FirstMerit (FMER) 10-Q 2005 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED
June 30, 2005

COMMISSION FILE NUMBER 0-10161

FIRSTMERIT CORPORATION

(Exact name of registrant as specified in its charter)

OHIO	34-1339938
(State or other jurisdiction of	(IRS Employer Identification
incorporation or organization)	Number)

III CASCADE PLAZA, 7TH FLOOR, AKRON, OHIO
44308-1103
(Address of principal executive offices)

(330) 996-6300
(Telephone Number)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YESþ NO

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YESþ NO

     As of July 29, 2005, 83,544,277 shares of the registrant’s common stock, without par value, were outstanding.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	ITEM 1. Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS
Exhibit Index
SIGNATURES
Exhibit 31.1 CEO Certification
Exhibit 31.2 CFO Certification
Exhibit 32.1 CEO/CFO Certification

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

FIRSTMERIT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Unaudited, except December 31, 2004, which is derived from the	June 30,			December 31,			June 30,
audited financial statements)	2005			2004			2004
				(in thousands)
ASSETS
Cash and due from banks	$	201,240			169,052			216,258
Investment securities (at fair value) and federal funds sold		2,829,017			2,862,015			2,973,858
Loans held for sale		52,555			48,393			58,862
Loans
Commercial loans		3,423,384			3,285,012			3,324,335
Mortgage loans		634,777			639,715			627,633
Installment loans		1,601,022			1,598,588			1,668,679
Home equity loans		737,207			676,230			646,197
Credit card loans		138,335			145,042			140,110
Leases		76,286			88,496			113,047
Total loans		6,611,011			6,433,083			6,520,001
Less allowance for loan losses		(92,808	)		(97,296	)		(101,569	)
Net loans		6,518,203			6,335,787			6,418,432
Premises and equipment, net		118,038			121,198			121,373
Goodwill		139,245			139,245			139,245
Intangible assets		4,200			4,647			5,091
Accrued interest receivable and other assets		451,770			442,290			451,028
Total assets	$	10,314,268			10,122,627			10,384,147
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand-non-interest bearing	$	1,439,800			1,470,543			1,400,715
Demand-interest bearing		834,315			841,595			804,355
Savings and money market accounts		2,350,829			2,384,510			2,498,152
Certificates and other time deposits		2,548,913			2,668,799			2,699,578
Total deposits		7,173,857			7,365,447			7,402,800
Securities sold under agreements to repurchase		1,699,337			1,336,471			1,573,492
Wholesale borrowings		333,627			300,220			320,367
Accrued taxes, expenses, and other liabilities		131,431			139,232			130,393
Total liabilities		9,338,252			9,141,370			9,427,052
Commitments and contingencies
Shareholders’ equity:
Preferred stock, without par value: authorized and unissued 7,000,000 shares		—			—			—
Preferred stock, Series A, without par value: designated 800,000 shares; none outstanding		—			—			—
Convertible preferred stock, Series B, without par value: designated 220,000 shares; none outstanding		—			—			—
Common stock, without par value: authorized 300,000,000 shares; issued 92,026,350 at June 30, 2005, December 31, 2004 and June 30, 2004		127,937			127,937			127,937
Capital surplus		108,736			110,513			110,415
Accumulated other comprehensive loss		(19,651	)		(14,208	)		(41,601	)
Retained earnings		977,052			956,802			943,021
Treasury stock, at cost, 8,504,487, 7,835,399 and 7,197,488 shares at June 30, 2005, December 31, 2004 and June 30, 2004, respectively		(218,058	)		(199,787	)		(182,677	)
Total shareholders’ equity		976,016			981,257			957,095
Total liabilities and shareholders’ equity	$	10,314,268			10,122,627			10,384,147

The accompanying notes are an integral part of the consolidated financial statements.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Three months ended						Six months ended
(Unaudited)	June 30						June 30
	2005			2004			2005			2004
	(In thousands, except per share data)
Interest income:
Interest and fees on loans, including loans held for sale	$	105,975			94,126			206,124			190,753
Interest and dividends on investment securities and federal funds sold		27,802			28,221			55,494			57,432
Total interest income		133,777			122,347			261,618			248,185
Interest expense:
Interest on deposits:
Demand-interest bearing		1,230			503			2,186			869
Savings and money market accounts		7,517			4,512			13,892			8,826
Certificates and other time deposits		20,696			19,598			41,296			41,229
Interest on securities sold under agreements to repurchase		10,624			6,271			19,465			12,409
Interest on wholesale borrowings		5,933			4,356			10,992			8,743
Total interest expense		46,000			35,240			87,831			72,076
Net interest income		87,777			87,107			173,787			176,109
Provision for loan losses		5,972			14,850			17,586			55,240
Net interest income after provision for loan losses		81,805			72,257			156,201			120,869
Other income:
Trust department income		5,684			5,696			11,189			11,052
Service charges on deposits		17,800			15,705			32,620			31,124
Credit card fees		10,523			9,546			19,934			18,210
ATM and other service fees		3,298			3,071			6,257			5,819
Bank owned life insurance income		3,024			3,083			6,098			6,209
Investment services and insurance		2,828			3,527			5,686			7,359
Manufactured housing income		40			5			142			150
Investment securities gains, net		(25	)		1,412			1,847			1,482
Loan sales and servicing income		1,520			334			2,653			2,412
Other operating income		5,403			3,340			6,147			6,988
Total other income		50,095			45,719			92,573			90,805
Other expenses:
Salaries, wages, pension and employee benefits		41,351			39,139			80,744			78,200
Net occupancy expense		5,881			5,526			12,417			11,543
Equipment expense		3,002			3,323			6,187			6,858
Stationery, supplies and postage		2,484			2,577			4,945			5,289
Bankcard, loan processing and other costs		5,444			5,988			10,953			11,691
Professional services		3,843			3,977			5,993			7,123
Amortization of intangibles		222			222			445			445
Other operating expenses		17,170			16,784			31,163			33,251
Total other expenses		79,397			77,536			152,847			154,400
Income before income tax expense		52,503			40,440			95,927			57,274
Federal income taxes		16,358			9,412			29,694			13,540
Net income	$	36,145			31,028			66,233			43,734
Other comprehensive income (loss), net of taxes:
Unrealized securities’ holding gains (losses), net of taxes		18,524			(54,037	)		(4,059	)		(31,163	)
Minimum pension liability adjustment, net of taxes		—			—			(183	)		—
Less: reclassification adjustment for securities’ gains (losses) realized in net income, net of taxes		(16	)		917			1,201			963
Total other comprehensive income (loss), net of taxes		18,540			(54,954	)		(5,443	)		(32,126	)
Comprehensive income (loss)	$	54,685			(23,926	)		60,790			11,608
Net income applicable to common shares	$	36,145			31,028			66,233			43,734
Net income used in diluted EPS calculation		36,152			31,035			66,247			43,748
Weighted average number of common shares outstanding — basic		83,603			84,809			83,849			84,789
Weighted average number of common shares outstanding — diluted		83,890			85,149			84,187			85,161
Basic Earnings per Share	$	0.43			0.37			0.79			0.52
Diluted Earnings per Share	$	0.43			0.36			0.79			0.51
Dividend per Share	$	0.27			0.26			0.54			0.52

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRSTMERIT CORPORATION AND SUBSIDIARIES

	Six months ended June 30,
(Unaudited)	2005			2004
	(In thousands)
Operating Activities
Net income	$	66,233			43,734
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		17,586			55,240
Provision for depreciation and amortization		6,801			6,835
Amortization of investment securities premiums, net		2,198			3,934
Accretion of income for lease financing		(2,335	)		(3,927	)
Gains on sales of investment securities, net		(1,847	)		(1,482	)
Increase in interest receivable		(1,690	)		(249	)
Increase (decrease) in interest payable		330			(5,251	)
Increase in other prepaid assets		(3,175	)		(3,105	)
Increase in bank owned life insurance		(6,100	)		(6,208	)
Originations of loans held for sale		(175,771	)		(218,094	)
Proceeds from sales of loans, primarily mortgage loans sold in the secondary mortgage markets		171,026			223,028
(Gains) losses on sales of loans, net		573			(477	)
Amortization of intangible assets		445			445
Other changes		(2,046	)		(9,382	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		72,228			85,041
Investing Activities
Dispositions of investment securities:
Available-for-sale — sales		87,524			117,247
Available-for-sale — maturities		249,907			279,674
Purchases of investment securities available-for-sale		(310,887	)		(362,047	)
Net increase in loans and leases, except sales		(197,667	)		(9,605	)
Purchases of premises and equipment		(4,783	)		(9,782	)
Sales of premises and equipment		1,142			653
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES		(174,764	)		16,140
Financing Activities
Net increase (decrease) in demand accounts		(38,023	)		84,982
Net increase (decrease) in savings and money market accounts		(33,681	)		36,887
Net decrease in certificates and other time deposits		(119,886	)		(221,853	)
Net increase in securities sold under agreements to repurchase		362,866			47,688
Net increase in wholesale borrowings		30,562			10,219
Cash dividends — common		(45,983	)		(44,205	)
Purchase of treasury shares		(25,605	)		—
Proceeds from exercise of stock options, conversion of debentures or conversion of preferred stock		4,474			2,310
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES		134,724			(83,972	)
Increase in cash and cash equivalents		32,188			17,209
Cash and cash equivalents at beginning of period		169,052			199,049
Cash and cash equivalents at end of period	$	201,240			216,258
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest, net of amounts capitalized	$	49,660			36,156
Federal income taxes	$	30,020			22,797

The accompanying notes are an integral part of the consolidated financial statements.

FirstMerit Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2005(Unaudited)(Dollars in thousands)

1.Company Organization and Financial Presentation — FirstMerit Corporation (“Corporation”), is a bank holding company whose principal asset is the common stock of its wholly owned subsidiary, FirstMerit Bank, N. A. The Corporation’s other subsidiaries include Citizens Savings Corporation of Stark County, FirstMerit Capital Trust I, FirstMerit Community Development Corporation, FirstMerit Credit Life Insurance Company, FMT, Inc., SF Development Corp and Realty Facility Holdings XV, L.L.C.

     The consolidated balance sheet at December 31, 2004 has been derived from the audited consolidated financial statements at that date. The accompanying unaudited interim financial statements reflect all adjustments (consisting only of normally recurring accruals) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the rules of the Securities and Exchange Commission (“SEC”). The consolidated financial statements of the Corporation as of June 30, 2005 and 2004 and for the three and six months ended June 30, 2005 and 2004 are not necessarily indicative of the results that may be achieved for the full fiscal year or for any future period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2004.

     Certain previously reported amounts have been reclassified to conform to the current reporting presentation.

2.Recent Accounting Pronouncements — In May 2005, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 154 (“SFAS 154”) “Accounting Changes and Error Corrections.” This statement, a replacement of APB Opinion No. 20 and FASB Statement No. 3, provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

     On July 14, 2005, the FASB issued an exposure draft (“ED”) of a proposed interpretation, “Accounting for Uncertain Tax Positions—an Interpretation of FASB Statement No. 109.” The ED contains proposed guidance on the recognition and measurement of uncertain tax positions. It also addresses the accrual of any interest and penalties related to tax uncertainties and the classification of liabilities resulting from tax uncertainties on the balance sheet. If issued as a final standard, the guidance should significantly reduce diversity in current practice with respect to tax uncertainties and is likely to result in greater period-to-period income statement volatility as changes in judgment with respect to uncertain tax positions are recognized as discrete items within income-tax expense. Management is currently evaluating the ED and

does not anticipate that it will have a material impact on the Corporation’s consolidated financial condition or results of operations.

