Attached files
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| 8-K - 8-K - FIRSTMERIT CORP /OH/ | d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
FirstMerit Corporation
Analysts: Thomas O’Malley/Investor Relations Officer
Phone: 330.384.7109
Media Contact: Robert Townsend/Media Relations Officer
Phone: 330.384.7075
FirstMerit Corporation Reports Second Quarter 2011 EPS of $0.27 Per Share
Quarterly Highlights include:
| • | 49th consecutive quarter of profitability |
| • | Solid linked-quarter credit trends supported by $12.9 million, or 11.45%, decline in non-performing assets and $1.4 million, or 8.09%, decline in net charge-offs to 0.89% of average loans from prior quarter |
| • | Average commercial loan growth of $111.8 million, or 2.45%, from prior quarter |
| • | Average core deposit growth of $406.4 million, or 4.67%, from prior quarter |
| • | Strong tangible common equity ratio at 7.79% |
Akron, Ohio (July 26, 2011) - FirstMerit Corporation (Nasdaq: FMER) reported second quarter 2011 net income of $29.8 million, or $0.27 per diluted share. This compares with $27.6 million, or $0.25 per diluted share, for the first quarter of 2011 and $31.5 million, or $0.32 per diluted share, for the second quarter 2010.
Returns on average common equity (“ROE”) and average assets (“ROA”) for the second quarter 2011 were 7.78% and 0.82%, respectively, compared with 7.37% and 0.78% for the first quarter of 2011 and 11.21% and 0.94% for the second quarter 2010.
“Our second quarter results reflect continued improvement in our credit quality as well as strong results in Chicago,” said Paul G. Greig, chairman, president and CEO of FirstMerit Corporation. “Year-to-date, commercial loan originations in Chicago of $189.4 million have eclipsed that market’s total commercial loan production in all of 2010. Additionally, I am pleased with the progress we showed this quarter on our initiatives to reduce expense. We remain focused on cost control and improving the overall efficiency of the bank.
“The economic recovery continues on a very modest pace but we are taking advantage of every opportunity for organic growth,” Mr. Greig added. “By capitalizing on disruption in our largest markets, we are adding new business and profitable customer relationships to grow shareholder value.”
Net interest margin was 3.77% for the second quarter of 2011 compared with 4.00% for the first quarter of 2011 and 4.02% for the second quarter of 2010. The decline in net interest margin in both periods was due to earning asset yields migrating lower in the quarter. This is attributable to the current interest rate environment producing lower yields on new loan originations and the reinvestment of security cash flows into the investment portfolio at rates below historic averages.
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
Average loans, not including covered loans, during the second quarter of 2011 increased $71.5 million, or 0.99%, compared with the first quarter of 2011 and $112.0 million, or 1.56%, compared with the second quarter of 2010. Overall loan growth was driven by an increase in average commercial loans of $111.8 million, or 2.45%, over the prior quarter and an increase of $289.3 million, or 6.61% over the year-ago quarter. Average covered loan balances including the indemnification asset were $1.8 billion, $1.9 billion, and $1.3 billion at June 30, 2011, March 31, 2011, and June 30, 2010, respectively.
Average deposits during the second quarter of 2011 increased $144.9 million, or 1.28%, compared with the first quarter of 2011 and increased $864.3 million, or 8.15%, compared with the second quarter of 2010. During the second quarter of 2011, the Corporation increased its average core deposits, which excludes time deposits, by $406.4 million, or 4.67%, compared with the first quarter of 2011, and $1.6 billion, or 20.54%, compared with the second quarter of 2010. Average time deposits decreased $261.4 million, or 9.96%, from the first quarter of 2011 and decreased $686.6 million, or 22.51% from the second quarter of 2010. The change in deposit mix over the prior quarter is due to the Corporation’s strategy to retain the acquired depository customers and move them from certificate of deposit accounts into core deposit accounts.
Average investments during the second quarter of 2011 increased $203.1 million, or 5.94%, compared with the first quarter of 2011 and increased $246.6 million, or 7.30%, over the second quarter of 2010. The increase in the second quarter of 2011 average investments, compared with the first quarter of 2011, is due to the purchase of $390.5 million in securities in the second quarter of 2011.
Net interest income on a fully tax-equivalent (“FTE”) basis was $119.5 million in the second quarter 2011 compared with $123.9 million in the first quarter of 2011 and $118.8 million in the second quarter of 2010. Compared with the first quarter of 2011, average earning assets increased $163.4 million, or 1.30%, and increased $863.8 million, or 7.28%, compared to the second quarter of 2010.
Noninterest income net of securities transactions for the second quarter of 2011 was $50.6 million, a decrease of $2.2 million, or 4.08%, from the first quarter of 2011 and a decrease of $2.0 million, or 3.72%, from the second quarter of 2010.
The decrease in other income for the second quarter of 2011 compared to the first quarter of 2011 was driven by lower mortgage revenue, including loan sales and servicing, down $2.4 million from the prior quarter and lower bank owned life insurance income, down $2.2 million from the prior quarter. Other income, net of securities gains, as a percentage of net revenue for the second quarter of 2011 was 29.75% compared with 29.86% for first quarter of 2011 and 30.67% for the second quarter of 2010. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.
Noninterest expense for the second quarter of 2011 was $110.1 million, a decrease of $4.4 million, or 3.82%, from the first quarter of 2011 and an increase of $4.3 million, or 4.11%, from the second quarter of 2010. The decrease in noninterest expense for the second quarter of 2011 compared with the first quarter of 2011 was driven by lower salary and benefits as well as reduced other expenses. For the three months ended June 30, 2011, increases in operating expenses compared to the second quarter of 2010 were primarily attributable to increased salary and benefits as a result of the three 2010 acquisitions.
During the second quarter of 2011, the Corporation reported an efficiency ratio of 64.39%, compared with 64.46% for the first quarter of 2011 and 61.30% for the second quarter of 2010.
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FirstMerit Corporation Reports Second Quarter 2011 EPS Results
Net charge-offs, excluding acquired loans, totaled $15.6 million, or 0.89% of average loans, excluding acquired loans, in the second quarter of 2011 compared with $17.0 million, or 0.99% of average loans, in the first quarter of 2011 and $19.8 million, or 1.15% of average loans, in the second quarter of 2010.
Nonperforming assets totaled $99.8 million at June 30, 2011, a decrease of $12.9 million compared with March 31, 2011 and a decrease of $9.9 million compared with June 30, 2010. Nonperforming assets at June 30, 2011 represented 1.38% of period-end loans plus other real estate, excluding acquired loans, compared with 1.61% at March 31, 2011 and 1.62% at June 30, 2010.
The allowance for noncovered loan losses, totaled $109.2 million at June 30, 2011, a decrease of $5.5 million from March 31, 2011. At June 30, 2011, the allowance for loan losses noncovered was 1.51% of period-end loans compared with 1.64% at March 31, 2011, and 1.75% at December 31, 2010. 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 1.59% of period-end loans, excluding acquired loans, at June 30, 2011, compared with 1.74% at March 31, 2011 and 1.85% at December 31, 2010. The allowance for credit losses to nonperforming loans was 158.30% at June 30, 2011, compared with 147.38% at March 31, 2011 and 126.51% at December 31, 2010.
