FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 23, 2012

Attached files

file filename
8-K - 8-K - FIRSTMERIT CORP /OH/fmer-8kq32012.htm
EX-99.2 - INVESTOR PRESENTATION - FIRSTMERIT CORP /OH/a3q12epsslidedeckoctober.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 Reports Third Quarter 2012 EPS of $0.32 Per Share
Quarterly Highlights include:
•
Sustained profitability: 54th consecutive quarter of profitability
•
Continued organic growth: Average commercial noncovered loan growth of $169.4 million, or 3.21%, from prior quarter; average core deposit growth of $126.8 million, or 1.28%, from prior quarter
•
Strong balance sheet: Strong tangible common equity ratio increased to 8.18% from 8.01% in the prior quarter.

Akron, Ohio (October 23, 2012) - FirstMerit Corporation (Nasdaq: FMER) reported third quarter 2012 net income of $35.0 million, or $0.32 per diluted share. This compares with $30.6 million, or $0.28 per diluted share, for the second quarter 2012 and $31.7 million, or $0.29 per diluted share, for the third quarter 2011.

Returns on average common equity (“ROE”) and average assets (“ROA”) for the third quarter 2012 were 8.60% and 0.94%, respectively, compared with 7.69% and 0.84%, respectively, for the second quarter 2012 and 8.02% and 0.86%, respectively, for the third quarter 2011.

“Our strong results in the third quarter reflect our continued focus on banking fundamentals in the face of ongoing industry challenges including a low-interest environment and slow economic recovery. Our financial strength and stability support continued geographic growth. To that point, we announced this quarter our intention to acquire Citizens Republic Bancorp ("Citizens") in Michigan. We anticipate this transaction will close in the second quarter of 2013, subject to the receipt of regulatory approvals and other closing conditions, and at that time we look to become the bank of choice throughout the Upper Midwest, across the five contiguous states of Pennsylvania, Ohio, Michigan, Illinois and Wisconsin,” said Paul G. Greig, chairman, president and CEO, FirstMerit Corporation.

“Noncovered commercial loan growth was very strong this quarter in both our Chicago and legacy Ohio markets.  Additionally, progress on our efficiency initiative is reflected in our lower operating expense levels and improved efficiency ratio compared against both prior and year ago quarterly periods,“ said Greig.

FirstMerit Corporation Reports Third Quarter 2012 EPS Results

Net interest margin was 3.66% for the third quarter of 2012 compared with 3.77% for the second quarter of 2012 and 3.75% for the third quarter of 2011. The net interest margin compressed 11 basis points compared with the second quarter of 2012 due to reductions in overall loan and investment portfolio yields.  Reductions in deposit costs and a favorable mix shift did not offset the downward pressure on earning asset yields in this persistent low rate environment.

Average noncovered loans during the third quarter of 2012 increased $244.4 million, or 3.08%, compared with the second quarter of 2012 and increased $702.2 million, or 9.38%, compared with the third quarter of 2011. Average noncovered commercial loans increased $169.4 million, or 3.21%, compared with the prior quarter, and increased $567.7 million, or 11.64%, compared with the year ago quarter. The average consumer loan portfolio grew for the fifth consecutive quarter, increasing $65.3 million, or 2.52%, compared to the prior quarter, and $102.8 million, or 4.03%, compared with the year ago quarter.

Average deposits were $11.6 billion during the third quarter of 2012, an increase of $36.6 million, or 0.32%, compared with the second quarter of 2012, and an increase of $144.2 million, or 1.26%, compared with the third quarter of 2011. During the third quarter 2012, average core deposits, which exclude time deposits, increased $126.8 million, or 1.28%, compared with the second quarter 2012 and increased $715.6 million, or 7.66%, compared with the third quarter 2011. Average time deposits decreased $90.1 million, or 5.57%, and decreased $571.4 million, or 27.21%, respectively, over prior and year-ago quarters. The Corporation continues to emphasize growth in lower cost core deposit products and decrease its reliance on certificates of deposit accounts to support balance sheet growth.   For the third quarter of 2012, average core deposits accounted for 86.82% of total average deposits, compared with 85.99% for the second quarter of 2012 and 81.66% for the third quarter of 2011.

Average investments decreased $4.3 million, or 0.12%, compared with the second quarter of 2012 and increased $17.5 million, or 0.48% compared with the third quarter of 2011.

Net interest income on a fully tax-equivalent (“FTE”) basis was $120.7 million in the third quarter 2012 compared with $121.7 million in the second quarter of 2012 and $121.8 million in the third quarter of 2011.

Noninterest income, excluding gains on securities transactions of $0.6 million, for the third quarter of 2012 was $54.4 million, a decrease of $0.4 million, or 0.70%, from the second quarter of 2012 and a decrease of $2.0 million, or 3.54%, from the third quarter of 2011. The decrease in noninterest income from the second quarter of 2012 was attributable to a decrease of $2.6 million in gains on covered loans paid in full partially offset by increased loan sales and servicing income of $2.1 million. The decrease in noninterest income from the third quarter of 2011 was attributable a decline in service charges on deposits of $3.2 million as a result of regulatory revisions to overdraft fee policies which took effect in the fourth quarter of 2011 and a decline in credit card fees of $2.6 million as a result of the implementation of the Durbin Interchange Amendment in the fourth quarter of 2011. These declines in income were partially offset by an increase in loans sales and servicing income of $3.8 million resulting from an increase in mortgage loan originations and refinancings activity due to a decrease in interest rates in 2012.

Other income, net of $0.6 million in securities gains, as a percentage of net revenue for the third quarter of 2012 was 31.05% compared with 31.03% for second quarter of 2012 and 31.64% for the third quarter of 2011. Net revenue is defined as net interest income, on an FTE basis, plus other income, less gains from securities sales.


2
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

Noninterest expense for the third quarter of 2012 was $108.6 million, a decrease of $10.5 million, or 8.81%, from the second quarter of 2012, which included $8.9 million in one-time charges related to the Efficiency Initiative announced in the prior quarter, and a decrease of $7.4 million, or 6.36%, from the third quarter of 2011. Other one-time charges incurred in the third quarter of 2012 included $0.5 million associated with costs of closing eight full service branches and $1.1 million of professional and legal fees associated with the proposed acquisition of Citizens. The Corporation demonstrated significant ongoing progress in reducing operating expenses in response to the challenging industry environment.

