<PAGE 2>
SKY FINANCIAL GROUP, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
June 30, 2000 and December 31, 1999 .................... 3
Consolidated Statements of Income
Three months ended June 30, 2000 and 1999 and
Six months ended June 30, 2000 and 1999 .............. 4
Condensed Consolidated Statements of Changes in
Shareholders' Equity
Three months ended June 30, 2000 and 1999 and
Six months ended June 30, 2000 and 1999 ............ 5
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2000 and 1999 ................ 6
Notes to Consolidated Financial Statements ............... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 15
Item 3. Quantitative and Qualitative Disclosures
About Market Risk ...................................... 24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ........................................ 25
Item 2. Changes in Securities .................................... 25
Item 3. Defaults Upon Senior Securities .......................... 25
Item 4. Submission of Matters to a Vote of Security Holders ...... 25
Item 5. Other Information ........................................ 26
Item 6. Exhibits and Reports on Form 8-K ......................... 26
SIGNATURES ......................................................... 27
EXHIBIT INDEX ...................................................... 28
<PAGE 3>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SKY FINANCIAL GROUP, INC.
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except share data) June 30, December 31,
2000 1999
ASSETS
Cash and due from banks $ 278,723 $ 380,980
Interest-earning deposits
with financial institutions 15,501 17,086
Federal funds sold 19,500 3,100
Loans held for sale 9,814 9,006
Securities available for sale 1,830,734 1,868,839
Total loans 5,623,153 5,477,494
Less allowance for credit losses (88,018) (86,750)
Net loans 5,535,135 5,390,744
Premises and equipment 116,949 115,675
Accrued interest receivable
and other assets 304,630 278,326
TOTAL ASSETS $8,110,986 $8,063,756
LIABILITIES
Deposits
Non-interest-bearing deposits $ 774,131 $ 757,537
Interest-bearing deposits 5,014,291 5,001,154
Total deposits 5,788,422 5,758,691
Securities sold under repurchase
agreements and federal funds purchased 666,147 657,913
Debt and Federal Home Loan Bank advances 864,631 915,957
Obligated mandatorily redeemable capital
securities of subsidiary trusts 108,600 48,600
Accrued interest payable
and other liabilities 109,128 116,264
TOTAL LIABILITIES 7,536,928 7,497,425
SHAREHOLDERS' EQUITY
Serial preferred stock, $10.00 par value;
10,000,000 shares authorized;
none issued -- --
Common stock, no par value;
150,000,000 shares authorized;
78,188,065 and 78,163,065 shares
issued in 2000 and 1999 571,271 571,543
Retained earnings 66,052 34,381
Treasury stock; 1,486,076 and
274,250 shares in 2000 and 1999 (26,904) (6,215)
Unearned ESOP shares (450) (717)
Accumulated other comprehensive income (35,911) (32,661)
TOTAL SHAREHOLDERS' EQUITY 574,058 566,331
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $8,110,986 $8,063,756
<PAGE 4>
SKY FINANCIAL GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, Three Months Ended Six Months Ended
except per share data) June 30, June 30,
2000 1999 2000 1999
Interest Income
Loans, including fees $123,463 $109,973 $242,949 $219,322
Securities
Taxable 26,465 27,420 53,179 56,010
Nontaxable 2,175 2,450 4,427 4,888
Federal funds sold and other 409 627 694 1,157
Total interest income 152,512 140,470 301,249 281,377
Interest Expense
Deposits 53,349 48,929 103,942 99,970
Borrowed funds 23,721 16,255 45,565 32,576
Total interest expense 77,070 65,184 149,507 132,546
Net Interest Income 75,442 75,286 151,742 148,831
Provision for Credit Losses 4,733 4,552 9,070 8,742
Net Interest Income After
Provision Credit Losses 70,709 70,734 142,672 140,089
Other Income
Trust income 3,736 2,975 7,468 5,904
Service charges and fees on
deposit accounts 6,695 6,904 12,993 13,757
Mortgage banking income 2,901 5,684 5,610 12,210
Brokerage and insurance
commissions 6,332 4,454 12,842 7,343
Collection agency fees 491 666 1,279 1,265
Net securities gains 665 307 847 619
Net gains on sales of
commercial financing loans 3,863 3,878 7,225 8,784
Other income 7,768 8,058 14,804 14,305
Total other income 32,451 32,926 63,068 64,187
Other Expense
Salaries and employee benefits 28,176 30,747 58,266 60,551
Occupancy and equipment expense 9,189 9,763 18,601 19,456
Other operating expense 19,778 18,627 37,682 36,085
Total other expenses 57,143 59,137 114,549 116,092
Income Before Income Taxes 46,017 44,523 91,191 88,184
Income taxes 14,518 13,885 28,586 27,665
Net Income $ 31,499 $ 30,638 $ 62,605 $ 60,519
Earnings per Common Share:
Basic $ 0.41 $ 0.39 $ 0.81 $ 0.77
Diluted $ 0.41 $ 0.39 $ 0.81 $ 0.77
<PAGE 5>
SKY FINANCIAL GROUP, INC.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
(Dollars in thousands, Three Months Ended Six Months Ended
except per share data) June 30, June 30,
2000 1999 2000 1999
Balance at
beginning of period $571,127 $621,237 $566,331 $611,713
Comprehensive income
Net income 31,499 30,638 62,605 60,519
Other comprehensive
income (loss) (1,122) (18,523) (3,250) (25,708)
Total comprehensive
income 30,377 12,115 59,355 34,811
Common cash dividends (15,378) (13,130) (30,963) (26,217)
Treasury shares
acquired (12,634) (3,489) (23,421) (6,229)
Treasury shares
issued 294 854 1,957 1,465
Shares issued to acquire
Picton Cavanaugh, Inc. -- 1,174 -- 1,174
Effect of conforming the year
end of pooled affiliate -- -- -- 1,584
Fractional shares
and other items 272 508 799 968
Balance at
end of period $574,058 $619,269 $574,058 $619,269
Common cash dividends
per share $ 0.20 $ 0.19 $ 0.40 $ 0.38
<PAGE 6>
SKY FINANCIAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited) Six Months Ended
(Dollars in thousands) June 30,
2000 1999
Net Cash From Operating Activities $ 43,739 $ 162,924
Investing Activities
Net decrease (increase) in interest-
bearing deposits in other banks 1,585 (5,441)
Net (increase) decrease in
federal funds sold (16,400) 42,374
Securities available for sale:
