Exhibit 99.1
2006 Financial Information Fourth Quarter
Table of Contents
| | | |
| Earnings Release | | Pages 1-6 |
| | | |
| Consolidated Financial Highlights | | Page 7 |
| | | |
| Consolidated Balance Sheets | | Page 8 |
| | | |
| Average Consolidated Balance Sheets | | Page 9 |
| | | |
| Average Consolidated Balance Sheets | | Pages 10-11 |
(Fully-tax Equivalent Interest Rates and Interest Differential) | | |
| | | |
| Consolidated Statements of Income and Comprehensive Income | | Page 12 |
| | | |
| Consolidated Statements of Income and Comprehensive Income | | Page 13 |
(Linked Quarters) | | |
| | | |
| Asset Quality Information | | Page 14 |
| | | |
| Noninterest Income and Noninterest Expense Detail | | Page 15 |
| | | |
| Allowance for Loan Losses — Net Charge-off Detail | | Page 16 |
FirstMerit Corporation
III Cascade Plaza
Akron, Ohio 44308
Investor Relations
Tom O’Malley
p.330-384-7109
| | | |
| | | For Release January 23, 2007, 7:30 a.m. EST |
| | | |
| | | Analysts: Tom O’Malley |
| | | (330) 384-7109 |
FirstMerit Reports Fourth Quarter and 2006 Full Year Results
Company to Accelerate Disposition of Problem Assets
Intends to Sell $80.9 Million of Commercial Assets During First
Quarter of 2007
AKRON, Ohio, — January 23, 2007 —FirstMerit Corporation (Nasdaq: FMER) today announced fourth quarter 2006 net income of $6.1 million, or $0.07 per diluted share. This compares with $27.7 million, or $0.34 per diluted share, for the prior-year quarter. For the full year 2006, the Company reported net income of $94.9 million, or $1.18 per diluted share, compared with $ 130.5 million, or $1.56 per share in 2005.
Both fourth quarter and full year 2006 results were affected by the Company’s decision in December 2006 to sell $80.9 million of commercial assets in a transaction to be completed during the first quarter of 2007. FirstMerit intends to sell $73.7 million of commercial loans and $7.2 million of other real estate during the first quarter of 2007. Approximately two-thirds of the assets to be sold are loans originated before June 2003. These assets have been reclassified as “held-for-sale” on the Company’s balance sheet at December 31, 2006. The allowance associated with the loans held for sale is $23.1 million and an additional reserve of $2.2 million for other real estate. Of the $64.2 million of nonperforming assets (0.93% of period-end loans and other real estate) at December 31, 2006, $31.0 million are held-for-sale. These held-for-sale nonperforming assets are expected to be sold before March 31, 2007.
Returns on average common equity (“ROE”) and average assets (“ROA”) for the fourth quarter 2006 were 2.66% and 0.24%, respectively, compared with 11.52% and 1.07% for the prior-year quarter.
1
“One of my top priorities since joining FirstMerit has been to improve credit quality,” said Paul G. Greig, Chairman and Chief Executive Officer of FirstMerit. “We recently completed an internal review of our entire commercial loan portfolio, going above and beyond the type of periodic review normally performed. This analysis was augmented by third party reviews of our larger commercial lending relationships and a number of business banking credits, as well as an evaluation of our lending and credit management processes. These reviews validated many of the improvements that had already been made through a series of credit enhancements implemented beginning in 2003. We were pleased to have confirmed that our portfolio of loans originated since that time is well seasoned and of sound quality. However, this recent assessment also identified areas to further strengthen portfolio management practices and procedures and we are implementing those changes. We believe the actions announced today, once complete, will significantly improve our credit quality and overall asset quality metric comparisons with our peers. A significantly improved credit profile will allow us to focus more closely on executing our business model. We look forward to delivering to our shareholders a higher quality and enhanced stream of earnings and realizing the full earnings potential of our franchise.”
Net interest margin was 3.58% for the fourth quarter of 2006 compared with 3.68% for the third quarter of 2006 and 3.73% for the fourth quarter of 2005. The decrease in net interest margin compared with the third quarter of 2006 resulted from an increase in deposit costs attributed to shifts in the deposit portfolio from lower-cost transaction products to time deposits. The decrease in net interest margin compared with the fourth quarter of 2005 reflected a similar shift in consumer preference for higher-yielding deposit products as well as increased pricing pressure from a rising interest rate environment. For the full year 2006, net interest margin declined to 3.71% compared with 3.73% for 2005, as the Company’s flexibly structured balance sheet provided opportunity to mitigate rising interest rates by shifting a portion of the investment portfolio into higher-yielding loans and paying off higher-cost borrowings.