During the third quarter of 2012, the Corporation reported an efficiency ratio of 61.75%, compared with 67.21% for the second quarter of 2012 and 64.78% for the third quarter of 2011. Excluding the $8.9 million in one-time charges related to the Efficiency Initiative announced in the prior quarter, the reported efficiency ratio for the second quarter of 2012 would be 62.15%.

As a result of guidance from the Office of the Comptroller of the Currency ("OCC"), $10.6 million of consumer loans were identified as troubled debt restructurings whereby the borrower's obligation to the Corporation has been discharged in bankruptcy and the borrower has not reaffirmed the debt. These loans were reclassified from performing loans to nonaccrual status and consisted of $6.7 million of first mortgages, $1.0 million of junior liens and $2.9 million of automobile loans, and net loan charge-offs of $2.8 million were recognized.

Net charge-offs of noncovered loans totaled $14.9 million, or 0.72% of average noncovered loans in the third quarter of 2012, including $2.8 million in charge-offs relating to the aforementioned troubled debt restructured loans, compared with $8.8 million, or 0.44% of average noncovered loans, in the second quarter 2012 and $14.6 million, or 0.77% of average noncovered loans, in the third quarter of 2011.

Nonperforming assets totaled $64.1 million at September 30, 2012, an increase of $3.0 million, or 4.87%, compared with June 30, 2012 and a decrease of $26.0 million, or 28.89%, compared with September 30, 2011. The increase in nonperforming assets in the third quarter is a result of the $10.6 million in loans noted above. Excluding the impact of the OCC guidance, nonperforming assets decreased $7.6 million or 12.44% compared with June 30, 2012 and $36.6 million or 40.63% compared with September 30, 2011. Nonperforming assets at September 30, 2012 represented 0.77% of period-end noncovered loans plus noncovered other real estate compared with 0.75% at June 30, 2012 and 1.18% at September 30, 2011.

The allowance for noncovered loan losses totaled $98.9 million at September 30, 2012, down from $103.8 million at June 30, 2012. At September 30, 2012, the allowance for noncovered loan losses was 1.19% of period-end noncovered loans compared with 1.28% at June 30, 2012 and 1.43% at September 30, 2011. 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 1.26% of period-end noncovered loans at September 30, 2012, compared with 1.35% at June 30, 2012 and 1.51% at September 30, 2011. The allowance for credit losses to nonperforming noncovered loans was 208.11% at September 30, 2012, compared with 234.57% at June 30, 2012 and 170.16% at September 30, 2011.

The Corporation's total assets at September 30, 2012 were $14.6 billion, an increase of $7.5 million, or 0.05%, compared with June 30, 2012 and a decrease of $59.4 million, or 0.40%, compared with September 30, 2011.

Total deposits were $11.5 billion at September 30, 2012, a decrease of $83.4 million, or 0.72%,

3
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

from June 30, 2012 and an increase of $136.3 million, or 1.20%, from September 30, 2011. Core deposits totaled $10.1 billion at September 30, 2012, an increase of $18.3 million, or 0.18% from June 30, 2012 and an increase of $0.6 billion, or 6.38%, from September 30, 2011.

Shareholders' equity was $1.6 billion at September 30, 2012, June 30, 2012 and September 30, 2011, respectively. The Corporation maintained a strong capital position as tangible common equity to assets was 8.18% at September 30, 2012, compared with 8.01% at June 30, 2012 and 7.75% at September 30, 2011. The common cash dividend per share paid in the third quarter 2012 was $0.16.
Third Quarter 2012 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 third 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: 39956933. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on October 23, 2012 through November 6, 2012 by dialing (855) 859-2056, and entering the PIN: 39956933. The Corporation will provide a slide presentation, which management will speak to during the conference call. A copy of the presentation will be available prior to the earnings conference call 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 $14.6 billion as of September 30, 2012 and 196 banking offices and 204 ATM locations in Ohio, Western Pennsylvania, and Chicago, Illinois areas. 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 its consolidated financial statements for the quarter ended September 30, 2012 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 September 30, 2012 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, success of the Corporation's efforts to reduce operating expenses, competitive pressures, changes in accounting, tax or regulatory practices or requirements, the Corporation's ability to successfully complete the proposed acquisition of Citizens and those risk factors detailed in the Corporation's periodic reports and registration statements filed with the Securities and

4
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

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.

Additional Information and Where to Find It
    
This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between FirstMerit and Citizens, FirstMerit will file with the U.S. Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of FirstMerit and Citizens that also constitutes a prospectus of FirstMerit. FirstMerit and Citizens will deliver the joint proxy statement/prospectus to their respective shareholders. FirstMerit and Citizens urge investors and shareholders to read the joint proxy statement/prospectus regarding the proposed merger when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (www.sec.gov). You may also obtain these documents, free of charge, from FirstMerit's website (www.firstmerit.com) under the heading “Investors” and then under the heading “Publications and Filings.” You may also obtain these documents, free of charge, from Citizens' website (www.citizensbanking.com) under the tab “Investors” and then under the heading “Financial Documents” and then under the heading “SEC Filings.”
 
Participants in the Merger Solicitation

FirstMerit, Citizens, and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from FirstMerit and Citizens shareholders in favor of the merger and related matters. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of FirstMerit and Citizens shareholders in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about FirstMerit's executive officers and directors in its definitive proxy statement filed with the SEC on March 8, 2012. You can find information about Citizens' executive officers and directors in its definitive proxy statement filed with the SEC on March 12, 2012. Additional information about FirstMerit's executive officers and directors and Citizens' executive officers and directors can be found in the above-referenced Registration Statement on Form S-4 when it becomes available. You can obtain free copies of these documents from FirstMerit and Citizens using the contact information above.




5
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

 
FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
Consolidated Financial Highlights
 
 
 
 
 
 
(Unaudited)
 
 
Quarters
 
 
 
(Dollars in thousands)
2012
2012
2012
2011
2011
 
 
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
 
EARNINGS
 
 
 
 
 
 
Net interest income FTE (a)
$
120,741

$
121,689

$
121,428

$
123,598

$
121,788

 
Provision for noncovered loan losses
9,965

8,766

8,129

12,275

14,604

 
Provision for covered loan losses
6,214

3,430

5,932

2,773

4,768

 
Other income
54,925

55,301

51,726

59,737

60,772

 
Other expenses
108,587

119,077

113,768

123,874

115,957

 
FTE adjustment (a)
2,851

2,766

2,641

2,632

2,396

 
Net income
34,953

30,585

30,344

30,496

31,737

 
Diluted EPS
0.32

0.28

0.28

0.28

0.29

 
PERFORMANCE RATIOS
 
 
 
 
 