Proceeds from maturities and payments 186,647 428,585
Proceeds from sales 15,811 152,050
Purchases (170,365) (439,727)
Securities held to maturity:
Proceeds from maturities and payments -- 920
Proceeds from sales of loans 4,225 12,870
Net increase in loans (158,809) (164,345)
Purchases of premises and equipment (8,995) (13,295)
Purchases of life insurance contracts -- (4,340)
Proceeds from sales of premises and equipment 606 4,603
Proceeds from sales of other real estate 2,169 852
Net cash from investing activities (143,526) 15,106
Financing Activities
Cash transferred in connection with
sale of branch deposits -- (95,917)
Purchases of branch deposits, net -- 4,765
Net increase (decrease) in deposit accounts 29,731 (156,741)
Net increase in federal funds and
repurchase agreements 8,234 36,467
Net decrease in short-term FHLB advances (43,700) (48,908)
Proceeds from issuance of debt
and long-term FHLB advances 303,000 115,390
Repayment of debt and long-term
FHLB advances (250,626) (25,595)
Cash dividends and fractional shares paid (31,124) (26,093)
Proceeds from issuance of common stock 1,605 2,288
Treasury stock purchases (19,590) (6,229)
Other items -- (93)
Net cash from financing activities (2,470) (200,666)
Net decrease in cash and due from banks (102,257) (22,636)
Effect on cash of conforming the year end
of pooled entity -- 3,331
Cash and due from banks at beginning of year 380,980 247,284
Cash and due from banks at end of period $ 278,723 $ 227,979
Cash paid for interest $ 150,920 $ 132,907
Cash paid for income taxes $ 30,100 $ 19,752
Noncash Transactions
Securitization of loans held for sale $ -- $ 3,880
<PAGE 7>
SKY FINANCIAL GROUP, INC.
Notes to Consolidated Financial Information (Unaudited)
(Dollars in thousands, except per share data)
1. Accounting Policies
Sky Financial Group, Inc. (Sky Financial) is a financial services holding
company headquartered in Bowling Green, Ohio. Sky Financial has three bank
subsidiaries primarily engaged in the commercial banking business in Ohio,
southern Michigan, western Pennsylvania and West Virginia. Sky Financial
also operates several financial services companies which complement its
banks, including a trust company, broker/dealer operation, insurance agency,
commercial finance unit and collections affiliate.
The accounting and reporting policies followed by Sky Financial conform to
generally accepted accounting principles and to general practices within the
financial services industry. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. Actual results could differ from those
estimates. The allowance for loan losses and fair values of financial
instruments are particularly subject to change.
These interim financial statements are prepared without audit and reflect all
accruals of a normal recurring nature which, in the opinion of management,
are necessary to present fairly the consolidated financial position of Sky
Financial at June 30, 2000, and its results of operations and cash flows
for the periods presented. Certain amounts in prior financial statements
have been reclassified to conform to the current presentation. The
accompanying consolidated financial statements do not contain all financial
disclosures required by generally accepted accounting principles. Sky
Financial's Annual Report for the year ended December 31, 1999, contains
consolidated financial statements and related notes which should be read in
conjunction with the accompanying consolidated financial statements.
The consolidated financial statements of Sky Financial include the accounts
of Sky Bank, Mid Am Bank, The Ohio Bank (Ohio Bank), Sky Asset Management
Services, Inc. (SAMSI), Sky Investments, Inc. (SII), Sky Financial Solutions,
Inc. (SFS), Mid Am Financial Services, Inc. (MAFSI), Sky Trust, N.A., (Sky
Trust), Sky Technology Resources, Inc. (Sky Tech), Mid Am Capital Trust I
(MACT), Sky Financial Group Capital Trust I (SFGCT), First Western Capital
Trust I (FWCT), First Western Investment Services, Inc. (FWIS), First Western
Bancorp, Inc. (First Western), Picton Cavanaugh, Inc. (Picton), Freedom
Financial Life Insurance Company and various other insignificant
subsidiaries. All significant intercompany transactions and accounts have
been eliminated in consolidation.
<PAGE 8>
New Accounting Pronouncements
Beginning January 1, 2001, a new accounting standard will require all
derivatives to be recorded at fair value. Unless designated as hedges,
changes in these fair values will be recorded in the income statement. Fair
value changes involving hedges will generally be recorded by offsetting gains
and losses on the hedge and on the hedged item, even if the fair value of the
hedged item is not otherwise recorded. This is not expected to have a
material effect, but the effect will depend on derivative holdings when this
standard applies. This standard may be adopted early at the beginning of any
fiscal quarter.
2. Mergers and Acquisitions
On July 13, 2000, Sky Financial acquired the Meyer & Eckenrode Insurance
Group, Inc., a full service insurance agency based in Carnegie, Pennsylvania.
Meyer & Eckenrode shareholders received 0.6 million shares of Sky Financial
common stock in a tax-free exchange accounted for as a purchase.
On September 30, 1999, Mahoning National Bancorp, Inc. (Mahoning Bancorp)
affiliated with Sky Financial in a tax-free exchange with a total of 11.4
million Sky Financial common shares issued in the merger. Mahoning Bancorp
was an $847 million bank holding company with offices in northeastern Ohio.
Its subsidiary, Mahoning National Bank of Youngstown, was operated as a
wholly-owned subsidiary of Sky Financial until April 14, 2000, when it was
merged into Sky Bank.
On August 6, 1999, First Western Bancorp, Inc. affiliated with Sky Financial
in a tax-free exchange with a total of 15.0 million Sky Financial common
shares issued in the merger. First Western was a $2.2 billion bank holding
company with offices in northwestern Pennsylvania and eastern Ohio. First
Western's bank affiliate, First Western Bank, N. A., was merged into Sky
Bank.