     On September 30, 2004, the Emerging Issues Task Force (“EITF”) of Financial Accounting Standard Board (“FASB”) issued a final FASB Staff Position, FSP EITF Issue 03-1-1, which delayed the effective date for the measurement and recognition guidance included in EITF Issue 03-1 which prescribed the criteria that should be used to determine when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. The disclosures about unrealized losses that have not been recognized as other-than-temporary impairments have not been deferred and appear in Footnote 4 (Investment Securities) of these financial statements as well as the 2004 Form 10-K.

     In December 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-3 (“SOP 03-3”) “Accounting for Certain Loans of Debt Securities Acquired in a Transfer.” SOP 03-3 requires acquired loans, including debt securities, to be recorded at the amount of the purchaser’s initial investment and prohibits carrying over valuation allowances from the seller for those individually-evaluated loans that have evidence of deterioration in credit quality since origination, and it is probable all contractual cash flows on the loan will be unable to be collected. SOP 03-3 also requires the excess of all undiscounted cash flows expected to be collected at acquisition over the purchaser’s initial investment to be recognized as interest income on a level-yield basis over the life of the loan. The guidance is effective for loans acquired in fiscal years beginning after December 15, 2004 and did not have a material impact on the Corporation’s financial condition, results of operations, or liquidity.

     In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” SFAS No. 148 is an amendment of SFAS No. 123 (“Accounting for Stock-Based Compensation”) and provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Corporation currently accounts for stock-based employee compensation under the provisions of Accounting Principles Board (“APB”) No. 25 “Accounting for Stock Issued to Employees” and related interpretations. No stock based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of SFAS No. 123 to stock based employee compensation. The Black-Scholes option-pricing model was used to estimate the fair market value of the options at the date of grant. This model was originally developed for use in estimating the fair value of traded options, which have different characteristics from the Corporation’s employee stock options. The model is also sensitive to changes in subjective assumptions, which can materially affect fair value estimates.

	Three			Three			Six			Six
	months			months			months			months
	ended			ended			ended			ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
Net income, as reported	$	36,145			31,028			66,233			43,734
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(937	)		(857	)		(1,682	)		(1,620	)
Pro forma net income	$	35,208			30,171			64,551			42,114
Pro forma EPS — Basic	$	0.42			0.36			0.77			0.50
Pro forma EPS — Diluted	$	0.42			0.35			0.77			0.49
Reported EPS — Basic	$	0.43			0.37			0.79			0.52
Reported EPS — Diluted	$	0.43			0.36			0.79			0.51
Assumptions:
Dividend yield		4.12	%		4.08	%		4.02	%		4.10	%
Expected volatility		26.72	%		29.91	%		28.48	%		30.00	%
Risk free interest rate		3.85 - 4.04	%		3.54 - 3.9	%		3.77 - 4.04	%		2.94 - 3.9	%
Expected lives	5 Years			5 Years			5 Years			5 Years

     In December 2004, the FASB issued a revision of SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123R”). This statement superseded APB Opinion No. 25 and its related guidance. SFAS 123R requires companies to expense the fair value of employee stock options and was effective for the first quarter beginning after June 15, 2005. On April 14, 2005, the SEC adopted a new rule that would extend the compliance date until the first quarter of 2006. Management plans to adopt SFAS 123R effective January 1, 2006 and is presently analyzing the alternative transition methods and option pricing models that are available under the new standard.

     In December 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“Modernization Act”), which introduces a prescription drug benefit under Medicare, into law. On May 19, 2004, FASB issued FASB Staff Position FAS No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP FAS No. 106-2”) which provides guidance on accounting for the effects of the new Medicare prescription drug legislation by employers whose prescription drug benefits are actuarially equivalent to the drug benefit under Medicare Part D. The Corporation early adopted this FSP in the first quarter of 2004 and has recognized the effect of the Modernization Act in the calculation of its postretirement benefit liability as of January 1, 2004. This change is more fully described in Note 10 (Benefit Plans) of these consolidated financial statements.

3.Critical Accounting Policies — The accounting and reporting policies of the Corporation are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the banking industry. Accounting and reporting policies for the allowance for loan losses, income taxes, mortgage servicing rights, derivative instruments and hedging activities, and pension and postretirement benefits are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by management could result in material changes in the Corporation’s financial position or results of operations. Note 1 (Summary of Significant Accounting Policies) and Note 4 (Allowance for Loan Losses), as described in the 2004 Form 10-K, provide considerable detail with regard to the Corporation’s methodology and reporting of the allowance for loan losses. Additional information for income tax accounting is contained within Note 1, as well as in Note 11 (Federal Income Taxes) as described in the 2004 Form 10-K. Accounting for mortgage servicing rights was also discussed in the 2004 Form 10-K in Note 1 and Note 6 (Mortgage Servicing Rights and Mortgage Servicing Activity). Derivative instruments and hedging activities are described more fully in Note 9 (Accounting for Derivatives) in these consolidated financial statements, as well as Note 1, Note 16 (Fair Value Disclosure of Financial Instruments), and Note 17 (Financial Instruments with Off-Balance-Sheet Risk) of the 2004 Form 10-K. A description of the plans and the assumptions used to estimate the liabilities for pension and postretirement benefits is described in Note 12 (Benefit Plans) to the 2004 Form 10-K as well as Note 10 (Benefit Plans) in these consolidated financial statements.

4.Investment Securities — All investment securities of the Corporation are classified as available for sale. The available for sale classification provides the Corporation with more flexibility to respond, through the portfolio, to changes in market interest rates, or to increases in loan demand or deposit withdrawals.

     The Components of investment securities are as follows:

	June 30, 2005
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities	$	747		34		3		778
U.S. Government agency obligations		973,290		434		13,200		960,524
Obligations of state and political subdivisions		100,128		2,474		30		102,572
Mortgage-backed securities		1,526,454		2,090		20,409		1,508,135
Other securities		255,805		1,599		1,286		256,118
	$	2,856,424		6,631		34,928		2,828,127

	Book Value		Fair Value
Due in one year or less	$	140,094		138,877
Due after one year through five years		2,326,571		2,297,868
Due after five years through ten years		256,565		256,768
Due after ten years		133,194		134,614
	$	2,856,424		2,828,127

	December 31, 2004
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities	$	747		35		—		782
U.S. Government agency obligations		869,869		248		10,232		859,885
Obligations of state and political subdivisions		102,052		3,026		29		105,049
Mortgage-backed securities		1,653,544		6,075		18,076		1,641,543
Other securities		253,577		1,064		1,460		253,181
	$	2,879,789		10,448		29,797		2,860,440

	Book Value		Fair Value
Due in one year or less	$	106,086		106,168
Due after one year through five years		2,453,879		2,433,730
Due after five years through ten years		181,261		180,972
Due after ten years		138,563		139,570
	$	2,879,789		2,860,440

	June 30, 2004
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities	$	497		26		—		523
U.S. Government agency obligations		813,823		560		17,397		796,986
Obligations of state and political subdivisions		105,178		2,117		493		106,802
Mortgage-backed securities		1,857,752		6,505		47,726		1,816,531
Other securities		258,105		1,216		6,305		253,016
	$	3,035,355		10,424		71,921		2,973,858

	Book Value		Fair Value
Due in one year or less	$	100,040		100,459
Due after one year through five years		1,846,348		1,813,158
Due after five years through ten years		935,951		911,140
Due after ten years		153,016		149,101
	$	3,035,355		2,973,858

     Expected maturities will differ from contractual maturities based on the issuers’ rights to call or prepay obligations with or without call or prepayment penalties. Securities with remaining maturities over five years consist of mortgage and asset backed securities.

     The carrying amount of investment securities pledged to secure trust and public deposits and for purposes required or permitted by law amounted to approximately $2.0 billion at June 30, 2005, $1.9 billion at December 31, 2004, and $2.0 billion at June 30, 2004.

     At June 30, 2005 and 2004, Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stock amounted to $8.6 million, $105.2 million and $8.6 million, $100.7 million, respectively, and are included in other securities in the preceding table. FRB and FHLB stock are classified as a restricted investment, carried at cost, and their value is determined by the ultimate recoverability of par value.

     The following tables show the unrealized losses that have not been recognized as other-than-temporary in accordance with EITF Issue 03-1. Management believes that due to the credit-worthiness of the issuers and the fact that the Corporation has the intent and the ability to hold the securities for the period necessary to recover the cost of the securities, the decline in the fair values is temporary in nature.

	At June 30, 2005
	Less than 12 months					12 months or longer							Total
											No.
			Unrealized					Unrealized			Securities				Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Impaired		Fair Value		Losses
U.S. Treasury securities	$	247		(3	)		—		—			—		247		(3	)
U.S. Government agency obligations		385,285		(2,057	)		536,901		(11,144	)		30		922,186		(13,201	)
Obligations of states and political subdivisions		4,633		(13	)		1,724		(6	)		2		6,357		(29	)
Mortgage-backed securities		526,963		(3,241	)		792,859		(17,168	)		37		1,319,822		(20,409	)
Other securities		18,243		(245	)		40,723		(1,041	)		6		58,965		(1,286	)
Total temporarily impaired securities	$	935,371		(5,559	)		1,372,207		(29,369	)		75		2,307,577		(34,928	)

	At December 31, 2004
	Less than 12 months					12 months or longer							Total
											No.
			Unrealized					Unrealized			Securities				Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Impaired		Fair Value		Losses
U.S. Treasury securities	$	—		—			—		—			—		—		—
U.S. Government agency obligations		536,438		(6,175	)		162,747		(4,057	)		11		699,185		(10,232	)
Obligations of states and political subdivisions		611		(2	)		1,715		(27	)		2		2,326		(29	)
Mortgage-backed securities		560,187		(4,160	)		455,784		(13,916	)		21		1,015,971		(18,076	)
Other securities		14,476		(123	)		40,492		(1,337	)		8		54,968		(1,460	)
Total temporarily impaired securities	$	1,111,712		(10,460	)		660,738		(19,337	)		42		1,772,450		(29,797	)

	At June 30, 2004
	Less than 12 months					12 months or longer							Total
											No.
			Unrealized					Unrealized			Securities				Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Impaired		Fair Value		Losses
U.S. Treasury securities	$	—		—			—		—			—		—		—
U.S. Government agency obligations		728,215		(17,405	)		23		(1	)		1		728,238		(17,406	)
Obligations of states and political subdivisions		13,977		(493	)		—		—			—		13,977		(493	)
Mortgage-backed securities		1,579,534		(47,716	)		100		(1	)		2		1,579,634		(47,717	)
Other securities		45,981		(631	)		61,145		(5,674	)		11		107,127		(6,305	)
Total temporarily impaired securities	$	2,367,707		(66,245	)		61,268		(5,676	)		14		2,428,976		(71,921	)

5.Allowance for loan losses (“ALL”) — The Corporation’s Credit Policy Division manages credit risk by establishing common credit policies for its subsidiary bank, participating in approval of its loans, conducting reviews of loan portfolios, providing centralized consumer underwriting, collections and loan operation services, and overseeing loan workouts. The Corporation’s objective is to minimize losses from its commercial lending activities and to maintain consumer losses at acceptable levels that are stable and consistent with growth and profitability objectives.