 
Return on average assets (ROA)
0.94
%
0.84
%
0.84
%
0.83
%
0.86
%
 
Return on average common equity (ROE)
8.60
%
7.69
%
7.72
%
7.70
%
8.02
%
 
Net interest margin FTE (a)
3.66
%
3.77
%
3.78
%
3.85
%
3.75
%
 
Efficiency ratio
61.75
%
67.21
%
65.52
%
69.46
%
64.78
%
 
Number of full-time equivalent employees
2,733

2,789

2,997

3,018

3,016

 
MARKET DATA
 
 
 
 
 
 
Book value/common share
$
14.82

$
14.60

$
14.51

$
14.33

$
14.38

 
Period-end common share mkt value
14.71

16.51

16.86

15.13

11.36

 
Market as a % of book
99
%
113
%
116
%
106
%
79
%
 
Cash dividends/common share
$
0.16

$
0.16

$
0.16

$
0.16

$
0.16

 
Common stock dividend payout ratio
50.00
%
57.14
%
57.14
%
57.14
%
55.17
%
 
Average basic common shares
109,645

109,562

109,211

109,249

109,245

 
Average diluted common shares
109,645

109,562

109,211

109,249

109,246

 
Period end common shares
109,653

109,641

109,187

109,251

109,247

 
Common shares repurchased
6

111

69

7

10

 
Common stock market capitalization
$
1,612,996

$
1,810,173

$
1,840,893

$
1,652,968

$
1,241,046

 
ASSET QUALITY (excluding covered loans)
 
 
 
 
 
 
Gross charge-offs
$
20,999

$
15,014

$
17,417

$
18,984

$
20,014

 
Net charge-offs
14,872

8,766

11,979

13,763

14,604

 
Allowance for noncovered loan losses
98,942

103,849

103,849

107,699

109,187

 
Reserve for unfunded lending commitments
5,760

5,666

5,410

6,373

6,360

 
Nonperforming assets (NPAs) (b)
64,055

61,080

67,933

81,094

90,075

 
Net charge-offs/average loans ratio (b)
0.72
%
0.44
%
0.62
%
0.71
%
0.77
%
 
Allowance for noncovered loan losses/period-end loans (b)
1.19
%
1.28
%
1.32
%
1.39
%
1.43
%
 
Allowance for credit losses/period-end loans (b)
1.26
%
1.35
%
1.39
%
1.47
%
1.51
%
 
NPAs/loans and other real estate (b)
0.77
%
0.75
%
0.86
%
1.04
%
1.18
%
 
Allowance for noncovered loan losses/nonperforming loans
196.66
%
222.44
%
194.97
%
166.64
%
160.80
%
 
Allowance for credit losses/nonperforming loans
208.11
%
234.57
%
205.13
%
176.50
%
170.16
%
 
CAPITAL & LIQUIDITY
 
 
 
 
 
 
Period-end tangible common equity to assets
8.18
%
8.01
%
7.86
%
7.86
%
7.75
%
 
Average equity to assets
10.97
%
10.98
%
10.91
%
10.75
%
10.75
%
 
Average equity to total loans (c)
17.46
%
17.57
%
17.50
%
17.40
%
17.55
%
 
Average total loans to deposits (c)
79.89
%
78.78
%
78.74
%
79.12
%
78.18
%
 
AVERAGE BALANCES
 
 
 
 
 
 
Assets
$
14,734,016

$
14,558,514

$
14,496,937

$
14,623,441

$
14,610,628

 
Deposits
11,591,931

11,555,283

11,472,021

11,416,546

11,447,682

 
Loans, excluding acquired loans (c)
8,121,083

7,857,840

7,677,963

7,520,400

7,298,446

 
Acquired loans, including covered loans (c)
1,139,568

1,245,246

1,355,086

1,512,123

1,651,559

 
Earning assets
13,119,473

12,986,988

12,935,184

12,747,868

12,878,105

 
Shareholders' equity
1,616,569

1,599,187

1,581,009

1,572,061

1,570,411

 
ENDING BALANCES
 
 
 
 
 
 
Assets
$
14,628,843

$
14,621,344

$
14,670,818

$
14,441,702

$
14,688,278

 
Deposits
11,532,426

11,615,841

11,648,165

11,431,609

11,396,121

 
Loans, excluding acquired loans (c)
8,260,426

8,031,998

7,764,058

7,635,776

7,453,613

 
Acquired loans, including covered loans (c)
1,099,052

1,187,203

1,306,165

1,404,644

1,604,706

 
Goodwill
460,044

460,044

460,044

460,044

460,044

 
Intangible assets
6,817

7,274

7,756

8,239

8,782

 
Earning assets
13,219,301

13,212,071

13,318,202

13,011,267

12,885,242

 
Total shareholders' equity
1,624,704

1,600,815

1,584,105

1,565,953

1,570,654

 
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 September 30, 2012 include $10.6 million 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 $131.9 million, $152.6 million, $171.1 million, $205.7 million and $220.5 million as of September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively.

6
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
September 30,
 
December 31,
 
September 30,
(Unaudited, except December 31, 2011, which is derived from the audited financial statements)
2012
 
2011
 
2011
ASSETS
 
 
 
 
 
 
Cash and due from banks
$
201,359

 
$
219,256

 
$
202,886

 
Interest-bearing deposits in banks
37,058

 
158,063

 
116,059

 
 
Total cash and cash equivalents
238,417

 
377,319

 
318,945

 
Investment securities
 
 
 
 
 
 
 
Held-to-maturity
620,631

 
82,764

 
92,214

 
 
Available-for-sale
2,911,993

 
3,353,553

 
3,198,046

 
 
Other investments
140,730

 
140,726

 
160,793

 
Loans held for sale
17,540

 
30,077

 
39,340

 
Noncovered loans:
 
 
 
 
 
 
 
Commercial
5,511,678

 
5,107,747

 
5,018,857

 
 
Residential mortgage
439,062

 
413,664

 
397,309

 
 
Installment
1,321,081

 
1,263,665

 
1,271,327

 
 
Home equity
789,743

 
743,982

 
743,377

 
 
Credit cards
143,918

 
146,356

 
142,710

 
 
Leases
110,938

 
73,530

 
57,992

 
 
 
Total noncovered loans
8,316,420

 
7,748,944

 
7,631,572

 
 
 
   Allowance for noncovered loan losses
(98,942
)
 
(107,699
)
 
(109,187
)
 
 
 