The Corporation’s total assets at June 30, 2011 were $14.3 billion, a decrease of $119.0 million inclusive of intangible assets, or 0.82%, compared with March 31, 2011 and a decrease of $173.9 million, or 1.20%, compared with June 30, 2010. Total loans, excluding covered loans, did not significantly change compared with March 31, 2011 and June 30, 2010. The decrease in total assets compared with June 30, 2010, is attributed the decline in the covered loan portfolio as expected as there were no new acquisitions of loans subject to loss share agreements after the quarter ended June 30, 2010. The covered loan portfolio will continue to decline, through payoffs, charge-offs, termination or expiration of loss share coverage, unless the Corporation acquires additional loans subject to loss share agreements in the future.
Total deposits were $11.3 billion at June 30, 2011, a decrease of $55.0 million, or 0.48%, from March 31, 2011 and a decrease of $174.2 million, or 1.51%, from June 30, 2010. Core deposits totaled $9.1 billion at June 30, 2011, an increase of $162.5 million, or 1.82%, from March 31, 2011 and an increase of $1.4 billion, or 18.16%, from June 30, 2010. The increase in core deposits compared with June 30, 2010 is due to the Corporation’s strategy to move customers from certificate of deposit accounts into core deposit products.
Shareholders’ equity was $1.6 billion at June 30, 2011, compared with $1.5 billion at March 31, 2011 and June 30, 2010. The Corporation maintained a strong capital position as tangible common equity to assets was 7.79% at June 30, 2011, compared with 7.50% and 7.35% at March 31, 2011 and June 30, 2010, respectively. The common dividend per share paid in the second quarter 2011 was $0.16.
Acquisitions and Integration
The three 2010 acquisitions of First Bank, George Washington and Midwest were considered business combinations and accounted for under FASB Accounting Standard Codification 805, Business Combinations (ASC 805). All acquired assets and liabilities were recorded at their estimated fair values as of the date of acquisition and identifiable intangible assets were recorded at their estimated fair value. As of June 30, 2011, the one year measurement period has expired for all three acquisitions. During the one year measurement period, material adjustments to acquisition date estimated fair values were recorded in the period in which the
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FirstMerit Corporation Reports Second Quarter 2011 EPS Results
acquisition occurred and, as a result, previously reported results may have changed. Certain reclassifications of prior periods’ amount may also be made to conform to the current period’s presentation and would have no effect on previously reported net income amounts.
Second Quarter 2011 Conference Call
FirstMerit Corporation senior management will host an earnings conference call today at 2:00 p.m. (Eastern Time) to provide an overview of second quarter 2011 results and highlights. To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 83562786. A replay of the conference call will be available at approximately 5:00 p.m. (Eastern Time) on July 26, 2011 through August 9, 2011 by dialing (855) 859-2056, and entering the PIN: 83562786.
About FirstMerit Corporation
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $14.3 billion as of June 30, 2011 and 207 banking offices and 213 ATM locations in Ohio, Western Pennsylvania and the Chicago area. FirstMerit Corporation provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal wholly-owned subsidiaries 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 June 30, 2011 consolidated financial statements on Form 10-Q. As a result, the Corporation will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of June 30, 2011 and will adjust amounts preliminarily reported, if necessary.
Forward-Looking Statement
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 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.
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FirstMerit Corporation Reports Second Quarter 2011 EPS Results
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
| (Unaudited) (Dollars in thousands) |
Quarters | |||||||||||||||||||
| EARNINGS |
2011 2nd Qtr |
2011 1st Qtr |
2010 4th Qtr |
2010 3rd Qtr |
2010 2nd Qtr |
|||||||||||||||
| Net interest income FTE (a) |
$ | 119,484 | $ | 123,940 | $ | 129,971 | $ | 125,514 | $ | 118,817 | ||||||||||
| Provision for noncovered loan losses |
10,138 | 17,018 | 19,816 | 18,108 | 20,366 | |||||||||||||||
| Provision for covered loan losses |
7,481 | 5,331 | 3,572 | 593 | 267 | |||||||||||||||
| Other income |
51,491 | 52,756 | 54,311 | 55,135 | 53,209 | |||||||||||||||
| Other expenses |
110,068 | 114,445 | 122,452 | 120,670 | 105,723 | |||||||||||||||
| FTE adjustment (a) |
2,041 | 2,116 | 2,107 | 2,021 | 2,050 | |||||||||||||||
| Net income |
29,763 | 27,560 | 27,030 | 28,996 | 31,493 | |||||||||||||||
| Diluted EPS |
0.27 | 0.25 | 0.25 | 0.27 | 0.32 | |||||||||||||||
| PERFORMANCE RATIOS |
||||||||||||||||||||
| Return on average assets (ROA) |
0.82 | % | 0.78 | % | 0.74 | % | 0.79 | % | 0.94 | % | ||||||||||
| Return on average common equity (ROE) |
7.78 | % | 7.37 | % | 7.04 | % | 7.60 | % | 11.21 | % | ||||||||||
| Net interest margin FTE (a) |
3.77 | % | 4.00 | % | 4.14 | % | 3.96 | % | 4.02 | % | ||||||||||
| Efficiency ratio |
64.39 | % | 64.46 | % | 65.95 | % | 66.26 | % | 61.30 | % | ||||||||||
| Number of full-time equivalent employees |
3,028 | 3,056 | 3,058 | 3,093 | 3,095 | |||||||||||||||
| MARKET DATA |
||||||||||||||||||||
| Book value/common share |
$ | 14.19 | $ | 13.98 | $ | 13.86 | $ | 13.95 | $ | 13.87 | ||||||||||
| Period-end common share mkt value |
16.51 | 17.07 | 19.79 | 18.32 | 17.13 | |||||||||||||||
| Market as a % of book |
116 | % | 122 | % | 143 | % | 131 | % | 124 | % | ||||||||||
| Cash dividends/common share |
$ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.16 | ||||||||||
