FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

file	filename
8-K - 8-K - FIRSTMERIT CORP /OH/	a8kq22013.htm
EX-99.2 - INVESTOR DECK - FIRSTMERIT CORP /OH/	a2q13epsslidedeckjuly22u.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 Second Quarter 2013 EPS of $0.29 Per Share

Results include impact of Citizens merger from acquisition date

Quarterly Highlights include:


•	Sustained profitability: 57th consecutive quarter of profitability.


•	Superior credit quality: Net charge-offs to average originated loans decreased to 0.15% from 0.27% in the prior quarter; nonperforming assets as a percent of period end originated loans plus other real estate remained low at 0.72%.


•	Strong balance sheet: Strong tangible common equity ratio at 7.61%.


•	Closed Citizens Republic Bancorp acquisition on April 12: Executed successful rebranding campaign in June.

Akron, Ohio (July 23, 2013) - FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported second quarter 2013 net income of $48.5 million, or $0.29 per diluted share. This compares with $37.3 million, or $0.33 per diluted share, for the first quarter 2013 and $30.6 million, or $0.28 per diluted share, for the second quarter 2012. Included in net income for the second quarter of 2013 were $32.1 million of one time pre-tax merger-related costs of which $2.8 million was recorded as a reduction to noninterest income and $29.3 million was recorded as noninterest expense. One time pre-tax merger costs for the first quarter of 2013 totaled $3.6 million and were recorded as noninterest expense.

Returns on average common equity (“ROE”) and average assets (“ROA”) for the second quarter 2013 were 7.56% and 0.85%, respectively, compared with 8.83% and 1.01%, respectively, for the first quarter 2013 and 7.69% and 0.84% for the second quarter 2012.

On April 12, 2013, the Corporation completed its acquisition of Citizens Republic Bancorp, Inc. ("Citizens") headquartered in Flint, Michigan. The impact of the acquisition is reflected in the Corporation's financial information from acquisition date. The acquisition added $9.3 billion in assets, $4.7 billion in loans and $7.3 billion in deposits. The purchase price of the acquisition was $1.3 billion, including the exchange of Citizens' common stock for 55.5 million shares of the Corporation's outstanding common stock and $355.4 million paid to the U.S. Treasury for Citizens' preferred stock and unpaid dividends and interest.

"FirstMerit’s strong second quarter financial results continued to reflect profitable growth. We completed our acquisition of Citizens on April 12 and introduced the FirstMerit brand to our new branch locations in Michigan and Wisconsin in June. As a combined company, we are now focused on taking

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

advantage of the many revenue growth opportunities we see across our Midwest footprint. Our value proposition provides consistently strong financial results supported by strong credit quality, a solid balance sheet and high capital levels," said Paul G. Greig, FirstMerit chairman, president and CEO.

Except as noted, the Citizens acquisition is primarily contributing to the increases period over period in the income statement and balance sheets. Citizens' results of operations are included in the reported current period results since the date of acquisition.

Citizens Acquisition

As required under purchase accounting rules, Citizens' balance sheet was recorded at estimated fair value at acquisition date, April 12, 2013. These fair value measurements are provisional based on third-party valuations that are currently under review and as such fair values are subject to refinement for up to one year after the acquisition date based on additional information obtained that existed as of the acquisition date. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:



(dollars in thousands)
ASSETS
Cash and due from banks	$	544,380
Securities	3,120,715
Loans and loans held for sale	4,708,008
Property and equipment	138,946
Other intangible assets	84,594
Other assets	677,056
Total identifiable assets acquired	$	9,273,699
LIABILITIES
Deposits	7,276,754
Borrowings	908,824
Other liabilities	78,866
Total liabilities assumed	8,264,444
Net identifiable assets acquired	1,009,255
Goodwill	274,388
Net assets acquired	$	1,283,643

"Acquired loans", as used herein, are those purchased in the Citizens acquisition. (As used herein, "originated loans" refer to loans which have been originated in the normal course of business and "covered loans" refer to loans covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.) To record the acquired loans at fair value, a preliminary adjustment, or "mark" of $346.6 million was recorded to reduce the acquired loans to estimated fair value. The fair value of the acquired loans does not include the pre-acquisition recorded allowance for loan losses of $104.0 million, as such amount was eliminated in purchase accounting. The acquired loans were segregated between those considered to be performing (“non-impaired acquired loans”) and those with evidence of credit deterioration (“acquired impaired loans”). Acquired loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable, at acquisition, all contractually required payments will not be collected. Revolving loans, including lines of credit, are excluded from acquired impaired loan accounting.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

The difference between the fair value of the non-impaired acquired loans and contractual amounts due at the acquisition date is accreted into interest income over the remaining life of the loans. The excess of cash flows expected to be collected over the carrying amount of the acquired impaired loans is accreted into interest income over the remaining life of the acquired impaired loans. Acquired impaired loans are not classified as nonaccrual as they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for purchased impaired loans and not to contractual interest payments.

Net Interest Income

Net interest income on a fully tax-equivalent (“FTE”) basis was $201.6 million in the second quarter 2013 compared with $114.4 million in the first quarter 2013 and $121.7 million in the second quarter 2012.

Net interest margin was 4.12% for the second quarter 2013 compared with 3.46% for the first quarter 2013 and 3.77% for the second quarter 2012. Net interest margin in the current period was impacted by the net accretion of the fair value adjustments on the acquired loans and certificates of deposits.

Average originated loans were $8.9 billion during the second quarter 2013, an increase of $142.4 million, or 1.63%, compared with the first quarter 2013, and an increase of $936.6 million, or 11.79%, compared with the second quarter 2012. Average originated commercial loans increased $29.1 million, or 0.50%, compared with the prior quarter, and increased $614.6 million, or 11.65%, compared with the year ago quarter.

Average deposits were $18.3 billion during the second quarter 2013, an increase of $6.5 billion, or 55.51%, compared with the first quarter 2013, and an increase of $6.8 billion, or 58.67%, compared with the second quarter 2012. Average balances include Citizens' deposit portfolio from the date of acquisition. During the second quarter 2013, average core deposits, which exclude time deposits, increased $5.2 billion, or 49.68%, compared with the first quarter 2013 and increased $5.7 billion, or 57.53%, compared with the second quarter 2012. Average time deposits increased $1.3 billion, or 101.29%, and increased $1.1 billion, or 65.62%, respectively, over prior and year-ago quarters. For the second quarter 2013, average core deposits accounted for 85.38% of total average deposits, compared with 88.71% for the first quarter 2013 and 85.99% for the second quarter 2012.

Average investments increased $2.2 billion, or 60.35%, compared with the first quarter 2013 and increased $2.2 billion, or 60.35% compared with the second quarter 2012.