Net interest income on a fully tax-equivalent (“FTE”) basis was $84.5 million in the fourth quarter 2006 compared with $85.9 million in the third quarter of 2006 and $88.2 million in the fourth quarter of 2005. The decrease in FTE net interest income compared with the third quarter 2006 resulted from net interest margin pressure, partially offset by an increase in average earning assets. The increase in earning assets was driven by loan growth in the commercial portfolio and the Company’s decision to increase the size of the investment portfolio given the higher interest rate environment. The decrease in FTE net interest income compared with the fourth quarter of 2005 resulted from lower net interest margin. FTE net interest income for the full year 2006 was $343.3 million, down from the $351.6 million in 2005. The Company executed a balance sheet restructuring initiative preventing additional margin pressure during the year. Average earning assets decreased $173.4 million during 2006, resulting from a $355.9 million reduction in the average investment portfolio. The majority of run-off in the securities portfolio was used to fund loan growth; average loans increased $187.8 million. The Company also used proceeds from maturing investments to pay down higher-cost borrowings.
2
Noninterest income net of securities transactions for the fourth quarter of 2006 was $48.3 million, a decrease of $1.0 million or 2.0% from the third quarter of 2006 and an increase of $0.8 million or 1.7% from the fourth quarter of 2005. For the full year 2006, noninterest income net of securities transactions totaled $195.1 million, an increase of $6.6 million or 3.5% from the $188.5 million in the same period of 2005. The increase from the prior year was primarily the result of higher service charges and credit card fees. Other income, net of securities gains, as a percentage of net revenue for the fourth quarter of 2006 was 36.39% compared with 36.50% for third quarter of 2006 and 35.04% for the fourth quarter of 2005. For the full year 2006, other income, net of securities gains, as a percentage of net revenue was 36.24% compared with 34.90% for 2005. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.
Noninterest expense for the fourth quarter of 2006 was $84.0 million, an increase of $7.0 million or 9.1% from the third quarter of 2006 and an increase of $4.7 million or 5.9% from the fourth quarter of 2005. For the full year 2006, noninterest expenses totaled $328.1 million, an increase of $14.6 million or 4.7% from $313.5 million for the same period of 2005. This increase is the result of higher salaries, wages, pension and employee benefits as well as higher professional services.
Net charge-offs totaled $18.6 million or 1.06% of average portfolio loans in the fourth quarter of 2006 compared with $11.6 million or 0.67% of average portfolio loans in the third quarter 2006 and $18.4 million or 1.09% of average portfolio loans in the fourth quarter of 2005. Additionally the allowance for loan losses was reduced by $23.1 million or 1.32% of average portfolio loans; the amount related to loans classified as held for sale.
Nonperforming assets totaled $64.2 million at December 31, a decrease of $8.3 million or 11.4% compared with September 30, 2006 and a decrease of $8.1 million or 11.2% compared with December 31, 2005. Nonperforming assets at December 31, 2006 and September 30, 2006 include loans held for sale of $26.1 million and $7.1 million, respectively. Nonperforming assets at December 31, 2006 represented 0.93% of period-end loans plus other real estate compared with 1.05% at September 30, 2006 and 1.08% at December 31, 2005.
The provision for loan losses increased to $44.2 million in the fourth quarter of 2006 compared with $12.6 million in the third quarter of 2006 and $16.3 million in the fourth quarter of 2005. For the full year of 2006, the provision for loan losses was $76.1 million, compared with $43.8 million for 2005. The increases are primarily related to the Company’s intention to sell $73.7 million of commercial loans during the first quarter of 2007, as previously discussed.
3
The allowance for loan losses totaled $91.3 million at December 31, 2006, an increase of $2.6 million and $0.7 million from September 30, 2006 and December 31, 2005, respectively. At December 31, 2006, the allowance for loan losses was 1.33% of period-end loans compared with 1.28% at September 30, 2006 and 1.36% at December 31, 2005. The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. For comparative purposes the allowance for credit losses was 1.42% at December 31, 2006 compared with 1.37% at September 30, 2006 and 1.45% at December 31, 2005. The allowance for credit losses to nonperforming loans increased to 179.60% at December 31, 2006 compared with 153.94% on September 30, 2006 and 155.36% on December 31, 2005.