     The activity within the ALL for the three and six months ended June 30, 2005 and 2004 and the full year ended December 31, 2004 is shown in the following table:

							Six			Six
	Quarter ended			Quarter ended			months ended			months ended			Year ended
	June 30,			June 30,			June 30,			June 30,			December 31,
	2005			2004			2005			2004			2004
Allowance for loan losses-beginning of period	$	97,115			113,573			97,296			91,459			91,459
Loans charged off:
Commercial		4,502			9,112			8,653			17,962			25,073
Mortgage		415			188			682			292			1,174
Installment		6,514			8,135			14,057			18,222			35,958
Home equity		571			542			1,323			1,327			3,085
Credit cards		2,662			2,941			5,082			5,696			11,254
Manufactured housing		—			27			—			313			443
Leases		758			396			2,365			1,195			2,012
Total charge-offs	$	15,422			21,341			32,162			45,007			78,999
Recoveries:
Commercial		1,184			2,466			2,212			3,364			6,068
Mortgage		52			7			107			32			42
Installment		2,580			3,194			5,305			6,041			11,545
Home equity		318			306			611			681			1,430
Credit cards		734			791			1,310			1,474			2,920
Manufactured housing		147			255			355			677			1,088
Leases		129			139			189			279			491
Total recoveries	$	5,144			7,158			10,089			12,548			23,584
Net charge-offs	$	10,278			14,183			22,073			32,459			55,415
Allowance related to loans sold		—			(12,671	)		—			(12,671	)		(12,671	)
Provision for loan losses		5,971			14,850			17,585			55,240			73,923
Allowance for loan losses-end of period	$	92,808			101,569			92,808			101,569			97,296
Allowance for loan losses:
As a percentage of loans outstanding		1.40	%		1.56	%		1.40	%		1.56	%		1.51	%
As a multiple of annualized net charge offs and allowance related to loans sold		2.25X			1.46X			2.09X			1.30X			1.43X

     Note 1 (Summary of Significant Accounting Policies) and Note 4 (Allowance for Loan Losses) in the 2004 Form 10-K more fully describe the components of the allowance for loan loss model.

6.Goodwill and Intangible Assets – The following table summarizes goodwill and intangible assets:

	At June 30, 2005						At December 31, 2004						At June 30, 2004
	Gross		Accumulated		Net		Gross		Accumulated		Net		Gross		Accumulated		Net
	Amount		Amortization		Amount		Amount		Amortization		Amount		Amount		Amortization		Amount
Amortizable intangible assets:
Deposit base intangible assets	$	10,137		5,935		4,202		10,137		5,490		4,647		10,137		5,045		5,092
Unamortizable intangible assets:
Goodwill	$	139,245				139,245		139,245				139,245		139,245				139,245

Amortization expense for intangible assets was $0.22 million for both quarters ending June 30, 2005 and 2004. The following table shows the estimated future amortization expense for deposit base intangible assets, based on existing asset balances at December 31, 2004, for the years ended:

December 31, 2005	$	889
December 31, 2006		889
December 31, 2007		889
December 31, 2008		573
December 31, 2009		347

     During the first quarter of 2005, the Corporation conducted its annual impairment testing as required by SFAS No. 142 “Goodwill and Other Intangible Assets,” and concluded that goodwill was not impaired.

7.Earnings per share — The reconciliation between basic and diluted earnings per share (“EPS”) is presented as follows:

					Six		Six
	Quarter ended		Quarter ended		months ended		months ended
	June 30,		June 30,		June 30,		June 30,
	2005		2004		2005		2004
BASIC EPS:
Net income applicable to common shares	$	36,145		31,028		66,233		43,734
Average common shares outstanding		83,603		84,809		83,849		84,789
Net income per share — basic	$	0.43		0.37		0.79		0.52
DILUTED EPS:
Net income available to common shares	$	36,145		31,028		66,233		43,734
Add: interest expense on convertible bonds		7		7		14		14
		36,152		31,035		66,247		43,748
Avg common shares outstanding		83,603		84,809		83,849		84,789
Add: Equivalents from stock options		235		285		285		318
Add: Equivalents-convertible bonds		52		54		53		54
Average common shares and equivalents outstanding		83,890		85,148		84,187		85,161
Net income per common share — diluted	$	0.43		0.36		0.79		0.51

     For the quarters ended June 30, 2005 and 2004, options to purchase 5.88 million and 4.95 million shares, respectively, were outstanding, but not included in the computation of diluted earnings per share because they were antidilutive.

8.Segment Information — The Corporation provides a diversified range of banking and certain nonbanking financial services and products through its various subsidiaries. Management reports the Corporation’s results through its major segment classification, Supercommunity Banking. Included in the Parent Company and Other Subsidiaries category are certain nonbanking affiliates and portions of certain assets, capital, and support functions not specifically identifiable with Supercommunity Banking.

     The Corporation’s business is conducted solely in the United States. The following tables present a summary of financial results as of and for the three-month and six-month periods ended June 30, 2005 and 2004 and the full year ended December 31, 2004:

						Parent Company and Other
June 30, 2005	Supercommunity Banking					Subsidiaries				Eliminations						FirstMerit Consolidated
	2nd Qtr			YTD		2nd Qtr		YTD		2nd Qtr			YTD			2nd Qtr		YTD
OPERATIONS(thousands):
Net interest income	$	86,120			170,552		27,234		53,029		(25,577	)		(49,794	)		87,777		173,787
Provision for loan losses		5,820			17,586		152		—		—			—			5,972		17,586
Other income		49,933			94,719		162		315		—			—			50,095		95,034
Other expenses		78,046			152,765		1,347		2,536		4			7			79,397		155,308
Net income	$	35,938			65,571		38,328		69,626		(38,121	)		(68,964	)		36,145		66,233
AVERAGES(millions):
Assets	$	10,242			10,194		1,248		1,254		(1,161	)		(1,170	)		10,329		10,278
Loans		6,597			6,543		4		4		—			—			6,601		6,547
Earnings assets		9,473			9,438		1,113		1,114		(1,097	)		(1,098	)		9,489		9,454
Deposits		7,357			7,380		—		—		(35	)		(42	)		7,322		7,338
Shareholders’ equity	$	798			799		1,146		1,154		(982	)		(983	)		962		970
						Parent Company and Other
December 31, 2004	Supercommunity Banking					Subsidiaries				Eliminations						FirstMerit Consolidated
			YTD					YTD					YTD					YTD
OPERATIONS(thousands):
Net interest income				$	345,767				91,634					(86,596	)				350,805
Provision for loan losses					73,732				191					—					73,923
Other income					173,532				753					—					174,285
Other expenses					311,119				804					6					311,929
Net income					100,076				110,784					(107,646	)				103,214
AVERAGES(millions):
Assets					10,255				1,270					(1,207	)				10,318
Loans					6,490				4					—					6,494
Earnings assets					9,502				1,100					(1,086	)				9,516
Deposits					7,526				—					(86	)				7,440
Shareholders’ equity					789				1,165					(970	)				984

					Parent Company and Other
June 30, 2004	Supercommunity Banking				Subsidiaries						Eliminations						FirstMerit Consolidated
	2nd Qtr		YTD		2nd Qtr			YTD			2nd Qtr			YTD			2nd Qtr		YTD
OPERATIONS(thousands):
Net interest income	$	85,942		173,819		1,155			24,504			10			(22,214	)		87,107		176,109
Provision for loan losses		14,911		55,290		(61	)		(50	)		—			—			14,850		55,240
Other income		45,548		90,426		171			379			—			—			45,719		90,805
Other expenses		77,409		153,887		132			509			(5	)		4			77,536		154,400
Net income	$	30,306		42,260		31,860			45,525			(31,138	)		(44,051	)		31,028		43,734
AVERAGES(millions):
Assets	$	10,342		10,391		1,270			1,292			(1,140	)		(1,223	)		10,472		10,460
Loans		6,537		6,529		4			4			—			—			6,541		6,533
Earnings assets		9,644		9,641		1,093			1,103			(1,078	)		(1,089	)		9,659		9,655
Deposits		7,527		7,531		—			—			(90	)		(91	)		7,437		7,440
Shareholders’ equity	$	727		792		1,163			1,174			(908	)		(974	)		982		992

9.Accounting for Derivatives — The Corporation follows the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS No. 149, in accounting for its derivative activities. At June 30, 2005, the Corporation had various interest rate swaps in place that were accounted for as fair value hedges under SFAS No. 133 since their purpose is to “swap” fixed interest rate liabilities and assets to a variable interest rate basis. All but one of the interest rate swaps are associated with the Corporation’s fixed-rate commercial loan swap program that was initiated during the first quarter of 2003 and the remaining interest rate swap converts the fixed interest rate of mandatorily redeemable trust preferred securities to a

variable rate. All of these interest rate swaps, with the exception of the one associated with the mandatorily redeemable trust preferred securities, qualify for the “shortcut method of accounting” as prescribed in SFAS No. 133. The shortcut method of accounting requires that the hedge and the hedged item meet certain qualifying criteria. If the swap qualifies for the shortcut method of accounting then no hedge ineffectiveness can be assumed and the need to test for ongoing effectiveness is eliminated. For hedges that qualify for the shortcut method of accounting, the fair value of the swap and the fair value of the hedged item are recorded on the balance sheets and statements of income. The remaining hedge does not meet all the criteria necessary to be considered for the shortcut method of accounting. Therefore, the long-haul method of accounting is utilized. The long-haul method of accounting requires periodic testing of hedge effectiveness with the portion of the hedge deemed to be ineffective reported in other operating expense.

     In the third quarter of 2004, the Corporation began entering into forward swap agreements which, in effect, fixed the borrowing costs of certain variable rate liabilities in the future. These transactions do not qualify for the short-cut method of accounting under SFAS No. 133 as previously discussed. The Corporation classifies these transactions as cash flow hedges, with any hedge ineffectiveness being reported in current earnings. It is anticipated that the hedges will prove to be highly effective. A correlation analysis performed at quarter-end verified that the hedges were effective.

     Additionally, in the normal course of business, the Corporation sells originated mortgage loans into the secondary mortgage loan markets. The Corporation maintains a risk management program to protect and manage interest-rate risk and pricing associated with its mortgage commitment pipeline. The Corporation’s mortgage commitment pipeline included interest-rate lock commitments (“IRLCs”) that have been extended to borrowers who have applied for loan funding and met certain defined credit and underwriting standards. During the term of the IRLCs, the Corporation is exposed to interest-rate risk, in that the value of the IRLCs may change significantly before the loans close. To mitigate this interest-rate risk, the Corporation enters into various derivatives by selling loans forward to investors using forward commitments. In accordance with SFAS No. 133, the Corporation classifies and accounts for IRLCs as nondesignated derivatives that are recorded at fair value with changes in value recorded to current earnings. The forward sale commitments used to manage the risk on the IRLCs are also classified and accounted for as nondesignated derivatives and, therefore, recorded at fair value with changes recorded to current earnings. During 2003, the Corporation implemented a SFAS No. 133 hedging program for its mortgage loan warehouse to gain protection for the changes in fair value of the mortgage loan warehouse and the forward commitments. As such, both the mortgage loan warehouse and the forward commitments are recorded at fair value with changes in value recorded to current earnings.

    ��In 2003, the Corporation periodically entered into derivative contracts by purchasing To Be Announced Mortgage Backed Securities (“TBA Securities”) to help mitigate the interest-rate risk associated with its mortgage servicing rights (“MSR”). During the third quarter of 2004, options on treasury securities, options on mortgage-backed securities and swaptions were utilized to enhance the effectiveness of the economic hedge associated with the MSR. Within the “Other Income” section of these consolidated financial statements and Note 6 to the 2004 Form 10-K, the Corporation’s basis for accounting for mortgage servicing rights is discussed in more detail. In accordance with SFAS No. 133, the Corporation classified and

accounted for all three of these instruments as nondesignated derivatives. Accordingly, these securities were recorded at fair value with changes in value recorded to current earnings in loan sales and servicing income. At June 30, 2005 the Corporation did not have any TBA Securities, options, or swaptions outstanding.

