Good afternoon. My name is Mindy and I will be your conference operator today. At this time, I would like to welcome everyone to the Huntington third quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Gould, you may begin your conference.

Thank you, Mindy, and welcome, everyone. I'm Jay Gould, Director of Investor Relations for Huntington Bancshares. Topics of the slides we will be reviewing can be found on our website Huntington.com. This call is being recorded and will be available as a rebroadcast starting about one hour from the close of the call. Please call the Investor Relations department at 614-480-5676 for more information on how to access these records, recordings for playback or should you have difficulty getting a copy of the slides. Slides 2 and 3 note several aspects of the days a basis of today's presentation. I encourage you to read these Let me point out one key disclosure. This presentation contains both GAAP and non-GAAP financial measures where we believe it's helpful to understanding Huntington's results of operations. Where non-GAAP financial measures are used, the comparable GAAP financial measure as well a the reconciliation can be found on the slide presentation in its appendix, in the press release, and in the quarterly financial review supplement to today's press release, all of which can also be found on our website. Today's discussion, including Q-and-A period may contain forward-looking statements. Such statements are based on information and assumptions available at this time and are subject to change, risks and uncertainties which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of the risks and uncertainties, please refer to this slide and materials filed with the SEC including our most recent Form 10-K, 10-Q and 8-K filings. Now, turning to today’s presentation, as noted on slide five, participating today are Tom Hoaglin, Chairman, President, and Chief Executive Officer; Don Kimble, Executive Vice President and Chief Financial Officer; and Tim Barber, Senior Vice President of Credit Risk Management. Also present for the Q&A session is Nick Stanutz, Senior Executive Vice President of Auto Finance and Dealer Services. Let’s get started. Tom?

Thank you Jerry and welcome everyone. Turning to slide 6, we are clearly in unprecedented times. The housing sector, the overall economy and the capital markets are all in turmoil. To say the least, uncertainties abound. So let me begin with some clear messages to our investors and customers about Huntington. First and foremost, we're making money. Granted that our earnings are lower than in more normal times, but we are profitable. Earnings are at a decent level and we expect this to continue. Second, our balance sheet is strong. Credit costs, as measured by net charge-offs and provision levels, are clearly elevated. In times like these that's to be expected, but even so, they're manageable and our loan loss reserve level was both increasing and sound. Our capital levels are strong. Our regulatory capital position is around $1 billion more than the well-capitalized regulatory thresholds. Our capital ratios increased this quarter. Our tangible capital assets ratio is now back in our 6% to 6.25% targeted range. Our funding capacity is well-positioned. There's ample cash at the holding company level. We have a very manageable level of debt maturities at the bank level during the next 12 months, which we'll be able to handle without having to access the capital markets and we have no holding company debt maturities for several years. It's also important to note that our local bank and relationship-driven business model is proving to be a competitive advantage. Underlying activities are performing well, as Don will detail for you. More important is the fact that we know our markets and our customers well. In 2001, we rededicated ourselves to staying in our Midwest markets and to strengthening our customer relationships. Staying close to home helped us to avoid the temptation to chase growth outside in unfamiliar…

Thanks, Tom. I'm going to start with an update of our perspective on the Franklin’s credit relationship, given the announcement of one of our co-lenders yesterday. Turning to slide 9, the Franklin credit relationship continued to perform as agreed. We are aware of the actions taken by one of the other participants in the credit, but believe that their actions nearly brought them more in line with our view of the collateral performance. We have been very upfront with our credit performance assumptions over the course of the past year and continue to watch the actual performance very closely on a real-time basis. Turning to slide 10, the monthly cash flow has been above the required debt service, allowing for accelerated principal paydowns of nearly $60 million for the first nine months of the year. As you can see, the absolute level of cash flow declined in the third quarter. Franklin has continued to actively work the portfolio as evidenced by the number of accounts moving into their modification status in the second quarter results. Given the current market dynamics, we fully expect the performance of the underlying collateral to continue to be negatively affected. But we remain convinced that the Franklin servicing platform is operating well, and we have appropriately sized the debt and reserves relative to anticipated collections. We remain comfortable that our credit assumptions regarding the overall portfolio performance are appropriately conservative. Let me review them quickly. As you recall, our probability of default assumptions of 70% for Tribeca and Franklin first, and 65% for Franklin second, remain conservative when compared with Franklin's actual performance. As recoveries in general and OREO net proceeds in particular make up a larger portion of total collections, it is important to note our recovery assumptions of only 10% for Franklin purchased…

