FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 27, 2015

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FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

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 Fourth Quarter 2014 EPS of $0.36 Per Share
Quarterly Highlights include:

•
Profitability Sustained: 63rd consecutive quarter of profitability.
•
Loan growth continued: Total loan growth of $84.1 million, or 0.55% from the prior quarter.
•
Credit quality remained solid: Net charge-offs to average originated loans of 0.12%; nonperforming assets as a percent of period end originated loans plus other real estate at 0.44%.
•
Balance sheet remained strong: Strong tangible common equity ratio1 at 7.98%.

Akron, Ohio (January 27, 2015) - FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported fourth quarter 2014 net income of $61.1 million, or $0.36 per diluted share. This compares with $63.9 million, or $0.37 per diluted share, for the third quarter 2014 and $57.2 million, or $0.33 per diluted share, for the fourth quarter 2013.
 
Returns on average common equity (“ROE”) and average assets (“ROA”) for the fourth quarter 2014 were 8.50% and 0.98%, respectively, compared with 9.03% and 1.03%, respectively, for the third quarter 2014 and 8.48% and 0.94%, respectively, for the fourth quarter 2013.

"FirstMerit’s solid performance in the fourth quarter of 2014 as well as for the entire year reflects a continued focus on strong organic growth, solid credit quality and strong capital levels. Our first full year of serving our five-state Midwest footprint resulted in record net income for the Corporation, keeping our span of consecutive profitable quarters going for more than 15 years. Our dedicated employees across the Corporation continue to work hard to provide our customers with exceptional service,” said Paul Greig, Chairman, President and CEO of FirstMerit Corporation.









1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

1
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

Net Interest Income

Net interest income on a fully tax-equivalent (“TE”)1 basis was $196.5 million in the fourth quarter 2014 compared with $197.6 million in the third quarter 2014 and $202.1 million in the fourth quarter 2013.

Net interest margin on TE basis1 was 3.56% for the fourth quarter 2014 compared with 3.60% for the third quarter 2014 and 3.89% for the fourth quarter 2013. Net interest margin compression in the fourth quarter, compared with the prior quarter, resulted from lower accretion from the acquired and covered loan portfolios due to the continued decline in the loan balances.

Average originated loans were $12.3 billion during the fourth quarter 2014, an increase of $491.9 million, or 4.16%, compared with the third quarter 2014, and an increase of $2.3 billion, or 23.20%, compared with the fourth quarter 2013. Average originated commercial loans increased $200.0 million, or 2.65%, compared with the prior quarter, and increased $1.2 billion, or 18.52%, compared with the year-ago quarter.

Average deposits were $19.5 billion during the fourth quarter 2014, a decrease of $81.2 million, or 0.42%, compared with the third quarter 2014, and a decrease of $66.8 million, or 0.34%, compared with the fourth quarter 2013. During the fourth quarter 2014, average core deposits, which exclude time deposits, decreased $86.8 million, or 0.50%, compared with the third quarter 2014 and increased $143.6 million, or 0.85%, compared with the fourth quarter 2013. Average time deposits increased $5.7 million, or 0.24%, and decreased $210.4 million, or 8.25%, respectively, over the prior and year-ago quarters. For the fourth quarter 2014, average core deposits accounted for 87.96% of total average deposits, compared with 88.04% for the third quarter 2014 and 86.93% for the fourth quarter 2013.

Average investments decreased $24.4 million, or 0.37%, compared with the third quarter 2014 and increased $312.6 million, or 4.96%, compared with the fourth quarter 2013.

Noninterest Income

Noninterest income, excluding gains and losses on securities transactions1, for the fourth quarter 2014 was $71.9 million, an increase of $2.2 million, or 3.19%, from the third quarter 2014 and relatively flat compared to the fourth quarter 2013. Included in noninterest income in the fourth quarter 2014 were death benefit proceeds of $3.5 million, and $0.5 million of net gains on covered loan resolutions. This additional income in the current quarter was partially offset by a decline from the third quarter 2014 in loan sales and servicing income of $1.2 million reflecting impairment on mortgage servicing rights and a decrease in the net fair value of the mortgage pipeline due to declining interest rates.

Noninterest income, excluding net securities gains and losses, as a percentage of net revenue1 for the fourth quarter 2014 was 26.80% compared with 26.08% for third quarter 2014 and 26.38% for the fourth quarter 2013.








1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

2
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

Noninterest Expense

Noninterest expense for the fourth quarter 2014 was $165.0 million, an increase of $1.9 million, or 1.16%, from the third quarter 2014 and a decrease of $13.6 million, or 7.60%, from the fourth quarter 2013. Noninterest expense in the current quarter included $0.9 million of restructure costs. Included in noninterest expense in the fourth quarter 2013 were merger related costs associated with the Citizens acquisition of $6.0 million. The Corporation's efficiency ratio1 was 60.39% for the fourth quarter 2014, compared with 59.92% for the third quarter 2014 and 64.08% for the fourth quarter 2013.

The effective tax rate was 29.09% for the fourth quarter 2014 compared with 29.76% for the third quarter 2014 and 30.12% for the fourth quarter 2013.

Asset Quality (excluding acquired loans and covered assets)

Due to the impact of business combination 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 at the date of acquisition with no allowance brought forward in accordance with business combination accounting. Impaired acquired and covered loans are considered to be performing due to the application of the accretion method under the applicable accounting guidance.

Net charge-offs on originated loans totaled $3.8 million in the fourth quarter 2014, compared to $5.9 million in the third quarter 2014, and $3.4 million in the fourth quarter 2013. Net charge-offs on originated loans were 0.12% of average originated loans at December 31, 2014, compared to 0.20% at September 30, 2014 and 0.13% at December 31, 2013.

Nonperforming assets totaled $55.0 million at December 31, 2014, a decrease of $8.1 million, or 12.80%, compared with September 30, 2014 and a decrease of $5.8 million, or 9.60%, compared with December 31, 2013. Nonperforming assets at December 31, 2014 represented 0.44% of period-end originated loans plus other real estate compared with 0.52% at September 30, 2014 and 0.60% at December 31, 2013.

The allowance for originated loan losses totaled $95.7 million at December 31, 2014. At December 31, 2014, the allowance for originated loan losses was 0.77% of period-end originated loans, compared with 0.75% at September 30, 2014 and 0.94% at December 31, 2013. In support of continued strong loan growth, the allowance for originated loan losses at December 31, 2014 compared to September 30, 2014 increased by $4.8 million. 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 0.81% of period end originated loans at December 31, 2014, compared with 0.81% at September 30, 2014 and 1.02% at December 31, 2013. The allowance for credit losses to nonperforming loans was 293.34% at December 31, 2014, compared with 248.85% at September 30, 2014 and 247.35% at December 31, 2013.








1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

3
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

Balance Sheet

The Corporation’s total assets at December 31, 2014 were $24.9 billion, an increase of $294.1 million, or 1.20%, compared with September 30, 2014 and an increase of $990.3 million, or 4.14%, compared with December 31, 2013. Total gross loans (originated, acquired, and covered) and total deposits were $15.3 billion and $19.5 billion, respectively, at December 31, 2014, $15.2 billion and $19.4 billion, respectively, at September 30, 2014 and $14.3 billion and $19.5 billion, respectively, at December 31, 2013. Core deposits totaled $17.2 billion at December 31, 2014, an increase of $239.3 million, or 1.41%, from September 30, 2014 and an increase of $142.2 million, or 0.83%, from December 31, 2013.

In the fourth quarter of 2014, FirstMerit Bank N.A. issued $250.0 million in aggregate principal of 4.27% subordinated notes due 2026. In connection with the issuance of these notes, the Bank entered into an interest rate swap agreement to manage interest rate risk whereby the fixed rate of interest was contractually modified to a floating rate of 1 month LIBOR + 1.61%.

Shareholders’ equity was $2.8 billion as of December 31, 2014 and September 30, 2014, and $2.7 billion as of December 31, 2013. The Corporation maintained a strong capital position as tangible common equity1 to assets was 7.98% at December 31, 2014, compared with 8.01% at September 30, 2014 and 7.70% at December 31, 2013. The common share cash dividend paid in the fourth quarter 2014 was $0.16 per share.