FirstMerit’s total assets at December 31, 2006 were $10.3 billion, an increase of $34.6 million or 0.34% compared with September 30, 2006 and an increase of $98.2 million or 0.97% compared with December 31, 2005. The increase from September 30, 2006 was principally due to an increase in commercial loans and in the investment securities portfolio. The increase over December 31, 2005 was due to growth in portfolio loans, primarily in the commercial portfolio of $174.6 million, or 4.96%. The majority of the loan growth over that time period was funded by cash flow from the Company’s maturing investment securities portfolio as part of a strategy to shift the mix of earning assets into higher yield categories.
Total deposits were $7.5 billion at December 31, 2006, an increase of $109.3 million or 1.48% from September 30, 2006 an increase of $265.3 million or 3.67% from December 31, 2005. Core deposits, which exclude all time deposits, totaled $4.5 billion at December 31, 2006, an increase of $102.4 million or 2.32% from September 30, 2006 and a decrease of $135.8 million or 2.92% from December 31, 2005. Compared with September 30, 2006, the increase reflects new pricing initiatives aimed at capturing new transaction account balances. Compared with December 31, 2005, the decrease reflects a shift in customer preference for time deposit accounts with higher yields.
Shareholders’ equity was $846.1 million at December 31, 2006 and the Company’s capital position remains strong as tangible equity to assets was 6.96%. The adoption of the new accounting pronouncement for “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” reduced other comprehensive income, a component of shareholders’ equity, by $46.4 million. The common dividend per share paid in the fourth quarter 2006 was $0.29. For the full year 2006, the common dividend per share paid was $1.14 compared with $1.10 for the same period of 2005, an increase per share of $0.04, or 3.64%.
4
Executive Changes
Today FirstMerit also announced the following executive changes.
Julie Anne Robbins has been appointed executive vice president of retail, effective January 22, 2007. Prior to joining FirstMerit, Robbins was senior vice president, retail strategy and development at Washington Mutual in Seattle, Washington. Prior to joining Washington Mutual, she was senior vice president, chief financial officer of retail at Charter One Bank in Cleveland, Ohio. Ms. Robbins’ experience includes: sales, customer service, business strategy development, marketing, product development and compliance. She has a BS, Business (Finance and Economics) from Indiana University’s Kelley School of Business. “Julie brings a solid banking and financial background to FirstMerit. We look forward to having her on our team and leading the overall performance and success of FirstMerit’s retail line of business,” said Mr. Greig.
Ms. Robbins replaces Robert P. Brecht, senior executive vice president and retail manager, who is retiring February 1, 2007 after 21 years of service with FirstMerit. Mr. Brecht joined FirstMerit in 1986 as manager, Commercial Loans and eventually assumed responsibility for all commercial and retail regional banking as senior executive vice president. In June of 2006, Brecht was reassigned to head FirstMerit’s retail line of business, which included retail marketing, pricing and product development along with branch operations and sales.
Fourth Quarter 2006 Conference Call
FirstMerit will host an earnings conference call on January 23, 2007, at 2:00 p.m. Eastern time to provide an overview of fourth quarter results and highlights. To participate in the conference call, please dial (877) 493-9121 ten minutes before start time and provide the reservation number: 8309116. A replay of the conference call will be available at approximately 4:30 p.m., on January 23, 2007 through February 6, 2007, by dialing (877) 519-4471, and entering the PIN: 8309116.
(Logo:http://www.newscom.com/cgi-bin/prnh/20001220/FIRSTMERITLOGO)
The fourth quarter earnings release will be available at approximately 7:30 a.m. that same morning on the Internet athttp://www.firstmerit.com under the Investor Relations portion of the Web site. Any material non-public information that might be disclosed during the conference call will be posted on the Web site immediately after the conference call ends.
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $10.3 billion as of December 31, 2006 and 161 banking offices and 176 ATMs in 24 Ohio and Western Pennsylvania counties. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal wholly-owned subsidiaries include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation, FirstMerit Title Agency, Ltd., and FirstMerit Community Development Corporation.
5
Forward-Looking Statement
This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Company, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, continued softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Company’s business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.