Net noncovered loans
8,217,478

 
7,641,245

 
7,522,385

 
Covered loans (includes loss share receivable of $131.9 million, $205.7 million and $220.5 million at September 30, 2012, December 31, 2011 and September 30, 2011, respectively)
1,174,929

 
1,497,140

 
1,647,218

 
 
 
   Allowance for covered loan losses
(43,644
)
 
(36,417
)
 
(34,603
)
 
 
 
Net covered loans
1,131,285

 
1,460,723

 
1,612,615

 
 
 
Net loans
9,348,763

 
9,101,968

 
9,135,000

 
Premises and equipment, net
182,043

 
192,949

 
193,075

 
Goodwill
460,044

 
460,044

 
460,044

 
Intangible assets
6,817

 
8,239

 
8,782

 
Covered other real estate (includes loss share receivable of $0.1 million, $1.3 million and $3.5 million at September 30, 2012, December 31, 2011 and September 30, 2011, respectively)
56,795

 
54,505

 
61,890

 
Accrued interest receivable and other assets
645,070

 
639,558

 
1,020,149

 
 
 
    Total assets
$
14,628,843

 
$
14,441,702

 
$
14,688,278

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
Noninterest-bearing
$
3,231,500

 
$
3,030,225

 
$
2,971,555

 
 
Interest-bearing
1,079,913

 
1,062,896

 
967,574

 
 
Savings and money market accounts
5,744,103

 
5,595,409

 
5,513,472

 
 
Certificates and other time deposits
1,476,910

 
1,743,079

 
1,943,520

 
 
 
Total deposits
11,532,426

 
11,431,609

 
11,396,121

 
Federal funds purchased and securities sold under agreements to repurchase
963,455

 
866,265

 
987,030

 
Wholesale borrowings
178,083

 
203,462

 
248,006

 
Accrued taxes, expenses, and other liabilities
330,175

 
374,413

 
486,467

 
 
 
Total liabilities
13,004,139

 
12,875,749

 
13,117,624

 
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
—

 
—

 
—

 
 
Common stock, without par value; authorized 300,000,000 shares; issued: September 30, 2012, December 31, 2011 and September 30, 2011 - 115,121,731 shares
127,937

 
127,937

 
127,937

 
 
Capital surplus
473,781

 
479,882

 
478,738

 
 
Accumulated other comprehensive loss
(13,900
)
 
(23,887
)
 
(4,654
)
 
 
Retained earnings
1,175,001

 
1,131,203

 
1,118,027

 
 
Treasury stock, at cost: September 30, 2012 - 5,468,853 shares; December 31, 2011 - 5,870,923 shares; September 30, 2011 -5,874,748 shares
(138,115
)
 
(149,182
)
 
(149,394
)
 
 
 
Total shareholders' equity
1,624,704

 
1,565,953

 
1,570,654

 
 
 
    Total liabilities and shareholders' equity
$
14,628,843

 
$
14,441,702

 
$
14,688,278

 
 
 
 
 
 
 
 
 

7
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
Average Consolidated Balance Sheets
 
 
 
 
 
 
Quarterly Periods
(Unaudited)
September 30,
June 30,
March 31,
December 31,
September 30,
(Dollars in thousands)
2012
2012
2012
2011
2011
ASSETS
 
 
 
 
 
Cash and due from banks
$
440,231

$
410,533

$
378,736

$
621,899

$
517,150

Investment securities:
 
 


 
Held-to-maturity
337,685

127,769

90,664

89,166

85,664

Available-for-sale
3,215,203

3,429,411

3,459,439

3,231,195

3,429,631

Other investments
140,736

140,744

140,719

160,147

160,799

Loans held for sale
23,631

22,731

26,483

24,215

24,524

Noncovered loans:
 
 
 
 
 
Commercial
5,443,712

5,274,352

5,143,087

5,049,479

4,876,034

Residential mortgage
437,123

431,752

421,648

405,329

399,228

Installment
1,293,054

1,263,013

1,261,122

1,267,952

1,264,868

Home equity
779,087

750,859

738,154

744,326

741,497

Credit card
143,948

142,311

143,794

145,560

144,796

Leases
88,583

78,862

73,644

61,267

56,909

Total noncovered loans
8,185,507

7,941,149

7,781,449

7,673,913

7,483,332

Covered loans and loss share receivable
1,216,711

1,325,184

1,436,430

1,569,232

1,694,155

Total loans
9,402,218

9,266,333

9,217,879

9,243,145

9,177,487

Less: allowance for loan losses
145,061

143,565

142,628

141,360

138,441

Net loans
9,257,157

9,122,768

9,075,251

9,101,785

9,039,046

Total earning assets
13,119,473

12,986,988

12,935,184

12,747,868

12,878,105

Premises and equipment, net
184,544

187,181

190,669

193,219

192,218

Accrued interest receivable and other assets
1,134,829

1,117,377

1,134,976

1,201,815

1,161,596

TOTAL ASSETS
$
14,734,016

$
14,558,514

$
14,496,937

$
14,623,441

$
14,610,628

LIABILITIES
 
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing
$
3,236,703

$
3,144,183

$
3,036,590

$
3,013,543

$
2,988,521

Interest-bearing
1,080,841

1,060,771

1,066,132

991,456

913,252

Savings and money market accounts
5,746,210

5,732,007

5,675,052

5,569,213

5,446,351

Certificates and other time deposits
1,528,177

1,618,322

1,694,247

1,842,334

2,099,558

Total deposits
11,591,931

11,555,283

11,472,021

11,416,546

11,447,682

Federal funds purchased and securities sold under agreements to repurchase
1,032,401

920,352

887,715

999,639

969,020

Wholesale borrowings
178,022

177,987

184,659

225,116

320,691

Total funds
12,802,354

12,653,622

12,544,395

12,641,301

12,737,393

Accrued taxes, expenses and other liabilities
315,093

305,705

371,533

410,079

302,824

Total liabilities
13,117,447

12,959,327

12,915,928

13,051,380

13,040,217

SHAREHOLDERS' EQUITY
 
 
 
 
 
Common stock
127,937

127,937

127,937

127,937

127,937

Capital surplus
472,820

473,650

481,856

479,257

477,864

Accumulated other comprehensive loss
(14,627
)
(18,363
)
(19,862
)
(15,198
)
(2,211
)
Retained earnings
1,168,649

1,156,324

1,140,953

1,129,392

1,116,207

Treasury stock
(138,210
)
(140,361
)
(149,875
)
(149,327
)
(149,386
)
Total shareholders' equity
1,616,569

