FirstMerit Reports First Quarter 2013 EPS of $0.33 Per Share

Apr 23, 2013, 07:30 ET from FirstMerit Corporation

AKRON, Ohio, April 23, 2013 /PRNewswire/ --

Quarterly Highlights include:

  • Sustained profitability: 56th consecutive quarter of profitability.
  • Continued organic growth:  Average commercial noncovered loan growth of $259.3 million, or 4.63%, from prior quarter; average core deposit growth of $285.4 million, or 2.81%, from prior quarter.
  • Superior credit quality:  Net charge-offs to noncovered average loans decreased to 0.27% from 0.34% in the prior quarter; nonperforming assets as a percent of noncovered period end loans plus other real estate remained low at 0.59% compared to 0.57% in the prior quarter.
  • Strong balance sheet:  Strong tangible common equity ratio at 8.03%.

FirstMerit Corporation (Nasdaq: FMER) reported first quarter 2013 net income of $37.3 million, or $0.33 per diluted share.  This compares with $38.2 million, or $0.35 per diluted share, for the fourth quarter 2012 and $30.3 million, or $0.28 per diluted share, for the first quarter 2012.

(Logo: http://photos.prnewswire.com/prnh/20070920/CLTU138LOGO )

Returns on average common equity ("ROE") and average assets ("ROA") for the first quarter 2013 were 8.83% and 1.01%, respectively, compared with 9.30% and 1.03%, respectively, for the fourth quarter 2012 and 7.72% and 0.84% for the first quarter 2012. 

"During the first quarter, FirstMerit continued its trend of strong financial results.  Our solid performance laid the foundation for our execution of the Citizens Republic Bancorp acquisition that we announced last September and closed on April 12, 2013.   Our most recent quarter was highlighted by excellent credit quality, additional cost savings generated by our successful efficiency initiative and robust growth in average noncovered commercial loans and average core deposits.  We are excited to introduce our value proposition into our newest markets, Michigan and Wisconsin, backed by our exceptional customer service.  We believe FirstMerit's consistent profitability, robust balance sheet and high capital levels will resonate well with customers as we capture market share in our new footprint," said Paul Greig, chairman, president and CEO, FirstMerit Corporation.

Net interest margin was 3.46% for the first quarter 2013 compared with 3.58% for the fourth quarter 2012 and 3.78% for the first quarter 2012.  Increased borrowing costs, primarily related to the Corporation's issuance of $250 million aggregate principal amount of subordinated notes in an underwritten public offering completed on February 4, 2013, accounted for six basis points of compression during the first quarter of 2013.

Average noncovered loans during the first quarter 2013 increased $291.1 million, or 3.45%, compared with the fourth quarter 2012 and also increased $953.9 million, or 12.26%, compared with the first quarter 2012.   Average noncovered commercial loans increased $259.3 million, or 4.63%, compared with the prior quarter, and increased $716.7 million, or 13.94%, compared with the year ago quarter.

Average deposits were $11.8 billion during the first quarter 2013, an increase of $194.7 million, or 1.68%, compared with the fourth quarter 2012, and an increase of $317.8 million, or 2.77%, compared with the first quarter 2012.  During the first quarter 2013, average core deposits, which exclude time deposits, increased $285.4 million, or 2.81%, compared with the fourth quarter 2012 and $680.5 million, or 6.96%, compared with the first quarter 2012.   Average time deposits decreased $90.7 million, or 6.38%, and decreased $362.7 million, or 21.41%, respectively, over prior and year-ago quarters.   For the first quarter 2013, average core deposits accounted for 88.71% of total average deposits, compared with 87.73% for the fourth quarter 2012 and 85.23% for the first quarter 2012.

Average investments increased $11.2 million, or 0.30%, compared with the fourth quarter 2012 and increased $7.2 million, or 0.19% compared with the first quarter 2012.

Net interest income on a fully tax-equivalent ("FTE") basis was $114.4 million in the first quarter 2013 compared with $119.1 million in the fourth quarter 2012 and $121.4 million in the first quarter 2012. 