Non-GAAP Financial Measures

In addition to results presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this news release contains certain non-GAAP financial information and performance measures. The Corporation's management uses these non-GAAP financial measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations of the Corporation and enhance comparability of results with prior periods, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. The Corporation believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. The Corporation's management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the Corporation's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The Corporation evaluates its net interest income on a fully taxable-equivalent basis, a non-GAAP financial measure. The Corporation believes managing the business with net interest income on a fully taxable-equivalent basis provides a more accurate picture of the interest margin for comparative purposes. Total revenue, net of interest expense, includes net interest income on a fully taxable-equivalent basis and noninterest income excluding gains and losses on the sale of securities. The Corporation views related ratios and analyses (i.e., efficiency ratios) on a fully taxable-equivalent basis. To derive the fully taxable-equivalent basis, net interest income is adjusted to reflect tax-exempt income on an equivalent before-tax basis with a corresponding increase in income tax expense. For purposes of this calculation, the Corporation uses the federal statutory tax rate of 35 percent. This measure ensures comparability of net interest income arising from taxable and tax-exempt sources.


1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

4
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

The Corporation also evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents an adjusted shareholders' equity or common shareholders' equity amount which has been reduced by goodwill and intangible assets. Return on average tangible common shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average common shareholders' equity. The tangible common equity ratio represents adjusted ending common shareholders' equity divided by total assets less goodwill and intangible assets. Return on average tangible shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average total shareholders' equity. The tangible equity ratio represents adjusted ending shareholders' equity divided by total assets less goodwill and intangible assets. Tangible book value per common share represents adjusted ending common shareholders' equity divided by ending common shares outstanding. These measures are used to evaluate the Corporation's use of equity. In addition, profitability, relationship and investment models all use return on average tangible shareholders' equity as key measures to support our overall growth goals.

The following tables provide reconciliations of these non-GAAP measures to financial measures defined by GAAP.
Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis
 
 
 
Quarters
 
2014
2014
2014
2014
2013
(Dollars in thousands)
4th qtr
3rd qtr
2nd qtr
1st qtr
4th qtr
Net interest income (GAAP)
$
192,511

$
193,578

$
195,577

$
193,900

$
198,068

Plus:
Fully taxable-equivalent adjustment
3,998

4,066

4,089

3,954

4,077

Net interest income on a fully taxable-equivalent basis (non-GAAP)
196,509

197,644

199,666

197,854

202,145

Average earning assets
21,920,889

21,804,243

21,367,496

20,903,863

20,593,750

Net interest margin on a fully taxable-equivalent basis (non-GAAP)
3.56
%
3.60
%
3.75
%
3.84
%
3.89
%
Reconciliation of noninterest income and noninterest expense to adjusted noninterest income and adjusted noninterest expense
 
 
Quarters
 
2014
2014
2014
2014
2013
(Dollars in thousands)
4th qtr
3rd qtr
2nd qtr
1st qtr
4th qtr
Noninterest expense (GAAP)
$
165,041

$
163,145

$
167,400

$
169,331

$
178,620

Less:
Intangible asset amortization
2,933

2,933

2,933

2,936

2,692

Adjusted noninterest expense (non-GAAP)
162,108

160,212

164,467

166,395

175,928

Noninterest income (GAAP)
71,960

69,733

72,560

67,270

72,420

Less:
Securities (gains)/losses
16

14

80

56

—

Adjusted noninterest income (non-GAAP)
71,944

69,719

72,480

67,214

72,420

Net interest income on a fully taxable-equivalent basis (non-GAAP)
196,509

197,644

199,666

197,854

202,145

Adjusted revenue (non-GAAP)
268,453

267,363

272,146

265,068

274,565

Efficiency ratio (non-GAAP)
60.39
%
59.92
%
60.43
%
62.77
%
64.08
%

5
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

Reconciliation of shareholders' equity to tangible common equity, and total assets to tangible assets
 
 
 
Quarters
 
2014
2014
2014
2014
2013
(Dollars in thousands, except per share amounts)
4th qtr
3rd qtr
2nd qtr
1st qtr
4th qtr
Shareholders’ equity (GAAP)
$
2,834,281

$
2,820,431

$
2,791,738

$
2,742,966

$
2,702,894

Less:
Preferred stock
100,000

100,000

100,000

100,000

100,000

Common shareholders' equity (non-GAAP)
2,734,281

2,720,431

2,691,738

2,642,966

2,602,894

Less:
Intangible assets
71,020

73,953

76,886

79,819

82,755

 
Goodwill
741,740

741,740

741,740

741,740

741,740

Tangible common equity (non-GAAP)
1,921,521

1,904,738

1,873,112

1,821,407

1,778,399

Total assets (GAAP)
$
24,902,347

$
24,608,207

$
24,564,431

$
24,498,661

$
23,912,028

Less:
Intangible assets
71,020

73,953

76,886

79,819

82,755

 
Goodwill
741,740

741,740

741,740

741,740

741,740

Tangible assets (non-GAAP)
$
24,089,587

$
23,792,514

$
23,745,805

$
23,677,102

$
23,087,533

Period end common shares
165,390

165,384

165,393

165,087

165,056

Tangible book value per common share
$
11.62

$
11.52

$
11.33

$
11.03

$
10.77

Tangible common equity to tangible assets ratio (non-GAAP)
7.98
%
8.01
%
7.89
%
7.69
%
7.70
%

Fourth Quarter 2014 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 fourth 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: 63896536. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on January 27, 2015 through February 10, 2015 by dialing (855) 859-2056, and entering the PIN: 63896536. The Corporation will provide a slide presentation, which management will speak to during the conference call. A copy of the presentation will be available at https://www.firstmerit.com/personal/investors.aspx; click on the Presentations link to access the slide presentation.

About FirstMerit Corporation

FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $24.9 billion as of December 31, 2014, and 383 banking offices and 411 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 and FirstMerit Title Agency, Ltd.

Subsequent Events

The Corporation is required under GAAP to evaluate subsequent events through the filing of its consolidated financial statements for the year ended December 31, 2014 on Form 10-K. As a result, the Corporation will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2014 and will adjust amounts preliminarily reported, if necessary.


6
FirstMerit Corporation Reports Fourth Quarter 2014 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 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.




7
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
Consolidated Financial Highlights
 
 
 
 
 
(Unaudited)
 
 
Quarters
 
 
(Dollars in thousands, except per share amounts)
2014
2014
2014
2014
2013
 
4th qtr
3rd qtr
2nd qtr
1st qtr
4th qtr
EARNINGS
 
 
 
 
 
Net interest income TE (a)
$
196,509

$
197,644

$
199,666

$
197,854

$
202,145

TE adjustment (a)
3,998

4,066

4,089

3,954

4,077

Provision for originated loan losses
8,662

4,862

5,993

3,654

1,552

Provision for acquired loan losses
3,407

4,411

5,815

7,827

5,515

Provision/(recapture) for covered loan losses
1,228

(81
)
3,445

3,055

2,983

Noninterest income
71,960

69,733

72,560

67,270

72,420

Noninterest expense
165,041

163,145

167,400

169,331

178,620

Net income
61,079

63,898

59,519

53,455

57,174

Diluted EPS (c)
0.36

0.37

0.35

0.31

0.33

PERFORMANCE RATIOS
 
 
 
 
 
Return on average assets (ROA)
0.98
%
1.03
%
0.98
%
0.90
%
0.94
%
Return on average equity (ROE)
8.50
%
9.03
%
8.62
%
7.93
%
8.48
%
Return on average tangible common equity (a)
12.52
%
13.41
%
12.92
%
11.98
%
12.96
%
Net interest margin TE (a)
3.56
%
3.60
%
3.75
%
3.84
%
3.89
%
Efficiency ratio (a)
60.39
%
59.92
%
60.43
%
62.77
%
64.08
%
Number of full-time equivalent employees
4,273

4,302

4,392

4,521

4,570

MARKET DATA
 
 
 
 
 
Book value per common share
$
17.14

$
17.05

$
16.88

$
16.62

$
16.38

Tangible book value per common share (a)
11.62

11.52

11.33

11.03

10.77

Period end common share market value
18.89

17.62

19.75

20.83

22.23

Market as a % of book
110
%
103
%
117
%
125
%
136
%
Cash dividends per common share
$
0.16

$
0.16

$
0.16

$
0.16

$
0.16

Common Stock dividend payout ratio
44.44
%
43.24
%
45.71
%
51.61
%
48.48
%
Average basic common shares
165,395

165,389

165,335

165,060

165,054

Average diluted common shares
165,974

165,804

166,147

166,004

166,097

Period end common shares
165,390

165,384

165,393

165,087

165,056

Common shares repurchased
15

10

186

51

17

Common Stock market capitalization
$
3,124,217

$
2,914,066

$
3,266,512

$
3,438,762

$
3,669,195

ASSET QUALITY (excluding acquired and covered loans) (b)
 