6
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights | |  |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarters |
| (Unaudited) | | 2006 | | 2006 | | 2006 | | 2006 | | 2005 |
| (Dollars in thousands) | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | | 4th Qtr |
| |
EARNINGS | | | | | | | | | | | | | | | | | | | | |
| Net interest income FTE (a) | | $ | 84,502 | | | | 85,850 | | | | 86,377 | | | | 86,563 | | | | 88,152 | |
| Provision for loan losses | | | 44,235 | | | | 12,612 | | | | 13,159 | | | | 6,106 | | | | 16,260 | |
| Other income | | | 48,332 | | | | 49,341 | | | | 52,078 | | | | 45,397 | | | | 47,586 | |
| Other expenses | | | 83,987 | | | | 76,983 | | | | 85,218 | | | | 81,899 | | | | 79,274 | |
| FTE adjustment (a) | | | 919 | | | | 763 | | | | 647 | | | | 590 | | | | 650 | |
| Net income | | | 6,117 | | | | 31,204 | | | | 27,661 | | | | 29,964 | | | | 27,656 | |
| Diluted EPS | | | 0.07 | | | | 0.39 | | | | 0.35 | | | | 0.37 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | | |
| PERFORMANCE RATIOS | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (ROA) | | | 0.24 | % | | | 1.22 | % | | | 1.10 | % | | | 1.20 | % | | | 1.07 | % |
| Return on average common equity (ROE) | | | 2.66 | % | | | 13.93 | % | | | 12.75 | % | | | 13.67 | % | | | 11.52 | % |
| Net interest margin FTE (a) | | | 3.58 | % | | | 3.68 | % | | | 3.78 | % | | | 3.80 | % | | | 3.73 | % |
| Efficiency ratio | | | 63.06 | % | | | 56.78 | % | | | 61.39 | % | | | 61.90 | % | | | 58.26 | % |
| Number of full-time equivalent employees | | | 2,755 | | | | 2,769 | | | | 2,986 | | | | 3,104 | | | | 3,057 | |
| | | | | | | | | | | | | | | | | | | | | |
| MARKET DATA | | | | | | | | | | | | | | | | | | | | |
| Book value/common share | | $ | 10.56 | | | | 11.28 | | | | 10.88 | | | | 10.91 | | | | 11.39 | |
| Period-end common share mkt value | | | 24.14 | | | | 23.17 | | | | 20.94 | | | | 24.66 | | | | 25.91 | |
| Market as a % of book | | | 229 | % | | | 205 | % | | | 193 | % | | | 226 | % | | | 228 | % |
| Cash dividends/common share | | $ | 0.29 | | | | 0.29 | | | | 0.28 | | | | 0.28 | | | | 0.28 | |
| Common stock dividend payout ratio | | | 414.29 | % | | | 74.36 | % | | | 80.00 | % | | | 75.68 | % | | | 82.35 | % |
| Average basic common shares | | | 80,091 | | | | 80,066 | | | | 79,983 | | | | 80,374 | | | | 82,786 | |
| Average diluted common shares | | | 80,316 | | | | 80,262 | | | | 80,203 | | | | 80,648 | | | | 83,082 | |
| Period end common shares | | | 80,101 | | | | 80,072 | | | | 80,058 | | | | 79,766 | | | | 82,335 | |
| Common shares repurchased | | | 15,876 | | | | 0 | | | | 1,329 | | | | 2,618,588 | | | | 1,228,293 | |
| Common stock market capitalization | | $ | 1,933,638 | | | | 1,855,268 | | | | 1,676,415 | | | | 1,967,030 | | | | 2,133,300 | |
| | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY | | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 22,323 | | | | 15,453 | | | | 18,038 | | | | 14,914 | | | | 22,736 | |
| Net charge-offs | | | 18,559 | | | | 11,584 | | | | 13,021 | | | | 9,178 | | | | 18,379 | |
| Allowance for loan losses | | | 91,342 | | | | 88,755 | | | | 87,727 | | | | 87,589 | | | | 90,661 | |
| Reserve for unfunded lending commitments | | | 6,294 | | | | 6,307 | | | | 5,716 | | | | 5,853 | | | | 6,072 | |