10.Benefit Plans — The Corporation sponsors several qualified and nonqualified pension and other postretirement benefit plans for certain of its employees. The net periodic benefit cost is based on estimated values provided by outside actuaries. The components of net periodic benefit cost are as follows:

	Pension Benefits
							Six			Six
	Quarter ended			Quarter ended			months ended			months ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
Components of Net Periodic Pension Cost
Service Cost	$	1,597			1,922			3,194			3,844
Interest Cost		2,206			2,057			4,413			4,114
Expected return on assets		(2,875	)		(2,851	)		(5,751	)		(5,702	)
Amortization of unrecognized:
Transition (asset)		—			(9	)		—			(18	)
Prior service costs		57			69			114			138
Cumulative net (gain) loss		863			567			1,726			1,134
Net periodic pension cost	$	1,848			1,755			3,696			3,510

	Postretirement Benefits
							Six			Six
	Quarter ended			Quarter ended			months ended			months ended
	June 30,			June 30,			June 30,			June 30,
	2005			2004			2005			2004
Components of Net Periodic Postretirement Cost
Service Cost	$	201			192			402			384
Interest Cost		386			502			772			1,004
Amortization of unrecognized:
Transition (asset)		—			39			—			78
Prior service costs		(135	)		(102	)		(270	)		(203	)
Cumulative net (gain) loss		24			92			48			184
Net periodic postretirement cost	$	476			723			952			1,447

     The Corporation anticipates making a contribution to the pension plan during the third quarter of 2005; however, Management has not yet completed the evaluation of the most appropriate discount rate and long term rate of return that should be used to determine the appropriate funding level.

     On December 8, 2003, President Bush signed the Modernization Act into law as disclosed in Note 2 of these consolidated financial statements. This law provides for a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to the benefit established by the Modernization Act. The federal subsidy in the Modernization Act resulted in a $1.6 million reduction in our accumulated postretirement benefit obligation. Concurrently during 2004, the Corporation amended its postretirement benefits plan to limit and cap benefits prospectively. The total impact of both changes on our actuarial liability was a decrease of $13.6 million and is being accounted for as an actuarial gain that will be amortized as a reduction of our periodic cost and liability.

11.Contingencies — The nature of the Corporation’s business results in a certain amount of litigation. Accordingly, FirstMerit Corporation and its subsidiaries are subject to various

pending and threatened lawsuits in which claims for monetary damages are asserted. Management, after consultation with legal counsel, is of the opinion that the ultimate liability of such pending matters would not have a material effect on the Corporation’s financial condition and results of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential

FIRSTMERIT CORPORATION AND SUBSIDIARIES	Three months ended								Year ended								Three months ended
(Dollars in thousands)	June 30, 2005								December 31, 2004								June 30, 2004
	Average					Average			Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Cash and due from banks	$	197,548								213,994								226,637
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government agency obligations (taxable)		2,478,319			23,722		3.84	%		2,602,317			97,037		3.73	%		2,689,533			24,729		3.70	%
Obligations of states and political subdivisions (tax exempt)		99,756			1,673		6.73	%		103,402			7,311		7.07	%		104,132			1,825		7.05	%
Other securities and federal funds sold		255,743			3,037		4.76	%		261,765			9,765		3.73	%		260,990			2,324		3.58	%
Total investment securities and federal funds sold		2,833,818			28,432		4.02	%		2,967,484			114,113		3.85	%		3,054,655			28,878		3.80	%
Loans held for sale		54,409			804		5.93	%		55,002			2,089		3.80	%		63,244			633		4.03	%
Loans		6,601,204			105,196		6.39	%		6,493,472			383,905		5.91	%		6,540,974			93,511		5.75	%
Total earning assets		9,489,431			134,432		5.68	%		9,515,958			500,107		5.26	%		9,658,873			123,022		5.12	%
Allowance for loan losses		(96,342	)							(100,959	)							(112,120	)
Other assets		738,530								689,312								698,570
Total assets	$	10,329,167								10,318,305								10,471,960
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing	$	1,470,673			—		—			1,398,112			—		—			1,402,273			—		—
Demand — interest bearing		834,708			1,230		0.59	%		805,419			2,152		0.27	%		814,718			503		0.25	%
Savings and money market accounts		2,370,280			7,517		1.27	%		2,473,728			19,145		0.77	%		2,492,318			4,512		0.73	%
Certificates and other time deposits		2,646,199			20,696		3.14	%		2,762,975			81,540		2.95	%		2,727,745			19,598		2.89	%
Total deposits		7,321,860			29,443		1.61	%		7,440,234			102,837		1.38	%		7,437,054			24,613		1.33	%
Securities sold under agreements to repurchase		1,385,644			10,624		3.08	%		1,447,629			26,259		1.81	%		1,589,014			6,271		1.59	%
Wholesale borrowings		498,088			5,933		4.78	%		307,867			17,494		5.68	%		320,222			4,356		5.47	%
Total interest bearing liabilities		7,734,919			46,000		2.39	%		7,797,618			146,590		1.88	%		7,944,017			35,240		1.78	%
Other liabilities		161,336								139,046								143,475
Shareholders’ equity		962,239								983,529								982,195
Total liabilities and shareholders’ equity	$	10,329,167								10,318,305								10,471,960
Net yield on earning assets	$	9,489,431			88,432		3.74	%		9,515,958			353,517		3.71	%		9,658,873			87,782		3.66	%
Interest rate spread							3.30	%							3.38	%							3.34	%

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.

AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)Continued
Fully-tax Equivalent Interest Rates and Interest Differential

FIRSTMERIT CORPORATION AND SUBSIDIARIES	Six months ended								Six months ended
(Dollars in thousands)	June 30, 2005								June 30, 2004
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Cash and due from banks	$	194,163								219,497
Investment securities:
U.S. Treasury securities and U.S. Government agency obligations (taxable)		2,496,528			47,540		3.84	%		2,696,804			50,295		3.75	%
Obligations of states and political subdivisions (tax exempt)		100,659			3,436		6.88	%		103,293			3,654		7.11	%
Other securities		253,816			5,743		4.56	%		262,211			4,803		3.68	%
Total investment securities		2,851,003			56,719		4.01	%		3,062,308			58,752		3.86	%
Federal funds sold		2,083			57		5.52	%		1,381			7		1.02	%
Loans held for sale		53,825			1,431		5.36	%		58,626			1,071		3.67	%
Loans		6,546,926			204,742		6.31	%		6,533,061			189,719		5.84	%
Total earning assets		9,453,837			262,949		5.61	%		9,655,376			249,549		5.20	%
Allowance for loan losses		(96,390	)							(107,920	)
Other assets		726,859								693,421
Total assets	$	10,278,469								10,460,374
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing	$	1,459,014			—		—			1,366,165			—		—
Demand — interest bearing		827,879			2,186		0.53	%		791,003			869		0.22	%
Savings and money market accounts		2,381,092			13,892		1.18	%		2,487,884			8,826		0.71	%
Certificates and other time deposits		2,670,199			41,296		3.12	%		2,794,536			41,229		2.97	%
Total deposits		7,338,184			57,374		1.58	%		7,439,588			50,924		1.38	%
Securities sold under agreements to repurchase		1,356,106			19,465		2.89	%		1,568,295			12,409		1.59	%
Wholesale borrowings		455,357			10,992		4.87	%		315,299			8,743		5.58	%
Total interest bearing liabilities		7,690,633			87,831		2.30	%		7,957,017			72,076		1.82	%
Other liabilities		158,804								145,467
Shareholders’ equity		970,018								991,725
Total liabilities and shareholders’ equity	$	10,278,469								10,460,374
Net yield on earning assets	$	9,453,837			175,118		3.74	%		9,655,376			177,473		3.70	%
Interest rate spread							3.31	%							3.38	%

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.

RESULTS OF OPERATIONS

     The Corporation recorded second quarter 2005 net income of $36.1 million, or $0.43 per diluted share, up from $31.0 million, or $0.36 per diluted share, for the second quarter of 2004. Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 15.07% and 1.40%, respectively, compared with 12.71% and 1.19% for the second quarter of 2004.

     For the first six months of 2005, the Company reported net income of $66.2 million, or $0.79 per diluted share, up from $43.7 million, or $0.51 per diluted share, for the first six months of 2004. ROE and ROA were 13.77% and 1.30%, respectively, compared with 8.87% and 0.84% for the prior-year period.

     Total revenue, defined as net interest income on a fully-tax equivalent (“FTE”) basis plus non-interest income net of securities transactions, was $138.6 million for the second quarter of 2005, compared with $132.1 million in the prior-year quarter. FTE net interest income increased 0.74% year-over-year, to $88.4 million. The impact of an 8 basis point increase in the net interest margin to 3.74% offset a 1.75% decline in average earning assets to $9.5 billion. The outstanding balance of the investment portfolio declined as a result of the Company’s de-leverage strategy to manage its interest rate risk position, however the yield on the investment portfolio has improved since the second quarter of 2004. Average loans increased 0.92%, to $6.6 billion, with growth tempered by the sale of problem commercial assets. While the loan sales in June of 2004 contributed to declining average loan balances in the third and fourth quarters of 2004, the transactions strengthened the risk profile of the balance sheet.

     Noninterest income for the second quarter of 2005 totaled $50.1 million, compared with $45.7 million for the second quarter of 2004. Excluding securities gains (losses), non-interest income was $50.1 million in the second quarter of 2005 and $44.3 million in the same period last year. The overall increase in noninterest income reflects increased deposit and bankcard fees resulting from the Company’s strategies to generate higher fee income from these business lines and the favorable settlement of certain contractual obligations.

     Noninterest expense totaled $79.4 million for the second quarter of 2005, compared with $77.5 million for the second quarter of 2004, an increase of 2.40%. Advertising and promotion expense increased $1.6 million, compared with the second quarter of 2004 and salary and benefits expense increased $2.2 million, or 5.65%. The efficiency ratio for the quarter was 57.14%, compared with 58.53% for the year ago quarter, reflecting the impact of profitable marketing activity offset slightly by higher compensation expenditures related to improved operating performance during the quarter.

     As of June 30, 2005, nonperforming assets were $54.0 million, or 0.82% of period-end loans plus other real estate, compared with $46.7 million, or 0.71%, as of March 31, 2005, $45.9 million or 0.71% as of December 31, 2004 and $48.8 million or 0.75%, as of June 30, 2004. Net charge-offs for the second quarter of 2005 were $10.3 million, compared with $14.2 million for the second quarter of 2004, a decline of $3.9 million, or 27.53%. Compared with the previous quarter, net charge-offs decreased $1.5 million, or 12.86%. Annualized net charge-offs to average loans in the second quarter of 2005 improved to 0.62%, compared with 0.74% for the prior quarter and 0.87% for the second quarter of 2004.

     The Company recorded $6.0 million of loan loss provision in the second quarter of 2005, compared with $14.9 million in the second quarter of 2004. In the first quarter of 2005, the loan loss provision was $11.6 million. The reduced loan loss provision was primarily the result of significant improvement in the Company’s level of criticized commercial loans in the second quarter of 2005. This reduction in criticized loans reflects continued strengthening of the overall quality of the loan portfolio and factored into the allowance for loan loss methodology for the period. The allowance for credit losses at June 30, 2005 was 1.49% of period-end loans, compared with 1.59% on March 31, 2005, 1.60% at December 31, 2004 and 1.65% on June 30, 2004.