 
 
 
 
Gross charge-offs
$
9,205

$
11,410

$
11,148

$
13,160

$
9,913

Net charge-offs
3,849

5,929

6,159

8,022

3,359

Allowance for originated loan losses
95,696

90,883

91,950

92,116

96,484

Reserve for unfunded lending commitments
5,848

6,966

7,107

7,481

7,907

Nonperforming assets (NPAs)
55,038

63,119

60,922

62,711

60,883

Net charge-offs to average loans ratio
0.12
%
0.20
%
0.22
%
0.31
%
0.13
%
Allowance for originated loan losses to period-end loans
0.77
%
0.75
%
0.80
%
0.85
%
0.94
%
Allowance for credit losses to period-end loans
0.81
%
0.81
%
0.86
%
0.92
%
1.02
%
NPAs to loans and other real estate
0.44
%
0.52
%
0.53
%
0.58
%
0.60
%
Allowance for originated loan losses to nonperforming loans
276.44
%
231.13
%
250.27
%
212.01
%
228.62
%
Allowance for credit losses to nonperforming loans
293.34
%
248.85
%
269.61
%
229.23
%
247.35
%
CAPITAL & LIQUIDITY
 
 
 
 
 
Period end tangible common equity to assets (a)
7.98
%
8.01
%
7.89
%
7.69
%
7.70
%
Average equity to assets
11.55
%
11.42
%
11.40
%
11.32
%
11.12
%
Average equity to total loans
18.67
%
18.58
%
18.90
%
19.04
%
18.81
%
Average total loans to deposits
78.47
%
77.36
%
75.15
%
73.11
%
72.84
%
AVERAGE BALANCES
 
 
 
 
 
Assets
$
24,664,987

$
24,583,776

$
24,291,276

$
24,144,570

$
24,034,846

Deposits
19,450,647

19,531,800

19,496,795

19,636,506

19,517,476

Originated loans
12,306,171

11,814,314

11,092,101

10,448,383

9,988,587

Acquired loans, including covered loans, less loss share receivable
2,956,867

3,295,547

3,558,810

3,907,802

4,227,693

Earning assets
21,920,889

21,804,243

21,367,496

20,903,863

20,593,750

Shareholders' equity
2,849,618

2,807,886

2,768,352

2,733,226

2,673,635

ENDING BALANCES
 
 
 
 
 
Assets
$
24,902,347

$
24,608,207

$
24,564,431

$
24,498,661

$
23,912,028

Deposits
19,504,665

19,366,911

19,298,396

19,811,674

19,533,601

Originated loans
12,493,812

12,071,759

11,467,193

10,826,913

10,213,387

Acquired loans, including covered loans,less loss share receivable
2,810,302

3,139,521

3,458,453

3,726,952

4,025,758

Goodwill
741,740

741,740

741,740

741,740

741,740

Intangible assets
71,020

73,953

76,886

79,819

82,755

Earning assets
22,153,552

21,930,840

21,789,773

21,715,302

21,048,910

Total shareholders' equity
2,834,281

2,820,431

2,791,738

2,742,966

2,702,894

NOTES:
 
 
 
 
 

(a) - Represents a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this press release for a reconciliation to GAAP financial measures.
(b) - Due to the impact of business combination 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.
(c) - Net income used to determine diluted EPS was reduced by the cash dividends payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A of approximately $1.5 million in each of the quarters presented.


8
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
December 31,
 
December 31,
 
(Unaudited, except December 31, 2013, which is derived from the audited financial statements)
2014
 
2013
 
ASSETS
 
 
 
 
 
Cash and due from banks
$
480,998

 
$
571,171

 
 
Interest-bearing deposits in banks
216,426

 
346,651

 
 
 
Total cash and cash equivalents
697,424

 
917,822

 
 
Investment securities:
 
 
 
 
 
 
Held-to-maturity
2,903,609

 
2,935,688

 
 
 
Available-for-sale
3,545,288

 
3,273,174

 
 
 
Other investments
148,654

 
180,803

 
 
Loans held for sale
13,428

 
11,622

 
 
Loans
15,326,147

 
14,300,972

 
 
Allowance for loan losses
(143,649
)
 
(141,252
)
 
 
     Net loans
15,182,498

 
14,159,720

 
 
Premises and equipment, net
332,297

 
327,054

 
 
Goodwill
741,740

 
741,740

 
 
Intangible assets
71,020

 
82,755

 
 
Covered other real estate
49,641

 
65,234

 
 
Accrued interest receivable and other assets
1,216,748

 
1,216,416

 
 
 
 
    Total assets
$
24,902,347

 
$
23,912,028

 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
Deposits:
 
 
 
 
 
 
Noninterest-bearing
$
5,786,662

 
$
5,459,029

 
 
 
Interest-bearing
3,028,888

 
3,026,735

 
 
 
Savings and money market accounts
8,399,612

 
8,587,167

 
 
 
Certificates and other time deposits
2,289,503

 
2,460,670

 
 
 
 
Total deposits
19,504,665

 
19,533,601

 
 
 
Federal funds purchased and securities sold under agreements to repurchase
1,272,591

 
851,535

 
 
 
Wholesale borrowings
428,071

 
200,600

 
 
 
Long-term debt
505,192

 
324,428

 
 
 
Accrued taxes, expenses, and other liabilities
357,547

 
298,970

 
 
 
 
Total liabilities
22,068,066

 
21,209,134

 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
5.875% Non-Cumulative Perpetual Preferred stock, Series A, without par value: authorized 115,000 shares; 100,000 issued
100,000

 
100,000

 
 
 
 
Common stock warrant
3,000

 
3,000

 
 
 
 
Common Stock, without par value; authorized 300,000,000 shares; issued: December 31, 2014 - 170,183,540 shares; December 31, 2013 - 170,183,540 shares
127,937

 
127,937

 
 
 
 
Capital surplus
1,393,090

 
1,390,643

 
 
 
 
Accumulated other comprehensive loss
(71,892
)
 
(66,876
)
 
 
 
 
Retained earnings
1,404,717

 
1,277,975

 
 
 
 
Treasury stock, at cost: December 31, 2014 - 4,793,566 shares; December 31, 2013 - 5,127,332 shares
(122,571
)
 
(129,785
)
 
 
 
 
Total shareholders' equity
2,834,281

 
2,702,894

 
 
 
 
    Total liabilities and shareholders' equity
$
24,902,347

 
$
23,912,028

 


9
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Period End Loans by Product Type (Unaudited)
(Dollars in thousands)
 
 
 
 
 
 
 
 
As of December 31, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,830,085

 
$
1,086,899

 
$
211,607

 
$
9,128,591

Mortgage
625,283

 
394,484

 
41,276

 
1,061,043

Installment
2,393,451

 
764,168

 
4,874

 
3,162,493

Home equity
1,110,336

 
233,629

 
73,365

 
1,417,330

Credit card
164,478

 
—

 
—

 
164,478

Leases
370,179

 
—

 
—

 
370,179

    Subtotal
12,493,812

 
2,479,180

 
331,122

 
15,304,114

Loss share receivable
—

 
—

 
22,033

 
22,033

    Total loans
12,493,812

 
2,479,180

 
353,155

 
15,326,147

Allowance for loan losses
(95,696
)
 
(7,457
)
 
(40,496
)
 
(143,649
)
Net loans
$
12,398,116

 
$
2,471,723

 
$
312,659

 
$
15,182,498

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,626,166

 
$
1,272,244

 
$
262,319

 
$
9,160,729

Mortgage
605,998

 
410,065

 
43,672

 
1,059,735

Installment
2,277,533

 
809,820

 
5,148

 
3,092,501

Home equity
1,062,013

 
252,975

 
83,278

 
1,398,266

Credit card
160,113

 
—

 
—

 
160,113

Leases
339,936

 
—

 
—

 
339,936

    Subtotal
12,071,759

 
2,745,104

 
394,417

 
15,211,280

Loss share receivable
—

 
—

 
30,746

 
30,746

    Total loans
12,071,759

 
2,745,104

 
425,163

 
15,242,026

Allowance for loan losses
(90,883
)
 
(6,206
)
 
(42,988
)
 