| Nonperforming assets (NPAs) | | | 64,177 | | | | 72,464 | | | | 58,786 | | | | 72,941 | | | | 72,257 | |
| Net charge-offs/average loans ratio | | | 1.06 | % | | | 0.67 | % | | | 0.78 | % | | | 0.56 | % | | | 1.09 | % |
| Net charge-offs and allowance related to loans held for sale/average loans ratio | | | 1.40 | % | | | 0.67 | % | | | 0.78 | % | | | 0.56 | % | | | 1.09 | % |
| Allowance for loan losses/period-end loans | | | 1.33 | % | | | 1.28 | % | | | 1.29 | % | | | 1.31 | % | | | 1.36 | % |
| Allowance for credit losses/period-end loans | | | 1.42 | % | | | 1.37 | % | | | 1.37 | % | | | 1.40 | % | | | 1.45 | % |
| NPAs/loans and other real estate | | | 0.93 | % | | | 1.05 | % | | | 0.86 | % | | | 1.09 | % | | | 1.08 | % |
| Allowance for loan losses/nonperforming loans | | | 168.03 | % | | | 143.73 | % | | | 174.80 | % | | | 136.22 | % | | | 145.61 | % |
| Allowance for credit losses/nonperforming loans | | | 179.60 | % | | | 153.94 | % | | | 186.19 | % | | | 145.32 | % | | | 155.36 | % |
| | | | | | | | | | | | | | | | | | | | | |
| CAPITAL & LIQUIDITY | | | | | | | | | | | | | | | | | | | | |
| Period-end tangible equity to assets | | | 6.96 | % | | | 7.55 | % | | | 7.20 | % | | | 7.31 | % | | | 7.94 | % |
| Average equity to assets | | | 8.91 | % | | | 8.77 | % | | | 8.66 | % | | | 8.79 | % | | | 9.33 | % |
| Average equity to loans | | | 13.17 | % | | | 12.99 | % | | | 12.93 | % | | | 13.27 | % | | | 14.22 | % |
| Average loans to deposits | | | 92.97 | % | | | 93.05 | % | | | 90.63 | % | | | 91.58 | % | | | 92.11 | % |
| | | | | | | | | | | | | | | | | | | | | |
| AVERAGE BALANCES | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 10,227,154 | | | | 10,138,856 | | | | 10,051,623 | | | | 10,111,553 | | | | 10,211,619 | |
| Deposits | | | 7,440,331 | | | | 7,355,877 | | | | 7,426,029 | | | | 7,313,509 | | | | 7,273,980 | |
| Loans | | | 6,917,572 | | | | 6,844,593 | | | | 6,730,531 | | | | 6,697,732 | | | | 6,699,997 | |
| Earning assets | | | 9,374,223 | | | | 9,249,769 | | | | 9,174,008 | | | | 9,245,882 | | | | 9,368,139 | |
| Shareholders’ equity | | | 911,348 | | | | 888,841 | | | | 870,234 | | | | 888,818 | | | | 952,715 | |
| | | | | | | | | | | | | | | | | | | | | |
| ENDING BALANCES | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 10,252,572 | | | | 10,217,968 | | | | 10,254,773 | | | | 10,100,717 | | | | 10,154,359 | |
| Deposits | | | 7,498,921 | | | | 7,389,633 | | | | 7,402,239 | | | | 7,510,562 | | | | 7,233,650 | |
| Loans | | | 6,878,873 | | | | 6,917,347 | | | | 6,804,769 | | | | 6,672,102 | | | | 6,667,327 | |
| Goodwill | | | 139,245 | | | | 139,245 | | | | 139,245 | | | | 139,245 | | | | 139,245 | |
| Intangible assets | | | 2,865 | | | | 3,088 | | | | 3,311 | | | | 3,533 | | | | 3,756 | |
| Earning assets | | | 9,382,033 | | | | 9,344,841 | | | | 9,315,062 | | | | 9,193,741 | | | | 9,256,389 | |
| Total shareholders’ equity | | | 846,111 | | | | 903,383 | | | | 870,698 | | | | 870,552 | | | | 937,580 | |
NOTES:
(a) — Net interest income on a fully tax-equivalent (“FTE”) basis restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate. Net interest income on an FTE basis is not an accounting principle generally accepted in the United States of America.