1,599,187

1,581,009

1,572,061

1,570,411

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
14,734,016

$
14,558,514

$
14,496,937

$
14,623,441

$
14,610,628

 
 
 
 
 
 

8
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

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
 
September 30, 2012
 
June 30, 2012
 
September 30, 2011
(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
$
440,231

 
 
 
 
 
$
410,533

 
 
 
 
 
$
517,150

 
 
 
 
Investment securities and federal funds sold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities and U.S. Government agency obligations (taxable)
2,688,658

 
$
17,981

 
2.66
%
 
2,823,055

 
$
19,028

 
2.71
%
 
2,974,656

 
$
19,864

 
2.65
%
Obligations of states and political subdivisions (tax exempt)
660,143

 
6,332

 
3.82
%
 
482,475

 
6,254

 
5.21
%
 
385,055

 
5,275

 
5.44
%
Other securities and federal funds sold
344,823

 
2,652

 
3.06
%
 
392,394

 
2,756

 
2.82
%
 
316,383

 
2,084

 
2.61
%
Total investment securities and federal funds sold
3,693,624

 
26,965

 
2.90
%
 
3,697,924

 
28,038

 
3.05
%
 
3,676,094

 
27,223

 
2.94
%
Loans held for sale
23,631

 
240

 
4.04
%
 
22,731

 
238

 
4.21
%
 
24,524

 
284

 
4.59
%
Loans, including loss share receivable
9,402,218

 
103,128

 
4.36
%
 
9,266,333

 
103,245

 
4.48
%
 
9,177,487

 
108,444

 
4.69
%
Total earning assets
13,119,473

 
130,333

 
3.95
%
 
12,986,988

 
131,521

 
4.07
%
 
12,878,105

 
135,951

 
4.19
%
Allowance for loan losses
(145,061
)
 
 
 
 
 
(143,565
)
 
 
 
 
 
(138,441
)
 
 
 
 
Other assets
1,319,373

 
 
 
 
 
1,304,558

 
 
 
 
 
1,353,814

 
 
 
 
Total assets
$
14,734,016

 
 
 
 
 
$
14,558,514

 
 
 
 
 
$
14,610,628

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
3,236,703

 
—

 
—
%
 
$
3,144,183

 
—

 
—
%
 
$
2,988,521

 
—

 
—
%
Interest-bearing
1,080,841

 
243

 
0.09
%
 
1,060,771

 
236

 
0.09
%
 
913,252

 
218

 
0.09
%
Savings and money market accounts
5,746,210

 
5,166

 
0.36
%
 
5,732,007

 
5,033

 
0.35
%
 
5,446,351

 
6,929

 
0.50
%
Certificates and other time deposits
1,528,177

 
2,743

 
0.71
%
 
1,618,322

 
3,169

 
0.79
%
 
2,099,558

 
4,370

 
0.83
%
Total deposits
11,591,931

 
8,152

 
0.28
%
 
11,555,283

 
8,438

 
0.29
%
 
11,447,682

 
11,517

 
0.40
%
Securities sold under agreements to repurchase
1,032,401

 
310

 
0.12
%
 
920,352

 
276

 
0.12
%
 
969,020

 
977

 
0.40
%
Wholesale borrowings
178,022

 
1,130

 
2.53
%
 
177,987

 
1,118

 
2.53
%
 
320,691

 
1,669

 
2.06
%
Total interest bearing liabilities
9,565,651

 
9,592

 
0.40
%
 
9,509,439

 
9,832

 
0.42
%
 
9,748,872

 
14,163

 
0.58
%
Other liabilities
315,093

 
 
 
 
 
305,705

 
 
 
 
 
302,824

 
 
 
 
Shareholders' equity
1,616,569

 
 
 
 
 
1,599,187

 
 
 
 
 
1,570,411

 
 
 
 
Total liabilities and shareholders' equity
$
14,734,016

 
 
 
 
 
$
14,558,514

 
 
 
 
 
$
14,610,628

 
 
 
 
Net yield on earning assets
$
13,119,473

 
$
120,741

 
3.66
%
 
$
12,986,988

 
$
121,689

 
3.77
%
 
$
12,878,105

 
$
121,788

 
3.75
%
Interest rate spread
 
 
 
 
3.55
%
 
 
 
 
 
3.66
%
 
 
 
 
 
3.61
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

9
FirstMerit Corporation Reports Third Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBSIDARIES
 
 
 
 
 
 
Average Consolidated Balance Sheets
Fully Tax-equivalent Interest Rates and Interest Differential
 
 
 
 
 
 
 
 
 
 
 
 

Nine Months Ended

Nine Months Ended

September 30, 2012

September 30, 2011
(Unaudited)
Average



Average

Average



Average
(Dollars in thousands)
Balance

Interest

Rate

Balance

Interest

Rate
ASSETS











Cash and due from banks
$
409,944






$
541,992





Investment securities and federal funds sold:











U.S. Treasury securities and U.S. Government agency obligations (taxable)
2,797,521


$
56,688


2.71
%

2,906,269


$
59,174


2.72
%
Obligations of states and political subdivisions (tax exempt)
526,962


18,450


4.68
%

370,553


15,709


5.67
%
Other securities and federal funds sold
369,639


8,146


2.94
%

296,976


6,436


2.90
%
Total investment securities and federal funds sold
3,694,122


83,284


3.01
%

3,573,798


81,319


3.04
%
Loans held for sale
24,279


761


4.19
%

21,877


779


4.76
%
Loans, including loss share receivable
9,295,866


309,530


4.45
%

9,126,596


330,965


4.85
%
Total earning assets
13,014,267


393,575


4.04
%

12,722,271


413,063


4.34
%
Allowance for loan losses
(143,756
)





(138,758
)





Other assets
1,316,071






1,326,045





Total assets
$
14,596,526






$
14,451,550





LIABILITIES AND SHAREHOLDERS' EQUITY










Deposits:











Noninterest-bearing
$
3,139,515


—


—
%

$
2,954,172


—


—
%
Interest-bearing
1,069,290


726


0.09
%

859,903


579


0.09
%
Savings and money market accounts
5,717,860


15,302


0.36
%

5,236,540


22,172


0.57
%
Certificates and other time deposits
1,613,270


9,436


0.78
%

2,360,522


16,803


0.95
%
Total deposits
11,539,935


25,464


0.29
%

11,411,137


39,554


0.46
%
Securities sold under agreements to repurchase
947,135


854


0.12
%

900,920


2,832


0.42
%
Wholesale borrowings
180,215


3,399


2.52
%

323,678


4,963


2.05
%
Total interest bearing liabilities
9,527,770


29,717


0.42
%

9,681,563


47,349


0.65
%
Other liabilities
330,254






275,452






Shareholders' equity
1,598,987






1,540,363





Total liabilities and shareholders' equity
$
14,596,526






$
14,451,550





Net yield on earning assets
$
13,014,267


$
363,858


3.73
%

$
12,722,271


$
365,714


3.84
%
Interest rate spread




3.62
%





3.69
%
 
 
 
 
 
 
 
 
 
 
 
 
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.