(140,077
)
Net loans
$
11,980,876

 
$
2,738,898

 
$
382,175

 
$
15,101,949

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,365,499

 
$
1,457,903

 
$
292,782

 
$
9,116,184

Mortgage
580,166

 
425,584

 
46,705

 
1,052,455

Installment
2,051,587

 
872,034

 
5,364

 
2,928,985

Home equity
998,179

 
268,266

 
89,815

 
1,356,260

Credit card
151,967

 
—

 
—

 
151,967

Leases
319,795

 
—

 
—

 
319,795

    Subtotal
11,467,193

 
3,023,787

 
434,666

 
14,925,646

Loss share receivable
—

 
—

 
43,981

 
43,981

    Total loans
11,467,193

 
3,023,787

 
478,647

 
14,969,627

Allowance for loan losses
(91,950
)
 
(4,977
)
 
(45,109
)
 
(142,036
)
Net loans
$
11,375,243

 
$
3,018,810

 
$
433,538

 
$
14,827,591

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,083,192

 
$
1,562,878

 
$
341,267

 
$
8,987,337

Mortgage
555,971

 
446,374

 
49,411

 
1,051,756

Installment
1,835,522

 
943,354

 
5,531

 
2,784,407

Home equity
946,802

 
283,309

 
94,828

 
1,324,939

Credit card
147,917

 
—

 
—

 
147,917

Leases
257,509

 
—

 
—

 
257,509

    Subtotal
10,826,913

 
3,235,915

 
491,037

 
14,553,865

Loss share receivable
—

 
—

 
54,748

 
54,748

    Total loans
10,826,913

 
3,235,915

 
545,785

 
14,608,613

Allowance for loan losses
(92,116
)
 
(2,974
)
 
(49,970
)
 
(145,060
)
Net loans
$
10,734,797

 
$
3,232,941

 
$
495,815

 
$
14,463,553

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

10
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

 
As of December 31, 2013
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
6,648,279

 
$
1,725,970

 
$
375,860

 
$
8,750,109

Mortgage
529,253

 
470,652

 
50,679

 
1,050,584

Installment
1,727,925

 
1,004,569

 
6,162

 
2,738,656

Home equity
920,066

 
294,424

 
97,442

 
1,311,932

Credit card
148,313

 
—

 
—

 
148,313

Leases
239,551

 
—

 
—

 
239,551

    Subtotal
10,213,387

 
3,495,615

 
530,143

 
14,239,145

Loss share receivable
—

 
—

 
61,827

 
61,827

    Total loans
10,213,387

 
3,495,615

 
591,970

 
14,300,972

Allowance for loan losses
(96,484
)
 
(741
)
 
(44,027
)
 
(141,252
)
Net loans
$
10,116,903

 
$
3,494,874

 
$
547,943

 
$
14,159,720

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


11
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
AVERAGE CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
Quarterly Periods
(Unaudited)
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
(Dollars in thousands)
2014
 
2014
 
2014
 
2014
 
2013
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
500,559

 
$
521,210

 
$
662,000

 
$
959,071

 
$
1,135,601

Investment securities:
 
 
 
 
 
 
 
 
 
Held-to-maturity
2,966,127

 
3,029,971

 
3,061,711

 
2,983,831

 
2,763,517

Available-for-sale
3,499,528

 
3,460,312

 
3,444,830

 
3,332,358

 
3,284,635

Other investments
148,636

 
148,427

 
148,440

 
168,389

 
253,490

Loans held for sale
16,708

 
17,433

 
10,196

 
6,804

 
10,248

Loans
15,289,890

 
15,148,100

 
14,702,319

 
14,412,481

 
14,281,860

Less: allowance for loan losses
138,540

 
140,026

 
146,368

 
138,891

 
177,628

Net loans
15,151,350

 
15,008,074

 
14,555,951

 
14,273,590

 
14,104,232

Total earning assets
21,920,889

 
21,804,243

 
21,367,496

 
20,903,863

 
20,593,750

Premises and equipment, net
321,187

 
317,366

 
323,175

 
327,845

 
326,632

Accrued interest receivable and other assets
2,060,892

 
2,080,983

 
2,084,973

 
2,092,682

 
2,156,491

TOTAL ASSETS
$
24,664,987

 
$
24,583,776

 
$
24,291,276

 
$
24,144,570

 
$
24,034,846

LIABILITIES
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
5,706,631

 
$
5,603,104

 
$
5,515,807

 
$
5,488,751

 
$
5,546,316

Interest-bearing
3,021,188

 
3,100,904

 
3,066,201

 
3,045,952

 
2,875,375

Savings and money market accounts
8,381,548

 
8,492,172

 
8,580,928

 
8,698,817

 
8,544,097

Certificates and other time deposits
2,341,280

 
2,335,620

 
2,333,859

 
2,402,986

 
2,551,688

Total deposits
19,450,647

 
19,531,800

 
19,496,795

 
19,636,506

 
19,517,476

Federal funds purchased and securities sold under
 
 
 
 
 
 
 
 
 
agreements to repurchase
1,241,948

 
1,182,507

 
1,024,598

 
884,065

 
948,959

Wholesale borrowings
450,587

 
438,941

 
373,213

 
276,324

 
200,622

Long-term debt
350,535

 
320,387

 
324,431

 
324,428

 
324,426

Total funds
21,493,717

 
21,473,635

 
21,219,037

 
21,121,323

 
20,991,483

Accrued taxes, expenses and other liabilities
321,652

 
302,255

 
303,887

 
290,021

 
369,728

Total liabilities
21,815,369

 
21,775,890

 
21,522,924

 
21,411,344

 
21,361,211

SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
Preferred stock
100,000

 
100,000

 
100,000

 
100,000

 
100,000

Common stock warrant
3,000

 
3,000

 
3,000

 
3,000

 
3,000

Common stock
127,937

 
127,937

 
127,937

 
127,937

 
127,937

Capital surplus
1,391,189

 
1,388,423

 
1,386,497

 
1,391,695

 
1,389,222

Accumulated other comprehensive loss
(38,827
)
 
(41,963
)
 
(44,952
)
 
(52,940
)
 
(79,431
)
Retained earnings
1,388,661

 
1,352,867

 
1,319,515

 
1,293,379

 
1,262,705

Treasury stock
(122,342
)
 
(122,378
)
 
(123,645
)
 
(129,845
)
 
(129,798
)
Total shareholders' equity
2,849,618

 
2,807,886

 
2,768,352

 
2,733,226

 
2,673,635

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
24,664,987

 
$
24,583,776

 
$
24,291,276

 
$
24,144,570

 
$
24,034,846

 
 
 
 
 
 
 
 
 
 


12
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Average Loans by Product Type (Unaudited)
(Dollars in thousands)
 
 
 
 
 
 
 
 
Quarter ended December 31, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,734,881

 
$
1,170,536

 
$
231,531

 
$
9,136,948

Mortgage
617,803

 
401,173

 
42,409

 
1,061,385

Installment
2,353,599

 
785,035

 
4,944

 
3,143,578

Home equity
1,087,123

 
242,878

 
78,361

 
1,408,362

Credit card
161,543

 
—

 
—

 
161,543

Leases
351,222

 
—

 
—

 
351,222

    Subtotal
12,306,171

 
2,599,622

 
357,245

 
15,263,038

Loss share receivable
—

 
—

 
26,852

 
26,852

    Total loans
12,306,171

 
2,599,622

 
384,097

 
15,289,890

Less allowance for loan losses
91,178

 
6,203

 
41,159

 
138,540

Net loans
$
12,214,993

 
$
2,593,419

 
$
342,938

 
$
15,151,350

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,534,848

 
$
1,373,103

 
$
271,299

 
$
9,179,250

Mortgage
594,258

 
416,417

 
44,672

 
1,055,347

Installment
2,171,246

 
838,687

 
5,278

 
3,015,211

Home equity
1,030,256

 
259,867

 
86,224

 
1,376,347

Credit card
156,866

 
—

 
—

 
156,866

Leases
326,840

 
—

 
—

 
326,840

    Subtotal
11,814,314

 
2,888,074

 
407,473

 
15,109,861

Loss share receivable
—

 
—

 
38,239

 
38,239

    Total loans
11,814,314

 
2,888,074

 
445,712

 
15,148,100

Less allowance for loan losses
91,888

 
6,088

 
42,050

 
140,026

Net loans
$
11,722,426

 
$
2,881,986

 
$
403,662

 
$
15,008,074

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended June 30, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
7,185,060