| Common stock dividend payout ratio |
59.26 | % | 64.00 | % | 64.41 | % | 60.03 | % | 50.00 | % | ||||||||||
| Average basic common shares |
109,138 | 108,769 | 108,807 | 108,793 | 98,968 | |||||||||||||||
| Average diluted common shares |
109,139 | 108,770 | 108,808 | 108,794 | 98,969 | |||||||||||||||
| Period end common shares |
109,241 | 108,734 | 108,817 | 108,803 | 108,786 | |||||||||||||||
| Common shares repurchased |
45 | 91 | 9 | 4 | 46 | |||||||||||||||
| Common stock market capitalization |
$ | 1,803,569 | $ | 1,856,089 | $ | 2,153,479 | $ | 1,993,276 | $ | 1,863,504 | ||||||||||
| ASSET QUALITY (excluding acquired loans) |
||||||||||||||||||||
| Gross charge-offs |
$ | 20,958 | $ | 22,812 | $ | 27,553 | $ | 25,817 | $ | 24,967 | ||||||||||
| Net charge-offs |
15,641 | 17,018 | 21,654 | 19,923 | 19,829 | |||||||||||||||
| Allowance for loan losses noncovered |
109,187 | 114,690 | 114,690 | 116,528 | 118,343 | |||||||||||||||
| Reserve for unfunded lending commitments |
5,799 | 7,202 | 8,849 | 7,864 | 6,812 | |||||||||||||||
| Nonperforming assets (NPAs) (b) |
99,846 | 112,759 | 123,502 | 115,267 | 109,781 | |||||||||||||||
| Net charge-offs/average loans ratio (b) |
0.89 | % | 0.99 | % | 1.25 | % | 1.17 | % | 1.15 | % | ||||||||||
| Allowance for loan losses noncovered/period-end loans (b) |
1.51 | % | 1.64 | % | 1.65 | % | 1.72 | % | 1.75 | % | ||||||||||
| Allowance for credit losses/period-end loans (b) |
1.59 | % | 1.74 | % | 1.78 | % | 1.84 | % | 1.85 | % | ||||||||||
| NPAs/loans and other real estate (b) |
1.38 | % | 1.61 | % | 1.78 | % | 1.70 | % | 1.62 | % | ||||||||||
| Allowance for loan losses noncovered/nonperforming loans |
150.31 | % | 138.67 | % | 109.56 | % | 111.00 | % | 119.62 | % | ||||||||||
| Allowance for credit losses/nonperforming loans |
158.30 | % | 147.38 | % | 118.01 | % | 118.49 | % | 126.51 | % | ||||||||||
| CAPITAL & LIQUIDITY |
||||||||||||||||||||
| Period-end tangible common equity to assets |
7.79 | % | 7.50 | % | 7.59 | % | 7.54 | % | 7.35 | % | ||||||||||
| Average equity to assets |
10.59 | % | 10.62 | % | 10.51 | % | 10.38 | % | 8.39 | % | ||||||||||
| Average equity to total loans (c) |
17.36 | % | 17.14 | % | 17.15 | % | 16.93 | % | 13.68 | % | ||||||||||
| Average total loans to deposits (c) |
77.05 | % | 78.14 | % | 78.00 | % | 78.25 | % | 77.73 | % | ||||||||||
| AVERAGE BALANCES |
||||||||||||||||||||
| Assets |
$ | 14,481,208 | $ | 14,270,871 | $ | 14,493,060 | $ | 14,587,126 | $ | 13,426,271 | ||||||||||
| Deposits |
11,464,738 | 11,319,809 | 11,388,423 | 11,425,740 | 10,600,401 | |||||||||||||||
| Loans, excluding acquired loans (c) |
7,080,109 | 6,963,389 | 6,868,222 | 6,781,123 | 6,810,582 | |||||||||||||||
| Acquired loans, including covered loans (c) |
1,753,942 | 1,881,540 | 2,014,361 | 2,160,075 | 1,429,388 | |||||||||||||||
| Earning assets |
12,724,269 | 12,560,913 | 12,466,629 | 12,579,486 | 11,860,439 | |||||||||||||||
| Shareholders’ equity |
1,533,855 | 1,516,227 | 1,523,078 | 1,513,527 | 1,127,017 | |||||||||||||||
| ENDING BALANCES |
||||||||||||||||||||
| Assets |
$ | 14,347,557 | $ | 14,466,509 | $ | 14,134,714 | $ | 14,354,086 | $ | 14,521,473 | ||||||||||
| Deposits |
11,340,939 | 11,395,946 | 11,268,006 | 11,271,416 | 11,515,171 | |||||||||||||||
| Loans, excluding acquired loans (c) |
7,216,015 | 6,989,973 | 6,937,142 | 6,776,098 | 6,779,941 | |||||||||||||||
| Acquired loans, including covered loans (c) |
1,707,887 | 1,800,525 | 1,953,093 | 2,117,505 | 2,239,301 | |||||||||||||||
| Goodwill |
460,044 | 460,044 | 460,044 | 460,044 | 460,044 | |||||||||||||||
| Intangible assets |
9,325 | 9,868 | 10,411 | 11,416 | 12,422 | |||||||||||||||
| Earning assets |
12,926,211 | 12,659,414 | 12,427,936 | 12,507,979 | 12,680,627 | |||||||||||||||
| Total shareholders’ equity |
1,550,387 | 1,519,957 | 1,507,715 | 1,517,892 | 1,505,345 | |||||||||||||||
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) | - As required by current accounting guidance, the acquired loans and other real estate from First Bank, George Washington Savings Bank and Midwest Bank & Trust Company were recorded at fair value with no carryover of the related allowances. The ratio of our allowance for loan and credit losses and NPAs do not include these loans and other real estate. |
| (c) | - Excludes loss share receivable of $239 million, $266 million, $289 million, $342 million and $344 million as of June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010, and June 30, 2010, respectively. |
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FirstMerit Corporation Reports Second Quarter 2011 EPS Results
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Dollars in thousands) (Unaudited, except December 31, 2010, which is derived from the audited financial statements) |
June 30, 2011 |
December 31, 2010 |
June 30, 2010 |
|||||||||
| ASSETS |
||||||||||||
| Cash and due from banks |
$ | 191,965 | $ | 157,415 | $ | 221,851 | ||||||
| Interest bearing-deposits in banks |
32,113 | 365,698 | 398,664 | |||||||||
| Total cash and cash equivalents |
224,078 | 523,113 | 620,515 | |||||||||
| Investment securities |
||||||||||||
| Held-to-maturity |
80,857 | 59,962 | 65,160 | |||||||||
| Available-for-sale |
3,498,272 | 2,987,040 | 3,067,552 | |||||||||
| Other investments |
160,805 | 160,752 | 160,222 | |||||||||
| Loans held for sale |
22,951 | 41,340 | 24,733 | |||||||||
| Noncovered loans: |
||||||||||||
| Commercial loans |
4,808,305 | 4,527,497 | 4,335,392 | |||||||||
| Mortgage loans |
400,661 | 403,843 | 430,550 | |||||||||
| Installment loans |
1,259,072 | 1,308,860 | 1,370,400 | |||||||||
| Home equity loans |
738,719 | 749,378 | 762,288 | |||||||||
| Credit card loans |
143,828 | 149,506 | 146,253 | |||||||||
| Leases |
57,634 | 63,004 | 58,555 | |||||||||
| Total noncovered loans |
7,408,219 | 7,202,088 | 7,103,438 | |||||||||
| Allowance for noncovered loan losses |
(109,187 | ) | (114,690 | ) | (118,343 | ) | ||||||
| Net noncovered loans |