10
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
Quarters ended
 
Nine Months Ended
(Dollars in thousands except per share data)
September 30,
 
September 30,
 
 
 
 
2012
 
2011
 
2012
 
2011
Interest income:
 
 
 
 
 
 
 
 
Loans and loans held for sale
$
103,005

 
$
108,417

 
$
309,213

 
$
330,877

 
Investment securities
 
 
 
 
 
 
 
 
 
Taxable
20,633

 
21,949

 
64,834

 
65,610

 
 
Tax-exempt
3,844

 
3,189

 
11,270

 
9,521

 
 
Total investment securities interest
24,477

 
25,138

 
76,104

 
75,131

 
 
 
Total interest income
127,482

 
133,555

 
385,317

 
406,008

Interest expense:
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Interest-bearing
243

 
218

 
726

 
579

 
 
Savings and money market accounts
5,166

 
6,929

 
15,302

 
22,172

 
 
Certificates and other time deposits
2,743

 
4,370

 
9,436

 
16,803

 
Securities sold under agreements to repurchase
310

 
977

 
854

 
2,832

 
Wholesale borrowings
1,130

 
1,669

 
3,399

 
4,963

 
 
Total interest expense
9,592

 
14,163

 
29,717

 
47,349

 
 
Net interest income
117,890

 
119,392

 
355,600

 
358,659

Provision for noncovered loan losses
9,965

 
14,604

 
26,860

 
41,760

Provision for covered loan losses
6,214

 
4,768

 
15,576

 
17,580

 
 
Net interest income after provision for loan losses
101,711

 
100,020

 
313,164

 
299,319

Other income:
 
 
 
 
 
 
 
 
Trust department income
6,124

 
5,607

 
17,481

 
16,983

 
Service charges on deposits
14,603

 
17,838

 
43,490

 
48,460

 
Credit card fees
11,006

 
13,640

 
32,402

 
39,357

 
ATM and other service fees
3,680

 
3,801

 
11,360

 
9,781

 
Bank owned life insurance income
3,094

 
3,182

 
9,073

 
11,439

 
Investment services and insurance
2,208

 
1,965

 
6,843

 
6,384

 
Investment securities gains, net
553

 
4,402

 
1,361

 
5,291

 
Loan sales and servicing income
7,255

 
3,426

 
19,085

 
9,102

 
Other operating income
6,402

 
6,911

 
20,857

 
18,222

 
 
Total other income
54,925

 
60,772

 
161,952

 
165,019

Other expenses:
 
 
 
 
 
 
 
 
Salaries, wages, pension and employee benefits
58,061

 
61,232

 
183,632

 
177,815

 
Net occupancy expense
8,077

 
8,464

 
24,640

 
25,144

 
Equipment expense
7,143

 
7,073

 
21,845

 
20,725

 
Stationery, supplies and postage
2,210

 
2,517

 
6,638

 
7,972

 
Bankcard, loan processing and other costs
8,424

 
8,449

 
24,935

 
24,278

 
Professional services
4,702

 
5,732

 
17,361

 
17,466

 
Amortization of intangibles
456

 
543

 
1,422

 
1,629

 
FDIC insurance expense
1,832

 
3,240

 
9,015

 
12,187

 
Other operating expense
17,682

 
18,707

 
51,944

 
53,254

 
 
Total other expenses
108,587

 
115,957

 
341,432

 
340,470

 
 
 
Income before income tax expense
48,049

 
44,835

 
133,684

 
123,868

Income tax expense
13,096

 
13,098

 
37,802

 
34,808

 
 
 
Net income
$
34,953

 
$
31,737

 
$
95,882

 
$
89,060

Other comprehensive income, net of taxes
 
 
 
 
 
 
 
 
Changes in unrealized securities' holding gains and losses
$
4,884

 
$
7,353

 
$
10,872

 
$
24,889

 
Reclassification for realized securities' gains
(359
)
 
(2,862
)
 
(885
)
 
(3,440
)
 
Total other comprehensive gain, net of taxes
4,525

 
4,491

 
9,987

 
21,449

 
 
Comprehensive income
$
39,478

 
$
36,228

 
$
105,869

 
$
110,509

Net income applicable to common shares
$
34,953

 
$
31,737

 
$
95,882

 
$
89,060

Net income used in diluted EPS calculation
$
34,953

 
$
31,737

 
$
95,882

 
$
89,060

Weighted average number of common shares outstanding - basic
109,645

 
109,245

 
109,473

 
109,052

Weighted average number of common shares outstanding - diluted
109,645

 
109,246

 
109,473

 
109,053

Basic earnings per common share
$
0.32

 
$
0.29

 
$
0.88

 
$
0.82

Diluted earnings per common share
$
0.32

 
$
0.29

 
$
0.88

 
$
0.82

Dividend per common share
$
0.16

 
$
0.16

 
$
0.48

 
$
0.48

 
 
 
 
 
 
 
 
 
 
 

11
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Comprehensive Income---linked quarters
 
 
 
 
 
 
 
 
Quarterly Results
(Unaudited)
2012
2012
2012
2011
2011
(Dollars in thousands, except share data)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
Loans and loans held for sale
$
103,005

$
103,126

$
103,082

$
107,516

$
108,417

Investment securities
24,477

25,629

25,998

24,732

25,138

Total interest income
127,482

128,755

129,080

132,248

133,555

Interest on deposits:
 
 
 
 
 
Interest-bearing
243

236

247

237

218

Savings and money market accounts
5,166

5,033

5,103

5,998

6,929

Certificates and other time deposits
2,743

3,169

3,524

3,201

4,370

Securities sold under agreements to repurchase
310

276

268

512

977

Wholesale borrowings
1,130

1,118

1,151

1,334

1,669

Total interest expense
9,592

9,832

10,293

11,282

14,163

Net interest income
117,890

118,923

118,787

120,966

119,392

Provision for noncovered loan losses
9,965

8,766

8,129

12,275

14,604

Provision for covered loan losses
6,214

3,430

5,932

2,773

4,768

Net interest income after provision for loan losses
101,711

106,727

104,726

105,918

100,020

Other income:
 