 
$
1,492,139

 
$
303,721

 
$
8,980,920

Mortgage
565,703

 
434,936

 
48,258

 
1,048,897

Installment
1,939,802

 
907,069

 
5,445

 
2,852,316

Home equity
969,592

 
275,387

 
91,855

 
1,336,834

Credit card
149,903

 
—

 
—

 
149,903

Leases
282,041

 
—

 
—

 
282,041

    Subtotal
11,092,101

 
3,109,531

 
449,279

 
14,650,911

Loss share receivable
—

 
—

 
51,408

 
51,408

    Total loans
11,092,101

 
3,109,531

 
500,687

 
14,702,319

Less allowance for loan losses
94,063

 
3,034

 
49,271

 
146,368

Net loans
$
10,998,038

 
$
3,106,497

 
$
451,416

 
$
14,555,951

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended March 31, 2014
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
6,819,522

 
$
1,678,267

 
$
357,033

 
$
8,854,822

Mortgage
538,151

 
459,842

 
49,921

 
1,047,914

Installment
1,771,434

 
972,711

 
6,012

 
2,750,157

Home equity
929,362

 
288,529

 
95,487

 
1,313,378

Credit card
147,265

 
—

 
—

 
147,265

Leases
242,649

 
—

 
—

 
242,649

    Subtotal
10,448,383

 
3,399,349

 
508,453

 
14,356,185

Loss share receivable
—

 
—

 
56,296

 
56,296

    Total loans
10,448,383

 
3,399,349

 
564,749

 
14,412,481

Less allowance for loan losses
96,789

 
(617
)
 
42,719

 
138,891

Net loans
$
10,351,594

 
$
3,399,966

 
$
522,030

 
$
14,273,590

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

13
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

 
Quarter ended December 31, 2013
 
Originated Loans
 
Acquired Loans (1)
 
Covered Loans (2)
 
Total Loans
Commercial
$
6,526,243

 
$
1,866,064

 
$
400,105

 
$
8,792,412

Mortgage
509,685

 
472,771

 
51,304

 
1,033,760

Installment
1,697,651

 
1,032,245

 
6,279

 
2,736,175

Home equity
905,172

 
298,212

 
100,712

 
1,304,096

Credit card
146,805

 
—

 
—

 
146,805

Leases
203,031

 
—

 
—

 
203,031

    Subtotal
9,988,587

 
3,669,292

 
558,401

 
14,216,280

Loss share receivable
—

 
—

 
65,580

 
65,580

    Total loans
9,988,587

 
3,669,292

 
623,981

 
14,281,860

Less allowance for loan losses
134,890

 
(2,091
)
 
44,829

 
177,628

Net loans
$
9,853,697

 
$
3,671,383

 
$
579,152

 
$
14,104,232

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



































14
FirstMerit Corporation Reports Fourth Quarter 2014 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
 
December 31, 2014
 
September 30, 2014
 
December 31, 2013
(Unaudited)
Average
 
 
 
Average
 
Average
 
 
 
Average
 
Average
 
 
 
Average
(Dollars in thousands)
Balance
 
Interest (1)
 
Rate
 
Balance
 
Interest (1)
 
Rate
 
Balance
 
Interest (1)
 
Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
500,559

 
 
 
 
 
$
521,210

 
 
 
 
 
$
1,135,601

 
 
 
 
Investment securities and federal funds sold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury securities and U.S. government agency obligations (taxable)

5,257,657

 
$
26,803

 
2.02
%
 
5,276,354

 
$
26,502

 
1.99
%
 
4,895,147

 
$
24,236

 
1.96
%
Obligations of states and political subdivisions (tax exempt)
767,026

 
8,636

 
4.47
%
 
776,376

 
8,734

 
4.46
%
 
728,408

 
8,609

 
4.69
%
Other securities and federal funds sold
589,608

 
5,213

 
3.51
%
 
585,980

 
5,571

 
3.77
%
 
678,087

 
6,445

 
3.77
%
Total investment securities and federal funds sold
6,614,291

 
40,652

 
2.44
%
 
6,638,710

 
40,807

 
2.44
%
 
6,301,642

 
39,290

 
2.47
%
Loans held for sale
16,708

 
145

 
3.44
%
 
17,433

 
154

 
3.50
%
 
10,248

 
92

 
3.56
%
Loans, including loss share receivable (2)
15,289,890

 
169,302

 
4.39
%
 
15,148,100

 
171,302

 
4.49
%
 
14,281,860

 
177,275

 
4.92
%
Total earning assets
21,920,889

 
$
210,099

 
3.80
%
 
21,804,243

 
$
212,263

 
3.86
%
 
20,593,750

 
$
216,657

 
4.17
%
Total allowance for loan losses
(138,540
)
 
 
 
 
 
(140,026
)
 
 
 
 
 
(177,628
)
 
 
 
 
Other assets
2,382,079

 
 
 
 
 
2,398,349

 
 
 
 
 
2,483,123

 
 
 
 
Total assets
$
24,664,987

 
 
 
 
 
$
24,583,776

 
 
 
 
 
$
24,034,846

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
5,706,631

 
$
—

 
—
%
 
$
5,603,104

 
$
—

 
—
%
 
$
5,546,316

 
$
—

 
—
%
Interest-bearing
3,021,188

 
727

 
0.10
%
 
3,100,904

 
755

 
0.10
%
 
2,875,375

 
759

 
0.10
%
Savings and money market accounts
8,381,548

 
5,496

 
0.26
%
 
8,492,172

 
5,570

 
0.26
%
 
8,544,097

 
6,127

 
0.28
%
Certificates and other time deposits
2,341,280

 
2,525

 
0.43
%
 
2,335,620

 
2,846

 
0.48
%
 
2,551,688

 
2,500

 
0.39
%
Total deposits
19,450,647

 
8,748

 
0.18
%
 
19,531,800

 
9,171

 
0.19
%
 
19,517,476

 
9,386

 
0.19
%
Securities sold under agreements to repurchase
1,241,948

 
294

 
0.09
%
 
1,182,507

 
268

 
0.09
%
 
948,959

 
291

 
0.12
%
Wholesale borrowings
450,587

 
2,360

 
2.08
%
 
438,941

 
1,397

 
1.26
%
 
200,622

 
938

 
1.85
%
Long-term debt
350,535

 
2,188

 
2.48
%
 
320,387

 
3,783

 
4.68
%
 
324,426

 
3,897

 
4.77
%
Total interest-bearing liabilities
15,787,086

 
13,590

 
0.34
%
 
15,870,531

 
14,619

 
0.37
%
 
15,445,167

 
14,512

 
0.37
%
Other liabilities
321,652

 
 
 
 
 
302,255

 
 
 
 
 
369,728

 
 
 
 
Shareholders' equity
2,849,618

 
 
 
 
 
2,807,886

 
 
 
 
 
2,673,635

 
 
 
 
Total liabilities and shareholders' equity
$
24,664,987

 
 
 
 
 
$
24,583,776

 
 
 
 
 
$
24,034,846

 
 
 
 
Net yield on earning assets
$
21,920,889

 
$
196,509

 
3.56
%
 
$
21,804,243

 
$
197,644

 
3.60
%
 
$
20,593,750

 
$
202,145

 
3.89
%
Interest rate spread
 
 
 
 
3.46
%
 
 
 
 
 
3.50
%
 
 
 
 
 
3.80
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes. As such, these tax-exempt securities typically yield lower returns than taxable securities. To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles in the Consolidated Statements of Income. The taxable-equivalent adjustments to net interest income were $4.0 million, $4.1 million, and $4.1 million for the three months ended December 31, 2014, September 30, 2014, and December 31, 2013, respectively.
(2) Nonaccrual loans have been included in the average balances.