Effective July 16, 1999, Wood Bancorp, Inc., Bowling Green, Ohio (Wood
Bancorp), affiliated with Sky Financial in a tax-free exchange with a total
of 2.3 million Sky Financial common shares issued in the merger. Wood
Bancorp was a $167 million bank holding company with offices located in
northwestern Ohio. Wood Bancorp's subsidiary, First Federal Bank, was merged
into Mid Am Bank.
Each of these mergers was accounted for as a pooling of interests.
Accordingly, all financial information has been restated to include the
historical information of the merged entities.
On May 1, 1999, Sky Financial completed its acquisition of Picton Cavanaugh,
Inc., a full-service insurance agency based in Toledo, Ohio. Picton
Cavanaugh shareholders received 0.3 million Sky Financial's common shares in
a tax-free exchange accounted for as a pooling of interests. Since Picton
Cavanaugh's financial statements were not material compared to Sky
Financial's, prior financial statements were not restated.
<PAGE 9>
3. Securities Available for Sale
The amortized costs, unrealized gains and losses and estimated fair values at
June 30, 2000 and December 31, 1999 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
June 30, 2000
U.S. Treasury and U.S.
Government agencies $ 653,574 $ 113 $(22,277) $ 631,410
Obligations of states and
political subdivisions 178,276 764 (2,225) 176,815
Corporate and other
securities 22,280 5 (354) 21,931
Mortgage-backed
securities 881,862 648 (23,385) 859,125
Total debt securities
available for sale 1,735,992 1,530 (48,241) 1,689,281
Marketable equity
securities 149,987 3,768 (12,302) 141,453
Total securities
available for sale $1,885,979 $ 5,298 $(60,543) $1,830,734
December 31, 1999
U.S. Treasury and U.S.
Government agencies $ 691,045 $ 331 $(16,936) $ 674,440
Obligations of states and
political subdivisions 192,111 1,335 (2,606) 190,840
Corporate and other
securities 21,170 -- (367) 20,803
Mortgage-backed
securities 865,857 379 (24,629) 841,607
Total debt securities
available for sale 1,770,183 2,045 (44,538) 1,727,690
Marketable equity
securities 148,904 3,534 (11,289) 141,149
Total securities
available for sale $1,919,087 $ 5,579 $(55,827) $1,868,839
<PAGE 10>
4. Loans
The loan portfolios are as follows:
June 30, 2000 December 31, 1999
Real estate loans:
Construction $ 150,840 $ 176,940
Residential mortgage 1,655,403 1,744,162
Non-residential mortgage 1,517,799 1,296,019
Commercial, financial and
agricultural 1,372,036 1,411,902
Installment and credit card loans 917,311 834,106
Other loans 9,764 14,365
Total loans $5,623,153 $5,477,494
5. Debt and Federal Home Loan Bank Advances
Sky Financial's debt and Federal Home Loan Bank (FHLB) advances are as
follows:
June 30, 2000 December 31, 1999
Borrowings under bank line of credit $ 44,000 $ 84,000
Borrowings under FHLB lines of credit 767,888 763,170
Subordinated note, 7.08%, January 2008 50,000 50,000
Obligated mandatorily redeemable capital
securities of subsidiary trusts
Due February 2027 at 9.875% 25,000 25,000
Due June 2027 at 10.20% 23,600 23,600
Due May 2030 at 9.34% 60,000 --
Capital lease obligations 1,843 1,903
Other items 900 16,884
Total debt and FHLB advances $ 973,231 $ 964,557
6. Other Comprehensive Income
Other comprehensive income consisted of the following:
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Other comprehensive income (loss)
Unrealized securities losses
arising during period $(1,058) $(28,166) $(4,150) $(38,920)
Reclassification adjustment
for gains included in income (665) (307) (847) (619)
Net unrealized losses on
securities available for sale (1,723) (28,473) (4,997) (39,539)
Tax effect 601 9,950 1,747 13,831
Total other comprehensive loss $(1,122) $(18,523) $(3,250) $(25,708)
<PAGE 11>
7. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted
average number of shares outstanding during the period, as restated for
shares issued in business combinations accounted for as pooling-of-interests,
stock splits and stock dividends. Diluted earnings per share is computed
using the weighted average number of shares determined for the basic
computation plus the number of shares of common stock that would be issued
assuming all contingently issuable shares having a dilutive effect on
earnings per share were outstanding for the period. For the three months
ended and the six months ended June 30, 2000, there were 3,090,000 weighted
shares and 2,994,000 weighted shares, respectively, under option excluded
from the diluted earnings per share calculation as they were anti-dilutive.
Earnings per share data have also been restated for the 10% stock dividend
declared in September 1999 and paid November 1, 1999.
The weighted average number of common shares outstanding for basic and
diluted earnings per share computations were as follows:
(Shares in thousands) Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Numerator:
Net income $31,499 $30,638 $62,605 $60,519
Denominator:
Weighted-average common
shares outstanding (basic) 77,182 78,196 77,401 78,097
Exercise of options 325 858 346 849
Weighted-average common
shares outstanding (diluted) 77,507 79,054 77,747 78,946
Earnings per share:
Basic $ 0.41 $ 0.39 $ 0.81 $ 0.77
Diluted $ 0.41 $ 0.39 $ 0.81 $ 0.77
8. Capital Resources
The Federal Reserve Board (FRB) has established risk-based capital guidelines
that must be observed by financial service holding companies and banks.
Failure to meet specified minimum capital requirements can result in certain
mandatory actions by primary regulators of Sky Financial and its bank
subsidiaries that could have a material effect on Sky Financial's financial
condition or results of operations. Under capital adequacy guidelines, Sky
Financial and its bank subsidiaries must meet specific quantitative measures
of their assets, liabilities and certain off balance sheet items as
determined under regulatory accounting practices. Sky Financial's and its
banks' capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings and other
factors. Management believes, as of June 30, 2000, that Sky Financial and
its banks meet all capital adequacy requirements to which they are subject.