Noninterest Income

Noninterest income for the second quarter 2013, excluding losses on securities transactions of $2.8 million related to dispositions of securities acquired from Citizens, was $72.2 million, an increase of $14.8 million, or 25.84%, from the first quarter 2013 and an increase of $17.5 million, or 31.93%, from the second quarter 2012. Included in noninterest income in the second quarter of 2013, the first quarter of 2013 and the second quarter of 2012 was approximately $1.0 million, $5.0 million and $2.6 million of gains on covered loans paid in full, respectively.

Other income, excluding net securities gains and losses, as a percentage of net revenue for the second quarter 2013 was 26.38% compared with 33.42% for first quarter 2013 and 31.03% for the second quarter 2012. Net revenue is defined as net interest income, on an FTE basis, plus other income, excluding gains and losses from securities sales.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

Noninterest Expense

Noninterest expense for the second quarter 2013 was $189.6 million, an increase of $82.7 million, or 77.36%, from the first quarter 2013 and an increase of $70.6 million, or 59.26%, from the second quarter 2012. Included in noninterest expense in the second quarter of 2013 and first quarter of 2013 were one time merger related costs associated with the Citizens acquisition of $29.3 million and $3.6 million, respectively. The majority of these one time costs were from severance arrangements and professional and legal services rendered in connection with the merger. The Corporation's efficiency ratio was 68.37% for the second quarter 2013, compared with 62.06% for the first quarter 2013 and 67.21% for the second quarter 2012.

Asset Quality (excluding acquired loans and covered assets)

Due to the impact of acquisition accounting and protection against credit risk from FDIC loss sharing agreements, acquired loans and covered assets are excluded from the asset quality discussion to provide for improved comparability to prior periods and better perspective into asset quality trends. Acquired loans are recorded at fair value with no allowance brought forward in accordance with acquisition accounting. Impaired acquired and covered loans are considered to be performing due to the application of the accretion method under acquisition accounting.

Net charge-offs on originated loans totaled $3.3 million, or 0.15% of average originated loans in the second quarter 2013, compared with $5.9 million, or 0.27% of average originated loans, in the first quarter 2013 and $8.8 million, or 0.44% of average originated loans, in the second quarter 2012.

Nonperforming assets totaled $66.2 million at June 30, 2013, an increase of $13.9 million, or 26.70%, compared with March 31, 2013 and an increase of $5.1 million, or 8.34%, compared with June 30, 2012. Nonperforming assets at June 30, 2013 represented 0.72% of period-end originated loans plus other real estate compared with 0.59% at March 31, 2013 and 0.75% at June 30, 2012.

The allowance for originated loan losses totaled $98.6 million at June 30, 2013. At June 30, 2013, the allowance for originated loan losses was 1.08% of period-end originated loans compared with 1.13% at March 31, 2013 and 1.28% at June 30, 2012. The allowance for credit losses is the sum of the allowance for originated loan losses and the reserve for unfunded lending commitments. For comparative purposes, the allowance for credit losses was 1.17% of period end originated loans at June 30, 2013, compared with 1.18% at March 31, 2013 and 1.35% at June 30, 2012. The allowance for credit losses to nonperforming loans was 234.82% at June 30, 2013, compared with 254.32% at March 31, 2013 and 234.57% at June 30, 2012.

Balance Sheet

The Corporation’s total assets at June 30, 2013 were $23.5 billion, an increase of $8.3 billion, or 54.08%, compared with March 31, 2013 and an increase of $8.9 billion, or 60.94%, compared with June 30, 2012. The increases from prior periods mainly reflect the $9.3 billion in assets acquired in the Citizens merger.

Total deposits were $19.1 billion at June 30, 2013, an increase of $7.2 billion, or 60.32%, from March 31, 2013 and an increase of $7.5 billion, or 64.60%, from June 30, 2012. Core deposits totaled $16.3 billion at June 30, 2013, an increase of $5.7 billion, or 53.47%, from March 31, 2013 and an increase of $6.3 billion, or 62.42%, from June 30, 2012. The increases from prior periods reflect the Citizens acquisition.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

Shareholders’ equity was $2.7 billion as of June 30, 2013 and $1.8 billion as of March 31, 2013 and $1.6 billion as of June 30, 2012. The increases mainly reflect the addition of $928.3 million in equity from the Citizen acquisition. The Corporation maintained a strong capital position as tangible common equity to assets was 7.61% at June 30, 2013, compared with 8.03% at March 31, 2013 and 8.01% at June 30, 2012. The common cash dividend per share paid in the second quarter 2013 was $0.16.

Integration Update

The integration of Citizens into the Corporation continues to progress as scheduled. Professional consulting groups have been assisting the Corporation with the integration and accounting matters related to the transaction. The main systems conversion is currently scheduled for the fourth quarter of 2013.

One time merger costs incurred to-date totaled approximately $38.7 million. Management expects a total of approximately $79.4 million in one time pre-tax merger costs related to the Citizens acquisition.

To date the Corporation has achieved merger-related cost savings related mainly to reduction in headcount. The timeline for realization of these expected cost synergies remains on track and Management remains confident it will meet its total projected annual cost saves of $59.0 million.

Second Quarter 2013 Conference Call

FirstMerit (Nasdaq: FMER) senior management will host an earnings conference call today at 11:00 a.m. (Eastern Time) to provide an overview of second 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: 17141232. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on July 23, 2013 through August 6, 2013 by dialing (855) 859-2056, and entering the PIN: 17141232. The Corporation will provide a slide presentation, which management will speak to during the conference call. A copy of the presentation will be available at https://www.firstmerit.com/personal/investors.aspx; click on the Presentations link to access the slide presentation.

About FirstMerit Corporation

FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $23.5 billion as of June 30, 2013, and 416 banking offices and 452 ATM locations in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal affiliates include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation, FirstMerit Title Agency, Ltd., and FirstMerit Community Development Corporation.