7,299,032 | 7,087,398 | 6,985,095 | |||||||||
| Covered loans (includes loss share receivable of $239 million, $289 million, and $344 million at June 30, 2011, December 31, 2010 and June 30, 2010, respectively.) |
1,755,107 | 1,976,754 | 2,259,522 | |||||||||
| Allowance for covered loan losses |
(33,360 | ) | (13,733 | ) | — | |||||||
| Net covered loans |
1,721,747 | 1,963,021 | 2,259,522 | |||||||||
| Net loans |
9,020,779 | 9,050,419 | 9,244,617 | |||||||||
| Premises and equipment, net |
191,674 | 197,866 | 169,563 | |||||||||
| Goodwill |
460,044 | 460,044 | 460,044 | |||||||||
| Intangible assets |
9,325 | 10,411 | 12,422 | |||||||||
| Other real estate covered by FDIC loss share |
58,502 | 54,710 | 50,461 | |||||||||
| Accrued interest receivable and other assets |
620,270 | 589,057 | 646,184 | |||||||||
| Total assets |
$ | 14,347,557 | $ | 14,134,714 | $ | 14,521,473 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Deposits: |
||||||||||||
| Demand-non-interest bearing |
$ | 2,944,117 | $ | 2,790,550 | $ | 2,621,994 | ||||||
| Demand-interest bearing |
842,280 | 868,404 | 718,891 | |||||||||
| Savings and money market accounts |
5,305,584 | 4,811,784 | 4,353,579 | |||||||||
| Certificates and other time deposits |
2,248,958 | 2,797,268 | 3,820,707 | |||||||||
| Total deposits |
11,340,939 | 11,268,006 | 11,515,171 | |||||||||
| Federal funds purchased and securities sold under agreements to repurchase |
809,570 | 777,585 | 744,055 | |||||||||
| Wholesale borrowings |
325,133 | 326,007 | 474,963 | |||||||||
| Accrued taxes, expenses, and other liabilities |
321,528 | 255,401 | 281,939 | |||||||||
| Total liabilities |
12,797,170 | 12,626,999 | 13,016,128 | |||||||||
| Commitments and contingencies |
||||||||||||
| Shareholders’ equity |
||||||||||||
| Common stock, without par value: authorized 300,000,000 shares; issued 115,121,731, 115,121,731 and 115,121,731 at June 30, 2011, December 31, 2010 and June 30, 2010, respectively |
127,937 | 127,937 | 127,937 | |||||||||
| Capital surplus |
477,449 | 485,567 | 483,958 | |||||||||
| Accumulated other comprehensive loss |
(9,145 | ) | (26,103 | ) | (4,517 | ) | ||||||
| Retained earnings |
1,103,608 | 1,080,900 | 1,059,418 | |||||||||
| Treasury stock, at cost, 5,880,692, 6,305,218 and 6,335,809 shares at June 30, 2011, December 31, 2010 and June 30, 2010, respectively |
(149,462 | ) | (160,586 | ) | (161,451 | ) | ||||||
| Total shareholders’ equity |
1,550,387 | 1,507,715 | 1,505,345 | |||||||||
| Total liabilities and shareholders’ equity |
$ | 14,347,557 | $ | 14,134,714 | $ | 14,521,473 | ||||||
Page 6
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
| (Unaudited) (Dollars in thousands) |
Quarterly Periods | |||||||||||||||||||
| June 30, 2011 |
March 31, 2011 |
December 31, 2010 |
September 30, 2010 |
June 30, 2010 |
||||||||||||||||
| ASSETS |
||||||||||||||||||||
| Cash and cash equivalents |
$ | 588,487 | $ | 520,602 | $ | 809,828 | $ | 821,713 | $ | 762,781 | ||||||||||
| Investment securities |
||||||||||||||||||||
| Held-to-maturity |
79,012 | 64,212 | 64,287 | 63,364 | 64,650 | |||||||||||||||
| Available-for-sale |
3,382,943 | 3,194,751 | 3,012,983 | 3,049,056 | 3,131,787 | |||||||||||||||
| Other investments |
160,811 | 160,752 | 160,756 | 158,591 | 179,735 | |||||||||||||||
| Loans held for sale |
18,512 | 22,574 | 39,174 | 21,659 | 18,827 | |||||||||||||||
| Noncovered loans: |
||||||||||||||||||||
| Commercial loans |
4,665,550 | 4,553,777 | 4,445,691 | 4,336,631 | 4,376,274 | |||||||||||||||
| Mortgage loans |
398,702 | 403,758 | 403,334 | 421,087 | 438,243 | |||||||||||||||
| Installment loans |
1,270,589 | 1,294,156 | 1,331,130 | 1,363,248 | 1,377,748 | |||||||||||||||
| Home equity loans |
736,117 | 741,596 | 754,270 | 762,626 | 763,943 | |||||||||||||||
| Credit card loans |
143,528 | 146,526 | 146,744 | 146,863 | 145,880 | |||||||||||||||
| Leases |
58,607 | 61,768 | 62,115 | 58,223 | 59,049 | |||||||||||||||
| Total noncovered loans |
7,273,093 | 7,201,581 | 7,143,284 | 7,088,678 | 7,161,137 | |||||||||||||||
| Covered loans and loss share receivable |
1,809,898 | 1,917,043 | 2,046,145 | 2,198,138 | 1,304,303 | |||||||||||||||
| Total loans |
9,082,991 | 9,118,624 | 9,189,429 | 9,286,816 | 8,465,440 | |||||||||||||||
| Less: total allowance for loan losses |
143,721 | 134,064 | 119,924 | 113,062 | 116,436 | |||||||||||||||
| Net loans |
8,939,270 | 8,984,560 | 9,069,505 | 9,173,754 | 8,349,004 | |||||||||||||||
| Total earning assets |
12,724,269 | 12,560,913 | 12,466,629 | 12,579,486 | 11,860,439 | |||||||||||||||
| Premises and equipment, net |
192,584 | 195,296 | 195,915 | 172,712 | 167,009 | |||||||||||||||
| Accrued interest receivable and other assets |
1,119,589 | 1,128,124 | 1,140,612 | 1,126,277 | 752,478 | |||||||||||||||
| TOTAL ASSETS |
$ | 14,481,208 | $ | 14,270,871 | $ | 14,493,060 | $ | 14,587,126 | $ | 13,426,271 | ||||||||||
| LIABILITIES |
||||||||||||||||||||
| Deposits: |
||||||||||||||||||||
| Demand-non-interest bearing |
$ | 2,998,090 | $ | 2,874,884 | $ | 2,816,850 | $ | 2,730,483 | $ | 2,496,826 | ||||||||||
| Demand-interest bearing |
824,125 | 841,545 | 857,960 | 858,168 | 775,031 | |||||||||||||||
| Savings and money market accounts |
5,279,353 | 4,978,773 | 4,710,682 | 4,502,779 | 4,278,756 | |||||||||||||||
| Certificates and other time deposits |
2,363,170 | 2,624,607 | 3,002,931 | 3,334,311 | 3,049,788 | |||||||||||||||
| Total deposits |
11,464,738 | 11,319,809 | 11,388,423 | 11,425,741 | 10,600,401 | |||||||||||||||
| Federal funds purchased and securities sold under agreements to repurchase |
884,244 | 848,169 | 904,163 | 928,607 | 843,652 | |||||||||||||||
| Wholesale borrowings |
325,057 | 325,296 | 368,397 | 443,890 | 526,963 | |||||||||||||||
| Total funds |
12,674,039 | 12,493,274 | 12,660,983 | 12,798,238 | 11,971,016 | |||||||||||||||
| Accrued taxes, expenses and other liabilities |
273,314 | 261,370 | 308,999 | 275,361 | 328,238 | |||||||||||||||