 
 
 
 
Trust department income
6,124

5,730

5,627

5,413

5,607

Service charges on deposits
14,603

14,478

14,409

15,622

17,838

Credit card fees
11,006

11,216

10,180

10,182

13,640

ATM and other service fees
3,680

3,890

3,790

3,920

3,801

Bank owned life insurance income
3,094

2,923

3,056

3,381

3,182

Investment services and insurance
2,208

2,388

2,247

1,844

1,965

Investment securities gains, net
553

548

260

5,790

4,402

Loan sales and servicing income
7,255

5,139

6,691

5,102

3,426

Other operating income
6,402

8,989

5,466

8,483

6,911

Total other income
54,925

55,301

51,726

59,737

60,772

Other expenses:
 
 
 
 
 
Salaries, wages, pension and employee benefits
58,061

61,598

63,973

62,546

61,232

Net occupancy expense
8,077

7,971

8,592

7,270

8,464

Equipment expense
7,143

7,598

7,104

7,234

7,073

Stationery, supplies and postage
2,210

2,285

2,143

2,719

2,517

Bankcard, loan processing and other costs
8,424

8,858

7,653

7,948

8,449

Professional services
4,702

9,307

3,352

5,763

5,732

Amortization of intangibles
456

483

483

543

543

FDIC insurance expense
1,832

3,463

3,720

5,119

3,240

Other operating expense
17,682

17,514

16,748

24,732

18,707

Total other expenses
108,587

119,077

113,768

123,874

115,957

Income before income tax expense
48,049

42,951

42,684

41,781

44,835

Income taxes
13,096

12,366

12,340

11,285

13,098

Net income
34,953

30,585

30,344

30,496

31,737

Other comprehensive income (loss), net of taxes
4,525

3,747

1,715

(19,233
)
4,491

Comprehensive income
$
39,478

$
34,332

$
32,059

$
11,263

$
36,228

Net income applicable to common shares
$
34,953

$
30,585

$
30,344

$
30,496

$
31,737

Net income used in diluted EPS calculation
$
34,953

$
30,585

$
30,344

$
30,496

$
31,737

Weighted average common shares - basic
109,645

109,562

109,211

109,249

109,245

Weighted average common shares - diluted
109,645

109,562

109,211

109,249

109,246

Basic earnings per common share
$
0.32

$
0.28

$
0.28

$
0.28

$
0.29

Diluted earnings per common share
$
0.32

$
0.28

$
0.28

$
0.28

$
0.29

 
 
 
 
 
 
 
 
 
 
 
 

12
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
Asset Quality Information (excluding Noncovered Assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited, except December 31, 2011 annual period which is derived from the audited financial statements)
 
 
 
 
(Dollars in thousands, except ratios)
 
 
 
 
 
 
 
 
Quarterly Periods
 
Annual Period
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
December 31,
Allowance for Credit Losses
2012
2012
2012
2011
2011
 
2011
Allowance for noncovered loan losses, beginning of period
$
103,849

$
103,849

$
107,699

$
109,187

$
109,187

 
$
114,690

Provision for noncovered loan losses
9,965

8,766

8,129

12,275

14,604

 
54,035

Charge-offs
20,999

15,014

17,417

18,984

20,014

 
82,768

Recoveries
6,127

6,248

5,438

5,221

5,410

 
21,742

Net charge-offs
14,872

8,766

11,979

13,763

14,604

 
61,026

Allowance for noncovered loan losses, end of period
$
98,942

$
103,849

$
103,849

$
107,699

$
109,187

 
$
107,699

Reserve for unfunded lending commitments, beginning of period
$
5,666

$
5,410

$
6,373

$
6,360

$
5,799

 
$
8,849

Provision for/(relief of) credit losses
94

256

(963
)
13

561

 
(2,476
)
Reserve for unfunded lending commitments, end of period
$
5,760

$
5,666

$
5,410

$
6,373

$
6,360

 
$
6,373

Allowance for Credit Losses
$
104,702

$
109,515

$
109,259

$
114,072

$
115,547

 
$
114,072

Ratios (a)
 
 
 
 
 
 
 
Provision for noncovered loan losses as a % of average loans
0.48
%
0.44
%
0.42
%
0.63
%
0.77
%
 
0.73
%
Net charge-offs as a % of average loans
0.72
%
0.44
%
0.62
%
0.71
%
0.77
%
 
0.82
%
Allowance for noncovered loan losses as a % of period-end loans
1.19
%
1.28
%
1.32
%
1.39
%
1.43
%
 
1.39
%
Allowance for credit losses as a % of period-end loans
1.26
%
1.35
%
1.39
%
1.47
%
1.51
%
 
1.47
%
Allowance for noncovered loan losses as a % of nonperforming loans
196.66
%
222.44
%
194.97
%
166.64
%
160.80
%
 
166.64
%
Allowance for credit losses as a % of nonperforming loans
208.11
%
234.57
%
205.13
%
176.50
%
170.16
%
 
176.50
%
Asset Quality (a)
 
 
 
 
 
 
 
Impaired noncovered loans:
 
 
 
 
 
 
 
Nonaccrual
$
31,492

$
38,381

$
44,546

$
55,815

$
59,932

 
$
55,815

Other nonperforming loans:
 
 
 
 
 
 
 
Nonaccrual (b)
18,819

8,306

8,717

8,816

7,971

 
8,816

Total nonperforming loans
50,311

46,687

53,263

64,631

67,903

 
64,631

Other real estate ("ORE")
13,744

14,393

14,670

16,463

22,172

 
16,463

Total nonperforming assets ("NPAs")
$
64,055

$
61,080

$
67,933

$
81,094

$
90,075

 
$
81,094

NPAs as % of period-end noncovered loans + ORE
0.77
%
0.75
%
0.86
%
1.04
%
1.18
%
 
1.04
%
Noncovered loans past due 90 days or more & accruing interest
$
9,691

$
6,545

$
9,261

$
11,376

$
4,403

 
$
11,376

 
 
 
 
 
 
 
 
(a) Excludes covered loans and related loss share receivable with a period end balance of $1.2 billion, $1.3 billion, $1.4 billion, $1.5 billion and $1.6 billion and covered ORE and related loss share receivable with a period end balance of $56.8 million, $54.5 million, $56.4 million, $54.5 million and $61.9 million at September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively.

(b) At September 30, 2012, included are $10.6 million of consumer loans classified as troubled debt restructurings where the borrower's obligation to the Corporation has been restructured in bankruptcy.