Subsequent Events

The Corporation is required under generally accepted accounting principles to evaluate subsequent events through the filing of the its consolidated financial statements for the quarter ended June 30, 2013 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, 2013 and will adjust amounts preliminarily reported, if necessary.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

Forward-Looking Statements

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

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights (a)
(Unaudited)							Quarters
(Dollars in thousands, except per share amounts)	2013			2013			2012			2012			2012
	2nd qtr			1st qtr			4th qtr			3rd qtr			2nd qtr
EARNINGS
Net interest income FTE (b)	$	201,605		$	114,376		$	119,130		$	120,741		$	121,689
Provision for originated loan losses	3,151			5,808			7,116			9,965			8,766
Provision for covered loan losses	4,158			4,138			5,146			6,214			3,430
Other income	69,439			57,392			61,652			54,925			55,301
Other expenses	189,640			106,925			112,181			108,587			119,077
FTE adjustment (b)	3,574			3,027			2,900			2,851			2,766
Net income	48,450			37,346			38,224			34,953			30,585
Diluted EPS (e)	0.29			0.33			0.35			0.32			0.28
PERFORMANCE RATIOS
Return on average assets (ROA)	0.85		%	1.01		%	1.03		%	0.94		%	0.84		%
Return on average equity (ROE)	7.56		%	8.83		%	9.30		%	8.60		%	7.69		%
Net interest margin FTE (b)	4.12		%	3.46		%	3.58		%	3.66		%	3.77		%
Efficiency ratio	68.37		%	62.06		%	62.65		%	61.75		%	67.21		%
Number of full-time equivalent employees	4,619			2,767			2,738			2,733			2,789
MARKET DATA
Book value per share	$	16.06		$	15.99		$	15.00		$	14.82		$	14.60
Period-end common share market value	20.03			16.54			14.19			14.71			16.51
Market as a % of book	125		%	103		%	95		%	99		%	113		%
Cash dividends per common share	$	0.16		$	0.16		$	0.16		$	0.16		$	0.16
Common stock dividend payout ratio	55.17		%	48.48		%	45.71		%	50.00		%	57.14		%
Average basic common shares	157,863			109,689			109,652			109,645			109,562
Average diluted common shares	157,982			109,689			109,652			109,645			109,562
Period end common shares	165,045			109,746			109,649			109,653			109,641
Common shares repurchased	168			26			12			6			111
Common stock market capitalization	$	3,305,851		$	1,815,199		$	1,555,919		$	1,612,996		$	1,810,173
ASSET QUALITY (excluding acquired and covered loans) (c)
Gross charge-offs	$	10,969		$	10,776		$	12,475		$	20,999		$	15,014
Net charge-offs	3,349			5,907			7,116			14,872			8,766
Allowance for originated loan losses	98,645			98,843			98,942			98,942			103,849
Reserve for unfunded lending commitments	8,114			4,941			5,433			5,760			5,666
Nonperforming assets (NPAs)	66,177			52,231			50,224			64,055			61,080
Net charge-offs to average loans ratio	0.15		%	0.27		%	0.34		%	0.72		%	0.44		%
Allowance for originated loan losses to period-end loans	1.08		%	1.13		%	1.13		%	1.19		%	1.28		%
Allowance for credit losses to period-end loans	1.17		%	1.18		%	1.20		%	1.26		%	1.35		%
NPAs to loans and other real estate	0.72		%	0.59		%	0.57		%	0.77		%	0.75		%
Allowance for originated loan losses to nonperforming loans	216.97		%	242.21		%	269.69		%	196.66		%	222.44		%
Allowance for credit losses to nonperforming loans	234.82		%	254.32		%	284.50		%	208.11		%	234.57		%
CAPITAL & LIQUIDITY
Period-end tangible common equity to assets	7.61		%	8.03		%	8.16		%	8.18		%	8.01		%
Average equity to assets	11.28		%	11.45		%	11.12		%	10.97		%	10.98		%
Average equity to total loans (d)	18.95		%	17.88		%	17.37		%	17.46		%	17.57		%
Average total loans to deposits (d)	74.04		%	81.36		%	81.21		%	79.89		%	78.78		%
AVERAGE BALANCES
Assets	$	22,810,702		$	14,983,543		$	14,702,215		$	14,734,016		$	14,558,514
Deposits	18,334,244			11,789,784			11,595,085			11,591,931			11,555,283
Originated loans	8,877,754			8,735,307			8,444,208			8,185,507			7,941,149
Acquired loans, including covered loans (d)	4,696,740			856,875			971,589			1,075,144			1,161,937
Earning assets	19,609,974			13,408,789			13,246,693			13,119,473			12,986,988
Shareholders' equity	2,571,964			1,715,005			1,635,275			1,616,569			1,599,187
ENDING BALANCES
Assets	$	23,532,129		$	15,272,484		$	14,913,012		$	14,628,843		$	14,621,344
Deposits	19,119,722			11,925,767			11,759,425			11,532,426			11,615,841
Originated loans	9,132,625			8,779,970			8,731,659			8,316,420			8,099,928
Acquired loans, including covered loans (d)	4,935,418			801,239			905,391			1,043,058			1,119,273
Goodwill	734,382			460,044			460,044			460,044			460,044
Intangible assets	88,419			6,055			6,373			6,817			7,274
Earning assets	20,781,279			13,905,342			13,472,067			13,219,301			13,212,071
Total shareholders' equity	2,650,909			1,754,850			1,645,202			1,624,704			1,600,815
NOTES:

(a) - Effective April 12, 2013, the Corporation acquired Citizens. Citizens' assets and liabilities are included in the consolidated balance sheet at their respective acquisition date fair value. Citizens' results of operations are included in the consolidated statement of comprehensive income beginning on the date of acquisition.

(b) 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.

(c) - Due to the impact of acquisition accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired loans and covered assets are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.

(d) - Excludes loss share receivable of $83.9 million, $95.6 million, $113.7 million, $131.9 million and $152.6 million as of June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