| Total liabilities |
12,947,353 | 12,754,644 | 12,969,982 | 13,073,599 | 12,299,254 | |||||||||||||||
| SHAREHOLDERS’ EQUITY |
||||||||||||||||||||
| Common stock |
127,937 | 127,937 | 127,937 | 127,937 | 127,937 | |||||||||||||||
| Capital surplus |
479,078 | 486,907 | 485,126 | 484,197 | 127,143 | |||||||||||||||
| Accumulated other comprehensive loss |
(16,402 | ) | (26,703 | ) | (9,867 | ) | (2,332 | ) | (15,913 | ) | ||||||||||
| Retained earnings |
1,095,270 | 1,089,554 | 1,080,809 | 1,065,001 | 1,051,308 | |||||||||||||||
| Treasury stock |
(152,028 | ) | (161,468 | ) | (160,927 | ) | (161,276 | ) | (163,458 | ) | ||||||||||
| Total shareholders’ equity |
1,533,855 | 1,516,227 | 1,523,078 | 1,513,527 | 1,127,017 | |||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 14,481,208 | $ | 14,270,871 | $ | 14,493,060 | $ | 14,587,126 | $ | 13,426,271 | ||||||||||
Page 7
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
| (Unaudited) (Dollars in thousands) |
Three months ended | Year ended | Three months ended | |||||||||||||||||||||||||||||||||
| June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||||||||||||||||||||||||||||||
| Average Balance |
Interest | Average Rate |
Average Balance |
Interest | Average Rate |
Average Balance |
Interest | Average Rate |
||||||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 588,487 | $ | 728,723 | $ | 762,781 | ||||||||||||||||||||||||||||||
| Investment securities and federal funds sold: |
||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and U.S. Government agency obligations (taxable) |
2,958,993 | 19,942 | 2.70 | % | 2,554,538 | 87,019 | 3.41 | % | 2,708,609 | 23,462 | 3.47 | % | ||||||||||||||||||||||||
| Obligations of states and political subdivisions (tax exempt) |
368,790 | 4,905 | 5.33 | % | 348,832 | 20,505 | 5.88 | % | 349,424 | 5,184 | 5.95 | % | ||||||||||||||||||||||||
| Other securities and federal funds sold |
294,983 | 2,235 | 3.04 | % | 300,700 | 8,508 | 2.83 | % | 318,139 | 2,139 | 2.70 | % | ||||||||||||||||||||||||
| Total investment securities and federal funds sold |
3,622,766 | 27,082 | 3.00 | % | 3,204,070 | 116,032 | 3.62 | % | 3,376,172 | 30,785 | 3.66 | % | ||||||||||||||||||||||||
| Loans held for sale |
18,512 | 221 | 4.79 | % | 23,612 | 1,162 | 4.92 | % | 18,827 | 239 | 5.09 | % | ||||||||||||||||||||||||
| Noncovered loans, covered loans and loss share receivable |
9,082,991 | 107,956 | 4.77 | % | 8,529,303 | 433,308 | 5.08 | % | 8,465,440 | 109,840 | 5.20 | % | ||||||||||||||||||||||||
| Total earning assets |
12,724,269 | 135,259 | 4.26 | % | 11,756,985 | 550,502 | 4.68 | % | 11,860,439 | 140,864 | 4.76 | % | ||||||||||||||||||||||||
| Total allowance for loan losses |
(143,721 | ) | (116,118 | ) | (116,436 | ) | ||||||||||||||||||||||||||||||
| Other assets |
1,312,173 | 1,154,761 | 919,487 | |||||||||||||||||||||||||||||||||
| Total assets |
$ | 14,481,208 | $ | 13,524,351 | $ | 13,426,271 | ||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||||||||||||||
| Deposits: |
||||||||||||||||||||||||||||||||||||
| Demand - non-interest bearing |
$ | 2,998,090 | — | — | $ | 2,550,849 | — | — | $ | 2,496,826 | — | — | ||||||||||||||||||||||||
| Demand - interest bearing |
824,125 | 177 | 0.09 | % | 794,497 | 751 | 0.09 | % | 775,031 | 149 | 0.08 | % | ||||||||||||||||||||||||
| Savings and money market accounts |
5,279,353 | 7,398 | 0.56 | % | 4,303,815 | 31,912 | 0.74 | % | 4,278,756 | 7,873 | 0.74 | % | ||||||||||||||||||||||||
| Certificates and other time deposits |
2,363,170 | 5,606 | 0.95 | % | 2,801,270 | 32,713 | 1.17 | % | 3,049,788 | 9,510 | 1.25 | % | ||||||||||||||||||||||||
| Total deposits |
11,464,738 | 13,181 | 0.46 | % | 10,450,431 | 65,376 | 0.63 | % | 10,600,401 | 17,532 | 0.66 | % | ||||||||||||||||||||||||
| Securities sold under agreements to repurchase |
884,244 | 940 | 0.43 | % | 907,015 | 4,477 | 0.49 | % | 843,652 | 1,404 | 0.67 | % | ||||||||||||||||||||||||
| Wholesale borrowings |
325,057 | 1,653 | 2.04 | % | 510,799 | 13,998 | 2.74 | % | 526,963 | 3,111 | 2.37 | % | ||||||||||||||||||||||||
| Total interest bearing liabilities |
9,675,949 | 15,774 | 0.65 | % | 9,317,396 | 83,851 | 0.90 | % | 9,474,190 | 22,047 | 0.93 | % | ||||||||||||||||||||||||
| Other liabilities |
273,314 | 340,485 | 328,238 | |||||||||||||||||||||||||||||||||
| Shareholders’ equity |
1,533,855 | 1,315,621 | 1,127,017 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity |
$ | 14,481,208 | $ | 13,524,351 | $ | 13,426,271 | ||||||||||||||||||||||||||||||
| Net yield on earning assets |
$ | 12,724,269 | 119,485 | 3.77 | % | $ | 11,756,985 | 466,651 | 3.97 | % | $ | 11,860,439 | 118,817 | 4.02 | % | |||||||||||||||||||||
| Interest rate spread |
3.61 | % | 3.78 | % | 3.82 | % | ||||||||||||||||||||||||||||||
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.
Page 8
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| (Unaudited) (Dollars in thousands except per share data) |
Quarters ended June 30, |
Six months ended June 30, |
||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Interest income: |
||||||||||||||||
| Interest and fees on loans, including held for sale |
$ | 107,904 | $ | 109,924 | $ | 222,460 | $ | 193,569 | ||||||||
| Investment securities |
||||||||||||||||
| Taxable |
22,176 | 25,602 | 43,661 | 50,472 | ||||||||||||
| Tax-exempt |
3,137 | 3,288 | 6,332 | 6,627 | ||||||||||||
| Total investment securities interest |
25,313 | 28,890 | 49,993 | 57,099 | ||||||||||||
| Total interest income |
133,217 | 138,814 | 272,453 | 250,668 | ||||||||||||
| Interest expense: |
||||||||||||||||
| Interest on deposits: |
||||||||||||||||
| Demand-interest bearing |
177 | 149 | 361 | 301 | ||||||||||||
| Savings and money market accounts |
7,398 | 7,873 | 15,243 | 15,474 | ||||||||||||
| Certificates and other time deposits |
5,606 | 9,510 | 12,433 | 15,916 | ||||||||||||
| Interest on securities sold under agreements to repurchase |
940 | 1,404 | 1,855 | 2,531 | ||||||||||||
| Interest on wholesale borrowings |