<PAGE 12>
Sky Financial and its banks have been notified by their respective regulators
that, as of the most recent regulatory examinations, each is regarded as well
capitalized under the regulatory framework for prompt corrective action.
Such determinations have been made evaluating Sky Financial and its banks
under Tier I, total capital, and leverage ratios. There are no conditions or
events since these notifications that management believes have changed any of
the well capitalized categorizations of Sky Financial and its bank
subsidiaries.
The following table presents the capital ratios of Sky Financial.
June 30, 2000 December 31, 1999
Total adjusted average assets
for leverage ratio $7,965,580 $7,909,479
Risk-weighted assets and
off-balance-sheet financial
instruments for capital ratio 6,570,572 6,206,820
Tier I capital 682,967 612,257
Total risk-based capital 829,401 751,976
Leverage ratio 8.6% 7.7%
Tier I capital ratio 10.4 9.9
Total capital ratio 12.6 12.1
Capital ratios applicable to Sky Financial's banking subsidiaries at
June 30, 2000 were as follows:
Total
Tier I Risk-based
Leverage Capital Capital
Regulatory Capital Requirements
Minimum 4.0% 4.0% 8.0%
Well-capitalized 5.0 6.0 10.0
Bank Subsidiaries
Sky Bank 7.5 10.8 13.0
Mid Am Bank 8.0 9.1 11.3
Ohio Bank 6.5 8.0 10.2
In September, 1999, the Board of Directors of Sky Financial authorized
management to undertake purchases of up to 3,850,000 shares of Sky
Financial's outstanding common stock over a twelve month period in the open
market or in privately negotiated transactions. The shares reacquired are
held as treasury stock and reserved for use in Sky Financial's stock option
plan and for future stock dividend declarations. As of June 30, 2000, Sky
Financial had repurchased approximately 1,662,000 shares of common stock
pursuant to its 1999 repurchase program. As of July 31, 2000, Sky Financial
had repurchased approximately 1,843,000 shares of common stock pursuant to
its 1999 repurchase program.
<PAGE 13>
9. Line of Business Reporting
Sky Financial manages and operates two major lines of business: community
banking and financial service affiliates. Community banking includes lending
and related services to businesses and consumers, mortgage banking and
deposit-gathering. Financial service affiliates consist of non-banking
companies engaged in commercial finance lending and leasing, broker/dealer
operations, non-conforming mortgage lending, collection activities, trust and
wealth management, insurance and other financial-related services.
The reported line of business results reflect the underlying core operating
performance within the business units. Parent and Other is comprised of the
parent company and several smaller business units. It includes the net
funding cost of the parent company and intercompany eliminations. Expenses
for centrally provided services and support are fully allocated based
principally upon estimated usage of services. All significant non-recurring
items of income and expense company-wide are included in Parent and Other.
Prior periods have been presented to conform with current reporting
methodologies. Substantially all of Sky Financial's assets are part of the
community banking line of business.
Selected segment information for the three months ended June 30, 2000 is
included in the following table:
Financial Parent
Three Months Ended Community Service and Consolidated
June 30, Banking Affiliates Other Total
2000
Net interest income $77,304 $ 607 $ (2,469) $ 75,442
Provision for credit losses 4,674 59 -- 4,733
Net interest income
after provision 72,630 548 (2,469) 70,709
Other income 18,029 15,476 (1,054) 32,451
Other expenses 44,350 14,439 (1,646) 57,143
Income (loss) before
income taxes 46,309 1,585 (1,877) 46,017
Income taxes 14,661 605 (748) 14,518
Net income (loss) $31,648 $ 980 $ (1,129) $ 31,499
1999
Net interest income $76,611 $ 588 $ (1,913) $ 75,286
Provision for credit losses 4,450 102 -- 4,552
Net interest income
after provision 72,161 486 (1,913) 70,734
Other income 18,433 14,339 154 32,926
Other expenses 44,929 13,537 671 59,137
Income (loss) before
income taxes 45,665 1,288 (2,430) 44,523
Income taxes 14,489 495 (1,099) 13,885
Net income (loss) $31,176 $ 793 $ (1,331) $ 30,638
<PAGE 14>
Selected segment information for the six months ended June 30, 2000 is
included in the following table:
Financial Parent
Six Months Ended Community Service and Consolidated
June 30, Banking Affiliates Other Total
2000
Net interest income $155,030 $ 1,122 $ (4,410) $151,742
Provision for credit losses 8,935 135 -- 9,070
Net interest income
after provision 146,095 987 (4,410) 142,672
Other income 33,596 30,983 (1,511) 63,068
Other expenses 89,329 28,541 (3,321) 114,549
Income (loss) before
income taxes 90,362 3,429 (2,600) 91,191
Income taxes 28,514 1,275 (1,203) 28,586
Net income (loss) $ 61,848 $ 2,154 $ (1,397) $ 62,605
1999
Net interest income $151,664 $ 1,110 $ (3,943) $148,831
Provision for credit losses 8,598 144 -- 8,742
Net interest income
after provision 143,066 966 (3,943) 140,089
Other income 36,612 27,530 45 64,187
Other expenses 90,365 25,335 392 116,092
Income (loss) before
income taxes 89,313 3,161 (4,290) 88,184
Income taxes 28,316 1,186 (1,837) 27,665
Net income (loss) $ 60,997 $ 1,975 $ (2,453) $ 60,519
<PAGE 15>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(Dollars in thousands, except per share data)
Three Months Ended June 30, 2000 and 1999
Results of Operations
Net income for the second quarter of 2000 was $31,499, an increase of $861
over the second quarter of 1999 earnings of $30,638. Diluted earnings per
common share for the second quarter of 2000 was $.41 ($.41 basic), as
compared to $.39 ($.39 basic) for the same period in 1999. Return on average
equity (ROE) was 21.97% and return on average assets (ROA) was 1.58% for the
second quarter of 2000 compared to 19.61% and 1.59%, respectively, in 1999.