(e) - Net income used to determine diluted EPS for the quarters ended June 30, 2013 and March 31, 2013 was reduced by the cash dividends of approximately $1.5 million and $0.9 million, respectively, payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)				June 30,			December 31,			June 30,
(Unaudited, except December 31, 2012, which is derived from the audited financial statements)				2013			2012			2012
ASSETS
	Cash and due from banks			$	421,836		$	244,223		$	226,026
	Interest-bearing deposits in banks			487,654			13,791			111,909
		Total cash and cash equivalents		909,490			258,014			337,935
	Investment securities:
		Held-to-maturity		2,551,860			622,121			352,221
		Available-for-sale		3,299,392			2,920,971			3,216,365
		Other investments		267,565			140,717			140,742
	Loans held for sale			22,855			23,683			19,018
	Loans			14,151,953			9,750,784			9,371,816
	Allowance for loan losses			(147,714		)	(142,197		)	(146,455		)
	Net loans			14,004,239			9,608,587			9,225,361
	Premises and equipment, net			317,107			181,149			184,851
	Goodwill			734,382			460,044			460,044
	Intangible assets			88,419			6,373			7,274
	Covered other real estate			67,786			59,855			54,549
	Accrued interest receivable and other assets			1,269,034			631,498			622,984
			Total assets	$	23,532,129		$	14,913,012		$	14,621,344
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
		Noninterest-bearing		$	5,277,647		$	3,338,371		$	3,227,819
		Interest-bearing		2,504,368			1,287,674			1,080,790
		Savings and money market accounts		8,520,806			5,758,123			5,728,598
		Certificates and other time deposits		2,816,901			1,375,257			1,578,634
			Total deposits	19,119,722			11,759,425			11,615,841
		Federal funds purchased and securities sold under agreements to repurchase		844,871			1,104,525			896,910
		Wholesale borrowings		201,337			136,883			178,135
		Long-term debt		324,422			—			—
		Accrued taxes, expenses, and other liabilities		390,868			266,977			329,643
			Total liabilities	20,881,220			13,267,810			13,020,529
		Shareholders' equity:
			5.875% Non-Cumulative Perpetual Preferred Stock, Series A, without par value: authorized 115,000 shares; 100,000 issued	100,000			—			—
			Common stock warrant	3,000			—			—
			Common stock, without par value; authorized 300,000,000 shares; issued: June 30, 2013 - 170,179,911 shares, December 31, 2012 and June 30, 2012 - 115,121,731 shares	127,937			127,937			127,937
			Capital surplus	1,386,063			475,979			472,138
			Accumulated other comprehensive loss	(71,897		)	(16,205		)	(18,425		)
			Retained earnings	1,235,530			1,195,850			1,157,422
			Treasury stock, at cost: June 30, 2013 - 5,134,463 shares; December 31, 2012 - 5,472,915 shares; June 30, 2012 - 5,481,058 shares	(129,724		)	(138,359		)	(138,257		)
			Total shareholders' equity	2,650,909			1,645,202			1,600,815
			Total liabilities and shareholders' equity	$	23,532,129		$	14,913,012		$	14,621,344

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Period End Loans by Product Type (Unaudited)

(Dollars in thousands)



As of June 30, 2013	As of June 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,997,812	$	2,275,243	$	505,706	$	8,778,761
Mortgage	462,427		440,394		56,056		958,877
Installment	1,496,663		1,221,060		7,794		2,725,517
Home equity	845,051		322,195		106,970		1,274,216
Credit card	142,319		—		—		142,319
Leases	188,353		—		—		188,353
Subtotal	9,132,625		4,258,892		676,526		14,068,043
Loss share receivable	—		—		83,910		83,910
Total loans	$	9,132,625	$	4,258,892	$	760,436	$	14,151,953
Less allowance for loan losses	98,645		—		49,069		147,714
Net loans	$	9,033,980	$	4,258,892	$	711,367	$	14,004,239


	As of March 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,888,337	$	—	$	621,188	$	6,509,525
Mortgage	451,522		—		58,627		510,149
Installment	1,322,795		—		8,081		1,330,876
Home equity	812,458		—		113,343		925,801
Credit card	140,721		—		—		140,721
Leases	164,137		—		—		164,137
Subtotal	8,779,970		—		801,239		9,581,209
Loss share receivable	—		—		95,593		95,593
Total loans	$	8,779,970	$	—	$	896,832	$	9,676,802
Less allowance for loan losses	98,843		—		47,945		146,788
Net loans	$	8,681,127	$	—	$	848,887	$	9,530,014


	As of December 31, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,866,489	$	—	$	718,437	$	6,584,926
Mortgage	445,211		—		61,540		506,751
Installment	1,328,258		—		8,189		1,336,447
Home equity	806,078		—		117,225		923,303
Credit card	146,387		—		—		146,387
Leases	139,236		—		—		139,236
Subtotal	8,731,659		—		905,391		9,637,050
Loss share receivable	—		—		113,734		113,734
Total loans	$	8,731,659	$	—	$	1,019,125	$	9,750,784
Less allowance for loan losses	98,942		—		43,255		142,197
Net loans	$	8,632,717	$	—	$	975,870	$	9,608,587


	September 30, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	5,511,678		$	—	$	847,741	$	6,359,419
Mortgage	439,062		—		63,779		502,841
Installment	1,321,081		—		8,360		1,329,441
Home equity	789,743		—		123,178		912,921
Credit card	143,918		—		—		143,918
Leases	110,938		—		—		110,938
Subtotal	8,316,420		—		1,043,058		9,359,478
Loss share receivable	—		—		131,871		131,871
Total loans	$	8,316,420	$	—	$	1,174,929	$	9,491,349
Less allowance for loan losses	98,942		—		43,644		142,586
Net loans	$	8,217,478	$	—	$	1,131,285	$	9,348,763

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



	As of June 30, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,404,971	$	—	$	915,038	$	6,320,009
Mortgage	438,147		—		65,772		503,919
Installment	1,262,877		—		8,835		1,271,712
Home equity	766,840		—		129,628		896,468
Credit card	142,586		—		—		142,586
Leases	84,507		—		—		84,507
Subtotal	8,099,928		—		1,119,273		9,219,201
Loss share receivable	—		—		152,615		152,615
Total loans	$	8,099,928	$	—	$	1,271,888	$	9,371,816
Less allowance for loan losses	103,849		—		42,606		146,455
Net loans	$	7,996,079	$	—	$	1,229,282	$	9,225,361

(1) Loans acquired from Citizens. No allowance was brought forward in accordance with the acquisition method of accounting.
(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
	Quarterly Periods
(Unaudited)	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2013			2013			2012			2012			2012
ASSETS
Cash and due from banks	$	806,129		$	394,896		$	238,366		$	440,231		$	410,533
Investment securities:
Held-to-maturity	1,953,094			637,614			620,154			337,685			127,769
Available-for-sale	3,723,002			2,919,636			2,925,938			3,215,203			3,429,411
Other investments	253,649			140,729			140,723			140,736			140,744
Loans held for sale	17,394			14,884			20,485			23,631			22,731
Loans	13,662,835			9,695,926			9,539,393			9,402,218			9,266,333
Less: allowance for loan losses	146,705			141,735			141,270			145,061			143,565
Net loans	13,516,130			9,554,191			9,398,123			9,257,157			9,122,768
Total earning assets	19,609,974			13,408,789			13,246,693			13,119,473			12,986,988
Premises and equipment, net	299,979			179,381			181,738			184,544			187,181
Accrued interest receivable and other assets	2,241,325			1,142,212			1,176,688			1,134,829			1,117,377
TOTAL ASSETS	$	22,810,702		$	14,983,543		$	14,702,215		$	14,734,016		$	14,558,514
LIABILITIES
Deposits:
Noninterest-bearing	$	5,095,977		$	3,321,660		$	3,306,444		$	3,236,703		$	3,144,183
Interest-bearing	2,347,155			1,300,816			1,122,796			1,080,841			1,060,771
Savings and money market accounts	8,210,780			5,835,750			5,743,599			5,746,210			5,732,007
Certificates and other time deposits	2,680,332			1,331,558			1,422,246			1,528,177			1,618,322
Total deposits	18,334,244			11,789,784			11,595,085			11,591,931			11,555,283
Federal funds purchased and securities sold under
agreements to repurchase	927,451			906,717			957,564			1,032,401			920,352
Wholesale borrowings	237,887			136,298			163,405			178,022			177,987
Long-term borrowings	314,597			155,506			—			—			—
Total funds	19,814,179			12,988,305			12,716,054			12,802,354			12,653,622
Accrued taxes, expenses and other liabilities	424,559			280,233			350,886			315,093			305,705
Total liabilities	20,238,738			13,268,538			13,066,940			13,117,447			12,959,327
SHAREHOLDERS' EQUITY
Preferred stock	100,000			62,222			—			—			—
Common stock warrant	2,637			—			—			—			—
Common stock	127,937			127,937			127,937			127,937			127,937
Capital surplus	1,274,758			473,943			474,532			472,820			473,650
Accumulated other comprehensive income (loss)	(29,033		)	(21,247		)	(17,666		)	(14,627		)	(18,363		)
Retained earnings	1,225,380			1,209,837			1,188,641			1,168,649			1,156,324
Treasury stock	(129,715		)	(137,687		)	(138,169		)	(138,210		)	(140,361		)
Total shareholders' equity	2,571,964			1,715,005			1,635,275			1,616,569			1,599,187
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	22,810,702		$	14,983,543		$	14,702,215		$	14,734,016		$	14,558,514