Noninterest income, excluding gains on securities transactions, for the first quarter 2013 was $57.4 million, a decrease of $1.8 million, or 3.08%, from the fourth quarter 2012 and an increase of $5.9 million, or 11.53%, from the first quarter 2012.  Included in noninterest income in both the first quarter of 2013 and the fourth quarter of 2012 were $5.0 million of gains on covered loans paid in full. 

Other income, net of securities gains, as a percentage of net revenue for the first quarter 2013 was 33.42% compared with 33.21% for fourth quarter 2012 and 29.77% for the first quarter 2012.  Net revenue is defined as net interest income, on an FTE basis, plus other income, less gains from securities sales.

Noninterest expense for the first quarter 2013 was $106.9 million, a decrease of $5.3 million, or 4.69%, from the fourth quarter 2012 and a decrease of $6.8 million, or 6.01%, from the first quarter 2012.  Included in noninterest expense in the first quarter of 2013 and fourth quarter of 2012 were acquisition related costs associated with the Citizens Republic Bancorp merger of $3.6 million and $2.1 million, respectively.  The majority of these acquisition related costs were from professional and legal services rendered in connection with the merger.  Also included in noninterest expense in the fourth quarter of 2012 was $2.3 million of fees related to the early termination of Federal Home Loan Bank advances.

During the first quarter 2013, the Corporation reported an efficiency ratio of 62.06%, compared with 62.65% for the fourth quarter 2012 and 65.52% for the first quarter 2012.

Net noncovered charge-offs totaled $5.9 million, or 0.27% of average noncovered loans in the first quarter 2013,  compared with $7.1 million, or 0.34% of average noncovered loans, in the fourth quarter 2012 and $12.0 million, or 0.62% of average noncovered loans, in the first quarter 2012. 

Nonperforming assets totaled $52.2 million at March 31, 2013, a increase of $2.0 million, or 4.00%, compared with December 31, 2012 and a decrease of $15.7 million, or 23.11%, compared with March 31, 2012. Nonperforming assets at March 31, 2013 represented 0.59% of period-end noncovered loans plus other real estate compared with 0.57% at December 31, 2012 and 0.86% at March 31, 2012.

The allowance for noncovered loan losses totaled $98.8 million at March 31, 2013.   At March 31, 2013, the allowance for noncovered loan losses was 1.13% of period-end noncovered loans compared with 1.13% at December 31, 2012 and 1.32% at March 31, 2012.  The allowance for credit losses is the sum of the allowance for noncovered loan losses and the reserve for unfunded lending commitments.  For comparative purposes, the allowance for credit losses was 1.18% of period end noncovered loans at March 31, 2013, compared with 1.20% at December 31, 2012 and 1.39% at March 31, 2012.  The allowance for credit losses to nonperforming loans was 254.32% at March 31, 2013, compared with 284.50% at December 31, 2012 and 205.13% at March 31, 2012.

The Corporation's total assets at March 31, 2013 were $15.3 billion, an increase of $359.5 million, or 2.41%, compared with December 31, 2012 and an increase of $601.7 million, or 4.10%, compared with March 31, 2012. 

Total deposits were $11.9 billion at March 31, 2013, an increase of $166.3 million, or 1.41%, from December 31, 2012 and an increase of $277.6 million, or 2.38%, from March 31, 2012.  Core deposits totaled $10.6 billion at March 31, 2013, an increase of $238.4 million, or 2.30%, from December 31, 2012 and an increase of $624.3 million, or 6.24%, from March 31, 2012.

Shareholders' equity was $1.8 billion as of March 31, 2013 and $1.6 billion as of December 31, 2012 and March 31, 2012.  On February 4, 2013, the Corporation issued 4,000,000 depositary shares (each representing a 1/40th interest in a share of the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A) for total gross proceeds of $100 million.   Dividends are payable quarterly in arrears on the 4th day of February, May, August and November, beginning May 4, 2013.  As of March 31, 2013, $0.9 million of dividends were accrued and payable on May 4, 2013 and accounted for approximately a one cent reduction in diluted EPS for the quarter ended March 31, 2013.  The Corporation maintained a strong capital position as tangible common equity to assets was 8.03% at March 31, 2013, compared with 8.16% at December 31, 2012 and 7.86% at March 31, 2012.  The common cash dividend per share paid in the first quarter 2013 was $0.16.