7
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
| | | | | | | | | |
| (Unaudited, except December 31, 2005, which is derived from the | | December 31, | | | December 31, | |
| audited financial statements) | | 2006 | | | 2005 | |
ASSETS | | | | | | | | |
| Cash and due from banks | | $ | 200,204 | | | | 225,953 | |
| Investment securities (at fair value) | | | 2,407,888 | | | | 2,546,496 | |
| Loans held for sale | | | 95,272 | | | | 42,566 | |
| Loans: | | | | | | | | |
| Commercial loans | | | 3,694,121 | | | | 3,519,483 | |
| Mortgage loans | | | 608,008 | | | | 628,581 | |
| Installment loans | | | 1,619,747 | | | | 1,524,355 | |
| Home equity loans | | | 731,473 | | | | 778,697 | |
| Credit card loans | | | 147,553 | | | | 145,592 | |
| Leases | | | 77,971 | | | | 70,619 | |
| | | | | | | |
| Total loans | | | 6,878,873 | | | | 6,667,327 | |
| Less allowance for loan losses | | | (91,342 | ) | | | (90,661 | ) |
| | | | | | | |
| Net loans | | | 6,787,531 | | | | 6,576,666 | |
| Premises and equipment, net | | | 122,954 | | | | 120,420 | |
| Goodwill | | | 139,245 | | | | 139,245 | |
| Intangible assets | | | 2,865 | | | | 3,756 | |
| Accrued interest receivable and other assets | | | 496,613 | | | | 499,257 | |
| | | | | | | |
| Total assets | | $ | 10,252,572 | | | | 10,154,359 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Deposits: | | | | | | | | |
| Demand-non-interest bearing | | $ | 1,455,097 | | | | 1,523,731 | |
| Demand-interest bearing | | | 799,571 | | | | 830,248 | |
| Savings and money market accounts | | | 2,267,686 | | | | 2,304,177 | |
| Certificates and other time deposits | | | 2,976,567 | | | | 2,575,494 | |
| | | | | | | |
| Total deposits | | | 7,498,921 | | | | 7,233,650 | |
| | | | | | | |
| Securities sold under agreements to repurchase | | | 1,261,821 | | | | 1,426,037 | |
| Wholesale borrowings | | | 464,227 | | | | 401,104 | |
| Accrued taxes, expenses, and other liabilities | | | 181,492 | | | | 155,988 | |
| | | | | | | |
| Total liabilities | | | 9,406,461 | | | | 9,216,779 | |
| | | | | | | |
| 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 December 31, 2006 and December 31, 2005 | | | 127,937 | | | | 127,937 | |
| Capital surplus | | | 106,916 | | | | 108,210 | |
| Accumulated other comprehensive loss | | | (79,508 | ) | | | (42,850 | ) |
| Retained earnings | | | 998,079 | | | | 994,487 | |
| Treasury stock, at cost, 11,925,803 and 9,691,424 shares at December 31, 2006 and December 31, 2005, respectively | | | (307,313 | ) | | | (250,204 | ) |
| | | | | | | |
| Total shareholders’ equity | | | 846,111 | | | | 937,580 | |
| | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 10,252,572 | | | | 10,154,359 | |
| | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements.
8
| | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Periods | |
| | | | | | | | | | | | | | | | |
| (Unaudited) | | December 31, | | | September 30, | | | June 30, | | | March 31, | | | December 31, | |
| (Dollars in thousands) | | 2006 | | | 2006 | | | 2006 | | | 2006 | | | 2005 | |
ASSETS | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 175,735 | | | | 185,628 | | | | 188,915 | | | | 194,042 | | | | 192,189 | |
| Investment securities/fed funds sold | | | 2,410,879 | | | | 2,360,494 | | | | 2,392,208 | | | | 2,500,021 | | | | 2,619,248 | |
| Loans held for sale | | | 45,772 | | | | 44,682 | | | | 51,269 | | | | 48,129 | | | | 48,894 | |
| Loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial loans | | | 3,730,110 | | | | 3,674,988 | | | | 3,603,083 | | | | 3,567,263 | | | | 3,519,807 | |
| Mortgage loans | | | 614,204 | | | | 619,542 | | | | 626,476 | | | | 630,702 | | | | 637,877 | |
| Installment loans | | | 1,625,962 | | | | 1,592,917 | | | | 1,526,094 | | | | 1,513,938 | | | | 1,556,212 | |
| Home equity loans | | | 738,630 | | | | 755,044 | | | | 772,196 | | | | 775,728 | | | | 772,757 | |
| Credit card loans | | | 144,351 | | | | 139,117 | | | | 137,545 | | | | 141,821 | | | | 142,743 | |
| Leases | | | 64,315 | | | | 62,985 | | | | 65,137 | | | | 68,280 | | | | 70,601 | |
| | | | | | | | | | | | | | | | |
| Total loans | | | 6,917,572 | | | | 6,844,593 | | | | 6,730,531 | | | | 6,697,732 | | | | 6,699,997 | |