FirstMerit Corporation Reports Second Quarter 2013 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Average Loans by Product Type (Unaudited)

(Dollars in thousands)



	Quarter ended June 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,888,935	$	2,141,015	$	575,859	$	8,605,809
Mortgage	453,813		408,723		56,825		919,361
Installment	1,388,765		1,107,076		7,912		2,503,753
Home equity	831,243		288,254		111,076		1,230,573
Credit card	141,785		—		—		141,785
Leases	173,213		—		—		173,213
Subtotal	8,877,754		3,945,068		751,672		13,574,494
Loss share receivable	—		—		88,341		88,341
Total loans	$	8,877,754	$	3,945,068	$	840,013	$	13,662,835
Less allowance for loan losses	99,411		—		47,294		146,705
Net loans	$	8,778,343	$	3,945,068	$	792,719	$	13,516,130


	March 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,859,818	$	—	$	673,815	$	6,533,633
Mortgage	448,589		—		60,391		508,980
Installment	1,325,016		—		8,118		1,333,134
Home equity	806,936		—		114,551		921,487
Credit card	144,159		—		—		144,159
Leases	150,789		—		—		150,789
Subtotal	8,735,307		—		856,875		9,592,182
Loss share receivable	—		—		103,744		103,744
Total loans	$	8,735,307	$	—	$	960,619	$	9,695,926
Less allowance for loan losses	98,660		—		43,075		141,735
Net loans	$	8,636,647	$	—	$	917,544	$	9,554,191


	Quarter ended December 31, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,600,522	$	—	$	780,904	$	6,381,426
Mortgage	443,542		—		62,382		505,924
Installment	1,331,131		—		8,251		1,339,382
Home equity	798,663		—		120,052		918,715
Credit card	145,050		—		—		145,050
Leases	125,300		—		—		125,300
Subtotal	8,444,208		—		971,589		9,415,797
Loss share receivable	—		—		123,596		123,596
Total loans	$	8,444,208	$	—	$	1,095,185	$	9,539,393
Less allowance for loan losses	99,461		—		41,809		141,270
Net loans	$	8,344,747	$	—	$	1,053,376	$	9,398,123


	Quarter ended September 30, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,443,712	$	—	$	877,003	$	6,320,715
Mortgage	437,123		—		64,382		501,505
Installment	1,293,054		—		8,388		1,301,442
Home equity	779,087		—		125,371		904,458
Credit card	143,948		—		—		143,948
Leases	88,583		—		—		88,583
Subtotal	8,185,507		—		1,075,144		9,260,651
Loss share receivable	—		—		141,567		141,567
Total loans	$	8,185,507	$	—	$	1,216,711	$	9,402,218
Less allowance for loan losses	103,511		—		41,550		145,061
Net loans	$	8,081,996	$	—	$	1,175,161	$	9,257,157

FirstMerit Corporation Reports Second Quarter 2013 EPS Results




	June 30, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,274,352	$	—	$	953,016	$	6,227,368
Mortgage	431,752		—		67,026		498,778
Installment	1,263,013		—		9,001		1,272,014
Home equity	750,859		—		132,894		883,753
Credit card	142,311		—		—		142,311
Leases	78,862		—		—		78,862
Subtotal	7,941,149		—		1,161,937		9,103,086
Loss share receivable	—		—		163,247		163,247
Total loans	$	7,941,149	$	—	$	1,325,184	$	9,266,333
Less allowance for loan losses	103,535		—		40,030		143,565
Net loans	$	7,837,614	$	—	$	1,285,154	$	9,122,768

(1) Loans acquired from Citizens. No allowance was brought forward in accordance with the acquisition method of accounting.
(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