First Quarter 2013 Conference Call FirstMerit (Nasdaq: FMER) senior management will host an earnings conference call today at 11:00 a.m. (Eastern Time) to provide an overview of first quarter results and highlights. To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 41933689.  A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on April 23, 2013 through May 7, 2013 by dialing (855) 859-2056, and entering the PIN: 41933689.  The Corporation will provide a slide presentation, which management will speak to during the conference call. A copy of the presentation will be available at https://www.firstmerit.com/personal/investors.aspx; click on the Presentations link to access the slide presentation.

About FirstMerit Corporation FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $24.5 billion as of close of business April 12, 2013, and 415 banking offices and 452 ATM locations in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal affiliates include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation, FirstMerit Title Agency, Ltd., and FirstMerit Community Development Corporation.

Subsequent Events The Corporation is required under generally accepted accounting principles to evaluate subsequent events through the filing of the its consolidated financial statements for the year ended March 31, 2013  on Form 10-K. As a result, the Corporation will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of March 31, 2013 and will adjust amounts preliminarily reported, if necessary.

Forward-Looking Statements This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Corporation, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, continued softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Corporation's business, competitive pressures, changes in accounting, tax or regulatory practices or requirements, the Corporation's ability to realize the synergies and benefits contemplated by the acquisition of Citizens Republic Bancorp, such as it being accretive to earnings and expanding the Corporation's geographic presence, in the time frame anticipated or at all, and those risk factors detailed in the Corporation's periodic reports and registration statements filed with the Securities and Exchange Commission. The Corporation undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Consolidated Financial Highlights

(Unaudited)

Quarters

(Dollars in thousands, except per share amounts)

2013

2012

2012

2012

2012

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

EARNINGS

Net interest income FTE (a)

$

114,376

$

119,130

$

120,741

$

121,689

$

121,428

Provision for noncovered loan losses

5,808

7,116

9,965

8,766

8,129

Provision for covered loan losses

4,138

5,146

6,214

3,430

5,932

Other income

57,392

61,652

54,925

55,301

51,726

Other expenses

106,925

112,181

108,587

119,077

113,768

FTE adjustment (a)

3,027

2,900

2,851

2,766

2,641

Net income

37,346

38,224

34,953

30,585

30,344

Diluted EPS (d)

0.33

0.35

0.32

0.28

0.28

PERFORMANCE RATIOS

Return on average assets (ROA)

1.01

%

1.03

%

0.94

%

0.84

%

0.84

%

Return on average common equity (ROE)

8.83

%

9.30

%

8.60

%

7.69

%

7.72

%

Net interest margin FTE (a)

3.46

%

3.58

%

3.66

%

3.77

%

3.78

%

Efficiency ratio

62.06

%

62.65

%

61.75

%

67.21

%

65.52

%

Number of full-time equivalent employees

2,767

2,738

2,733

2,789

2,997

MARKET DATA

Book value per common share

$

15.99

$

15.00

$

14.82

$

14.60

$

14.51

Period-end common share market value

16.54

14.19

14.71

16.51

16.86

Market as a % of book

103

%

95

%

99

%

113

%

116

%

Cash dividends per common share

$

0.16

$

0.16

$

0.16

$

0.16

$

0.16

Common stock dividend payout ratio

48.48

%

45.71

%

50.00

%

57.14

%

57.14

%

Average basic common shares

109,689

109,652

109,645

109,562

109,211

Average diluted common shares

109,689

109,652

109,645

109,562

109,211

Period end common shares

109,746

109,649

109,653

109,641

109,187

Common shares repurchased

26

12

6

111

69

Common stock market capitalization

$

1,815,199

$

1,555,919

$

1,612,996

$

1,810,173

$

1,840,893

ASSET QUALITY (excluding covered loans)