Thanks, Tim. Turning to slide 26, our reported net income was $115.2 million, or $0.28 per common share, for the quarter. These results were impacted by two significant items. First, we had $11.8 million, or $0.02 per share, of net market-related gains consisting of the following items: $21.4 million of gains from the extinguishment of debt as we discussed during our second quarter earnings call; $3.7million of equity investment gains; $1.9 million of positive impact from the revaluation of mortgage servicing rights, net of hedging. This was offset by $15.2 million of net losses from investment securities, which included $17.9 million of impairment on certain asset backed securities. Second, $3.7 million, or $0.01, deferred tax valuation allowance adjustment representing an increase to the previously established capital loss carry forward valuation allowance related to the Visa stock held by Huntington. In other words, our income tax expense went up by $3.7 million for this issue. Slide 27 provides a quick snapshot of the quarter's performance. As previously noted our net income was $0.28 per share. Our net interest margin was 3.29%, stable with the second quarter. This performance reflected better pricing on loan products, offset by more aggressive deposit [rising] in our region for this quarter. Average total commercial loans increased at a 4% annualized pace. This growth was comprised of new and increased loan facilities to existing borrowers. Average total consumer loans were down slightly from the prior period, reflecting the impact of the mortgage loan sale late in the second quarter. Average total core deposits were up at a 4% annualized rate, reflecting the growth in consumer time deposits, more than offsetting a reduction in certain non-relationship collateralized deposits. These collateralized deposits provide little incremental margin and letting them run off allowed us to reduce the corresponding in investment…

Thanks Don. Before wrapping this up, there are two other issues to cover. First, effective with 2009 reporting, we're changing our earnings guidance practices. We will continue our practice of providing robust qualitative forward-looking comments regarding all the key earnings drivers. This includes such things as net interest margin, loan and deposit trends, fee income and expense growth expectations, credit quality trends, capital trends, the impact of changes in the economic environment and the like, but consistent with much of corporate America these days, we'll no longer provide specific earnings per share target. Second, I want to comment on recent government actions to stabilize the credit markets and assist banks. These actions include the Emergency Economic Stabilization Act of which the $700 billion Troubled Asset Relief Program, or TARP, is the centerpiece. This week, further announcements were made including the plan to take equity interest in banks. The FDIC announced a temporary liquidity program, where it extended FDIC guarantees to certain unsecured senior debtor banks, as well as the safety deposits beyond the $250,000 threshold. So what are we to make of all this? First of all, we applaud these bold actions as we believe they will help address the challenges facing many banks and their customers. Given time they should be helpful in stabilizing the economy and markets by assisting banks with troubled assets and liquidity challenges. However, we don't know yet what impact if any of these actions will mean specifically for Huntington. It's simply too early to assess these until all of the regulations, rules, and mechanics of the plans have been defined. Any comments today would be speculation and could unintentionally set false expectations, but we can say definitely that, if there is a way these programs can provide long-term benefits for our shareholders, we will…

(Operator Instructions) Your first question comes from Ken Zerbe of Morgan Stanley. Your line is open.

Thank you. First question is on Franklin. I was hoping you would review the cash flow trends a little bit there. Just in a little more detail. I saw the presentation. It does appear that they are still well above your, total cash flow expectations, but the difference does seem to be coming down quite sharply. At what point do you have to go back and re-evaluate this? If you could also just talk about the actual covenants that you have with Franklin because actually I thought I read through the covenants and it did not seem it was on a total cash flow basis but yet it was on, say, an interest coverage basis. Just if you could go into that, that would be great.

Ken, I am going to ask Tim Barber to respond to you.

Ken, there are a lot of questions in there. The first one would be clearly the cash flow has declined over time. We are focused more on the relative stability over the last six months than comparing it to a year ago or even very early 2008 numbers. As the portfolio declines, the cash flow will also fall. We are also looking at the OREO segment or the recovery segment as a significant piece of future cash flows. That is not necessarily reflected in the current levels and that again is a function of the performance over time. They are focused on working the OREO properties or the defaulted properties through the system. So that is one of the reasons we continue to feel comfortable about the cash flows.

Just to interrupt, Tim for a minute here, what we are experiencing and I feel quite certain others around the country are and what Franklin is experiencing is a court system that is just engulfed in paperwork from lenders trying to gain control and sell properties. So there has been a bit of a slowdown in collections from OREO. That does not mean that the collections will not be achieved. It just has changed a bit, the timing of those over the last few months. Tim?

Yes, I think that is fair and we were pleased to see the amount of OREO proceeds increase in the month of September relative to July and August within the third quarter. As it relates to the covenants in the agreement, the original covenant was an interest coverage ratio. The more current covenants reflect total cash collections versus debt service requirements. So when will we have to re-evaluate? We evaluate on an ongoing basis and are comfortable right now. Certainly if there was a material difference in performance going forward or we changed our projections going forward, we would have to re-evaluate the covenants under which the relationship operates.

Okay, so, just to be clear on that, so you have completely scrapped the interest coverage covenants and have moved purely to a total cash flow basis?

The covenants are total cash flow. Obviously we continue to be focused on what the interest coverage is within that overall cash flow coverage.