FirstMerit Corporation Reports Second Quarter 2013 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
	June 30, 2013							March 31, 2013							June 30, 2012
(Unaudited)	Average					Average		Average					Average		Average					Average
(Dollars in thousands)	Balance			Interest		Rate		Balance			Interest		Rate		Balance			Interest		Rate
ASSETS
Cash and due from banks	$	806,129						$	394,896						$	410,533
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	4,714,823			$	24,679	2.10	%	2,790,039			$	16,294	2.37	%	2,823,055			$	19,028	2.71	%
Obligations of states and political subdivisions (tax exempt)	710,579			9,217		5.20	%	541,014			6,595		4.94	%	482,475			6,254		5.21	%
Other securities and federal funds sold	504,343			4,459		3.55	%	366,926			2,944		3.25	%	392,394			2,756		2.82	%
Total investment securities and federal funds sold	5,929,745			38,355		2.59	%	3,697,979			25,833		2.83	%	3,697,924			28,038		3.05	%
Loans held for sale	17,394			143		3.30	%	14,884			144		3.92	%	22,731			238		4.21	%
Loans, including loss share receivable	13,662,835			178,847		5.25	%	9,695,926			99,006		4.14	%	9,266,333			103,245		4.48	%
Total earning assets	19,609,974			217,345		4.45	%	13,408,789			124,983		3.78	%	12,986,988			131,521		4.07	%
Allowance for loan losses	(146,565		)					(141,735		)					(143,565		)
Other assets	2,541,164							1,321,593							1,304,558
Total assets	$	22,810,702						$	14,983,543						$	14,558,514
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,095,977		—		—	%	$	3,321,660		—		—	%	$	3,144,183		—		—	%
Interest-bearing	2,347,155			656		0.11	%	1,300,816			318		0.10	%	1,060,771			236		0.09	%
Savings and money market accounts	8,210,780			6,469		0.32	%	5,835,750			5,315		0.37	%	5,732,007			5,033		0.35	%
Certificates and other time deposits	2,680,332			3,374		0.50	%	1,331,558			2,063		0.63	%	1,618,322			3,169		0.79	%
Total deposits	18,334,244			10,499		0.23	%	11,789,784			7,696		0.26	%	11,555,283			8,438		0.29	%
Securities sold under agreements to repurchase	927,451			329		0.14	%	906,717			313		0.14	%	920,352			276		0.12	%
Wholesale borrowings	237,887			1,169		1.97	%	136,298			850		2.53	%	177,987			1,118		2.53	%
Long-term debt	314,597			3,743		4.77	%	155,506			1,748		4.56	%	—			—		—	%
Total interest bearing liabilities	14,718,202			15,740		0.43	%	9,666,645			10,607		0.45	%	9,509,439			9,832		0.42	%
Other liabilities	424,559							280,233							305,705
Shareholders' equity	2,571,964							1,715,005							1,599,187
Total liabilities and shareholders' equity	$	22,810,702						$	14,983,543						$	14,558,514
Net yield on earning assets	$	19,609,974		$	201,605	4.12	%	$	13,408,789		$	114,376	3.46	%	$	12,986,988		$	121,689	3.77	%
Interest rate spread						4.02	%						3.34	%						3.66	%

Note: Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBIDARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential

	Six months ended							Six months ended
	June 30, 2013							June 30, 2012
(Unaudited)	Average					Average		Average					Average
(Dollars in thousands)	Balance			Interest		Rate		Balance			Interest		Rate
ASSETS
Cash and due from banks	$	601,649						$	394,634
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	3,757,748			$	40,974	2.20	%	2,852,550			$	38,707	2.73	%
Obligations of states and political subdivisions (tax exempt)	626,265			15,812		5.09	%	459,640			12,118		5.30	%
Other securities and federal funds sold	436,014			7,403		3.42	%	382,184			5,494		2.89	%
Total investment securities and federal funds sold	4,820,027			64,189		2.69	%	3,694,374			56,319		3.07	%
Loans held for sale	16,146			287		3.58	%	24,607			522		4.27	%
Loans,including loss share receivable	11,690,339			277,852		4.79	%	9,242,105			206,400		4.49	%
Total earning assets	16,526,512			342,328		4.18	%	12,961,086			263,241		4.08	%
Allowance for loan losses	(144,164		)					(143,096		)
Other assets	1,930,584							1,314,888
Total assets	$	18,914,581						$	14,527,512
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	4,213,720		—		—	%	$	3,090,386		—		—%
Interest-bearing	1,826,876			974		0.11	%	1,063,451			483		0.09	%
Savings and money market accounts	7,029,826			11,784		0.34	%	5,703,530			10,136		0.36	%
Certificates and other time deposits	2,009,671			5,437		0.55	%	1,656,284			6,693		0.81	%
Total deposits	15,080,093			18,195		0.24	%	11,513,651			17,312		0.30	%
Securities sold under agreements to repurchase	917,141			642		0.14	%	904,033			544		0.12	%
Wholesale borrowings	187,373			2,019		2.17	%	181,323			2,269		2.52	%
Long-term debt	235,491			5,491		4.70	%	—			—		—	%
Total interest bearing liabilities	12,206,378			26,347		0.44	%	9,508,621			20,125		0.43	%
Other liabilities	348,632							338,408
Shareholders' equity	2,145,851							1,590,097
Total liabilities and shareholders' equity	$	18,914,581						$	14,527,512
Net yield on earning assets	$	16,526,512		$	315,981	3.86	%	$	12,961,086		$	243,116	3.77	%
Interest rate spread						3.74	%						3.66	%

Note: Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)				Quarters ended						Six months ended
(Dollars in thousands except per share data)				June 30,						June 30,
				2013			2012			2013			2012
Interest income:
	Loans and loans held for sale			$	178,535		$	103,126		$	277,206		$	206,208
	Investment securities:
		Taxable		29,138			21,783			48,377			44,201
		Tax-exempt		6,098			3,846			10,143			7,426
		Total investment securities interest		35,236			25,629			58,520			51,627
			Total interest income	213,771			128,755			335,726			257,835
Interest expense:
	Deposits:
		Interest-bearing		656			236			974			483
		Savings and money market accounts		6,469			5,033			11,784			10,136
		Certificates and other time deposits		3,374			3,169			5,437			6,693
	Securities sold under agreements to repurchase			329			276			642			544
	Wholesale borrowings			1,169			1,118			2,019			2,269
	Long-term debt			3,743			—			5,491			—
		Total interest expense		15,740			9,832			26,347			20,125
		Net interest income		198,031			118,923			309,379			237,710
Provision for originated loan losses				3,151			8,766			8,959			16,895
Provision for covered loan losses				4,158			3,430			8,297			9,362
		Net interest income after provision for loan losses		190,722			106,727			292,123			211,453
Other income:
	Trust department income			9,167			5,730			14,907			11,357
	Service charges on deposits			20,582			14,478			33,168			28,887
	Credit card fees			14,317			11,216			24,540			21,396
	ATM and other service fees			4,945			3,890			8,280			7,680
	Bank owned life insurance income			3,641			2,923			8,538			5,979
	Investment services and insurance			3,429			2,388			5,844			4,635
	Investment securities (losses)/gains, net			(2,794		)	548			(2,803		)	808
	Loan sales and servicing income			7,985			5,139			15,848			11,830
	Other operating income			8,167			8,989			18,510			14,455
		Total other income		69,439			55,301			126,832			107,027
Other expenses:
	Salaries, wages, pension and employee benefits			105,099			61,598			163,005			125,571
	Net occupancy expense			13,346			7,971			21,628			16,563
	Equipment expense			10,309			7,598			17,659			14,702
	Stationery, supplies and postage			3,407			2,285			5,503			4,428
	Bankcard, loan processing and other costs			12,417			8,858			20,257			16,511
	Professional services			17,144			9,307			22,554			12,659
	Amortization of intangibles			2,411			483			2,728			966
	FDIC insurance expense			4,149			3,463			7,675			7,183
	Other operating expense			21,358			17,514			35,556			34,262
		Total other expenses		189,640			119,077			296,565			232,845
			Income before income tax expense	70,521			42,951			122,391			85,635
Income tax expense				22,071			12,366			36,595			24,706
			Net income	$	48,450		$	30,585		$	85,796		$	60,929
Other comprehensive income, net of taxes
	Changes in unrealized securities' holding gains and (losses), net of taxes of ($26.7) million and $2.2 million for the quarter ended and ($31.0) and $3.2 million for the six months ended, respectively			$	(49,593	)	$	4,103		$	(57,513	)	$	5,987
	Reclassification for realized securities' (gains) and losses, net of taxes of ($0.98) million and $0.19 million for the quarter ended and ($0.98)million and $0.28 million for the six months ended, respectively			1,816			(356		)	1,822			(525		)
	Total other comprehensive gain (loss), net of taxes			(47,777		)	3,747			(55,691		)	5,462
		Comprehensive income		$	673		$	34,332		$	30,105		$	66,391
	Net income attributable to common shareholders			$	46,597		$	30,472		$	36,416		$	60,786
	Net income used in diluted EPS calculation			$	46,597		$	30,472		$	36,416		$	60,786
Weighted average number of common shares outstanding - basic				157,863			109,562			133,909			109,386
Weighted average number of common shares outstanding - diluted				157,982			109,562			133,969			109,386
Basic earnings per common share				$	0.30		$	0.28		$	0.62		$	0.56
Diluted earnings per common share				$	0.29		$	0.28		$	0.62		$	0.56
Dividend per common share				$	0.16		$	0.16		$	0.32		$	0.32