     Assets at June 30, 2005 totaled $10.3 billion, down 0.67% from June 30, 2004, but up 1.9% from December 31, 2004. Period-end loan growth of $91.0 million, or 1.40%, was driven by commercial loans and home equity loans increasing 2.98% and 14.08%, respectively, to mitigate a 4.05% decline in installment loans and an anticipated 32.52% decline in the leasing portfolio. Investment securities and federal funds sold decreased $144.8 million, or 4.87%, over the same time period, funding the growth of other earning assets.

     Deposits totaled $7.2 billion at June 30, 2005, down 2.6% from December 31, 2004 and 3.09% from June 30, 2004. Time deposits declined $150.7 million, or 5.58%, significantly impacted by the maturation of high-cost brokered CD’s. The Company increased its core deposit concentration to 64.47% of deposits at June 30, 2005, compared with 63.80% at December 31, 2004 and 63.53% at June 30, 2004.

     Shareholders’ equity was $976.0 million on June 30, 2005. The Corporation’s capital position remains strong as tangible equity to assets was 8.19%, compared with 8.39% on December 31, 2004 and 7.94% on June 30, 2004. The common dividend paid during the quarter was $0.27 per share, a $0.01 increase from the prior-year quarter. During the second quarter of 2005 the Company repurchased 145,143 common shares. Period-end common shares outstanding totaled 83.5 million.

Net Interest Income

     Net interest income, the Corporation’s principal source of earnings, is the difference between interest income generated by earning assets (primarily loans and investment securities) and interest paid on interest-bearing funds (namely customer deposits, securities sold under agreements to repurchase and wholesale borrowings). Net interest income for the quarter ended June 30, 2005 was $87.78 million compared to $87.11 million for the three months ended June 2004. The $0.67 million increase in net interest income occurred because the $10.76 million increase in interest expense, compared to the same quarter last year was less than the $11.43 million increase in interest income during the same period. For the purpose of this remaining discussion, net interest income is presented on a fully tax-equivalent (“FTE”) basis, to provide a comparison among all types of interest earning assets. That is, interest on tax-free securities and tax-exempt loans has been restated as if such interest were taxed at the statutory Federal income tax rate of 35%, adjusted for the non-deductible portion of interest expense incurred to acquire the tax-free assets. Net interest income presented on an FTE basis is a non-GAAP financial

measure widely used by financial services corporations. The FTE adjustment was $0.7 million for both quarters ending June 30, 2005 and 2004.

     FTE net interest income for the quarter ended June 30, 2005 was $88.43 million compared to $87.78 million for the three months ended June 30, 2004. The $0.65 million increase in FTE net interest income occurred because the $10.76 million increase in interest expense, compared to the same quarter last year, was less than the $11.41 million increase in interest income during the same period. As illustrated in the following rate/volume analysis table, interest income and interest expense both increased due to the rising interest rate environment.

     As illustrated in the following table, the increased amount of interest income recorded in the 2005 second quarter compared to the same 2004 period, was primarily rate driven as higher yields on loans increased interest income by $10.82 million during those periods. The table also depicts similar three-month increases in interest expense, again caused by the continued rise in interest rates from 2004 through the second quarter of 2005. The higher rates paid on customer deposits and securities sold under agreements to repurchase in the 2005 quarter compared to the same 2004 period increased interest expense by $10.89 million. The six-month analysis was also primarily rate driven as the higher yield on loans increased interest income by $14.62 while the increase in rates paid on deposits and securities sold under agreements to repurchase increased interest expense by $17.61 million.

	Quarters ended June 30, 2005 and 2004									Six months ended June 30, 2005 and 2004
RATE/VOLUME ANALYSIS	Increases (Decreases)									Increases (Decreases)
(Dollars in thousands)	Volume			Rate			Total			Volume			Rate			Total
INTEREST INCOME — FTE
Investment securities	$	(2,138	)		1,652			(486	)		(4,078	)		2,045			(2,033	)
Loans held for sale		(98	)		269			171			(94	)		454			360
Loans		868			10,817			11,685			404			14,619			15,023
Federal funds sold		4			36			40			5			45			50
Total interest income — FTE	$	(1,364	)		12,774			11,410			(3,763	)		17,163			13,400
INTEREST EXPENSE
Demand deposits-interest bearing	$	12			715			727			42			1,275			1,317
Savings and money market accounts		(231	)		3,236			3,005			(394	)		5,460			5,066
Certificates of deposits and other time deposits		(599	)		1,697			1,098			(1,877	)		1,944			67
Securities sold under agreements to repurchase		(892	)		5,245			4,353			(1,874	)		8,930			7,056
Wholesale borrowings		2,174			(597	)		1,577			3,495			(1,246	)		2,249
Total interest expense	$	464			10,296			10,760			(608	)		16,363			15,755
Net interest income — FTE	$	(1,828	)		2,478			650			(3,155	)		800			(2,355	)

Net Interest Margin

     The following table provides 2005 FTE net interest income and net interest margin totals as well as 2004 comparative amounts:

	Quarters ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2005			2004			2005			2004
Net interest income	$	87,777			87,107			173,787			176,109
Tax equivalent adjustment		655			675			1,331			1,364
Net interest income — FTE	$	88,432			87,782			175,118			177,473
Average earning assets	$	9,489,431			9,658,873			9,453,837			9,655,376
Net interest margin — FTE		3.74	%		3.66	%		3.74	%		3.70	%

     Average loan outstandings for the current year and prior year second quarters totaled $6.60 billion and $6.54 billion, respectively. Increases in average loan balances from second quarter 2004 to second quarter this year occurred in commercial, residential mortgage and home equity loans while installment loans, credit card loans, and leases declined. Efforts to grow loan outstandings continue to be tempered by the less than robust economy that currently exists in the Corporation’s primary lending areas.

     Specific changes in average loan outstandings, compared to second quarter 2004, were as follows: commercial loans up $66.31 million or 1.97%; residential real estate loans up $13.48 million or 2.15%; home equity loans as a result of targeted marketing rose $61.69 million or 9.60%; credit card loans down $3.54 million or 2.50%; installment loans, both direct and indirect, were down $38.89 million or 2.37%; and leases were down $38.82 million, or 32.50%. The majority of fixed-rate mortgage loan originations are sold to investors through the secondary mortgage loan market. Average outstanding loans for the 2005 and 2004 second quarters equaled 69.56% and 67.72% of average earning assets, respectively. The modest increase in this percentage illustrates that liquidity remains high and overall loan demand remains flat.

     Average deposits were $7.32 billion during the 2005 second quarter, down $115,194 million, or 1.55%, from the same period last year. Core deposits, which are defined as checking accounts, savings accounts and money market savings products, declined. For the quarter ended June 30, 2005, average core deposits decreased $33.65 million or 0.71% and represented 63.86% of total average deposits compared to 63.32% for the 2004 second quarter. Average certificates of deposit (“CDs”) declined $81.55 million or 2.99% compared to the prior year quarter. Average wholesale borrowings increased $177.87 million and as a percentage of total interest-bearing funds equaled 6.44% for the 2005 second quarter and 4.03% for the same quarter one year ago. Securities sold under agreements to repurchase decreased $203.37 million and as a percentage of total interest bearing funds equaled 17.91% for the 2005 second quarter and 20.00% for the 2004 second quarter. The decrease in deposits was offset by an increase in

wholesale borrowings. Average interest-bearing liabilities funded 81.51% of average earning assets in the current year quarter and 82.25% during the three months ended June 30, 2004.

     In summary, loan growth over the past six months occurred mainly in higher-yielding commercial, residential mortgages and home equity outstandings, resulting in a lower concentration of leases, installment and credit card loans.

Other Income

     Other (non-interest) income for the quarter totaled $50.10 million, an increase of $4.38 million from the $45.72 million earned during the same period one year ago.

     Other income, net of securities gains, as a percentage of net revenue for the second quarter was 36.17% compared to 33.54% for the same quarter one year ago. Net revenue is defined as net interest income, on a fully tax-equivalent (“FTE”) basis, plus other income, less gains from securities sales.

     A principle component of the overall increase in other income was the $1.19 million increase in loan sales and servicing income consisting of: a $0.34 million increase in loan origination fees; a $1.28 million decrease in the mortgage servicing rights valuation allowance and a $0.66 million decrease in the amortization of mortgage servicing rights offset by a $1.09 million decrease in the gain on sale of mortgages.

     The remaining changes in other income, compared to the second quarter last year, were primarily as follows: service charges on deposit accounts totaled $17.80 million, up 13.34% due in part to new fee strategies; credit card fees increased $0.98 million or 10.32%; ATM and other service fees increased $0.23 million or 7.39%; income from bank owned life insurance decreased $0.60 million or 1.91%; investment services and insurance fees decreased $0.70 million. There were no significant sales of investment securities during the second quarter of 2005 compared to the gains of $1.41 million recorded in the second quarter 2004. Other operating income increased $2.06 million. During the fourth quarter of 2001, the Corporation exited the manufactured housing lending business and thereby ceased new originations of manufactured housing loans. In conjunction with the exit of this business, the Corporation recorded a liability for certain contractual obligations. In the second quarter of 2005, settlements were reached on several of the contracts and $2.46 million was recorded in noninterest income.

     A significant component of loan sales and servicing income category is the income derived from mortgage servicing activities. The following is a summary of changes in capitalized Mortgage Servicing Rights (“MSR”), net of accumulated amortization and valuation allowance, included in the consolidated Balance Sheets:

	Quarter ended			Quarter ended			Quarter ended			Quarter ended			Quarter ended
	June 30			March 31			December 31,			September 31,			June 30,
(Dollars in thousands)	2005			2005			2004			2004			2004
Balance at beginning of period	$	18,396			18,261			18,099			18,258			16,424
Addition of mortgage servicing rights		1,072			703			931			1,117			1,495
Amortization		(759	)		(793	)		(877	)		(931	)		(1,422	)
Changes in valuation allowance		(74	)		225			108			(345	)		1,761
Balance at end of period	$	18,635			18,396			18,261			18,099			18,258

     On a quarterly basis, the Corporation assesses its capitalized servicing rights for impairment based on their current fair value. As permitted, the Corporation disaggregates its servicing rights portfolio based on loan type and interest rate which are the predominant risk characteristics of the underlying loans. If any impairment results after current market assumptions are applied, the value of the servicing rights is reduced through the use of a valuation allowance, the balance of which is $0.10 million, $0.2 million, and $0.0 million at June 30, 2005, December 31, 2004 and June 30, 2004, respectively. The MSRs are amortized over the period of and in proportion to the estimated net servicing revenues.

     These balances represent the rights to service approximately $1.95 billion, $2.03 billion and $2.6 billion of mortgage loans at June 30, 2005, December 31, 2004, and June 30, 2004, respectively. The portfolio primarily consists of conventional mortgages.

     The Corporation continues to focus upon non-interest income (fee income) as a means by which to diversify revenue.

Other Expenses

     Other (non-interest) expenses totaled $79.4 million for the second quarter compared to $77.5 million in 2004, an increase of $1.86 million, or 2.40%.

     For the three months ended June 30, 2005, increases in operating costs compared to second quarter 2004 occurred as follows: salaries,wages, pension and employee benefits, rose $2.21 million, primarily due to additional staff added to revenue-generating positions created to implement strategic revenue initiatives; occupancy expenses rose $0.36 million primarily due to inclement weather during the second quarter; while professional fees decreased $0.13 million.