Business Line Results
Sky Financial's business line results for the second quarter ended June 30,
2000 and 1999 are summarized in the table below.
Net Income (Loss)
Quarter Ended June 30, 2000 1999
Community Banking $ 31,648 $ 31,176
Financial Service Affiliates 980 793
Parent and Other (1,129) (1,331)
Consolidated $ 31,499 $ 30,638
The increase in community banking net income in 2000 was primarily due to
growth in net interest income and reductions in non-interest expense,
partially offset by a decrease in mortgage banking income. The efficiency
ratio was 45.6% for the second quarter of 2000 compared to 46.3% in the
second quarter of 1999. The 2000 community banking results reflect a ROE of
21.72% and a ROA of 1.63% compared to 20.88% and 1.65%, respectively, in the
second quarter of 1999.
The financial service affiliates' earnings reflect Sky Financial's continued
investment in the development and growth of these businesses. While earnings
remain modest, revenues have grown 8% in 2000, primarily due to an increase
of $1,879 in brokerage and insurance commissions and an increase of $759 in
trust income.
Parent and other includes the net funding costs of the parent company and all
significant non-recurring items of income and expense. The reason for the
improvement in parent and other business segment is a reduction in non-
interest expense.
<PAGE 16>
Net Interest Income
Net interest income for the second quarter of 2000 was $75,442, basically
even from $75,286 in the second quarter of 1999. Net interest income, the
difference between interest income earned on interest-earning assets and
interest expense incurred on interest-bearing liabilities, is the most
significant component of the Company's earnings. Net interest income is
affected by changes in the volumes, rates and composition of interest-earning
assets and interest-bearing liabilities. For the second quarter of 2000,
average loans were $5,596,000, increasing 9% from the second quarter of 1999.
Sky Financial's net interest margin for the three months ended June 30, 2000
decreased to 4.19% as compared to 4.31% for the same period in 1999. The
continued increase in short-term interest rates and the cost of funding share
repurchases were the primary factors contributing to the net interest margin
decline.
Provision for Credit Losses
The provision for credit losses represents the charge to income necessary to
adjust the allowance for loan losses to an amount that represents
management's assessment of the estimated probable credit losses inherent in
Sky Financial's loan portfolio which have been incurred at each balance sheet
date. The provision for credit losses increased $181 or 4% to $4,733 in
the second quarter of 2000 compared to $4,552 in the second quarter of 1999.
The higher provision for credit losses in the second quarter of 2000 was
attributable to higher net charge-offs and growth in the loan portfolio.
Net charge-offs were $4,545 or 0.32% (annualized) of average loans during the
three months ended June 30, 2000, compared to $4,261 or 0.33% (annualized)
for the same period in 1999.
June 30, December 31, June 30,
2000 1999 1999
Allowance for credit losses
as a percentage of loans 1.57% 1.58% 1.58%
Allowance for credit losses
as a percentage of
non-performing loans 492.99 445.10 504.46
Other Income
The change in other income reflects the emphasis of Sky Financial on
expanding its fee-based businesses, diversifying its revenue sources and
adding to profitability beyond traditional banking products and services to
offset cyclical declines in mortgage banking. Other income for the second
quarter of 2000 was $32,451, a decrease of $475 or 1% from the $32,926 for
the same quarter of 1999. The decrease was primarily due to a decrease of
$2,783 in mortgage banking income, a decrease of $175 in collection agency
fees and a decrease in service charges and fees on deposit accounts of $209.
The decreases were partially offset by an increase of $1,878 in brokerage and
insurance commissions, an increase of $761 in trust income and an increase of
$358 in net securities gains. The decrease in mortgage banking revenue was
due to lower origination volumes caused primarily by rising interest rates.
The increase in brokerage and insurance commissions was primarily due to the
acquisition of Picton Cavanaugh in the second quarter of 1999 and increased
volumes.
<PAGE 17>
Other Expense
Other expense for the second quarter of 2000 was $57,143, a decrease of
$1,994 or 3% from the $59,137 reported for the same quarter of 1999. The
efficiency ratio was 51.93% for the second quarter of 2000, decreasing from
53.58% for the same quarter last year. Salaries and employee benefits, which
comprise the largest component of other expense, decreased $2,571 or 8% in
the second quarter of 2000 as compared to the same period in 1999. Expense
savings realized from the acquisitions completed in 1999, primarily related
to staffing costs, have more than offset increased other expenses to support
revenue growth. Occupancy and equipment expense decreased $574 or 6% and
other expenses increased $1,151 or 6% to $19,778 in 2000 from $18,627 in
1999.
Income Taxes
The provision for income taxes for the second quarter of 2000 increased
$633 to $14,518 from $13,885 for the same period in 1999. The effective tax
rate for the second quarter of 2000 was 31.5% as compared to 31.2% for the
same period in 1999.
Six Months Ended June 30, 2000 and 1999
Results of Operations
Net income for the six months ended June 30, 2000 was $62,605, an increase of
$2,086 over the six months ended June 30, 1999 earnings of $60,519. Diluted
earnings per common share year to date for 2000 was $.81 ($.81 basic), as
compared to $.77 ($.77 basic) for the same period in 1999. Return on average
equity was 21.91% and return on average assets was 1.58% for the six months
ended June 30, 2000 compared to 19.54% and 1.57%, respectively, in 1999.
Business Line Results
Sky Financial's business line results for the six months ended June 30, 2000
and 1999 are summarized in the table below.
Net Income (Loss)
Six Months Ended June 30, 2000 1999
Community Banking $ 61,848 $ 60,997
Financial Service Affiliates 2,154 1,975
Parent and Other (1,397) (2,453)
Consolidated $ 62,605 $ 60,519
<PAGE 18>
The increase in community banking net income in 2000 was primarily due to
growth in net interest income and reductions in non-interest expense,
partially offset by a decrease in mortgage banking income. The efficiency
ratio was 46.4% for the six months ended June 30, 2000 compared to 47.0% in
the same period of 1999. The 2000 community banking results reflect a ROE of
21.43% and a ROA of 1.59% compared to 20.64% and 1.60%, respectively, in the
six months ended June 30, 1999.