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME---LINKED QUARTERS

	Quarterly Results
(Unaudited)	2013			2013			2012			2012		2012
(Dollars in thousands, except share data)	2nd qtr			1st qtr			4th qtr			3rd qtr		2nd qtr
Loans and loans held for sale	$	178,535		$	98,672		$	101,086		$	103,005	$	103,126
Investment securities	35,236			23,284			24,280			24,477		25,629
Total interest income	213,771			121,956			125,366			127,482		128,755
Interest on deposits:
Interest-bearing	656			318			261			243		236
Savings and money market accounts	6,469			5,315			5,261			5,166		5,033
Certificates and other time deposits	3,374			2,063			2,287			2,743		3,169
Securities sold under agreements to repurchase	329			313			303			310		276
Wholesale borrowings	1,169			850			1,024			1,130		1,118
Long-term debt	3,743			1,748			—			—		—
Total interest expense	15,740			10,607			9,136			9,592		9,832
Net interest income	198,031			111,349			116,230			117,890		118,923
Provision for originated loan losses	3,151			5,808			7,116			9,965		8,766
Provision for covered loan losses	4,158			4,138			5,146			6,214		3,430
Net interest income after provision for loan losses	190,722			101,403			103,968			101,711		106,727
Other income:
Trust department income	9,167			5,741			5,662			6,124		5,730
Service charges on deposits	20,582			12,585			14,247			14,603		14,478
Credit card fees	14,317			10,222			11,167			11,006		11,216
ATM and other service fees	4,945			3,335			3,432			3,680		3,890
Bank owned life insurance income	3,641			4,897			3,067			3,094		2,923
Investment services and insurance	3,429			2,415			2,147			2,208		2,388
Investment securities (losses)/gains, net	(2,794		)	(9		)	2,425			553		548
Loan sales and servicing income	7,985			7,863			7,946			7,255		5,139
Other operating income	8,167			10,343			11,559			6,402		8,989
Total other income	69,439			57,392			61,652			54,925		55,301
Other expenses:
Salaries, wages, pension and employee benefits	105,099			57,906			61,560			58,061		61,598
Net occupancy expense	13,346			8,282			7,114			8,077		7,971
Equipment expense	10,309			7,349			7,398			7,143		7,598
Stationery, supplies and postage	3,407			2,096			2,162			2,210		2,285
Bankcard, loan processing and other costs	12,417			7,840			9,260			8,424		8,858
Professional services	17,144			5,410			6,119			4,702		9,307
Amortization of intangibles	2,411			317			444			456		483
FDIC insurance expense	4,149			3,526			1,738			1,832		3,463
Other operating expense	21,358			14,199			16,386			17,682		17,514
Total other expenses	189,640			106,925			112,181			108,587		119,077
Income before income tax expense	70,521			51,870			53,439			48,049		42,951
Income taxes	22,071			14,524			15,215			13,096		12,366
Net income	48,450			37,346			38,224			34,953		30,585
Other comprehensive income (loss), net of taxes	(47,777		)	(7,914		)	(2,305		)	4,525		3,747
Comprehensive income	$	673		$	29,432		$	35,919		$	39,478	$	34,332
Net income attributable to common shareholders	$	46,597		$	36,125		$	38,041		$	34,797	$	30,472
Net income used in diluted EPS calculation	$	46,597		$	36,125		$	38,041		$	34,797	$	30,472
Weighted-average common shares - basic	157,863			109,689			109,652			109,645		109,562
Weighted-average common shares - diluted	157,982			109,689			109,652			109,645		109,562
Basic earnings per common share	$	0.30		$	0.33		$	0.35		$	0.32	$	0.28
Diluted earnings per common share	$	0.29		$	0.33		$	0.35		$	0.32	$	0.28

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION (excluding acquired loans and covered assets) (a)


	(Unaudited)															(Audited)
(Dollars in thousands, except ratios)	Quarterly Periods															Annual Period
	June 30,			March 31,			December 31,			September 30,			June 30,			December 31,
Allowance for Credit Losses	2013			2013			2012			2012			2012			2012
Allowance for originated loan losses, beginning of period	$	98,843		$	98,942		$	98,942		$	103,849		$	103,849		$	107,699
Provision for originated loan losses	3,151			5,808			7,116			9,965			8,766			33,976
Charge-offs	10,969			10,776			12,475			20,999			15,014			65,905
Recoveries	7,620			4,869			5,359			6,127			6,248			23,172
Net charge-offs	3,349			5,907			7,116			14,872			8,766			42,733
Allowance for originated loan losses, end of period	$	98,645		$	98,843		$	98,942		$	98,942		$	103,849		$	98,942
Reserve for unfunded lending commitments,
beginning of period	$	4,941		$	5,433		$	5,760		$	5,666		$	5,410		$	6,373
Provision for (relief of) credit losses	3,173			(492		)	(327		)	94			256			(940		)
Reserve for unfunded lending commitments,
end of period	$	8,114		$	4,941		$	5,433		$	5,760		$	5,666		$	5,433
Allowance for Credit Losses	$	106,759		$	103,784		$	104,375		$	104,702		$	109,515		$	104,375
Ratios
Provision for loan losses to average loans	0.14		%	0.27		%	0.34		%	0.48		%	0.44		%	0.42		%
Net charge-offs to average loans	0.15		%	0.27		%	0.34		%	0.72		%	0.44		%	0.53		%
Allowance for loan losses to period-end loans	1.08		%	1.13		%	1.13		%	1.19		%	1.28		%	1.13		%
Allowance for credit losses to period-end loans	1.17		%	1.18		%	1.20		%	1.26		%	1.35		%	1.20		%
Allowance for loan losses to nonperforming loans	216.97		%	242.21		%	269.69		%	196.66		%	222.44		%	269.69		%
Allowance for credit losses to nonperforming loans	234.82		%	254.32		%	284.50		%	208.11		%	234.57		%	284.50		%
Asset Quality
Impaired originated loans:
Nonaccrual	$	28,935		$	23,843		$	21,766		$	31,492		$	38,381		$	21,766
Other nonperforming loans:
Nonaccrual	16,529			16,966			14,921			18,819			8,306			14,921
Total nonperforming loans	45,464			40,809			36,687			50,311			46,687			36,687
Other real estate ("ORE")	20,713			11,422			13,537			13,744			14,393			13,537
Total nonperforming assets ("NPAs")	$	66,177		$	52,231		$	50,224		$	64,055		$	61,080		$	50,224
NPAs to period-end loans + ORE	0.72		%	0.59		%	0.57		%	0.77		%	0.75		%	0.57		%
Accruing originated loans past due 90 days or more	$	11,760		$	12,393		$	9,417		$	9,691		$	6,545		$	9,417

