FirstMerit Reports First Quarter 2013 EPS of $0.33 Per Share

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


3,463


3,720


Other operating expense

14,199


16,386


17,682


17,514


16,748


Total other expenses

106,925


112,181


108,587


119,077


113,768


Income before income tax expense

51,870


53,439


48,049


42,951


42,684


Income taxes

14,524


15,215


13,096


12,366


12,340


Net income

37,346


38,224


34,953


30,585


30,344


Other comprehensive income (loss), net of taxes

(7,914)


(2,305)


4,525


3,747


1,715


Comprehensive income

$

29,432


$

35,919


$

39,478


$

34,332


$

32,059


Net income applicable to common shares

$

36,125


$

38,041


$

34,797


$

30,472


$

30,207


Net income used in diluted EPS calculation

$

36,125


$

38,041


$

34,797


$

30,472


$

30,207


Weighted-average common shares - basic

109,689


109,652


109,645


109,562


109,211


Weighted-average common shares - diluted

109,689


109,652


109,645


109,562


109,211


Basic earnings per common share

$

0.33


$

0.35


$

0.32


$

0.28


$

0.28


Diluted earnings per common share

$

0.33


$

0.35


$

0.32


$

0.28


$

0.28


 

 



FIRSTMERIT CORPORATION AND SUBSIDIARIES




ASSET QUALITY INFORMATION (excluding Covered Assets)








(Unaudited)


(Audited)

(Dollars in thousands, except ratios)

Quarterly Periods


Annual Period


March 31,

December 31,

September 30,

June 30,

March 31,


December 31,

Allowance for Credit Losses

2013

2012

2012

2012

2012


2012

Allowance for noncovered loan losses, beginning of period

$

98,942


$

98,942


$

103,849


$

103,849


$

107,699



$

107,699


Provision for noncovered loan losses

5,808


7,116


9,965


8,766


8,129



33,976


Charge-offs

10,776


12,475


20,999


15,014


17,417



65,905


Recoveries

4,869


5,359


6,127


6,248


5,438



23,172


Net charge-offs

5,907


7,116


14,872


8,766


11,979



42,733


Allowance for noncovered loan losses, end of period

$

98,843


$

98,942


$

98,942


$

103,849


$

103,849



$

98,942


Reserve for unfunded lending commitments,








beginning of period

$

5,433


$

5,760


$

5,666


$

5,410


$

6,373



$

6,373


Provision for (relief of) credit losses

(492)


(327)


94


256


(963)



(940)


Reserve for unfunded lending commitments,








end of period

$

4,941


$

5,433


$

5,760


$

5,666


$

5,410



$

5,433


Allowance for Credit Losses

$

103,784


$

104,375


$

104,702


$

109,515


$

109,259



$

104,375


 

Ratios (a)








Provision for loan losses to average loans

0.27

%

0.34

%

0.48

%

0.44

%

0.42

%


0.42

%

Net charge-offs to average loans

0.27

%

0.34

%

0.72

%

0.44

%

0.62

%


0.53

%

Allowance for loan losses to period-end loans

1.13

%

1.13

%

1.19

%

1.28

%

1.32

%


1.13

%

Allowance for credit losses to period-end loans

1.18

%

1.20

%

1.26

%

1.35

%

1.39

%


1.20

%

Allowance for loan losses to nonperforming loans

242.21

%

269.69

%

196.66

%

222.44

%

194.97

%


269.69

%

Allowance for credit losses to nonperforming loans

254.32

%

284.50

%

208.11

%

234.57

%

205.13

%


284.50

%

 

Asset Quality (a)








Impaired noncovered loans:








Nonaccrual

$

23,843


$

21,766


$

31,492


$

38,381


$

44,546



$

21,766