15
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBIDARIES
 
 
 
 
 
 
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
 
 
 
 
 
Year Ended
 
Year Ended
 
December 31, 2014
 
December 31, 2013
(Unaudited)
Average
 
 
 
Average
 
Average
 
 
 
Average
(Dollars in thousands)
Balance
 
Interest (1)
 
Rate
 
Balance
 
Interest (1)
 
Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
659,072

 
 
 
 
 
$
941,356

 
 
 
 
Investment securities and federal funds sold:
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury securities and U.S. government agency obligations (taxable)
5,247,620

 
$
105,966

 
2.02
%
 
4,319,524

 
$
88,761

 
2.05
%
Obligations of states and political subdivisions (tax exempt)
762,864

 
34,736

 
4.55
%
 
673,695

 
33,311

 
4.94
%
Other securities and federal funds sold
588,123

 
22,398

 
3.81
%
 
535,916

 
20,063

 
3.74
%
Total investment securities and federal funds sold
6,598,607

 
163,100

 
2.47
%
 
5,529,135

 
142,135

 
2.57
%
Loans held for sale
12,825

 
447

 
3.49
%
 
15,194

 
553

 
3.64
%
Loans, including loss share receivable (2)
14,891,315

 
685,058

 
4.60
%
 
12,948,666

 
637,532

 
4.92
%
Total earning assets
21,502,747

 
$
848,605

 
3.95
%
 
18,492,995

 
$
780,220

 
4.22
%
Total allowance for loan losses
(140,953
)
 
 
 
 
 
(153,190
)
 
 
 
 
Other assets
2,397,345

 
 
 
 
 
2,208,614

 
 
 
 
Total assets
$
24,418,211

 
 
 
 
 
$
21,489,775

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
5,579,237

 
$
—

 
—
%
 
$
4,859,659

 
$
—

 
—
%
Interest-bearing
3,058,609

 
2,963

 
0.10
%
 
2,316,421

 
2,543

 
0.11
%
Savings and money market accounts
8,537,371

 
22,101

 
0.26
%
 
7,799,943

 
24,406

 
0.31
%
Certificates and other time deposits
2,353,218

 
10,844

 
0.46
%
 
2,325,565

 
9,649

 
0.41
%
Total deposits
19,528,435

 
35,908

 
0.18
%
 
17,301,588

 
36,598

 
0.21
%
Securities sold under agreements to repurchase
1,084,532

 
991

 
0.09
%
 
949,068

 
1,240

 
0.13
%
Wholesale borrowings
385,392

 
13,754

 
1.63
%
 
194,150

 
3,893

 
2.01
%
Long-term debt
329,991

 
6,277

 
4.17
%
 
280,323

 
13,287

 
4.74
%
Total interest-bearing liabilities
15,749,113

 
56,930

 
0.36
%
 
13,865,470

 
55,018

 
0.40
%
Other liabilities
299,722

 
 
 
 
 
355,781

 
 
 
 
Shareholders' equity
2,790,139

 
 
 
 
 
2,408,865

 
 
 
 
Total liabilities and shareholders' equity
$
24,418,211

 
 
 
 
 
$
21,489,775

 
 
 
 
Net yield on earning assets
$
21,502,747

 
$
791,675

 
3.68
%
 
$
18,492,995

 
$
725,202

 
3.92
%
Interest rate spread
 
 
 
 
3.59
%
 
 
 
 
 
3.82
%
 
 
 
 
 
 
 
 
 
 
 
 
(1) The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes. As such, these tax-exempt securities typically yield lower returns than taxable securities. To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles in the Consolidated Statements of Income. The taxable-equivalent adjustments to net interest income were $16.1 million and $14.4 million for the twelve months ended December 31, 2014 and December 31, 2013, respectively.
(2) Nonaccrual loans have been included in the average balances.


16
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(Unaudited)
Quarters Ended
 
Year Ended
(Dollars in thousands except per share data)
December 31,
 
December 31,
 
 
 
 
2014
 
2013
 
2014
 
2013
Interest income:
 
 
 
 
 
 
 
 
Loans and loans held for sale
$
168,650

 
$
176,559

 
$
682,328

 
$
635,872

 
Investment securities:
 
 
 
 
 
 
 
 
 
Taxable
32,016

 
30,681

 
128,363

 
108,824

 
 
Tax-exempt
5,435

 
5,340

 
21,807

 
21,107

 
 
Total investment securities interest
37,451

 
36,021

 
150,170

 
129,931

 
 
 
Total interest income
206,101

 
212,580

 
832,498

 
765,803

Interest expense:
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Interest-bearing
727

 
759

 
2,963

 
2,543

 
 
Savings and money market accounts
5,496

 
6,127

 
22,101

 
24,406

 
 
Certificates and other time deposits
2,525

 
2,500

 
10,844

 
9,649

 
Securities sold under agreements to repurchase
294

 
291

 
991

 
1,240

 
Wholesale borrowings
2,360

 
938

 
6,277

 
3,893

 
Long-term debt
2,188

 
3,897

 
13,754

 
13,287

 
 
Total interest expense
13,590

 
14,512

 
56,930

 
55,018

 
 
Net interest income
192,511

 
198,068

 
775,568

 
710,785

 
Provision for loan losses
13,297

 
10,050

 
52,279

 
33,684

 
 
Net interest income after provision for loan losses
179,214

 
188,018

 
723,289

 
677,101

Noninterest income:
 
 
 
 
 
 
 
 
Trust department income
9,831

 
10,255

 
39,949

 
34,770

 
Service charges on deposits
17,597

 
19,084

 
71,457

 
74,399

 
Credit card fees
13,305

 
12,414

 
52,666

 
50,542

 
ATM and other service fees
6,181

 
5,659

 
24,179

 
19,155

 
Bank owned life insurance income
7,337

 
4,037

 
19,177

 
16,926

 
Investment services and insurance
4,171

 
3,530

 
15,145

 
12,777

 
Investment securities gains/(losses), net
16

 
—

 
166

 
(2,803
)
 
Loan sales and servicing income
3,112

 
3,577

 
16,044

 
23,069

 
Other operating income
10,410

 
13,864

 
42,741

 
41,508

 
 
Total noninterest income
71,960

 
72,420

 
281,524

 
270,343

Noninterest expenses:
 
 
 
 
 
 
 
 
Salaries, wages, pension and employee benefits
89,899

 
93,621

 
358,970

 
354,016

 
Net occupancy expense
14,188

 
14,066

 
59,436

 
49,510

 
Equipment expense
12,133

 
13,177

 
48,499

 
41,875

 
Stationery, supplies and postage
3,767

 
4,895

 
15,587

 
14,199

 
Bankcard, loan processing and other costs
11,830

 
10,886

 
45,625

 
71,929

 
Professional services
6,440

 
8,358

 
21,813

 
40,680

 
Amortization of intangibles
2,933

 
2,692

 
11,735

 
8,392

 
FDIC insurance expense
5,989

 
5,106

 
20,481

 
17,707

 
Other operating expense
17,862

 
25,819

 
82,773

 
85,945

 
 
Total noninterest expenses
165,041

 
178,620

 
664,919

 
684,253

Income before income tax expense
86,133

 
81,818

 
339,894

 
263,191

Income tax expense
25,054

 
24,644

 
101,943

 
79,507

 
 
 
Net income
$
61,079

 
$
57,174

 
$
237,951

 
$
183,684

Less:
Net income allocated to participating shareholders
496

 
441

 
1,930

 
1,545

 
 
 
Preferred stock dividends
1,469

 
1,469

 
5,876

 
5,337

Net income attributable to common shareholders
$
59,114

 
$
55,264

 
$
230,145

 
$
176,802

Net income used in diluted EPS calculation
$
59,114

 
$
55,264

 
$
230,145

 
$
176,802

Weighted average number of common shares outstanding - basic
165,395

 
165,054

 
165,296

 
149,607

Weighted average number of common shares outstanding - diluted
165,974

 
166,097

 
166,054

 
150,421

Basic earnings per common share
$
0.36

 
$
0.33

 
$
1.39

 
$
1.18

Diluted earnings per common share
$
0.36

 
$
0.33

 
$
1.39

 
$
1.18

Cash dividends per common share
$
0.16

 
$
0.16

 
$
0.64

 
$
0.64


17
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
 
 
 
 
(Unaudited)
Quarter Ended
 
Year Ended
(Dollars in thousands)
December 31, 2014
 
December 31, 2014
 
Pre-tax
 
Tax
 
After-tax
 
Pre-tax
 
Tax
 
After-tax
Net Income
$
86,133

 
$
25,054

 
$
61,079

 
$
339,894

 
$
101,943

 
$
237,951

Other comprehensive income/(loss)
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains and losses on securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Changes in unrealized securities' holding gains/(losses)
14,571

 
5,100

 
9,471

 
38,864

 
13,602

 
25,262

Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity
(606
)
 
(210
)
 
(396
)
 
(2,157
)
 
(753
)
 
(1,404
)
Net losses/(gains) realized on sale of securities reclassified to noninterest income
(16
)
 
(6
)
 
(10
)
 
(166
)
 
(58
)
 
(108
)
Net change in unrealized gains/(losses) on securities available for sale
13,949

 
4,884

 
9,065

 
36,541

 
12,791

 
23,750

Pension plans and other postretirement benefits:
 
 
 
 
 
 
 
 
 
 
 
Net gains/(losses) arising during the period
(49,552
)
 
(17,345
)
 
(32,207
)
 