Gross charge-offs

$

10,776

$

12,475

$

20,999

$

15,014

$

17,417

Net charge-offs

5,907

7,116

14,872

8,766

11,979

Allowance for noncovered loan losses

98,843

98,942

98,942

103,849

103,849

Reserve for unfunded lending commitments

4,941

5,433

5,760

5,666

5,410

Nonperforming assets (NPAs) (b)

52,231

50,224

64,055

61,080

67,933

Net charge-offs to average loans ratio (b)

0.27

%

0.34

%

0.72

%

0.44

%

0.62

%

Allowance for noncovered loan losses to period-end loans (b)

1.13

%

1.13

%

1.19

%

1.28

%

1.32

%

Allowance for credit losses to period-end loans (b)

1.18

%

1.20

%

1.26

%

1.35

%

1.39

%

NPAs to loans and other real estate (b)

0.59

%

0.57

%

0.77

%

0.75

%

0.86

%

Allowance for noncovered loan losses to nonperforming loans

242.21

%

269.69

%

196.66

%

222.44

%

194.97

%

Allowance for credit losses to nonperforming loans

254.32

%

284.50

%

208.11

%

234.57

%

205.13

%

CAPITAL & LIQUIDITY

Period-end tangible common equity to assets

8.03

%

8.16

%

8.18

%

8.01

%

7.86

%

Average equity to assets

11.45

%

11.12

%

10.97

%

10.98

%

10.91

%

Average equity to total loans (c)

17.88

%

17.37

%

17.46

%

17.57

%

17.50

%

Average total loans to deposits (c)

81.36

%

81.21

%

79.89

%

78.78

%

78.74

%

AVERAGE BALANCES

Assets

$

14,983,543

$

14,702,215

$

14,734,016

$

14,558,514

$

14,496,937

Deposits

11,789,784

11,595,085

11,591,931

11,555,283

11,472,021

Loans, excluding acquired loans (c)

8,681,295

8,389,223

8,121,083

7,857,840

7,677,963

Acquired loans, including covered loans (c)

910,887

1,026,574

1,139,568

1,245,246

1,355,086

Earning assets

13,408,789

13,246,693

13,119,473

12,986,988

12,935,184

Shareholders' equity

1,715,005

1,635,275

1,616,569

1,599,187

1,581,009

ENDING BALANCES

Assets

$

15,272,484

$

14,913,012

$

14,628,843

$

14,621,344

$

14,670,818

Deposits

11,925,767

11,759,425

11,532,426

11,615,841

11,648,165

Loans, excluding acquired loans (c)

8,725,839

8,677,501

8,260,426

8,031,998

7,764,058

Acquired loans, including covered loans (c)

855,370

959,549

1,099,052

1,187,203

1,306,165

Goodwill

460,044

460,044

460,044

460,044

460,044

Intangible assets

6,055

6,373

6,817

7,274

7,756

Earning assets

13,905,342

13,472,067

13,219,301

13,212,071

13,318,202

Total shareholders' equity

1,754,850

1,645,202

1,624,704

1,600,815

1,584,105

NOTES:

(a) - Net interest income on a fully tax-equivalent ("FTE") basis restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate. Net interest income on an FTE basis is not an accounting principle generally accepted in the United States of America.

(b) - Covered loans and other real estate from George Washington Savings Bank and Midwest Bank & Trust Company are excluded from the ratio of our allowance for loan and credit losses and NPAs. Nonperforming assets at March 31, 2013, December 31, 2012, and September 30, 2012 include $10.0 million, $7.7 million, and $10.6 million, respectively, of loans resulting from consumer loans classified as troubled debt restructurings where the borrower's obligation to the Corporation has been restructured in bankruptcy.

(c) - Excludes loss share receivable of $95.6 million, $113.7 million, $131.9 million, $152.6 million and $171.1 million as of March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively.