The financial service affiliates' earnings reflect Sky Financial's continued
investment in the development and growth of these businesses. While earnings
remain modest, revenues have grown 13% in 2000, primarily due to an increase
of $5,498 in brokerage and insurance commissions and an increase of $1,484 in
trust income.
Parent and other includes the net funding costs of the parent company and all
significant non-recurring items of income and expense. The reason for the
improvement in parent and other business segment is a reduction in non-
interest expense.
Net Interest Income
Net interest income increased $2,911 to $151,742 in the six months ended June
30, 2000 as compared to $148,831 for the same period in 1999. Net interest
income, the difference between interest income earned on interest-earning
assets and interest expense incurred on interest-bearing liabilities, is the
most significant component of the Company's earnings. Net interest income is
affected by changes in the volumes, rates and composition of interest-earning
assets and interest-bearing liabilities. For the six months ended June 30,
2000, average loans were $5,553,000, increasing 9% from the six months ended
June 30, 1999. Sky Financial's net interest margin for the six months ended
June 30, 2000 decreased to 4.23% as compared to 4.27% for the same period in
1999. The continued increase in short-term interest rates and the cost of
funding share repurchases were the primary factors contributing to the net
interest margin decline.
Provision for Credit Losses
The provision for credit losses represents the charge to income necessary to
adjust the allowance for loan losses to an amount that represents
management's assessment of the estimated probable credit losses inherent in
Sky Financial's loan portfolio which have been incurred at each balance sheet
date. The provision for credit losses increased $328 or 4% to $9,070 in
the six months ended June 30, 2000 compared to $8,742 in the six months ended
June 30, 1999. The higher provision for credit losses in the six months
ended June 30, 2000 was attributable to higher net charge-offs and growth in
the loan portfolio. Net charge-offs were $7,802 or 0.28% (annualized) of
average loans during the six months ended June 30, 2000, compared to $7,065
or 0.28% (annualized) for the same period in 1999.
<PAGE 19>
Other Income
The change in other income reflects the emphasis of Sky Financial on
expanding its fee-based businesses, diversifying its revenue sources and
adding to profitability beyond traditional banking products and services to
offset cyclical declines in mortgage banking. Other income for the six
months ended June 30, 2000 was $63,068, a decrease of $1,119 or 2% from the
$64,187 for the same period in 1999. The decrease was primarily due to a
decrease of $6,600 in mortgage banking income, a decrease of $1,559 in net
gains on sales of commercial financing loans and a decrease in service
charges and fees on deposit accounts of $764. The decreases were partially
offset by an increase of $5,499 in brokerage and insurance commissions, an
increase of $1,564 in trust income and an increase of $499 in other income.
The decrease in mortgage banking revenue was due to lower origination volumes
caused primarily by rising interest rates. The increase in brokerage and
insurance commissions was primarily due to the acquisition of Picton
Cavanaugh in the second quarter of 1999 and increased volumes.
Other Expense
Other expense for the six months ended June 30, 2000 was $114,549, a decrease
of $1,543 or 1% from the $116,092 reported for the same period in 1999. The
efficiency ratio was 52.30% for the six months ended June 30, 2000,
decreasing from 53.43% for the same period last year. Salaries and employee
benefits, which comprise the largest component of other expense, decreased
$2,285 or 4% in the six months ended June 30, 2000 as compared to the same
period in 1999. Expense savings realized from the acquisitions completed in
1999, primarily related to staffing costs, have more than offset increased
other expenses to support revenue growth. Occupancy and equipment expense
decreased $855 or 4% and other expenses increased $1,597 or 4% to $37,682 in
2000 from $36,085 in 1999.
Income Taxes
The provision for income taxes for the six months ended June 30, 2000
increased $921 to $28,586 from $27,665 in 1999. The effective tax rate for
the six months ended June 30, 2000 was 31.3% as compared to 31.4% for the
same period in 1999.
Balance Sheet
At June 30, 2000, total assets were $8,110,986, an increase of $47,230 from
December 31, 1999. The increase was primarily attributable to continued
strong growth in loans, up $145,659 to $5,623,153, partially offset by a
reduction in cash and due from banks of $102,257. The net growth in assets
was funded primarily by growth in total deposits, up $29,731 and borrowed
funds, up $16,908.
<PAGE 20>
Shareholders' equity totaled $574,058 at June 30, 2000, increasing $7,727
from December 31, 1999. Net retained earnings (net income less cash
dividends) for the six months ended June 30, 2000 totaled $31,642. This
increase was offset mainly by a net increase in treasury stock of $20,689 as
Sky Financial continued to repurchase shares, as authorized by its Board of
Directors, for issuance in future stock dividends and stock option plans
(see Note 8).
Non-Performing Assets
The following table presents the aggregate amounts of non-performing assets
and respective ratios on the dates indicated.
June 30, December 31, June 30,
2000 1999 1999
Non-accrual loans $16,643 $17,423 $13,977
Restructured loans 1,211 2,067 2,369
Total non-performing loans 17,854 19,490 16,346
Other real estate owned 2,450 3,293 2,589
Total non-performing assets $20,304 $22,783 $18,935
Loans 90 days or more past due
and not on non-accrual $ 7,422 $ 9,538 $ 9,045
Non-performing loans to
total loans 0.32% 0.36% 0.31%
Non-performing assets to
total loans plus other
real estate owned 0.36 0.42 0.36
Allowance for credit losses to
total non-performing loans 492.99 445.10 504.46
Loans 90 days or more past due
and not on non-accrual to
total loans 0.13 0.17 0.17
Loans now current but where some concerns exist as to the ability of the
borrower to comply with present loan repayment terms, excluding non-
performing loans, approximated $52,142 and $40,825 at June 30, 2000 and
December 31, 1999, respectively, and are being closely monitored by
management and the Boards of Directors of the subsidiaries. The
classification of these loans, however, does not imply that management
expects losses on each of these loans, but rather that a higher level of
scrutiny is prudent under the circumstances. In the opinion of management,
these loans require close monitoring despite the fact that they are
performing according to their terms. Such classifications relate to
specific concerns relating to each individual borrower and do not relate to
any concentrated risk elements common to all loans in this group.