1,653 | 3,111 | 3,292 | 9,285 | ||||||||||||
| Total interest expense |
15,774 | 22,047 | 33,184 | 43,507 | ||||||||||||
| Net interest income |
117,443 | 116,767 | 239,269 | 207,161 | ||||||||||||
| Provision for noncovered loan losses |
10,138 | 20,366 | 27,156 | 45,859 | ||||||||||||
| Provision for covered loan losses |
7,481 | 267 | 12,812 | 267 | ||||||||||||
| Net interest income after provision for loan losses |
99,824 | 96,134 | 199,301 | 161,035 | ||||||||||||
| Other income: |
||||||||||||||||
| Trust department income |
5,863 | 5,574 | 11,377 | 10,855 | ||||||||||||
| Service charges on deposits |
15,712 | 17,737 | 30,622 | 33,103 | ||||||||||||
| Credit card fees |
13,510 | 12,242 | 25,717 | 23,800 | ||||||||||||
| ATM and other service fees |
3,063 | 2,844 | 5,980 | 5,353 | ||||||||||||
| Bank owned life insurance income |
3,015 | 2,886 | 8,256 | 8,538 | ||||||||||||
| Investment services and insurance |
1,972 | 2,535 | 4,419 | 4,463 | ||||||||||||
| Investment securities gains, net |
889 | 651 | 889 | 651 | ||||||||||||
| Loan sales and servicing income |
2,609 | 2,975 | 7,621 | 6,212 | ||||||||||||
| Gain on George Washington acquisition |
— | — | — | 1,041 | ||||||||||||
| Other operating income |
4,858 | 5,765 | 9,366 | 9,093 | ||||||||||||
| Total other income |
51,491 | 53,209 | 104,247 | 103,109 | ||||||||||||
| Other expenses: |
||||||||||||||||
| Salaries, wages, pension and employee benefits |
56,713 | 51,899 | 116,583 | 100,055 | ||||||||||||
| Net occupancy expense |
8,086 | 7,680 | 16,680 | 14,820 | ||||||||||||
| Equipment expense |
6,816 | 6,735 | 13,652 | 12,785 | ||||||||||||
| Stationery, supplies and postage |
2,750 | 2,696 | 5,455 | 5,389 | ||||||||||||
| Bankcard, loan processing and other costs |
8,266 | 7,663 | 15,829 | 15,481 | ||||||||||||
| Professional services |
5,940 | 7,845 | 11,734 | 13,082 | ||||||||||||
| Amortization of intangibles |
543 | 669 | 1,086 | 903 | ||||||||||||
| FDIC expense |
4,581 | 4,416 | 8,947 | 8,181 | ||||||||||||
| Other operating expense |
16,373 | 16,120 | 34,548 | 29,040 | ||||||||||||
| Total other expenses |
110,068 | 105,723 | 224,514 | 199,736 | ||||||||||||
| Income before income tax expense |
41,247 | 43,620 | 79,034 | 64,408 | ||||||||||||
| Income tax expense |
11,484 | 12,127 | 21,710 | 17,525 | ||||||||||||
| Net income |
$ | 29,763 | $ | 31,493 | $ | 57,324 | $ | 46,883 | ||||||||
| Other comprehensive income, net of taxes |
||||||||||||||||
| Unrealized securities’ holding gain, net of taxes |
$ | 17,198 | $ | 16,889 | $ | 17,536 | $ | 21,365 | ||||||||
| Less: reclassification adjustment for securities’ gain realized in income, net of taxes |
578 | 423 | 578 | 423 | ||||||||||||
| Total other comprehensive gain, net of taxes |
16,620 | 16,466 | 16,958 | 20,942 | ||||||||||||
| Comprehensive income |
$ | 46,383 | $ | 47,959 | $ | 74,282 | $ | 67,825 | ||||||||
| Net income applicable to common shares |
$ | 29,763 | $ | 31,493 | $ | 57,324 | $ | 46,883 | ||||||||
| Net income used in diluted EPS calculation |
$ | 29,763 | $ | 31,493 | $ | 57,324 | $ | 46,883 | ||||||||
| Weighted average number of common shares outstanding - basic |
109,138 | 98,968 | 108,954 | 93,400 | ||||||||||||
| Weighted average number of common shares outstanding - diluted |
109,139 | 98,969 | 108,955 | 93,403 | ||||||||||||
| Basic earnings per share |
$ | 0.27 | $ | 0.32 | $ | 0.53 | $ | 0.50 | ||||||||
| Diluted earnings per share |
$ | 0.27 | $ | 0.32 | $ | 0.53 | $ | 0.50 | ||||||||
| Dividend per share |
$ | 0.16 | $ | 0.16 | $ | 0.32 | $ | 0.32 | ||||||||
Page 9
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME—LINKED QUARTERS
| (Unaudited) (Dollars in thousands, except share data) |
Quarterly Results | |||||||||||||||||||
| 2011 2nd Qtr |
2011 1st Qtr |
2010 4th Qtr |
2010 3rd Qtr |
2010 2nd Qtr |
||||||||||||||||
| Interest and fees on loans, including held for sale |
$ | 107,904 | $ | 114,555 | $ | 121,651 | $ | 118,543 | $ | 109,924 | ||||||||||
| Interest and dividends - securities and federal funds sold |
25,313 | 24,680 | 24,714 | 26,794 | 28,890 | |||||||||||||||
| Total interest income |
133,217 | 139,235 | 146,365 | 145,337 | 138,814 | |||||||||||||||
| Interest on deposits: |
||||||||||||||||||||
| Demand-interest bearing |
177 | 184 | 198 | 252 | 149 | |||||||||||||||
| Savings and money market accounts |
7,398 | 7,845 | 8,145 | 8,294 | 7,873 | |||||||||||||||
| Certificates and other time deposits |
5,606 | 6,827 | 7,209 | 9,588 | 9,510 | |||||||||||||||
| Securities sold under agreements to repurchase |
940 | 915 | 960 | 986 | 1,404 | |||||||||||||||
| Wholesale borrowings |
1,653 | 1,640 | 1,989 | 2,724 | 3,111 | |||||||||||||||
| Total interest expense |
15,774 | 17,411 | 18,501 | 21,844 | 22,047 | |||||||||||||||
| Net interest income |
117,443 | 121,824 | 127,864 | 123,493 | 116,767 | |||||||||||||||
| Provision for noncovered loan losses |
10,138 | 17,018 | 19,816 | 18,108 | 20,366 | |||||||||||||||
| Provision for covered loan losses |
7,481 | 5,331 | 3,572 | 593 | 267 | |||||||||||||||
| Net interest income after provision for loan losses |
99,824 | 99,475 | 104,476 | 104,792 | 96,134 | |||||||||||||||
| Other income: |
||||||||||||||||||||
| Trust department income |
5,863 | 5,514 | 5,627 | 5,469 | 5,574 | |||||||||||||||
| Service charges on deposits |
15,712 | 14,910 | 15,938 | 16,859 | 17,737 | |||||||||||||||
| Credit card fees |
13,510 | 12,207 | 12,678 | 12,532 | 12,242 | |||||||||||||||
| ATM and other service fees |
3,063 | 2,917 | 2,910 | 2,996 | 2,844 | |||||||||||||||
| Bank owned life insurance income |
3,015 | 5,241 | 3,192 | 3,219 | 2,886 | |||||||||||||||
| Investment services and insurance |
1,972 | 2,447 | 2,300 | 2,688 | 2,535 | |||||||||||||||
| Investment securities gains, net |
889 | — | 146 | 58 | 651 | |||||||||||||||
| Loan sales and servicing income |
2,609 | 5,012 | 9,221 | 4,006 | 2,975 | |||||||||||||||
| Other operating income |
4,858 | 4,508 | 2,299 | 7,308 | 5,765 | |||||||||||||||