(d) - Net income used to determine diluted EPS for the quarter ended March 31, 2013 was reduced by the cash dividends of approximately $0.9 million payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A.

 

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

March 31,

December 31,

March 31,

(Unaudited, except December 31, 2012, which is derived from the audited financial statements)

2013

2012

2012

ASSETS

Cash and due from banks

$

183,430

$

244,223

$

188,789

Interest-bearing deposits in banks

163,673

13,791

301,196

Total cash and cash equivalents

347,103

258,014

489,985

Investment securities:

Held-to-maturity

665,589

622,121

100,840

Available-for-sale

3,243,835

2,920,971

3,491,647

Other investments

140,984

140,717

140,713

Loans held for sale

14,459

23,683

42,447

Noncovered loans:

Commercial

5,888,337

5,866,489

5,220,051

Mortgage

451,522

445,211

428,950

Installment

1,322,795

1,328,258

1,259,930

Home equity

812,458

806,078

739,548

Credit card

140,721

146,387

140,618

Leases

164,137

139,236

74,112

Total noncovered loans

8,779,970

8,731,659

7,863,209

Allowance for noncovered loan losses

(98,843)

(98,942)

(103,849)

Net noncovered loans

8,681,127

8,632,717

7,759,360

Covered loans (includes loss share receivable of $95.6 million, $113.7 million and $171.1 million at

March 31, 2013, December 31, 2012 and March 31, 2012, respectively)

896,832

1,019,125

1,378,150

Allowance for covered loan losses

(47,945)

(43,255)

(41,070)

Net covered loans

848,887

975,870

1,337,080

Net loans

9,530,014

9,608,587

9,096,440

Premises and equipment, net

177,137

181,149

188,347

Goodwill

460,044

460,044

460,044

Intangible assets

6,055

6,373

7,756

Covered other real estate (includes loss share receivable of $.04 million, $.05 million, and $0.7 million at

March 31, 2013, December 31, 2012 and March 31, 2012, respectively)

70,267

59,855

56,411

Accrued interest receivable and other assets

616,997

631,498

596,188

Total assets

$

15,272,484

$

14,913,012

$

14,670,818

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$

3,360,841

$

3,338,371

$

3,136,595

Interest-bearing

1,371,359

1,287,674

1,119,102

Savings and money market accounts

5,890,369

5,758,123

5,742,547

Certificates and other time deposits

1,303,198

1,375,257

1,649,921

Total deposits

11,925,767

11,759,425

11,648,165

Federal funds purchased and securities sold under agreements to repurchase

826,855

1,104,525

928,760

Wholesale borrowings

385,924

136,883

176,611

Accrued taxes, expenses, and other liabilities

379,088

266,977

333,177

Total liabilities

13,517,634

13,267,810

13,086,713

Shareholders' equity:

Preferred stock, without par value:

authorized and unissued 7,000,000 shares

Preferred stock, Series A, without par value:

designated 800,000 shares; none outstanding

Convertible preferred stock, Series B, without par value:

designated 220,000 shares; none outstanding

5.875% Non-Cumulative Perpetual Preferred Stock, Series A, without par value: 115,000

authorized shares; 100,000 outstanding shares

100,000

Common stock, without par value;  authorized 300,000,000 shares; issued: March 31, 2013,

December 31, 2012 and March 31, 2012 - 115,121,731 shares

127,937

127,937

127,937

Capital surplus

472,975

475,979

484,491

Accumulated other comprehensive loss

(24,119)

(16,205)

(22,172)

Retained earnings

1,214,889

1,195,850

1,144,210

Treasury stock, at cost: March 31, 2013 - 5,375,905 shares; December 31, 2012 - 5,472,915 shares;

March 31, 2012 -  5,935,169 shares

(136,832)

(138,359)

(150,361)

Total shareholders' equity

1,754,850

1,645,202

1,584,105

Total liabilities and shareholders' equity

$

15,272,484

$

14,913,012

$

14,670,818

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

AVERAGE CONSOLIDATED BALANCE SHEETS

Quarterly Periods

(Unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

(Dollars in thousands)