(49,552
)
 
(17,345
)
 
(32,207
)
Amortization of actuarial gain
767

 
269

 
498

 
3,165

 
1,108

 
2,057

Amortization of prior service cost reclassified to other noninterest expense
516

 
181

 
335

 
2,130

 
746

 
1,384

Net change from defined benefit pension plans
(48,269
)
 
(16,895
)
 
(31,374
)
 
(44,257
)
 
(15,491
)
 
(28,766
)
Total other comprehensive gains/(losses)
(34,320
)
 
(12,011
)
 
(22,309
)
 
(7,716
)
 
(2,700
)
 
(5,016
)
Comprehensive income
$
51,813

 
$
13,043

 
$
38,770

 
$
332,178

 
$
99,243

 
$
232,935


(Unaudited)
Quarter Ended
 
Year Ended
(Dollars in thousands)
December 31, 2013
 
December 31, 2013
 
Pre-tax
 
Tax
 
After-tax
 
Pre-tax
 
Tax
 
After-tax
Net Income
$
81,818

 
$
24,644

 
$
57,174

 
$
263,191

 
$
79,507

 
$
183,684

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains and losses on securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Changes in unrealized securities' holding gains/(losses)
(26,093
)
 
(9,134
)
 
(16,959
)
 
(130,947
)
 
(45,832
)
 
(85,115
)
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity
(533
)
 
(186
)
 
(347
)
 
(2,187
)
 
(765
)
 
(1,422
)
Net losses/(gains) realized on sale of securities reclassified to noninterest income
—

 
—

 
—

 
2,803

 
981

 
1,822

Net change in unrealized gains/(losses) on securities available for sale
(26,626
)
 
(9,320
)
 
(17,306
)
 
(130,331
)
 
(45,616
)
 
(84,715
)
Pension plans and other postretirement benefits:
 
 
 
 
 
 
 
 
 
 
 
Net gains/(losses) arising during the period
47,940

 
16,779

 
31,161

 
47,940

 
16,779

 
31,161

Amortization of actuarial gain
4,437

 
1,553

 
2,884

 
4,437

 
1,553

 
2,884

Amortization of prior service cost reclassified to other noninterest expense
(1
)
 
—

 
(1
)
 
(1
)
 
—

 
(1
)
Net change from defined benefit pension plans
52,376

 
18,332

 
34,044

 
52,376

 
18,332

 
34,044

Total other comprehensive gains/(losses)
25,750

 
9,012

 
16,738

 
(77,955
)
 
(27,284
)
 
(50,671
)
Comprehensive income
$
107,568

 
$
33,656

 
$
73,912

 
$
185,236

 
$
52,223

 
$
133,013




18
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
CONSOLIDATED STATEMENTS OF INCOME---LINKED QUARTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarterly Results
(Unaudited)
2014
 
2014
 
2014
 
2014
 
2013
(Dollars in thousands, except share data)
4th qtr
 
3rd qtr
 
2nd qtr
 
1st qtr
 
4th qtr
Loans and loans held for sale
$
168,650

 
$
170,648

 
$
172,517

 
$
170,514

 
$
176,559

Investment securities
37,451

 
37,549

 
37,808

 
37,362

 
36,021

Total interest income
206,101

 
208,197

 
210,325

 
207,876

 
212,580

Interest expense
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Interest-bearing
727

 
755

 
745

 
737

 
759

Savings and money market accounts
5,496

 
5,570

 
5,477

 
5,559

 
6,127

Certificates and other time deposits
2,525

 
2,846

 
3,009

 
2,464

 
2,500

Securities sold under agreements to repurchase
294

 
268

 
233

 
197

 
291

Wholesale borrowings
2,360

 
1,397

 
1,391

 
1,129

 
938

Long-term debt
2,188

 
3,783

 
3,893

 
3,890

 
3,897

Total interest expense
13,590

 
14,619

 
14,748

 
13,976

 
14,512

Net interest income
192,511

 
193,578

 
195,577

 
193,900

 
198,068

Provision for loan losses
13,297

 
9,192

 
15,253

 
14,536

 
10,050

Net interest income after provision for loan losses
179,214

 
184,386

 
180,324

 
179,364

 
188,018

Noninterest income:
 
 
 
 
 
 
 
 
 
Trust department income
9,831

 
10,300

 
10,070

 
9,748

 
10,255

Service charges on deposits
17,597

 
18,684

 
18,528

 
16,648

 
19,084

Credit card fees
13,305

 
13,754

 
13,455

 
12,152

 
12,414

ATM and other service fees
6,181

 
6,182

 
5,996

 
5,819

 
5,659

Bank owned life insurance income
7,337

 
4,218

 
4,040

 
3,582

 
4,037

Investment services and insurance
4,171

 
3,606

 
3,852

 
3,516

 
3,530

Investment securities gains/(losses), net
16

 
14

 
80

 
56

 
—

Loan sales and servicing income
3,112

 
4,740

 
4,462

 
3,730

 
3,577

Other operating income
10,410

 
8,235

 
12,077

 
12,019

 
13,864

Total noninterest income
71,960

 
69,733

 
72,560

 
67,270

 
72,420

Noninterest expenses:
 
 
 
 
 
 
 
 
 
Salaries, wages, pension and employee benefits
89,899

 
90,593

 
89,465

 
89,013

 
93,621

Net occupancy expense
14,188

 
13,887

 
14,347

 
17,014

 
14,066

Equipment expense
12,133

 
12,188

 
12,267

 
11,911

 
13,177

Stationery, supplies and postage
3,767

 
3,723

 
3,990

 
4,108

 
4,895

Bankcard, loan processing and other costs
11,830

 
11,151

 
11,810

 
10,834

 
10,886

Professional services
6,440

 
5,270

 
4,745

 
5,359

 
8,358

Amortization of intangibles
2,933

 
2,933

 
2,933

 
2,936

 
2,692

FDIC insurance expense
5,989

 
2,988

 
5,533

 
5,971

 
5,106

Other operating expense
17,862

 
20,412

 
22,310

 
22,185

 
25,819

Total noninterest expenses
165,041

 
163,145

 
167,400

 
169,331

 
178,620

Income before income tax expense
86,133

 
90,974

 
85,484

 
77,303

 
81,818

Income tax expense
25,054

 
27,076

 
25,965

 
23,848

 
24,644

Net income
61,079

 
63,898

 
59,519

 
53,455

 
57,174

Less: Net income allocated to participating shareholders
496

 
519

 
489

 
380

 
441

Preferred stock dividends
1,469

 
1,469

 
1,469

 
1,469

 
1,469

Net income attributable to common shareholders
$
59,114

 
$
61,910

 
$
57,561

 
$
51,606

 
$
55,264

Net income used in diluted EPS calculation
$
59,114

 
$
61,910

 
$
57,561

 
$
51,606

 
$
55,264

Weighted-average number of common shares outstanding - basic
165,395

 
165,389

 
165,335

 
165,060

 
165,054

Weighted-average number of common shares outstanding- diluted
165,974

 
165,804

 
166,147

 
166,004

 
166,097

Basic earnings per common share
$
0.36

 
$
0.37

 
$
0.35

 
$
0.31

 
$
0.33

Diluted earnings per common share
$
0.36

 
$
0.37

 
$
0.35

 
$
0.31

 
$
0.33

Cash dividends per common share
$
0.16

 
$
0.16

 
$
0.16

 
$
0.16

 
$
0.16


19
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
ASSET QUALITY INFORMATION (excluding acquired loans and covered assets) (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
(Unaudited)
 
(Audited)
(Dollars in thousands, except ratios)
Quarterly Periods
 
Annual Period
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
December 31,
Allowance for Credit Losses
2014
 
2014
 
2014
 
2014
 
2013
 
2013
Allowance for originated loan losses, beginning of period
$
90,883

 
$
91,950

 
$
92,116

 
$
96,484

 
$
98,291

 
$
98,942

Provision for originated loan losses
8,662

 
4,862

 
5,993

 
3,654

 
1,552

 
13,034

Charge-offs
9,205

 
11,410

 
11,148

 
13,160

 
9,913

 
40,173

Recoveries
5,356

 
5,481

 
4,989

 
5,138

 
6,554

 
24,681

Net charge-offs
3,849

 
5,929

 
6,159

 
8,022

 
3,359

 
15,492

Allowance for originated loan losses, end of period
$
95,696

 
$
90,883

 
$
91,950

 
$
92,116

 
$
96,484

 
$
96,484

Reserve for unfunded lending commitments,
 
 
 