| Total other income |
51,491 | 52,756 | 54,311 | 55,135 | 53,209 | |||||||||||||||
| Other expenses: |
||||||||||||||||||||
| Salaries, wages, pension and employee benefits |
56,713 | 59,871 | 62,331 | 58,930 | 51,899 | |||||||||||||||
| Net occupancy expense |
8,086 | 8,594 | 9,236 | 8,608 | 7,680 | |||||||||||||||
| Equipment expense |
6,816 | 6,836 | 7,549 | 7,330 | 6,735 | |||||||||||||||
| Stationery, supplies and postage |
2,750 | 2,705 | 3,183 | 2,865 | 2,696 | |||||||||||||||
| Bankcard, loan processing and other costs |
8,266 | 7,562 | 7,810 | 8,281 | 7,663 | |||||||||||||||
| Professional services |
5,940 | 5,793 | 7,731 | 8,544 | 7,845 | |||||||||||||||
| Amortization of intangibles |
543 | 543 | 1,006 | 1,006 | 669 | |||||||||||||||
| FDIC expense |
4,581 | 4,366 | 4,342 | 5,267 | 4,416 | |||||||||||||||
| Other operating expense |
16,373 | 18,175 | 19,264 | 19,839 | 16,120 | |||||||||||||||
| Total other expenses |
110,068 | 114,445 | 122,452 | 120,670 | 105,723 | |||||||||||||||
| Income before income tax expense |
41,247 | 37,786 | 36,335 | 39,257 | 43,620 | |||||||||||||||
| Income taxes |
11,484 | 10,226 | 9,305 | 10,261 | 12,127 | |||||||||||||||
| Net income |
$ | 29,763 | $ | 27,560 | $ | 27,030 | $ | 28,996 | $ | 31,493 | ||||||||||
| Other comprehensive income (loss), net of taxes |
16,620 | 338 | (21,188 | ) | (398 | ) | 16,466 | |||||||||||||
| Comprehensive income |
$ | 46,383 | $ | 27,898 | $ | 5,842 | $ | 28,598 | $ | 47,959 | ||||||||||
| Net income applicable to common shares |
$ | 29,763 | $ | 27,560 | $ | 27,030 | $ | 28,996 | $ | 31,493 | ||||||||||
| Adjusted net income used in diluted EPS calculation |
$ | 29,763 | $ | 27,560 | $ | 27,030 | $ | 28,996 | $ | 31,493 | ||||||||||
| Weighted-average common shares outstanding - basic |
109,138 | 108,769 | 108,807 | 108,793 | 98,968 | |||||||||||||||
| Weighted-average common shares outstanding - diluted |
109,139 | 108,770 | 108,808 | 108,794 | 98,969 | |||||||||||||||
| Basic net income per share |
$ | 0.27 | $ | 0.25 | $ | 0.25 | $ | 0.27 | $ | 0.32 | ||||||||||
| Diluted net income per share |
$ | 0.27 | $ | 0.25 | $ | 0.25 | $ | 0.27 | $ | 0.32 | ||||||||||
Page 10
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
ASSET QUALITY INFORMATION (Excluding Acquired Assets)
| (Unaudited, except December 31, 2010 annual period which is derived from the audited financial statements) (Dollars in thousands, except ratios) |
||||||||||||||||||||||||
| Quarterly Periods | Annual Period | |||||||||||||||||||||||
| Allowance for Credit Losses |
June 30, 2011 |
March 31, 2011 |
December 31, 2010 |
September 30, 2010 |
June 30, 2010 |
December 31, 2010 |
||||||||||||||||||
| Allowance for noncovered loan losses, beginning of period |
$ | 114,690 | $ | 114,690 | $ | 116,528 | $ | 118,343 | $ | 117,806 | $ | 115,092 | ||||||||||||
| Provision for noncovered loan losses |
10,138 | 17,018 | 19,816 | 18,108 | 20,366 | 83,783 | ||||||||||||||||||
| Charge-offs |
20,958 | 22,812 | 27,553 | 25,817 | 24,967 | 104,532 | ||||||||||||||||||
| Recoveries |
5,317 | 5,794 | 5,899 | 5,894 | 5,138 | 20,347 | ||||||||||||||||||
| Net charge-offs |
15,641 | 17,018 | 21,654 | 19,923 | 19,829 | 84,185 | ||||||||||||||||||
| Allowance for noncovered loan losses, end of period |
$ | 109,187 | $ | 114,690 | $ | 114,690 | $ | 116,528 | $ | 118,343 | $ | 114,690 | ||||||||||||
| Reserve for unfunded lending commitments, beginning of period |
$ | 7,202 | $ | 8,849 | $ | 7,864 | $ | 6,812 | $ | 6,337 | $ | 5,751 | ||||||||||||
| Provision for / (relief of) credit losses |
(1,403 | ) | (1,647 | ) | 985 | 1,052 | 475 | 3,098 | ||||||||||||||||
| Reserve for unfunded lending commitments, end of period |
$ | 5,799 | $ | 7,202 | $ | 8,849 | $ | 7,864 | $ | 6,812 | $ | 8,849 | ||||||||||||
| Allowance for Credit Losses |
$ | 114,986 | $ | 121,892 | $ | 123,539 | $ | 124,392 | $ | 125,155 | $ | 123,539 | ||||||||||||
| Ratios (a) |
||||||||||||||||||||||||
| Provision for loan losses as a % of average loans |
0.57 | % | 0.99 | % | 1.14 | % | 1.06 | % | 1.20 | % | 1.23 | % | ||||||||||||
| Provision for / (relief of) credit losses as a % of average loans |
-0.08 | % | -0.10 | % | 0.06 | % | 0.06 | % | 0.03 | % | 0.05 | % | ||||||||||||
| Net charge-offs as a % of average loans |
0.89 | % | 0.99 | % | 1.25 | % | 1.17 | % | 1.15 | % | 1.23 | % | ||||||||||||
| Allowance for loan losses as a % of period-end loans |
1.51 | % | 1.64 | % | 1.65 | % | 1.72 | % | 1.75 | % | 1.65 | % | ||||||||||||
| Allowance for credit losses as a % of period-end loans |
1.59 | % | 1.74 | % | 1.78 | % | 1.84 | % | 1.85 | % | 1.78 | % | ||||||||||||
| Allowance for loan losses as a % of nonperforming loans |
150.31 | % | 138.67 | % | 109.56 | % | 111.00 | % | 119.62 | % | 109.56 | % | ||||||||||||
| Allowance for credit losses as a % of nonperforming loans |
158.30 | % | 147.38 | % | 118.01 | % | 118.49 | % | 126.51 | % | 118.01 | % | ||||||||||||
| Asset Quality (a) |
||||||||||||||||||||||||
| Impaired loans: |
||||||||||||||||||||||||
| Nonaccrual |
$ | 63,688 | $ | 71,246 | $ | 89,828 | $ | 91,646 | $ | 84,535 | $ | 89,828 | ||||||||||||
| Other nonperforming loans: |
||||||||||||||||||||||||
| Nonaccrual |
8,951 | 11,460 | 14,859 | 13,331 | 14,394 | 14,859 | ||||||||||||||||||
| Total nonperforming loans |
72,639 | 82,706 | 104,687 | 104,977 | 98,929 | 104,687 | ||||||||||||||||||
| Other real estate (“ORE”) |
27,207 | 30,053 | 18,815 | 10,290 | 10,852 | 18,815 | ||||||||||||||||||
| Total nonperforming assets (“NPAs”) |
$ | 99,846 | $ | 112,759 | $ | 123,502 | $ | 115,267 | $ | 109,781 | $ | 123,502 | ||||||||||||
| NPAs as % of period-end loans + ORE |
1.38 | % | 1.61 | % | 1.78 | % | 1.70 | % | 1.62 | % | 1.78 | % | ||||||||||||
| Past due 90 days or more & accruing interest |
$ | 10,424 | $ | 5,652 | $ | 22,017 | $ | 36,895 | $ | 36,932 | $ | 22,017 | ||||||||||||