     The efficiency ratio of 57.14% for second quarter 2005 was better than the efficiency ratio of 58.53% recorded for the second quarter, 2004. The efficiency ratio for the three months ended June 30, 2005 indicates 57.14 cents of operating costs were spent in order to generate each dollar of net revenue.

Federal Income Taxes

     Federal income tax expense totaled $16.36 million and $9.41 million for the quarters ended June 30, 2005 and 2004, respectively. The effective federal income tax rate for second quarter 2005 was 31.2% compared to 23.3% for the same quarter 2004. The increase in effective rate is primarily due to the relative change in pre-tax net income as well as a reduction in tax expense for the 2004 quarter due to the successful resolution of Internal Revenue Service’s review of the Corporation’s tax returns for the years 1999 and 2000. Additional federal income tax information is contained in Note 11 (Federal Income Taxes) in the 2004 Form 10-K.

FINANCIAL CONDITION

Investment Securities

     The June 30, 2005 amortized cost and market value of investment securities, including mortgage-backed securities, by average remaining term, are included in Note 4 (Investment Securities) to the unaudited consolidated financial statements.

     These securities are purchased within an overall strategy to maximize future earnings taking into account an acceptable level of interest rate risk. While the maturities of the mortgage and asset-backed securities are beyond five years, these instruments provide periodic principal payments and include securities with adjustable interest rates, reducing the interest rate risk associated with longer-term investments.

Allowance for Credit Losses

     During the fourth quarter of 2004, the Corporation reclassified the reserve of unfunded lending commitments from the allowance for loan losses to other liabilities. Amounts presented prior to December 31, 2004 have been reclassified to conform to the current presentation. In addition, the provision for credit losses associated with the unfunded lending commitments was reclassified from the provision for loan losses to other expense to conform to the current year presentation. The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments.

     During the quarter ended March 31, 2004, the Corporation strengthened the allowance for loan losses by $22.1 million above net charge-offs. During that quarter, Management observed that rising input costs such as plastic resins, steel and petroleum would impact certain segments of the commercial and industrial loan portfolio. We also observed a higher level of nonaccrual loans from within previously identified criticized loan levels while the economy was in an early stage of recovery. These observations led Management to change some of the assumptions used in the Corporation’s allowance for loan losses methodology by shortening the historical period used for estimating loss migration factors which had the effect of more heavily weighting recent loss history in the portfolio. Note 1 (Summary of Significant Accounting Policies) and Note 4

(Allowance for Loan Losses) in the 2004 Form 10-K more fully describes the components of the model.

     During the third quarter of 2004, Management analyzed and subsequently made further refinements to the allowance for loan losses model assumptions and methodology to better reflect current loss expectations. Management averaged the Corporation’s commercial loan five year migration loss ratios with the Corporation’s two year loss ratios to better reflect the new underwriting standards that have been in effect for the last two years. This methodology has been consistently applied to all subsequent periods.

				Year Ended
	Quarter ended			December 31,			Quarter ended
	June 30, 2005			2004			June 30, 2004
Allowance for Loan Losses
Allowance for loan losses-beginning of period	$	97,115			91,459			113,573
Provision for loan losses		5,971			73,923			14,850
Loans charged off		(15,422	)		(78,999	)		(21,341	)
Recoveries on loans previously charged off		5,144			23,584			7,158
Allowance related to loans sold		—			(12,671	)		(12,671	)
Allowance for loan losses-end of period	$	92,808			97,296			101,569
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	6,479			6,094			6,688
Provision for credit losses		(694	)		(320	)		(696	)
Balance at end of period	$	5,785			5,774			5,992
Allowance for Credit Losses	$	98,593			103,070			107,561
Annualized net charge-offs and allowance related to loans sold as a % of average loans		0.62	%		1.05	%		1.65	%
Allowance for credit losses:
As a percentage of loans outstanding		1.49	%		1.60	%		1.65	%
As a percentage of nonperforming loans		221.76	%		254.39	%		261.67	%

     The allowance for credit losses decreased $4.5 million from December 31, 2004 to June 30, 2005 as compared to a decrease of $9.0 million from June 30, 2004 to June 30, 2005. The overall decrease was attributed to a substantial improvement in criticized assets. During the quarter ended June 30, 2005, $54.0 million of criticized assets were paid off or upgraded. Net charge offs declined $10.4 million for the six months ending June 30, 2005 from six months ending June 30, 2004. The decline in criticized assets coupled with the decline in net charge offs was the primary reason for the $8.9 million reduction in the provision for loans losses at June 30, 2005 from June 30, 2004. The following tables show this overall trend in increased credit quality by specific asset and risk categories.

	At June 30, 2005
	Loan Type
	Commercial		Commercial R/E				Installment		Home Equity		Credit Card		Res Mortgage
Allowance for Loan Losses Components:	Loans		Loans		Leases		Loans		Loans		Loans		Loans		Total
(In thousands)
Individually Impaired Loan Component:
Loan balance	$	13,510		15,694				—		—		—		—		29,204
Allowance		3,020		1,993				—		—		—		—		5,013
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		27,190		1,378		—										28,568
Grade 1 allowance		100		2		—										102
Grade 2 loan balance		165,035		95,489		14,581										275,105
Grade 2 allowance		1,341		285		130										1,756
Grade 3 loan balance		255,714		319,928		18,231										593,873
Grade 3 allowance		2,004		1,257		171										3,432
Grade 4 loan balance		855,271		1,423,441		51,624										2,330,336
Grade 4 allowance		18,118		9,885		1,200										29,203
Grade 5 (Special Mention) loan balance		55,682		37,789		594										94,065
Grade 5 allowance		3,754		708		44										4,506
Grade 6 (Substandard) loan balance		80,429		63,398		22										143,849
Grade 6 allowance		10,956		3,056		3										14,015
Grade 7 (Doubtful) loan balance		461		493		—										954
Grade 7 allowance		179		61		—										240
Consumer loans based on payment status:
Current loan balances						11,367		1,571,280		733,271		134,284		607,818		3,058,020
Current loans allowance						177		20,765		2,273		3,646		1,070		27,931
30 days past due loan balance						230		13,942		2,657		1,835		11,423		30,087
30 days past due allowance						7		1,155		135		648		125		2,070
60 days past due loan balance						131		4,857		576		948		4,055		10,567
60 days past due allowance						15		1,135		86		523		138		1,897
90+ days past due loan balance						54		2,889		702		1,267		11,471		16,383
90+ days past due allowance						15		1,304		195		1,001		128		2,643
Total loans	$	1,453,292		1,957,610		96,834		1,592,968		737,206		138,334		634,767		6,611,011
Total Allowance for Loan Losses	$	39,472		17,247		1,762		24,359		2,689		5,818		1,461		92,808

	At December 31, 2004
	Loan Type
	Commercial		Commercial R/E				Installment		Home Equity		Credit Card		Res Mortgage
Allowance for Loan Losses Components:	Loans		Loans		Leases		Loans		Loans		Loans		Loans		Total
(In thousands)
Individually Impaired Loan Component:
Loan balance	$	7,317		14,299		779		—		—		—		—		22,395
Allowance		2,530		1,561		779		—		—		—		—		4,870
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		13,912		1,479		—										15,391
Grade 1 allowance		46		2		—										48
Grade 2 loan balance		156,983		102,607		19,191										278,781
Grade 2 allowance		1,058		302		142										1,502
Grade 3 loan balance		233,813		299,103		21,709										554,625
Grade 3 allowance		1,899		1,120		192										3,211
Grade 4 loan balance		795,649		1,337,019		48,296										2,180,964
Grade 4 allowance		17,917		7,820		1,140										26,877
Grade 5 (Special Mention) loan balance		76,974		48,195		63										125,232
Grade 5 allowance		5,327		828		5										6,160
Grade 6 (Substandard) loan balance		104,121		70,606		4,142										178,869
Grade 6 allowance		14,175		2,914		614										17,703
Grade 7 (Doubtful) loan balance		534		586		35										1,155
Grade 7 allowance		196		82		14										292
Consumer loans based on payment status:
Current loan balances						19,926		1,559,608		671,297		140,666		612,790		3,004,287
Current loans allowance						312		20,645		1,865		4,128		894		27,844
30 days past due loan balance						1,492		21,099		3,079		1,764		13,050		40,484
30 days past due allowance						49		1,705		147		643		131		2,675
60 days past due loan balance						258		6,910		820		1,066		4,938		13,992
60 days past due allowance						30		1,501		114		602		150		2,397
90+ days past due loan balance						228		5,164		1,035		1,544		8,937		16,908
90+ days past due allowance						54		2,094		277		1,197		95		3,717
Total loans	$	1,389,303		1,873,894		116,119		1,592,781		676,231		145,040		639,715		6,433,083
Total Allowance for Loan Losses	$	43,148		14,629		3,331		25,945		2,403		6,570		1,270		97,296

	At June 30, 2004
	Loan Type
	Commercial		Commercial R/E				Installment		Home Equity		Credit Card		Res Mortgage
Allowance for Loan Losses Components:	Loans		Loans		Leases		Loans		Loans		Loans		Loans		Total
(In thousands)
Individually Impaired Loan Component:
Loan balance	$	9,648		10,965		898		—		—		—		—		21,511
Allowance		2,410		828		773		—		—		—		—		4,011
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		12,552		1,976		—										14,528
Grade 1 allowance		58		5		—										63
Grade 2 loan balance		160,777		117,510		28,342										306,629
Grade 2 allowance		896		530		170										1,596
Grade 3 loan balance		230,302		289,080		24,775										544,157
Grade 3 allowance		3,902		1,657		287										5,846
Grade 4 loan balance		888,644		1,288,650		53,824										2,231,118
Grade 4 allowance		21,416		11,624		1,527										34,567
Grade 5 (Special Mention) loan balance		64,989		51,525		1,889										118,403
Grade 5 allowance		3,807		880		130										4,817
Grade 6 (Substandard) loan balance		116,635		68,369		653										185,657
Grade 6 allowance		13,347		2,835		87										16,269
Grade 7 (Doubtful) loan balance		674		553		—										1,227
Grade 7 allowance		265		91		—										356
Consumer loans based on payment status:
Current loan balances						34,742		1,613,408		641,408		134,880		598,331		3,022,769
Current loans allowance						401		19,114		1,817		3,895		724		25,951
30 days past due loan balance						1,802		19,850		2,703		1,993		14,672		41,020
30 days past due allowance						45		1,372		109		717		132		2,375
60 days past due loan balance						391		7,757		1,478		1,300		3,969		14,895
60 days past due allowance						33		1,393		172		720		105		2,423
90+ days past due loan balance						198		4,680		610		1,938		10,661		18,087
90+ days past due allowance						35		1,591		149		1,415		105		3,295
Total loans	$	1,484,221		1,828,628		147,514		1,645,695		646,199		140,111		627,633		6,520,001
Total Allowance for Loan Losses	$	46,101		18,450		3,488		23,470		2,247		6,747		1,066		101,569

Loans

     Total loan outstandings at June, 2005 were $6.6 billion compared to $6.4 billion at December 31, 2004 and $6.5 billion at June 30, 2004.

     The commercial loan portfolio increased by 2.98% over the prior year quarter, but continues to be impacted by lower demand for credit in our region. While the Corporation originated $126.0 million of mortgage loans in the second quarter 2005, compared to $309.4 million in same quarter of 2004, and $590.9 billion for the full year ended December 31, 2004, the majority of these loans were fixed rate mortgages and sold with servicing rights retained. Further discussion of the Corporation’s loan mix strategy as well as changes in average balances for the quarter ended June 30, 2005 compared to the quarter ended June 30, 2004 can be found in the Net Interest Income section of this document.