(a) Due to the impact of acquisition accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired loans and covered assets are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. Acquired and covered loans and the related loss share receivable had a period end balance of $5.0 billion, $0.9 billion, $1.0 billion, $1.0 billion and $1.2 billion and covered ORE and related loss share receivable had a period end balance of $67.8 million, $70.3 million, $59.9 million, $56.8 million and $54.5 million at June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL

(Unaudited)
(Dollars in thousands)
	2013			2013			2012		2012		2012
QUARTERLY OTHER INCOME DETAIL	2nd qtr			1st qtr			4th qtr		3rd qtr		2nd qtr
Trust department income	$	9,167		$	5,741		$	5,662	$	6,124	$	5,730
Service charges on deposits	20,582			12,585			14,247		14,603		14,478
Credit card fees	14,317			10,222			11,167		11,006		11,216
ATM and other service fees	4,945			3,335			3,432		3,680		3,890
Bank owned life insurance income	3,641			4,897			3,067		3,094		2,923
Investment services and insurance	3,429			2,415			2,147		2,208		2,388
Investment securities (losses)/gains, net	(2,794		)	(9		)	2,425		553		548
Loan sales and servicing income	7,985			7,863			7,946		7,255		5,139
Other operating income	8,167			10,343			11,559		6,402		8,989
Total Other Income	$	69,439		$	57,392		$	61,652	$	54,925	$	55,301
	2013			2013			2012		2012		2012
QUARTERLY OTHER EXPENSES DETAIL	2nd qtr			1st qtr			4th qtr		3rd qtr		2nd qtr
Salaries and wages	$	85,680		$	46,391		$	45,988	$	43,806	$	48,766
Pension and employee benefits	19,419			11,515			15,572		14,255		12,832
Net occupancy expense	13,346			8,282			7,114		8,077		7,971
Equipment expense	10,309			7,349			7,398		7,143		7,598
Taxes, other than income taxes	2,891			1,922			1,924		2,051		2,020
Stationery, supplies and postage	3,407			2,096			2,162		2,210		2,285
Bankcard, loan processing and other costs	12,417			7,840			9,260		8,424		8,858
Advertising	3,745			2,070			2,774		2,472		2,280
Professional services	17,144			5,410			6,119		4,702		9,307
Telephone	2,728			1,177			1,230		1,316		1,379
Amortization of intangibles	2,411			317			444		456		483
FDIC insurance expense	4,149			3,526			1,738		1,832		3,463
Other operating expense	11,994			9,030			10,458		11,843		11,835
Total Other Expenses	$	189,640		$	106,925		$	112,181	$	108,587	$	119,077

FirstMerit Corporation Reports Second Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR ORIGINATED LOAN LOSSES - Net Charge-off Detail (excluding acquired and covered loans) (a)

(Unaudited)	Quarters ended						Six months ended						Year ended
(Dollars in thousands)	June 30,						June 30,						December 31,
	2013			2012			2013			2012			2012
Allowance for originated loan losses - beginning of period	$	98,843		$	103,849		$	98,942		$	107,699		$	107,699
Loans charged off:
Commercial	2,750			6,941			5,422			13,940			28,648
Mortgage	414			878			684			1,740			3,964
Installment	3,612			3,696			8,206			8,934			18,029
Home equity	1,133			1,465			2,439			3,789			7,249
Credit cards	1,459			1,645			2,862			3,228			6,171
Leases	1,237			—			1,237			—			144
Overdrafts	364			389			895			800			1,700
Total	10,969			15,014			21,745			32,431			65,905
Recoveries:
Commercial	3,762			1,966			5,007			2,660			5,626
Mortgage	51			56			94			91			235
Installment	2,728			3,004			5,197			6,184			11,635
Home equity	486			593			833			1,238			2,819
Credit cards	469			465			982			1,095			2,138
Manufactured housing	11			15			38			37			59
Leases	—			1			89			38			38
Overdrafts	113			148			249			343			622
Total	7,620			6,248			12,489			11,686			23,172
Net charge-offs	3,349			8,766			9,256			20,745			42,733
Provision for originated loan losses	3,151			8,766			8,959			16,895			33,976
Allowance for originated loan losses-end of period	$	98,645		$	103,849		$	98,645		$	103,849		$	98,942

Average originated loans	$	8,877,754		$	7,941,149		$	8,806,924		$	7,861,298		$	8,089,317
Ratio to average originated loans:
(Annualized) originated net charge-offs	0.15		%	0.44		%	0.21		%	0.53		%	0.53		%
Provision for originated loan losses	0.14		%	0.44		%	0.21		%	0.43		%	0.42		%
Originated Loans, period-end	$	9,132,625		$	8,099,928		$	9,132,625		$	8,099,928		$	8,731,659

Allowance for credit losses:	$	106,759		$	109,515		$	106,759		$	109,515		$	104,375
To (annualized) net charge-offs	7.95			3.11			5.72			2.63			2.44
Allowance for originated loan losses:
To period-end originated loans	1.08		%	1.28		%	1.08		%	1.28		%	1.13		%
To (annualized) net originated charge-offs	7.34			2.95			5.28			2.49			2.32

(a) Due to the impact of acquisition accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and covered loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.

FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 23, 2013

Attached files