 
 
 
 
 
 
 
 
beginning of period
$
6,966

 
$
7,107

 
$
7,481

 
$
7,907

 
$
8,493

 
$
5,433

Provision for (relief of) credit losses
(1,118
)
 
(141
)
 
(374
)
 
(426
)
 
(586
)
 
2,474

Reserve for unfunded lending commitments,
 
 
 
 
 
 
 
 
 
 
 
end of period
$
5,848

 
$
6,966

 
$
7,107

 
$
7,481

 
$
7,907

 
$
7,907

Allowance for Credit Losses
$
101,544

 
$
97,849

 
$
99,057

 
$
99,597

 
$
104,391

 
$
104,391

Ratios
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses to average loans
0.28
%
 
0.16
%
 
0.22
%
 
0.14
%
 
0.06
%
 
0.14
%
Net charge-offs to average loans
0.12
%
 
0.20
%
 
0.22
%
 
0.31
%
 
0.13
%
 
0.17
%
Allowance for loan losses to period-end loans
0.77
%
 
0.75
%
 
0.80
%
 
0.85
%
 
0.94
%
 
0.94
%
Allowance for credit losses to period-end loans
0.81
%
 
0.81
%
 
0.86
%
 
0.92
%
 
1.02
%
 
1.02
%
Allowance for loan losses to nonperforming loans
276.44
%
 
231.13
%
 
250.27
%
 
212.01
%
 
228.62
%
 
228.62
%
Allowance for credit losses to nonperforming loans
293.34
%
 
248.85
%
 
269.61
%
 
229.23
%
 
247.35
%
 
247.35
%
Asset Quality
 
 
 
 
 
 
 
 
 
 
 
Impaired originated loans:
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual
$
17,147

 
$
22,347

 
$
21,072

 
$
27,122

 
$
25,674

 
$
25,674

Other nonperforming loans:
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual
17,470

 
16,974

 
15,669

 
16,326

 
16,529

 
16,529

Total nonperforming loans
34,617

 
39,321

 
36,741

 
43,448

 
42,203

 
42,203

Other real estate ("ORE")
20,421

 
23,798

 
24,181

 
19,263

 
18,680

 
18,680

Total nonperforming assets ("NPAs")
$
55,038

 
$
63,119

 
$
60,922

 
$
62,711

 
$
60,883

 
$
60,883

NPAs to period-end loans + ORE
0.44
%
 
0.52
%
 
0.53
%
 
0.58
%
 
0.60
%
 
0.60
%
Accruing originated loans past due 90 days or more
$
12,156

 
$
8,538

 
$
15,643

 
$
11,860

 
$
11,176

 
$
11,176

(a) Due to the impact of business combination 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.


20
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
2014
 
2013
QUARTERLY NONINTEREST INCOME DETAIL
 
4th qtr
 
3rd qtr
 
2nd qtr
 
1st qtr
 
4th qtr
Trust department income
 
$
9,831

 
$
10,300

 
$
10,070

 
$
9,748

 
$
10,255

Service charges on deposits
 
17,597

 
18,684

 
18,528

 
16,648

 
19,084

Credit card fees
 
13,305

 
13,754

 
13,455

 
12,152

 
12,414

ATM and other service fees
 
6,181

 
6,182

 
5,996

 
5,819

 
5,659

Bank owned life insurance income
 
7,337

 
4,218

 
4,040

 
3,582

 
4,037

Investment services and insurance
 
4,171

 
3,606

 
3,852

 
3,516

 
3,530

Investment securities gains/(losses), net
 
16

 
14

 
80

 
56

 
—

Loan sales and servicing income
 
3,112

 
4,740

 
4,462

 
3,730

 
3,577

Other operating income
 
10,410

 
8,235

 
12,077

 
12,019

 
13,864

Total Noninterest Income
 
$
71,960

 
$
69,733

 
$
72,560

 
$
67,270

 
$
72,420

 
 
2014
 
2014
 
2014
 
2014
 
2013
QUARTERLY NONINTEREST EXPENSE DETAIL
 
4th qtr
 
3rd qtr
 
2nd qtr
 
1st qtr
 
4th qtr
Salaries and wages
 
$
71,638

 
$
71,769

 
$
69,892

 
$
71,669

 
$
76,685

Pension and employee benefits
 
18,261

 
18,824

 
19,573

 
17,344

 
16,936

Net occupancy expense
 
14,188

 
13,887

 
14,347

 
17,014

 
14,066

Equipment expense
 
12,133

 
12,188

 
12,267

 
11,911

 
13,177

Taxes, other than federal income taxes
 
1,661

 
1,286

 
2,576

 
2,774

 
2,618

Stationery, supplies and postage
 
3,767

 
3,723

 
3,990

 
4,108

 
4,895

Bankcard, loan processing and other costs
 
11,830

 
11,151

 
11,810

 
10,834

 
10,886

Advertising
 
3,586

 
3,942

 
3,801

 
3,516

 
4,855

Professional services
 
6,440

 
5,270

 
4,745

 
5,359

 
8,358

Telephone
 
2,779

 
2,831

 
2,857

 
2,908

 
3,427

Amortization of intangibles
 
2,933

 
2,933

 
2,933

 
2,936

 
2,692

FDIC insurance expense
 
5,989

 
2,988

 
5,533

 
5,971

 
5,106

Other operating expense
 
9,836

 
12,353

 
13,076

 
12,987

 
14,919

Total Noninterest Expense
 
$
165,041

 
$
163,145

 
$
167,400

 
$
169,331

 
$
178,620



21
FirstMerit Corporation Reports Fourth Quarter 2014 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
ALLOWANCE FOR ORIGINATED LOAN LOSSES - Net Charge-off Detail (excluding acquired and covered loans) (a)
 
 
 
 
 
 
 
 
(Unaudited)
Quarters Ended
 
Year Ended
(Dollars in thousands, except ratios)
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
Allowance for originated loan losses - beginning of period
$
90,883

 
$
98,291

 
$
96,484

 
$
98,942

Loans charged off:
 
 
 
 
 
 
 
Commercial
445

 
993

 
12,701

 
7,637

Mortgage
547

 
718

 
2,031

 
1,903

Installment
4,949

 
4,895

 
17,932

 
16,683

Home equity
1,428

 
1,201

 
4,831

 
5,036

Credit cards
1,060

 
1,312

 
4,604

 
5,541

Leases
—

 
—

 
—

 
1,237

Overdrafts
776

 
794

 
2,824

 
2,136

Total
9,205

 
9,913

 
44,923

 
40,173

Recoveries:
 
 
 
 
 
 
 
Commercial
1,612

 
2,281

 
4,332

 
9,012

Mortgage
99

 
97

 
318

 
230

Installment
2,318

 
2,649

 
10,513

 
10,459

Home equity
713

 
955

 
2,940

 
2,492

Credit cards
456

 
421

 
1,716

 
1,841

Manufactured housing
9

 
11

 
87

 
60

Leases
5

 
—

 
379

 
100

Overdrafts
144

 
140

 
679

 
487

Total
5,356

 
6,554

 
20,964

 
24,681

Net charge-offs
3,849

 
3,359

 
23,959

 
15,492

Provision for originated loan losses
8,662

 
1,552

 
23,171

 
13,034

Allowance for originated loan losses-end of period
$
95,696

 
$
96,484

 
$
95,696

 
$
96,484

 
 
 
 
 
 
 
 
Average originated loans
$
12,306,171

 
$
9,988,587

 
$
11,421,426

 
$
9,252,555

Ratio (annualized) to average originated loans:
 
 
 
 
 
 
 
Originated net charge-offs
0.12
%
 
0.13
%
 
0.21
%
 
0.17
%
Provision for originated loan losses
0.28
%
 
0.06
%
 
0.20
%
 
0.14
%
Originated Loans, period-end
$
12,493,812

 
$
10,213,387

 
$
12,493,812

 
$
10,213,387

 
 
 
 
 
 
 
 
Allowance for credit losses:
$
101,544

 
$
104,391

 
$
101,544

 
$
104,391

To (annualized) net charge-offs
6.65

 
7.83

 
4.24

 
6.74

Allowance for originated loan losses:
 
 
 
 
 
 
 
To period-end originated loans
0.77
%
 
0.94
%
 
0.77
%
 
0.94
%
To (annualized) net originated charge-offs
6.27

 
7.24

 
3.99

 
6.23

 
 
 
 
 
 
 
 
(a) Due to the impact of business combination 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.


22