	As of		As of		As of
	June 30,		December 31,		June 30,
(Dollars in thousands)	2005		2004		2004
Commercial loans	$	3,423,384		3,285,012		3,324,335
Mortgage loans		634,777		639,715		627,633
Installment loans		1,601,022		1,598,588		1,668,679
Home equity loans		737,207		676,230		646,197
Credit card loans		138,335		145,042		140,110
Leases		76,286		88,496		113,047
Total Loans	$	6,611,011		6,433,083		6,520,001

     Expected cash flow and interest rate information for commercial loans is presented in the following table:

	As of
	June 30, 2005
	(Dollars in thousands)
Due in one year or less	$	1,502,916
Due after one year but within five years		1,591,208
Due after five years		329,260
Totals	$	3,423,384
Due after one year with a predetermined fixed interest rate	$	966,701
Due after one year with a floating interest rate		953,767
Totals	$	1,920,468

     The following table summarizes the Corporation’s nonperforming assets:

	June 30,			December 31,			June 30,
	2005			2004			2004
	(Dollars in thousands)
Nonperforming commercial loans	$	38,124			33,831			33,080
Other nonaccrual loans:		6,336			6,685			8,025
Total nonperforming loans		44,460			40,516			41,105
Other real estate (“ORE”)		9,525			5,375			7,714
Total nonperforming assets	$	53,985			45,891			48,819
Loans past due 90 day or more accruing interest	$	17,969			20,703			18,387
Total nonperforming assets as a percentage of total loans and ORE		0.82	%		0.71	%		0.75	%

     The $7.3 million increase in nonperforming assets over the linked quarter, is primarily attributable to a $3.0 million assisted living facility that reached nonaccrual status and a $5.0 million golf course community loan that moved to the ORE portfolio offset by a $0.7 million additional reserve on an existing ORE property. Both loans were underwritten several years ago and have been in the criticized loan category for several years. Management does not anticipate a significant loss from either credit. The allowance for credit losses covers nonperforming loans by 221.76% compared to 261.67% at the end of the prior year quarter. See Note 1 (Summary of Significant Accounting Policies) of the 2004 Form 10-K for a summary of the Corporation’s nonaccrual and charge off policies.

     The following table is a nonaccrual commercial loan flow analysis:

Period End	2Q05			1Q05			4Q04			3Q04			2Q04
				(Dollars in thousands)
Nonaccrual commercial loans beginning of period	$	34,207			33,831			33,812			33,080			71,596
Credit Actions:
New		22,498			11,315			13,766			9,094			10,211
Loan and lease losses		(3,332	)		(3,904	)		(4,665	)		(1,857	)		(7,253	)
Charged down		(2,444	)		(1,874	)		(137	)		(1,009	)		(1,859	)
Return to accruing status		(801	)		(2,130	)		(4,449	)		(345	)		(744	)
Payments		(12,004	)		(3,031	)		(4,496	)		(5,151	)		(3,937	)
Sales		—			—			—			—			(34,934	)
Nonaccrual commercial loans end of period	$	38,124			34,207			33,831			33,812			33,080

Deposits

     The following schedule illustrates the change in composition of the average balances of deposits and average rates paid for the noted periods:

	Quarter Ended					Year Ended					Quarter Ended
	June 30, 2005					December 31, 2004					June 30, 2004
	Average		Average			Average		Average			Average		Average
	Balance		Rate			Balance		Rate			Balance		Rate
	(Dollars in thousands)
Non-interest DDA	$	1,470,673		—			1,398,112		—			1,402,273		—
Interest-bearing DDA		834,708		0.59	%		805,419		0.27	%		814,718		0.25	%
Savings and money market		2,370,280		1.27	%		2,473,728		0.77	%		2,492,318		0.73	%
CDs and other time deposits		2,646,199		3.14	%		2,762,975		2.95	%		2,727,745		2.89	%
Total customer deposits	$	7,321,860		1.61	%		7,440,234		1.38	%		7,437,054		1.33	%
Securities sold under agreements to repurchase		1,385,644		3.08	%		1,447,629		1.81	%		1,589,014		1.59	%
Wholesale borrowings		498,088		4.78	%		307,867		5.68	%		320,222		5.47	%
Total funds	$	9,205,592					9,195,730					9,346,290

     Interest-bearing and noninterest-bearing demand deposits, on a combined basis, averaged $2.31 billion during the 2005 second quarter, up $88.39 million or 3.99% from second quarter 2004. Savings deposits, including money market savings accounts averaged $2.37 billion, $122.04 million or 4.90% lower than the year ago quarter. The sum of demand and savings accounts, often referred to as “core deposits,” dropped $33.65 million or 0.71%, and represented 63.86% of total average deposits for the second quarter, 2005 compared to 63.32% last year.

     The weighted-average yield paid on interest-bearing core deposits during the quarter at 1.09% was 49 basis points more than last year’s average core deposits rate. Average CDs, still the largest individual component of deposits, totaled $2.65 billion for the second quarter, down 2.99% from the same quarter last year. Average rates paid on CDs rose 25 basis points from 2.89% in the 2004 quarter to 3.14% this year. On a percentage basis, average CDs were 34.21% and 34.34%, respectively, of total interest-bearing funds for the June 30, 2005 and 2004 quarters.

     Securities sold under agreements to repurchase decreased to 17.91% of interest-bearing funds during the three months ended June 30, 2005 from 20.00% for the June 30, 2004 quarter. Interest-bearing liabilities funded 81.51% of average earning assets during the quarter ended June 30, 2005 and 82.25% during the quarter ended June 30, 2004. Wholesale funds increased to 6.44% of interest-bearing funds during the second quarter, 2005 from 4.03% in the year ago quarter. In summary, the decrease in average core deposits during the quarter compared to the same period in 2004.

     The following table summarizes scheduled maturities of CDs of $100 thousand or more (“Jumbo CDs”) that were outstanding as of June 30, 2005:

Maturing in:	Amount
(Dollars in thousands)
Under 3 months	$	367,160
3 to 12 months		311,520
Over 12 months		118,638
	$	797,318

Market Risk

     Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility. The Corporation is primarily exposed to interest rate risk as a result of offering a wide array of financial products to its customers.

     Changes in market interest rates may result in changes in the fair market value of the Corporation’s financial instruments, cash flows, and net interest income. The Corporation seeks to achieve consistent growth in net interest income and capital while managing volatility arising from shifts in market interest rates. The Asset and Liability Committee (“ALCO”) oversees market risk management, establishing risk measures, limits, and policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. According to these policies, responsibility for measuring and the management of interest rate risk resides in the Corporate Treasury function.

     Interest rate risk on the Corporation’s consolidated balance sheets consists of reprice, option, and basis risks. Reprice risk results from differences in the maturity, or repricing, of asset and liability portfolios. Option risk arises from “embedded options” present in many financial instruments such as loan prepayment options, deposit early withdrawal options and interest rate options. These options allow customers opportunities to benefit when market interest rates change, which typically results in higher net revenue for the Corporation. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in a narrowing of profit spread on an earning asset or liability. Basis risk is also present in administered rate liabilities, such as interest-bearing checking accounts, savings accounts and money market accounts where historical pricing relationships to market rates may change due to the level or directional change in market interest rates.

     The interest rate risk position is measured and monitored using risk management tools, including earnings simulation modeling and economic value of equity sensitivity analysis, which capture both near-term and long-term interest rate risk exposures. Combining the results from these separate risk measurement processes allows a reasonably comprehensive view of short-term and long-term interest rate risk in the Corporation.

     Earnings simulation involves forecasting net interest earnings under a variety of scenarios including changes in the level of interest rates, the shape of the yield curve, and spreads between

market interest rates. The sensitivity of net interest income to changes in interest rates is measured using numerous interest rate scenarios including shocks, gradual ramps, curve flattening, curve steepening as well as forecasts of likely interest rates scenarios. Presented below is the Corporation’s interest rate risk profile as of June 30, 2005 and December 31, 2004:

Immediate Change in Rates and Resulting Percentage Increase/(Decrease) in Net Interest Income:

	-100 basis points			+100 basis points			+200 basis points
June 30, 2005		(2.12	%)		(0.19	%)		(1.31	%)
December 31, 2004		(2.81	%)		0.36	%		0.25	%

     Modeling the sensitivity of net interest earnings to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling process. To the extent that actual performance is different than what was assumed, actual net interest earnings sensitivity may be different than projected. The assumptions used in the models are management’s best estimate based on studies conducted by the ALCO department. The ALCO department uses a data-warehouse to study interest rate risk at a transactional level and uses various ad-hoc reports to refine assumptions continuously. Assumptions and methodologies regarding administered rate liabilities (e.g., savings, money market and interest-bearing checking accounts), balance trends, and repricing relationships reflect management’s best estimate of expected behavior and these assumptions are reviewed regularly.

     The Corporation also has longer-term interest rate risk exposure, which may not be appropriately measured by earnings sensitivity analysis. ALCO uses economic value of equity, or EVE, sensitivity analysis to study the impact of long-term cash flows on earnings and capital. Economic value of equity involves discounting present values of all cash flows on the balance sheet and off balance sheet items under different interest rate scenarios. The discounted present value of all cash flows represents the Corporation’s economic value of equity. The analysis requires modifying the expected cash flows in each interest rate scenario, which will impact the discounted present value. The amount of base-case measurement and its sensitivity to shifts in the yield curve allow management to measure longer-term repricing and option risk in the balance sheet. Presented below is the Corporation’s EVE profile as of June 30, 2005 and December 31, 2004:

Immediate Change in Rates and Resulting Percentage Increase/(Decrease) in EVE:

	-100 basis points			+100 basis points			+200 basis points
June 30, 2005		(2.72	%)		(0.16	%)		(1.77	%)
December 31, 2004		(0.22	%)		(1.99	%)		(5.57	%)

Capital Resources

     Shareholders’ equity at June 30, 2005 totaled $976.0 million compared to $981.3 million at December 31, 2004 and $957.1 million at June 30, 2004.

The following table reflects the various measures of capital:

	June 30,				December 31,				June 30,
(Dollars in thousands)	2005				2004				2004
Consolidated
Total equity	$	976,016	9.46	%		981,257	9.69	%		957,095	9.22	%
Common equity		976,016	9.46	%		981,257	9.69	%		957,095	9.22	%
Tangible common equity (a)		832,571	8.19	%		837,365	8.39	%		812,759	7.94	%
Tier 1 capital (b)		873,672	11.01	%		871,197	11.09	%		871,011	10.98	%
Total risk-based capital (c)		1,092,262	13.76	%		1,119,095	14.25	%		1,119,913	14.11	%
Leverage (d)		873,672	8.54	%		871,197	8.72	%		871,011	8.43	%
Bank Only
Total equity	$	805,645	7.83	%		791,486	7.83	%		770,984	7.45	%
Common equity		805,645	7.83	%		791,486	7.83	%		770,984	7.45	%
Tangible common equity (a)		662,200	6.53	%		647,594	6.50	%		626,648	6.14	%
Tier 1 capital (b)		792,486	10.01	%		771,854	9.85	%		773,927	9.77	%
Total risk-based capital (c)		1,008,606	12.74	%		1,017,214	12.98	%		1,020,429	12.89	%
Leverage (d)	$	792,488	7.77	%		771,854	7.75	%		773,927	7.51	%

(a)	Common equity less all intangibles; computed as a ratio to total assets less intangible assets.
(b)	Shareholders’ equity minus net unrealized holding gains on equity securities, plus or minus net unrealized holding losses or gains on available for sale debt securities, less goodwill; computed as a ratio to risk-adjusted assets, as defined in the 1992 risk-based capital guidelines.