2013

2012

2012

2012

2012

ASSETS

Cash and due from banks

$

394,896

$

238,366

$

440,231

$

410,533

$

378,736

Investment securities:

Held-to-maturity

637,614

620,154

337,685

127,769

90,664

Available-for-sale

2,919,636

2,925,938

3,215,203

3,429,411

3,459,439

Other investments

140,729

140,723

140,736

140,744

140,719

Loans held for sale

14,884

20,485

23,631

22,731

26,483

Noncovered loans:

Commercial

5,859,818

5,600,522

5,443,712

5,274,352

5,143,087

Residential Mortgage

448,589

443,542

437,123

431,752

421,648

Installment

1,325,016

1,331,131

1,293,054

1,263,013

1,261,122

Home equity

806,936

798,663

779,087

750,859

738,154

Credit card

144,159

145,050

143,948

142,311

143,794

Leases

150,789

125,300

88,583

78,862

73,644

Total noncovered loans

8,735,307

8,444,208

8,185,507

7,941,149

7,781,449

Covered loans and loss share receivable

960,619

1,095,185

1,216,711

1,325,184

1,436,430

Total loans

9,695,926

9,539,393

9,402,218

9,266,333

9,217,879

Less: allowance for loan losses

141,735

141,270

145,061

143,565

142,628

Net loans

9,554,191

9,398,123

9,257,157

9,122,768

9,075,251

Total earning assets

13,408,789

13,246,693

13,119,473

12,986,988

12,935,184

Premises and equipment, net

179,381

181,738

184,544

187,181

190,669

Accrued interest receivable and other assets

1,142,212

1,176,688

1,134,829

1,117,377

1,134,976

TOTAL ASSETS

$

14,983,543

$

14,702,215

$

14,734,016

$

14,558,514

$

14,496,937

 

LIABILITIES

Deposits:

Noninterest-bearing

$

3,321,660

$

3,306,444

$

3,236,703

$

3,144,183

$

3,036,590

Interest-bearing

1,300,816

1,122,796

1,080,841

1,060,771

1,066,132

Savings and money market accounts

5,835,750

5,743,599

5,746,210

5,732,007

5,675,052

Certificates and other time deposits

1,331,558

1,422,246

1,528,177

1,618,322

1,694,247

Total deposits

11,789,784

11,595,085

11,591,931

11,555,283

11,472,021

Federal funds purchased and securities sold under

agreements to repurchase

906,717

957,564

1,032,401

920,352

887,715

Wholesale borrowings

291,804

163,405

178,022

177,987

184,659

Total funds

12,988,305

12,716,054

12,802,354

12,653,622

12,544,395

Accrued taxes, expenses and other liabilities

280,233

350,886

315,093

305,705

371,533

Total liabilities

13,268,538

13,066,940

13,117,447

12,959,327

12,915,928

SHAREHOLDERS' EQUITY

Preferred stock

62,222

Common stock

127,937

127,937

127,937

127,937

127,937

Capital surplus

473,943

474,532

472,820

473,650

481,856

Accumulated other comprehensive income (loss)

(21,247)

(17,666)

(14,627)

(18,363)

(19,862)

Retained earnings

1,209,837

1,188,641

1,168,649

1,156,324

1,140,953

Treasury stock

(137,687)

(138,169)

(138,210)

(140,361)

(149,875)

Total shareholders' equity

1,715,005

1,635,275

1,616,569

1,599,187

1,581,009

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

14,983,543

$

14,702,215

$

14,734,016

$

14,558,514

$

14,496,937

 

 

FIRSTMERIT CORPORATION AND SUBIDARIES

AVERAGE CONSOLIDATED BALANCE SHEETS

Fully Tax-equivalent Interest Rates and Interest Differential

Three months ended

Three months ended

Three months ended

March 31, 2013

December 31, 2012

March 31, 2012

(Unaudited)

Average

Average

Average

Average

Average

Average

(Dollars in thousands)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

ASSETS

Cash and due from banks

$

394,896

$

238,366

$

378,736

Investment securities and federal funds sold:

U.S. treasury securities and U.S. government agency obligations (taxable)

2,790,039

$

16,294

2.37

%

2,794,524

$

16,767

2.39

%

2,882,045

$

19,679

2.75

%

Obligations of states and political subdivisions (tax exempt)

541,014

6,595

4.94

%

510,722

6,583

5.13

%

436,804

5,864

5.40

%

Other securities and federal funds sold

366,926

2,944

3.25

%

381,569

3,429

3.58

%

371,973

2,739

2.96

%

Total investment securities and federal funds sold

3,697,979

25,833

2.83

%

3,686,815

26,779

2.89

%

3,690,822

28,282

3.08

%

Loans held for sale

14,884

144

3.92

%

20,485

199

3.86

%

26,483

283

4.30

%

Noncovered loans, covered loans and loss share receivable

9,695,926

99,006

4.14

%

9,539,393

101,288

4.22

%

9,217,879

103,156

4.50

%

Total earning assets

13,408,789

124,983

3.78

%

13,246,693

128,266

3.85

%

12,935,184

131,721

4.10

%

Allowance for loan losses

(141,735)

(141,270)

(142,628)

Other assets

1,321,593

1,358,426

1,325,645

Total assets

$

14,983,543

$

14,702,215

$

14,496,937

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$

3,321,660

%

$

3,306,444

%

$

3,036,590

%

Interest-bearing

1,300,816

318

0.10

%

1,122,796

261

0.09

%

1,066,132

247

0.09

%

Savings and money market accounts

5,835,750

5,315

0.37

%

5,743,599

5,261

0.36

%

5,675,052

5,103

0.36

%

Certificates and other time deposits

1,331,558

2,063

0.63

%

1,422,246

2,287

0.64

%

1,694,247

3,524

0.84

%

Total deposits

11,789,784

7,696

0.26

%

11,595,085

7,809

0.27

%

11,472,021

8,874

0.31

%

Securities sold under agreements to repurchase

906,717

313

0.14

%

957,564

303

0.13

%

887,715

268

0.12

%

Wholesale borrowings

291,804

2,598

3.61

%

163,405

1,024

2.49

%

184,659

1,151

2.51

%

Total interest bearing liabilities

9,666,645

10,607

0.45

%

9,409,610

9,136

0.39

%

9,507,805

10,293

0.44

%

Other liabilities

280,233

350,886

371,533

Shareholders' equity

1,715,005

1,635,275

1,581,009

Total liabilities and shareholders' equity

$

14,983,543

$

14,702,215

$

14,496,937

Net yield on earning assets

$

13,408,789

$

114,376

3.46

%

$

13,246,693

$

119,130

3.58

%

$

12,935,184

$

121,428

3.78

%

Interest rate spread

3.34

%

3.47

%

3.66

%

Note:  Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis.

Nonaccrual loans have been included in the average balances.

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Quarters ended

(Dollars in thousands except per share data)

March 31,

2013

2012

Interest income:

Loans and loans held for sale

$

98,672

$

103,082

Investment securities:

Taxable

19,239

22,418

Tax-exempt

4,045

3,580

Total investment securities interest

23,284

25,998

Total interest income

121,956

129,080

Interest expense:

Deposits:

Interest-bearing

318

247

Savings and money market accounts

5,315

5,103

Certificates and other time deposits

2,063

3,524

Securities sold under agreements to repurchase

313

268

Wholesale borrowings

2,598

1,151

Total interest expense

10,607

10,293

Net interest income

111,349

118,787

Provision for noncovered loan losses

5,808

8,129

Provision for covered loan losses

4,138

5,932

Net interest income after provision for loan losses

101,403

104,726

Other income:

Trust department income

5,741

5,627

Service charges on deposits

12,585

14,409

Credit card fees

10,222

10,180

ATM and other service fees

3,335

3,790

Bank owned life insurance income

4,897

3,056

Investment services and insurance

2,415

2,247

Investment securities (losses)/gains, net

(9)