As of June 30, 2000, Sky Financial did not have any loan concentrations
which exceeded 10% of total loans.
<PAGE 21>
Allowance for Credit Losses
The following table presents a summary of Sky Financial's credit loss
experience for the six months ended June 30, 2000 and 1999.
2000 1999
Balance of allowance at
beginning of year $86,750 $80,748
Loans charged-off:
Real estate (798) (1,351)
Commercial and agricultural (4,268) (1,757)
Installment and credit card (6,889) (6,046)
Other loans (453) (6)
Total loans charged-off (12,408) (9,160)
Recoveries:
Real estate 651 173
Commercial and agricultural 2,068 485
Installment and credit card 1,880 1,417
Other loans 7 20
Total recoveries 4,606 2,095
Net loans charged-off (7,802) (7,065)
Provision charged to operating
expense 9,070 8,742
Effect of conforming year end
of pooled entity -- 34
Balance of allowance at
end of period $88,018 $82,459
Ratio of net charge-offs to
average loans outstanding 0.28% 0.28%
Allowance for credit losses
to total loans 1.57 1.58
Allowance for credit losses
to total non-performing loans 492.99 504.46
Sky Financial maintains an allowance for credit losses at a level adequate to
absorb management's estimate of probable losses inherent in the loan
portfolio. The allowance is comprised of a general allowance, a specific
allowance for identified problem loans and an unallocated allowance.
The general allowance is determined by applying estimated loss factors to the
credit exposures from outstanding loans. For construction, commercial and
commercial real estate loans, loss factors are applied based on internal risk
grades of these loans. For residential real estate, installment, credit card
and other loans, loss factors are applied on a portfolio basis. Loss factors
are based on peer and industry loss data compared to Sky Financial's
historical loss experience, and are reviewed for correction on a quarterly
basis, along with other factors affecting the collectibility of the loan
portfolio.
<PAGE 22>
Specific allowances are established for all criticized and classified loans,
where management has determined that, due to identified significant
conditions, the probability that a loss has been incurred exceeds the general
allowance loss factor determination for those loans.
The unallocated allowance recognizes the estimation risk associated with
the allocated general and specific allowances and incorporates management's
evaluation of existing conditions that are not included in the allocated
allowance determinations. These conditions are reviewed quarterly by
management and include general economic conditions, credit quality trends,
and internal loan review examination findings.
The following table sets forth Sky Financial's allocation of the allowance
for credit losses as of June 30, 2000 and December 31, 1999.
June 30, 2000 December 31, 1999
Construction $ 36 $ 707
Real estate 26,456 22,186
Commercial, financial
and agricultural 17,023 15,365
Installment and credit card 24,441 22,434
Other loans 925 800
Unallocated 19,137 25,258
Total $88,018 $86,750
Liquidity
The liquidity of a financial institution reflects its ability to provide
funds to meet requests, to accommodate possible outflows in deposits and to
take advantage of interest rate market opportunities. Funding of loan
requests, providing for liability outflows, and management of interest rate
fluctuations require continuous analysis in order to match the maturities of
specific categories of short-term loans and investments with specific types
of deposits and borrowings. Financial institution liquidity is thus normally
considered in terms of the nature and mix of the institution's sources and
uses of funds.
Sky Financial's banking subsidiaries maintain adequate liquidity primarily
through the use of investment securities and unused borrowing capacity, in
addition to maintaining a stable core deposit base. At June 30, 2000,
securities and other short-term investments with maturities of one year or
less totaled $177,967, with additional liquidity provided by the remainder of
the investment portfolio. The banks utilize several short-term and long-term
borrowing sources. Each of the banking subsidiaries is a member of the
Federal Home Loan Bank (FHLB) and have lines of credit with the FHLB. At
June 30, 2000, these lines of credit enable the banks to borrow up to
$874,089, of which $767,888 is currently outstanding.
Since Sky Financial is a holding company and does not conduct operations, its
primary sources of liquidity are borrowings from outside sources and
dividends paid to it by its subsidiaries. For the banking subsidiaries,
regulatory approval is required in order to pay dividends in excess of the
subsidiaries' earnings retained for the current year plus retained net
profits for the prior two years. As a result of these restrictions,
dividends which could be paid to Sky Financial by its bank subsidiaries,
without prior regulatory approval, were limited to $38,968 at June 30, 2000.
<PAGE 23>
In March, 2000, Sky Financial renegotiated an agreement with unrelated
financial institutions which enabled Sky Financial to borrow up to $120,000
through March 6, 2001. At June 30, 2000, Sky Financial had borrowings of
$44,000 under this agreement.
On March 31, 2000, Sky Financial completed the issuance of $60,000 of trust
preferred securities. The proceeds from this issuance will be used to
continue its share repurchases, as authorized by the Board of Directors, for
use in future stock dividends and stock option plans.
Asset/Liability Management
Closely related to liquidity management is the management of interest-earning
assets and interest-bearing liabilities. Sky Financial manages its rate
sensitivity position to avoid wide swings in net interest margins and to
minimize risk due to changes in interest rates. At June 30, 2000, Sky
Financial had a manageable negative gap position and therefore does not
expect to experience any significant fluctuations in its net interest income
as a consequence of changes in interest rates. See also Item. 3,
"Quantitative and Qualitative Disclosures About Market Risk."