| Less allowance for loan losses (a) | | | 88,175 | | | | 87,127 | | | | 86,583 | | | | 90,229 | | | | 91,916 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loans | | | 6,829,397 | | | | 6,757,466 | | | | 6,643,948 | | | | 6,607,503 | | | | 6,608,081 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 9,374,223 | | | | 9,249,769 | | | | 9,174,008 | | | | 9,245,882 | | | | 9,368,139 | |
| | | | | | | | | | | | | | | | | | | | | |
| Premises and equipment, net | | | 121,956 | | | | 120,088 | | | | 119,666 | | | | 120,155 | | | | 117,387 | |
| Accrued interest receivable and other assets | | | 643,415 | | | | 670,498 | | | | 655,617 | | | | 641,703 | | | | 625,820 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
TOTAL ASSETS | | $ | 10,227,154 | | | | 10,138,856 | | | | 10,051,623 | | | | 10,111,553 | | | | 10,211,619 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand-non-interest bearing | | $ | 1,413,682 | | | | 1,407,653 | | | | 1,455,229 | | | | 1,462,671 | | | | 1,488,679 | |
| Demand-interest bearing | | | 767,430 | | | | 794,886 | | | | 865,563 | | | | 848,209 | | | | 817,009 | |
| Savings and money market accounts | | | 2,267,268 | | | | 2,246,386 | | | | 2,280,657 | | | | 2,292,865 | | | | 2,332,528 | |
| Certificates and other time deposits | | | 2,991,951 | | | | 2,906,952 | | | | 2,824,580 | | | | 2,709,764 | | | | 2,635,764 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,440,331 | | | | 7,355,877 | | | | 7,426,029 | | | | 7,313,509 | | | | 7,273,980 | |
| | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 1,269,873 | | | | 1,357,746 | | | | 1,212,470 | | | | 1,295,178 | | | | 1,443,740 | |
| Wholesale borrowings | | | 446,950 | | | | 367,640 | | | | 371,309 | | | | 433,257 | | | | 375,167 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total funds | | | 9,157,154 | | | | 9,081,263 | | | | 9,009,808 | | | | 9,041,944 | | | | 9,092,887 | |
| Accrued taxes, expenses and other liabilities (a) | | | 158,652 | | | | 168,752 | | | | 171,581 | | | | 180,791 | | | | 166,017 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 9,315,806 | | | | 9,250,015 | | | | 9,181,389 | | | | 9,222,735 | | | | 9,258,904 | |
| | | | | | | | | | | | | | | | | | | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | |
| Common stock | | | 127,937 | | | | 127,937 | | | | 127,937 | | | | 127,937 | | | | 127,937 | |
| Capital surplus | | | 106,339 | | | | 105,587 | | | | 104,477 | | | | 108,330 | | | | 108,303 | |
| Accumulated other comprehensive (loss) income | | | (36,045 | ) | | | (52,601 | ) | | | (54,132 | ) | | | (44,150 | ) | | | (39,834 | ) |
| Retained earnings | | | 1,020,518 | | | | 1,015,749 | | | | 1,001,647 | | | | 998,173 | | | | 994,301 | |
| Treasury stock | | | (307,401 | ) | | | (307,831 | ) | | | (309,695 | ) | | | (301,472 | ) | | | (237,992 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total shareholders’ equity | | | 911,348 | | | | 888,841 | | | | 870,234 | | | | 888,818 | | | | 952,715 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 10,227,154 | | | | 10,138,856 | | | | 10,051,623 | | | | 10,111,553 | | | | 10,211,619 | |
| | | | | | | | | | | | | | | | |
9
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) | | December 31, 2006 | | | December 31, 2005 | | | December 31, 2005 | |
| | | Average | | | | | | | Average | | | Average | | | | | | | Average | | | Average | | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 175,735 | | | | | | | | | | | | 194,485 | | | | | | | | | | | | 192,189 | | | | | | | | | |
| Investment securities and federal funds sold: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury securities and U.S. Government agency obligations (taxable) | | | 1,996,290 | | | | 20,246 | | | | 4.02 | % | | | 2,416,360 | | | | 91,814 | | | | 3.80 | % | | | 2,266,774 | | | | 21,651 | | | | 3.79 | % |
| Obligations of states and political subdivisions (tax exempt) | | | 163,815 | | | | 2,448 | | | | 5.93 | % | | | 99,487 | | | | 6,707 | | | | 6.74 | % | | | 97,395 | | | | 1,633 | | | | 6.65 | % |