(c)	Tier 1 capital plus qualifying loan loss allowance, computed as a ratio to risk-adjusted assets, as defined in the 1992 risk-based capital guidelines.
(d)	Tier 1 capital; computed as a ratio to the latest quarter’s average assets less goodwill.

     The risk-based capital guidelines issued by the Federal Reserve Bank in 1988 require banks to maintain adequate capital equal to 8% of risk-adjusted assets effective December 31, 1993. At June 30, 2005, the Corporation’s risk-based capital equaled 13.76% of risk-adjusted assets, exceeding minimum guidelines.

     The cash dividend of $0.27 paid in the second quarter has an indicated annual rate of $1.08 per share.

Liquidity Risk Management

     Liquidity risk is the possibility of the Corporation being unable to meet current and future financial obligations in a timely manner. Liquidity is managed to ensure stable, reliable and cost-effective sources of funds to satisfy demand for credit, deposit withdrawals and investment opportunities. The Corporation considers core earnings, strong capital ratios and credit quality essential for maintaining high credit ratings, which allow the Corporation cost-effective access to market-based liquidity. The Corporation relies on a large, stable core deposit base and a diversified base of wholesale funding sources to manage liquidity risk.

     The Treasury Group is responsible for identifying, measuring and monitoring the Corporation’s liquidity profile. The position is evaluated daily, weekly and monthly by analyzing the composition of all funding sources, reviewing projected liquidity commitments by future month and identifying sources and uses of funds. The Treasury Group also prepares a contingency funding plan that details the potential erosion of funds in the event of a systemic financial market crisis or institutional-specific stress. In addition, the overall management of the Corporation’s liquidity position is integrated into retail deposit pricing policies to ensure a stable core deposit base.

     The Corporation’s primary source of liquidity is its core deposit base, raised through its retail branch system, along with unencumbered, or unpledged, investment securities and unused wholesale sources of liquidity. The Corporation also has available unused wholesale sources of liquidity, including advances from the Federal Home Loan Bank of Cincinnati, issuance through dealers in the capital markets and access to certificates of deposits issued through brokers. Liquidity is also provided by unencumbered, or un-pledged investment securities that totaled $746.69 million at quarter end 2005.

     Funding Trends for the Quarter — During the three months ended June 30, 2005, total deposits decreased $191.6 million from the linked quarter as certificates of deposit were allowed to mature without rollover.

     Parent Company Liquidity — The Corporation manages its liquidity principally through dividends from the bank subsidiary. During the second quarter ended June 30, 2005, FirstMerit Bank paid FirstMerit Corporation $23.0 million in dividends. As of June 30, 2005, FirstMerit Bank had an additional $68.8 million available to pay dividends without regulatory approval.

Off-Balance Sheet Arrangements

     A detailed discussion of the Corporation’s off-balance sheet arrangements, including swaps, hedges, forward swap agreements, IRLCs, TBA securities, options and swaptions is included in Note 9 (Accounting for Derivatives) in these consolidated financial statements and in Note 17 to the 2004 Form 10-K.

Critical Accounting Policies

     The accounting and reporting policies of the Corporation are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the banking industry. Accounting and reporting policies for the allowance for loan losses, income taxes, mortgage servicing rights, derivative instruments and hedging activities, and pension and postretirement benefits are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by management could result in material changes in the Corporation’s financial position or results of operations. Note 1 (Summary of Significant Accounting Policies) and Note 4 (Allowance for Loan Losses), as described in the 2004 Form 10-K, provide considerable detail with regard to the Corporation’s methodology and reporting of the allowance for loan losses. Additional information for income tax accounting is contained within Note 1, as well as in Note 11 (Federal Income Taxes) as described in the 2004 Form 10-K. Accounting for mortgage servicing rights was also discussed in the 2004 Form 10-K in Note 1 and Note 6 (Mortgage Servicing Rights and Mortgage Servicing Activity). Derivative instruments and hedging activities are described more fully in Note 9 (Accounting for Derivatives) in these consolidated financial statements, as well as Note 1, Note 16 (Fair Value Disclosure of Financial Instruments), and Note 17 (Financial Instruments with Off-Balance-Sheet Risk) of the 2004 Form 10-K. A description of the plans and the assumptions used to estimate the liabilities for pension and postretirement benefits is described in Note 12 (Benefit Plans) to the 2004 Form 10-K as well as Note 10 (Benefit Plans) in these consolidated financial statements.

Forward-looking Safe-harbor Statement

     The Corporation cautions that any forward-looking statements contained in this report, in a report incorporated by reference to this report or made by management of the Corporation, involve risks and uncertainties and are subject to change based upon various factors. Actual results could differ materially from those expressed or implied. Reference is made to the section titled “Forward-looking Statements” in the Corporation’s Form 10-K for the period ended December 31, 2004.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See Market Risk Section in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 4. CONTROLS AND PROCEDURES

     Management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, has made an evaluation of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15.

     During the period covered by the report, there was no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

     Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this report, that the Corporation’s disclosure controls and procedures are effective.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     In the normal course of business, the Corporation is at all times subject to pending and threatened legal actions, some for which the relief or damages sought are substantial. Although the Corporation is not able to predict the outcome of such actions, after reviewing pending and threatened actions with counsel, management believes that the outcome of such actions will not have a material adverse effect on the results of operations or shareholders’ equity of the Corporation.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)	Not applicable
(b)	Not applicable.

     The following table provides information with respect to purchases the Corporation made of its common stock during the first quarter of the 2005 fiscal year:

						Total Number of		Maximum
						Shares Purchased		Number of Shares
						as Part of Publicly		that May Yet be
	Total Number of			Average Price		Announced Plans		Purchased Under
	Shares Purchased			Paid per Share		or Programs (1)		Plans or Programs
Balance as of March 31, 2005:									1,480,828
April 1, 2005 - April 30, 2005		—		$	—		—		1,480,828
May 1, 2005 - May 31, 2005		47,140			25.78		25,000		1,455,828
June 1, 2005 - June 30, 2005		98,003			26.60		97,364		1,358,464
Balance as of March 31, 2005:		145,143		$	25.96		122,364		1,358,464
		(2	)

(1)	On July 15, 2004 the Board of Directors authorized the repurchase of up to 3 million shares of its currently outstanding common stock. This repurchase plan supersedes all other repurchase programs and does not have an expiration date.
(2)	22,779 of these shares of common stock were either delivered by the option holder with respect to the exercise of stock options or the settlement of performance share awards, or in the case of restricted shares of common stock, withheld to pay income tax or other tax liabilities with respect to the vesting of restricted stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On April 20, 2005, the Registrant held its Annual Meeting of Shareholders for which the Board of Directors solicited proxies. At the Annual Meeting, the shareholders adopted a proposal, as stated in the Proxy Statement dated March 17, 2005, to elect four Class II Directors. The proposal was voted on and approved by the shareholders. The voting results are as follows:

					Authority
	For		Against		Withheld
Karen S. Belden		68,799,702		*		2,417,321
R. Cary Blair		68,732,656		*		2,484,367
Robert W. Briggs		69,150,992		*		2,066,031
Clifford J. Isroff		68,957,688		*		2,259,335

* Proxies provide that shareholders may either cast a vote for, or abstain from voting for, directors.

     All Class III directors (John C. Blickle, Terry L Haines, Jerry M. Wolf and Gina D. France) and Class I directors (John R. Cochran, Richard Colella, Philip A. Lloyd, II, Roger T. Read and Richard Seaman) continued in their positions.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Index

Exhibit
Number
3.1	Amended and Restated Articles of Incorporation of FirstMerit Corporation, as amended (incorporated by reference from Exhibit 3.1 to the Form 10-K/A filed by the Registrant on April 29, 1999)
3.2	Amended and Restated Code of Regulations of FirstMerit Corporation (incorporated by reference from Exhibit 3(b) to the Form 10-K filed by the registrant on April 9, 1998)
4.1	Shareholders Rights Agreement dated October 21, 1993, between FirstMerit Corporation and FirstMerit Bank, N.A., as amended and restated May 20, 1998 (incorporated by reference from Exhibit 4 to the Form 8-A/A filed by the registrant on June 22, 1998)
4.2	Instrument of Assumption of Indenture between FirstMerit Corporation and NBD Bank, as Trustee. dated October 23, 1998 regarding FirstMerit Corporation’s 6 1/4% Convertible Subordinated Debentures, due May 1, 2008 (incorporated by reference from Exhibit 4(b) to the Form 10-Q filed by the registrant on November 13, 1998)
4.3	Supplemental Indenture, dated as of February 12, 1999, between FirstMerit and Firstar Bank Milwaukee, National Association, as Trustee relating to the obligations of the FirstMerit Capital Trust I, fka Signal Capital Trust I (incorporated by reference from Exhibit 4.3 to the Form 10-K filed by the Registrant on March 22, 1999)
4.4	Indenture dated as of February 13, 1998 between Firstar Bank Milwaukee, National Association, as trustee and Signal Corp (incorporated by reference from Exhibit 4.1 to the Form S-4 No. 333-52581-01, filed by FirstMerit Capital Trust I, fka Signal Capital Trust I, on May 13, 1998)
4.5	Amended and Restated Declaration of Trust of FirstMerit Capital Trust I, fka Signal Capital Trust I, dated as of February 13, 1998 (incorporated by reference from Exhibit 4.5 to the Form S-4 No. 333-52581-01, filed by FirstMerit Capital Trust I, fka Signal Capital Trust I, on May 13, 1998)
4.6	Form Capital Security Certificate (incorporated by reference from Exhibit 4.6 to the Form S-4 No. 333-52581-01, filed by FirstMerit Capital Trust I, fka Signal Capital Trust I, on May 13, 1998)
4.7	Series B Capital Securities Guarantee Agreement (incorporated by reference from Exhibit 4.7 to the Form S-4 No. 333-52581-01, filed by FirstMerit Capital Trust I, fka Signal Capital Trust I, on May 13, 1998)
4.8	Form of 8.67% Junior Subordinated Deferrable Interest Debenture, Series B (incorporated by reference from Exhibit 4.7 to the Form S-4 No. 333-52581-01, filed by FirstMerit Capital Trust I, fka Signal Capital Trust I, on May 13, 1998)

Exhibit
Number
10.1*	Executive Cash Incentive Plan (incorporated by reference from Exhibit 10.1 to the Form 8-K filed by the registrant on January 26, 2005)*
31.1	Rule 13a-14(a)/Section 302 Certification of John R. Cochran, Chairman and Chief Executive Officer of FirstMerit Corporation
31.2	Rule 13a-14(a)/Section 302 Certification of Terrence E. Bichsel, Executive Vice President and Chief Financial Officer of FirstMerit Corporation
32.1	Rule 13a-14(b)/Section 906 Certifications of John R. Cochran, Chairman and Chief Executive Officer of FirstMerit Corporation, and Terrence E. Bichsel, Executive Vice President and Chief Financial Officer of FirstMerit Corporation

* Indicates management contract or compensatory plan or arrangement

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRSTMERIT CORPORATION
	By:	/s/ TERRENCE E. BICHSEL
		Terrence E. Bichsel, Executive Vice President
		and Chief Financial Officer
DATE: August 4, 2005