Of course, okay. Then I just want to make sure I read this chart correctly that as of September 2008, the principle and interest that you were collecting, if we just look at principle and interest coming from Franklin, that was insufficient to meet their required principle and interest and expenses payments to you, but there they are making up the difference in cash flows by just selling their real estate? I mean, is that the right way to read that chart?

Chart 10 represents the entire Franklin credit relationship. That does not represent Huntington's portion of it. So, the principle and interest collections were essentially exactly what the debt service coverage plus servicing costs was for the month of September.

Okay. Then the last question I had, could you just comment a little bit about what might be the differences in your Franklin exposure versus M&I, you reported yesterday and I know, M&I actually wrote down its Franklin exposure during the quarter but you did not and I was curious, why the difference there?

Ken let me just say, this is Tom, do you think that M&I has done what we have done with this exposure in the past? So just harkening back to what Tim said earlier, we believe that our reserving position has been conservative from the outset and that you may see that in the light of catching up to where we have been. So please do not judge us based upon the actions of others. Tim?

Yes, I cannot get to exactly what M&I did. I can say that we continue to believe that the way we are assessing the risks in the underlying collateral portfolio is conservative and we believe the reserve that we have established for our exposure is appropriate.

Okay. That was very helpful. Thank you very much.

Your next question comes from Matthew O'Connor UBS. Your line is open.

Hi everyone.

Hi, Matt.

Do you know or think that Huntington will be able to qualify for the treasury capital?

We will let you know on November 14th, Matt. That is the deadline for communication, as you might know, to the treasury with regard to participation. We are at present still trying to gather information about various programs and that is I think an accurate representation of the status from Huntington's viewpoint.

Okay. Then assume that you are eligible; do you view at this point taking the capital as a sign of strength or weakness? I think there is a lot of debate over that?

Because there is a lot of debate on it, it would be great for us to update you on or about November the 14th. We are all going to learn a lot between now and then, I think.

Fair enough. Maybe switching to a different topic here. A couple years ago you talked about tightening the underwriting standards in home equity and auto, and I think a lot of us, including myself, were doubtful that your home equity losses would level off, which they have done. Now, as we look out from a broader perspective, the economy seems like it is going to be a lot weaker than we would have thought just a few months ago. So what are you doing differently, say specifically, in the commercial and non-residential commercial real estate books?

I think we are not doing anything differently today than we were not doing six to 12 months ago. We have continued to focus on top tier developers in the real estate world and that has gotten a lot of play publicly. We have essentially exactly the same commitment on the C&I side which is to deal with high quality customers.

I think, Tim, it is safe to say that our underwriting, for example, in the CRE world, was never the same underwriting that some wrote for conduit purposes. We have always been and continue to be much more conservative than that.

Yes, I think that is a great point in the commercial real estate portfolio specifically. There were deals getting done at 1.05% times debt coverage. That is been something that Huntington just never engaged in. So I think we have always had a higher credit quality standard than the market in general. So, continuing that focus and sharpening that focus maybe in times of economic upheaval or economic distress is where Huntington is related to the commercial world.

By no means are we without blemish. Let's be perfectly clear about that. We certainly made some mistakes along the way but I really do believe that our fundamental approach to underwriting in the commercial environment stands pretty well as we move into this period of time.

Okay, thank you.

Operator, can you disconnect that line? [AUDIO GAP]

Currently the regulators in some or all states may take a number of possible corrective actions in response to our noncompliance including license revocation and/or suspension, etcetera. I know you have filed an 8-K that made reference to this, but just wanted to see the status of that and make sure that all of that has been solved.

This is Tim Barber. The status of that is that Franklin continues to operate in all of the states. That was a preliminary view from the company's standpoint a worst case scenario. That has proven to not be an issue for them.

So it is been fully resolved?

Yes.

Okay. Thank you.

Your next question comes from Edward Hemmelgarn, your line is open.

Yes, I just wondered if you could maybe discuss a little bit of trends that you might be seeing or you might expect to see in net interest margins over the next 12 months, given the additions of liquidity that have been added and the steepening of the yield curve.

Edward, this is Don. I can go ahead and take a first crack at that. I think with the improvement in the liquidity position, we are hoping that we will see some improved deposit pricing throughout our footprint and that is been one of the main reasons why we did not see a significant lift to our margin over the past quarter. So we are hoping to see as we said in our guidance stable margins. That would assume more of the same environment that we have been experiencing and any additional benefit from enhanced liquidity position should help to widen that spread.

Okay. Thanks.

Thank you.

Your next question comes from Ryan Randall of Randall Capital. Your line is open.

That is okay, my question was answered.

Thanks Ryan.

(Operator Instructions)

Okay, Operator, that there are no other questions. Well, thank you everybody for participating in today’s call. Jack and I stand by to answer any follow-up questions that you may have. Thank you.

This concludes today's conference.