13
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
Noninterest Income and Noninterest Expense Detail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
2012
 
2012
 
2011
 
2011
QUARTERLY OTHER INCOME DETAIL
 
3rd Qtr
 
2nd Qtr
 
1st Qtr
 
4th Qtr
 
3rd Qtr
Trust department income
 
$
6,124

 
$
5,730

 
$
5,627

 
$
5,413

 
$
5,607

Service charges on deposits
 
14,603

 
14,478

 
14,409

 
15,622

 
17,838

Credit card fees
 
11,006

 
11,216

 
10,180

 
10,182

 
13,640

ATM and other service fees
 
3,680

 
3,890

 
3,790

 
3,920

 
3,801

Bank owned life insurance income
 
3,094

 
2,923

 
3,056

 
3,381

 
3,182

Investment services and insurance
 
2,208

 
2,388

 
2,247

 
1,844

 
1,965

Investment securities gains, net
 
553

 
548

 
260

 
5,790

 
4,402

Loan sales and servicing income
 
7,255

 
5,139

 
6,691

 
5,102

 
3,426

Other operating income
 
6,402

 
8,989

 
5,466

 
8,483

 
6,911

Total Other Income
 
$
54,925

 
$
55,301

 
$
51,726

 
$
59,737

 
$
60,772

 
 
2012
 
2012
 
2012
 
2011
 
2011
QUARTERLY OTHER EXPENSES DETAIL
 
3rd Qtr
 
2nd Qtr
 
1st Qtr
 
4th Qtr
 
3rd Qtr
Salaries, wages, pension and employee benefits
 
$
58,061

 
$
61,598

 
$
63,973

 
$
62,546

 
$
61,232

Net occupancy expense
 
8,077

 
7,971

 
8,592

 
7,270

 
8,464

Equipment expense
 
7,143

 
7,598

 
7,104

 
7,234

 
7,073

Taxes, other than income taxes
 
2,051

 
2,020

 
1,955

 
1,389

 
1,507

Stationery, supplies and postage
 
2,210

 
2,285

 
2,143

 
2,719

 
2,517

Bankcard, loan processing and other costs
 
8,424

 
8,858

 
7,653

 
7,948

 
8,449

Advertising
 
2,472

 
2,280

 
1,684

 
2,275

 
2,391

Professional services
 
4,702

 
9,307

 
3,352

 
5,763

 
5,732

Telephone
 
1,316

 
1,379

 
1,398

 
1,525

 
1,570

Amortization of intangibles
 
456

 
483

 
483

 
543

 
543

FDIC insurance expense
 
1,832

 
3,463

 
3,720

 
5,119

 
3,240

Other operating expense
 
11,843

 
11,835

 
11,711

 
19,543

 
13,239

Total Other Expenses
 
$
108,587

 
$
119,077

 
$
113,768

 
$
123,874

 
$
115,957


14
FirstMerit Corporation Reports Third Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
 
 
Allowance for Noncovered Loan Losses - Net Charge-off Detail
 
 
 
 
 
 
 
 
 
 
(Unaudited)
Quarters ended
 
Nine Months Ended
 
Year ended
(Dollars in thousands)
September 30,
 
September 30,
 
December 31,
 
2012
 
2011
 
2012
 
2011
 
2011
Allowance for noncovered loan losses - beginning of period
$
103,849

 
$
109,187

 
$
107,699

 
$
114,690

 
$
114,690

Loans charged off:
 
 
 
 
 
 
 
 
 
Commercial
9,627

 
8,382

 
23,567

 
24,525

 
31,943

Residential mortgage
1,691

 
771

 
3,431

 
3,786

 
4,819

Installment
5,507

 
5,911

 
14,441

 
20,204

 
25,839

Home equity
2,319

 
1,929

 
6,108

 
6,200

 
8,691

Credit cards
1,390

 
1,520

 
4,618

 
6,135

 
7,846

Leases
—

 
651

 
—

 
778

 
778

Overdrafts
465

 
850

 
1,265

 
2,156

 
2,852

Total
20,999

 
20,014

 
53,430

 
63,784

 
82,768

Recoveries:
 
 
 
 
 
 
 
 
 
Commercial
1,649

 
717

 
4,309

 
1,853

 
2,703

Residential mortgage
100

 
74

 
191

 
192

 
221

Installment
2,870

 
3,361

 
9,054

 
10,749

 
13,639

Home equity
856

 
466

 
2,094

 
1,255

 
1,985

Credit cards
488

 
585

 
1,583

 
1,789

 
2,264

Manufactured housing
13

 
14

 
50

 
63

 
119

Leases
—

 
1

 
38

 
35

 
37

Overdrafts
151

 
192

 
494

 
585

 
774

Total
6,127

 
5,410

 
17,813

 
16,521

 
21,742

Net charge-offs
14,872

 
14,604

 
35,617

 
47,263

 
61,026

Provision for noncovered loan losses
9,965

 
14,604

 
26,860

 
41,760

 
54,035

Allowance for noncovered loan losses - end of period
$
98,942

 
$
109,187

 
$
98,942

 
$
109,187

 
$
107,699

 
 
 
 
 
 
 
 
 
 
Average noncovered loans (a)
$
8,185,507

 
$
7,483,332

 
$
7,970,157

 
$
7,320,380

 
$
7,409,502

Ratio to average noncovered loans (a):
 
 
 
 
 
 
 
 
 
(Annualized) noncovered net charge-offs
0.72
%
 
0.77
%
 
0.60
%
 
0.86
%
 
0.82
%
Provision for noncovered loan losses
0.48
%
 
0.77
%
 
0.45
%
 
0.76
%
 
0.73
%
Noncovered Loans, period-end
$
8,260,426

 
$
7,631,572

 
$
8,260,426

 
$
7,631,572

 
$
7,748,944

 
 
 
 
 
 
 
 
 
 
Allowance for credit losses (a):
$
104,702

 
$
115,547

 
$
104,702

 
$
115,547

 
$
114,072

As a multiple of (annualized) net charge-offs
1.77

 
1.99

 
2.20

 
1.83

 
1.87

Allowance for noncovered loan losses (a):
 
 
 
 
 
 
 
 
 
As a percent of period-end noncovered loans
1.19
%
 
1.43
%
 
1.19
%
 
1.43
%
 
1.39
%
As a multiple of (annualized) net noncovered charge-offs
1.67

 
1.88

 
2.08

 
1.73

 
1.76

(a) Excludes covered loans and loss share receivable.


15