| (a) | Excludes acquired loans and loss share receivable with a period end balance of $1.7 billion, $2.1 billion and $2.3 billion, $2.5 billion and $2.6 billion at June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30,2010, respectively, and ORE covered by an FDIC loss share with a period end balance of $58.5 million, $58.7 million, $54.7 million, $53.5 million and $50.5 million at June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30, 2010, respectively, which, as required by current accounting guidance, were recorded at fair value on the date of acquisition. |
Page 11
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
| (Unaudited) (Dollars in thousands) |
||||||||||||||||||||
| QUARTERLY OTHER INCOME DETAIL | 2011 2nd Qtr |
2011 1st Qtr |
2010 4th Qtr |
2010 3rd Qtr |
2010 2nd Qtr |
|||||||||||||||
| Trust department income |
$ | 5,863 | $ | 5,514 | $ | 5,627 | $ | 5,469 | $ | 5,574 | ||||||||||
| Service charges on deposits |
15,712 | 14,910 | 15,938 | 16,859 | 17,737 | |||||||||||||||
| Credit card fees |
13,510 | 12,207 | 12,678 | 12,532 | 12,242 | |||||||||||||||
| ATM and other service fees |
3,063 | 2,917 | 2,910 | 2,996 | 2,844 | |||||||||||||||
| Bank owned life insurance income |
3,015 | 5,241 | 3,192 | 3,219 | 2,886 | |||||||||||||||
| Investment services and insurance |
1,972 | 2,447 | 2,300 | 2,688 | 2,535 | |||||||||||||||
| Investment securities gains, net |
889 | — | 146 | 58 | 651 | |||||||||||||||
| Loan sales and servicing income |
2,609 | 5,012 | 9,221 | 4,006 | 2,975 | |||||||||||||||
| Other operating income |
4,858 | 4,508 | 2,299 | 7,308 | 5,765 | |||||||||||||||
| Total Other Income |
$ | 51,491 | $ | 52,756 | $ | 54,311 | $ | 55,135 | $ | 53,209 | ||||||||||
| QUARTERLY OTHER EXPENSES DETAIL | 2011 2nd Qtr |
2011 1st Qtr |
2010 4th Qtr |
2010 3rd Qtr |
2010 2nd Qtr |
|||||||||||||||
| Salaries, wages, pension and employee benefits |
$ | 56,713 | $ | 59,871 | $ | 62,331 | $ | 58,930 | $ | 51,899 | ||||||||||
| Net occupancy expense |
8,086 | 8,594 | 9,236 | 8,608 | 7,680 | |||||||||||||||
| Equipment expense |
6,816 | 6,836 | 7,549 | 7,330 | 6,735 | |||||||||||||||
| Taxes, other than federal income taxes |
922 | 1,960 | 2,021 | 1,680 | 2,236 | |||||||||||||||
| Stationery, supplies and postage |
2,750 | 2,705 | 3,183 | 2,865 | 2,696 | |||||||||||||||
| Bankcard, loan processing and other costs |
8,266 | 7,562 | 7,810 | 8,281 | 7,663 | |||||||||||||||
| Advertising |
2,287 | 2,384 | 3,094 | 2,488 | 2,407 | |||||||||||||||
| Professional services |
5,940 | 5,793 | 7,731 | 8,544 | 7,845 | |||||||||||||||
| Telephone |
1,462 | 1,486 | 1,579 | 1,561 | 1,267 | |||||||||||||||
| Amortization of intangibles |
543 | 543 | 1,006 | 1,006 | 669 | |||||||||||||||
| FDIC expense |
4,581 | 4,366 | 4,342 | 5,267 | 4,416 | |||||||||||||||
| Other operating expense |
11,702 | 12,345 | 12,570 | 14,110 | 10,210 | |||||||||||||||
| Total Other Expenses |
$ | 110,068 | $ | 114,445 | $ | 122,452 | $ | 120,670 | $ | 105,723 | ||||||||||
Page 12
FirstMerit Corporation Reports Second Quarter 2011 EPS Results
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES NONCOVERED - Net Charge-off Detail
| (Unaudited) (Dollars in thousands) |
Quarters ended June 30, |
Year ended December 31, |
Six months ended June 30, |
|||||||||||||||||
| 2011 | 2010 | 2010 | 2011 | 2010 | ||||||||||||||||
| Allowance for loan losses noncovered - beginning of period |
$ | 114,690 | $ | 117,806 | $ | 115,092 | $ | 114,690 | $ | 115,092 | ||||||||||
| Loans charged off: |
||||||||||||||||||||
| Commercial |
8,219 | 6,942 | 39,766 | 16,143 | 15,837 | |||||||||||||||
| Mortgage |
1,351 | 1,395 | 5,156 | 3,015 | 3,041 | |||||||||||||||
| Installment |
6,202 | 8,430 | 34,054 | 14,293 | 17,235 | |||||||||||||||
| Home equity |
2,115 | 2,761 | 7,912 | 4,271 | 4,831 | |||||||||||||||
| Credit cards |
2,297 | 4,010 | 13,577 | 4,615 | 8,178 | |||||||||||||||
| Leases |
127 | 617 | 896 | 127 | 637 | |||||||||||||||
| Overdrafts |
647 | 812 | 3,171 | 1,306 | 1,403 | |||||||||||||||
| Total |
20,958 | 24,967 | 104,532 | 43,770 | 51,162 | |||||||||||||||
| Recoveries: |
||||||||||||||||||||
| Commercial |
528 | 430 | 1,952 | 1,136 | 802 | |||||||||||||||
| Mortgage |
29 | 38 | 263 | 118 | 63 | |||||||||||||||
| Installment |
3,700 | 3,081 | 13,047 | 7,388 | 5,098 | |||||||||||||||
| Home equity |
322 | 444 | 1,599 | 789 | 701 | |||||||||||||||
| Credit cards |
557 | 608 | 2,199 | 1,204 | 1,081 | |||||||||||||||
| Manufactured housing |
18 | 55 | 156 | 49 | 86 | |||||||||||||||
| Leases |
2 | 229 | 267 | 34 | 238 | |||||||||||||||
| Overdrafts |
161 | 253 | 864 | 393 | 485 | |||||||||||||||
| Total |
5,317 | 5,138 | 20,347 | 11,111 | 8,554 | |||||||||||||||
| Net charge-offs |
15,641 | 19,829 | 84,185 | 32,659 | 42,608 | |||||||||||||||
| Provision for noncovered loan losses |
10,138 | 20,366 | 83,783 | 27,156 | 45,859 | |||||||||||||||
| Allowance for noncovered loan losses - end of period |
$ | 109,187 | $ | 118,343 | $ | 114,690 | $ | 109,187 | $ | 118,343 | ||||||||||
| Average loans (a) |
$ | 7,080,109 | $ | 6,810,582 | $ | 6,818,962 | $ | 7,022,092 | $ | 6,810,923 | ||||||||||
| Ratio to average loans (a): |
||||||||||||||||||||
| (Annualized) net charge-offs |
0.89 | % | 1.15 | % | 1.23 | % | 0.94 | % | 1.26 | % | ||||||||||
| Provision for loan losses |
0.57 | % | 1.20 | % | 1.23 | % | 0.78 | % | 1.36 | % | ||||||||||
| Loans, period-end (excluding acquired loans) (a) |
$ | 7,216,015 | $ | 6,779,941 | $ | 6,937,142 | $ | 7,216,015 | $ | 6,779,941 | ||||||||||
| Allowance for credit losses (a): |
$ | 114,986 | $ | 125,155 | $ | 123,539 | $ | 114,986 | $ | 125,155 | ||||||||||
| As a multiple of (annualized) net charge-offs |
1.83 | 1.57 | 1.47 | 1.75 | 1.46 | |||||||||||||||
| Allowance for loan losses (a): |
||||||||||||||||||||
| As a percent of period-end loans |
1.51 | % | 1.75 | % | 1.65 | % | 1.51 | % | 1.75 | % | ||||||||||
| As a multiple of (annualized) net charge-offs |
1.74 | 1.49 | 1.36 | 1.66 | 1.38 | |||||||||||||||
| (a) | Excludes acquired loans and loss share receivable. |
Page 13