260

Loan sales and servicing income

7,863

6,691

Other operating income

10,343

5,466

Total other income

57,392

51,726

Other expenses:

Salaries, wages, pension and employee benefits

57,906

63,973

Net occupancy expense

8,282

8,592

Equipment expense

7,349

7,104

Stationery, supplies and postage

2,096

2,143

Bankcard, loan processing and other costs

7,840

7,653

Professional services

5,410

3,352

Amortization of intangibles

317

483

FDIC insurance expense

3,526

3,720

Other operating expense

14,199

16,748

Total other expenses

106,925

113,768

Income before income tax expense

51,870

42,684

Income tax expense

14,524

12,340

Net income

$

37,346

$

30,344

Other comprehensive income, net of taxes

Changes in unrealized securities' holding gains and (losses), net of taxes of ($4.3) million and $1.0 million

$

(7,920)

$

1,884

Reclassification for realized securities' (gains) and losses, net of taxes of ($.003) million and $.09 million

6

(169)

Total other comprehensive gain (loss), net of taxes

(7,914)

1,715

Comprehensive income

$

29,432

$

32,059

Net income applicable to common shares

$

36,125

$

30,207

Net income used in diluted EPS calculation

$

36,125

$

30,207

Weighted average number of common shares outstanding - basic

109,689

109,211

Weighted average number of common shares outstanding - diluted

109,689

109,211

Basic earnings per common share

$

0.33

$

0.28

Diluted earnings per common share

$

0.33

$

0.28

Dividend per common share

$

0.16

$

0.16

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME---LINKED QUARTERS

Quarterly Results

(Unaudited)

2013

2012

2012

2012

2012

(Dollars in thousands, except share data)

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Loans and loans held for sale

$

98,672

$

101,086

$

103,005

$

103,126

$

103,082

Investment securities

23,284

24,280

24,477

25,629

25,998

Total interest income

121,956

125,366

127,482

128,755

129,080

Interest on deposits:

Interest-bearing

318

261

243

236

247

Savings and money market accounts

5,315

5,261

5,166

5,033

5,103

Certificates and other time deposits

2,063

2,287

2,743

3,169

3,524

Securities sold under agreements to repurchase

313

303

310

276

268

Wholesale borrowings

2,598

1,024

1,130

1,118

1,151

Total interest expense

10,607

9,136

9,592

9,832

10,293

Net interest income

111,349

116,230

117,890

118,923

118,787

Provision for noncovered loan losses

5,808

7,116

9,965

8,766

8,129

Provision for covered loan losses

4,138

5,146

6,214

3,430

5,932

Net interest income after provision for loan losses

101,403

103,968

101,711

106,727

104,726

Other income:

Trust department income

5,741

5,662

6,124

5,730

5,627

Service charges on deposits

12,585

14,247

14,603

14,478

14,409

Credit card fees

10,222

11,167

11,006

11,216

10,180

ATM and other service fees

3,335

3,432

3,680

3,890

3,790

Bank owned life insurance income

4,897

3,067

3,094

2,923

3,056

Investment services and insurance

2,415

2,147

2,208

2,388

2,247

Investment securities gains, net

(9)

2,425

553

548

260

Loan sales and servicing income

7,863

7,946

7,255

5,139

6,691

Other operating income

10,343

11,559

6,402

8,989

5,466

Total other income

57,392

61,652

54,925

55,301

51,726

Other expenses:

Salaries, wages, pension and employee benefits

57,906

61,560

58,061

61,598

63,973

Net occupancy expense

8,282

7,114

8,077

7,971

8,592

Equipment expense

7,349

7,398

7,143

7,598

7,104

Stationery, supplies and postage

2,096

2,162

2,210

2,285

2,143

Bankcard, loan processing and other costs

7,840

9,260

8,424

8,858

7,653

Professional services

5,410

6,119

4,702

9,307

3,352

Amortization of intangibles

317

444

456

483

483

FDIC  insurance expense

3,526

1,738

1,832