Forward-Looking Statements
This report includes forward-looking statements by Sky Financial relating to
such matters as anticipated operating results, prospects for new lines of
business, technological developments, economic trends (including interest
rates), reorganization transactions and similar matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for forward-
looking statements, and the purpose of this paragraph is to secure the use of
the safe harbor provisions. While Sky Financial believes that the
assumptions underlying the forward-looking statements contained herein and in
other public documents are reasonable, any of the assumptions could prove to
be inaccurate, and accordingly, actual results and experience could differ
materially from the anticipated results or other expectations expressed by
Sky Financial in its forward-looking statements. Factors that could cause
actual results or experience to differ from results discussed in the forward-
looking statements include, but are not limited to: economic conditions;
volatility and direction of market interest rates; capital investment in and
operating results on non-banking business ventures of Sky Financial;
governmental legislation and regulation; material unforeseen changes in the
financial condition or results of operations of Sky Financial's customers;
customer reaction to and unforeseen complications with respect to Sky
Financial's restructuring or integration of acquisitions; difficulties in
realizing expected cost savings from acquisitions; difficulties associated
with data conversions in acquisitions or migrations to a single platform
system; and other risks identified, from time-to-time in Sky Financial's
other public documents on file with the Securities and Exchange Commission.
<PAGE 24>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The primary market risk to which Sky Financial is exposed is interest rate
risk. The primary business of Sky Financial and the composition of its
balance sheet consists of investments in interest-earning assets, which are
funded by interest-bearing liabilities. These financial instruments have
varying levels of sensitivity to changes in the market rates of interest,
resulting in market risk. None of Sky Financial's financial instruments are
held for trading purposes.
Sky Financial monitors and manages its rate sensitivity position to maximize
net interest income, while minimizing the risk due to changes in interest
rates. One method Sky Financial uses to manage its interest rate risk is a
rate sensitivity gap analysis.
Sky Financial also monitors its interest rate risk through a sensitivity
analysis, whereby it measures potential changes in its future earnings and
the fair values of its financial instruments that may result from one or more
hypothetical changes in interest rates. This analysis is performed by
estimating the expected cash flows of Sky Financial's financial instruments
using interest rates in effect at June 30, 2000 and December 31, 1999. For
the fair value estimates, the cash flows are then discounted to year end to
arrive at an estimated present value of Sky Financial's financial
instruments. Hypothetical changes in interest rates are then applied to the
financial instruments, and the cash flows and fair values are again estimated
using these hypothetical rates. For the net interest income estimates, the
hypothetical rates are applied to the financial instruments based on the
assumed cash flows. Sky Financial applies these interest rate shocks to its
financial instruments up and down 200 basis points.
The following table presents an analysis of the potential sensitivity of Sky
Financial's annual net interest income and present value of Sky Financial's
financial instruments to sudden and sustained 200 basis-point changes in
market interest rates.
June 30, December 31,
2000 1999 Guidelines
One Year Net Interest
Income Change
+200 Basis points (1.2)% (3.7)% (10.0)%
-200 Basis points (0.9) 1.7 (10.0)
Net Present Value of
Equity Change
+200 Basis points (29.8) (22.4)% (30.0)%
-200 Basis points 29.8 15.3 (30.0)
The projected volatility of net interest income and the net present value of
equity rates to a +/- 200 basis points change at June 30, 2000 and December
31, 1999 fall within the Board of Directors guidelines.
The above analysis is based on numerous assumptions, including relative
levels of market interest rates, loan prepayments and reactions of depositors
to changes in interest rates, and should not be relied upon as being
indicative of actual results. Further, the analysis does not necessarily
contemplate all actions Sky Financial may undertake in response to changes in
interest rates.
<PAGE 25>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Sky Financial is, from time-to-time, involved in various lawsuits and claims,
which arise in the normal course of business. In the opinion of management,
any liabilities that may result from these lawsuits and claims will not
materially affect the financial position or results of operations of Sky
Financial.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of Sky Financial Group, Inc. held
April 19, 2000, ballot totals for the election of ten Class II Directors to
serve until the Annual Meeting of Shareholders in 2003 were as follows:
Class II FOR WITHHELD
David A. Bryan 61,515,836 79.1% 2,067,232
Keith D. Burgett 61,495,846 79.0 2,087,222
George N. Chandler, II 61,527,266 79.1 2,055,802
Robert C. Duvall 61,498,137 79.0 2,084,931
Del E. Goedeker 61,488,727 79.0 2,094,341
H. Lee Kinney 61,384,354 78.9 2,198,714
Thomas S. Noneman 61,529,668 79.1 2,053,400
Gregory L. Ridler 61,410,757 78.9 2,172,311
Emerson J. Ross, Jr. 61,557,131 79.1 2,025,937
Douglas J. Shierson 61,517,749 79.1 2,065,319
The following incumbent Class I and Class III Directors who were not nominees
for election at the April 19, 2000 Annual Meeting are as follows:
Gerald D. Aller Charles I. Homan Jonathan Levy
Kenneth E. McConnell Thomas J. O'Shane Edward J. Reiter
Patrick W. Rooney C. Gregory Spangler Robert E. Stearns
Marty E. Adams D. James Hilliker Fred H. Johnson, III
Marilyn O. McAlear James C. McBane Gerard P. Mastroianni
Robert E. Spitler Richard R. Hollington, Jr. Joseph N. Tosh, II
<PAGE 26>
At the Annual Meeting of Sky Financial Group, Inc. Shareholders on April 19,
2000, ballot totals for the approval and adoption of amendments to Sky
Financial's Code of Regulations were as follows:
FOR 49,326,509 63.4%
AGAINST 3,388,658 4.4
ABSTAIN 881,902 1.1
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11.1) Statement Re Computation of Earnings Per Common Share
(b) Reports on Form 8-K
Not applicable.
<PAGE 27>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SKY FINANCIAL GROUP, INC.
/s/ W. Granger Souder, Jr.
W. Granger Souder, Jr.
Executive Vice President / General Counsel
DATE: August 11, 2000
<PAGE 28>
SKY FINANCIAL GROUP, INC.
EXHIBIT INDEX
Exhibit No. Description Page Number
(11.1) Statement Re Computation of Earnings
Per Common Share
The information required by this exhibit
is incorporated herein by reference from
the information contained in Note 7
"Earnings Per Share" on page 11 of Sky
Financial's Form 10-Q for June 30, 2000.
(27.1) Financial Data Schedule 29