| Other securities and federal funds sold | | | 250,774 | | | | 3,987 | | | | 6.31 | % | | | 255,568 | | | | 12,291 | | | | 4.81 | % | | | 255,079 | | | | 3,437 | | | | 5.35 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total investment securities and federal funds sold | | | 2,410,879 | | | | 26,681 | | | | 4.39 | % | | | 2,771,415 | | | | 110,812 | | | | 4.00 | % | | | 2,619,248 | | | | 26,721 | | | | 4.05 | % |
| Loans held for sale | | | 45,772 | | | | 743 | | | | 6.44 | % | | | 52,740 | | | | 2,854 | | | | 5.41 | % | | | 48,894 | | | | 762 | | | | 6.18 | % |
| Loans | | | 6,917,572 | | | | 130,973 | | | | 7.51 | % | | | 6,610,509 | | | | 430,402 | | | | 6.51 | % | | | 6,699,997 | | | | 115,126 | | | | 6.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 9,374,223 | | | | 158,397 | | | | 6.70 | % | | | 9,434,664 | | | | 544,068 | | | | 5.77 | % | | | 9,368,139 | | | | 142,609 | | | | 6.04 | % |
| |
| Allowance for loan losses | | | (88,175 | ) | | | | | | | | | | | (94,118 | ) | | | | | | | | | | | (91,916 | ) | | | | | | | | |
| Other assets | | | 765,371 | | | | | | | | | | | | 729,398 | | | | | | | | | | | | 743,207 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 10,227,154 | | | | | | | | | | | | 10,264,429 | | | | | | | | | | | | 10,211,619 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand — non-interest bearing | | $ | 1,413,682 | | | | — | | | | — | | | | 1,466,106 | | | | — | | | | — | | | | 1,488,679 | | | | — | | | | — | |
| Demand — interest bearing | | | 767,430 | | | | 2,031 | | | | 1.05 | % | | | 827,829 | | | | 5,871 | | | | 0.71 | % | | | 817,009 | | | | 1,953 | | | | 0.95 | % |
| Savings and money market accounts | | | 2,267,268 | | | | 14,068 | | | | 2.46 | % | | | 2,356,813 | | | | 32,944 | | | | 1.40 | % | | | 2,332,528 | | | | 10,352 | | | | 1.76 | % |
| Certificates and other time deposits | | | 2,991,951 | | | | 35,569 | | | | 4.72 | % | | | 2,647,908 | | | | 86,764 | | | | 3.28 | % | | | 2,635,764 | | | | 23,831 | | | | 3.59 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,440,331 | | | | 51,668 | | | | 2.76 | % | | | 7,298,656 | | | | 125,579 | | | | 1.72 | % | | | 7,273,980 | | | | 36,136 | | | | 1.97 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 1,269,873 | | | | 15,393 | | | | 4.81 | % | | | 1,409,135 | | | | 45,423 | | | | 3.22 | % | | | 1,443,740 | | | | 13,423 | | | | 3.69 | % |
| Wholesale borrowings | | | 446,950 | | | | 6,834 | | | | 6.07 | % | | | 431,787 | | | | 21,449 | | | | 4.97 | % | | | 375,167 | | | | 4,898 | | | | 5.18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest bearing liabilities | | | 7,743,472 | | | | 73,895 | | | | 3.79 | % | | | 7,673,472 | | | | 192,451 | | | | 2.51 | % | | | 7,604,208 | | | | 54,457 | | | | 2.84 | % |
| |
| Other liabilities | | | 158,652 | | | | | | | | | | | | 158,125 | | | | | | | | | | | | 166,017 | | | | | | | | | |
| |
| Shareholders’ equity | | | 911,348 | | | | | | | | | | | | 966,726 | | | | | | | | | | | | 952,715 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 10,227,154 | | | | | | | | | | | | 10,264,429 | | | | | | | | | | | | 10,211,619 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net yield on earning assets | | $ | 9,374,223 | | | | 84,502 | | | | 3.58 | % | | | 9,434,664 | | | | 351,617 | | | | 3.73 | % | | | 9,368,139 | | | | 88,152 | | | | 3.73 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | | | | | 2.92 | % | | | | | | | | | | | 3.26 | % | | | | | | | | | | | 3.20 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| Notes: | | Interest income on tax-exempt securities and loans have been adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances. |
10
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FIRSTMERIT CORPORATION AND SUBSIDIARIES | | Twelve months ended | | | Twelve months ended | |
| (Dollars in thousands) | | December 31, 2006 | | | December 31, 2005 | |
| | | Average | | | | | | | Average | | | Average | | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 186,029 | | | | | | | | | | | | 194,485 | | | | | | | | | |
| Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury securities and U.S. Government agency obligations (taxable) | | | 2,050,736 | | | | 81,207 | | | | 3.96 | % | | | 2,416,360 | | | | 91,814 | | | | 3.80 | % |
| Obligations of states and political subdivisions (tax exempt) | | | 114,548 | | | | 7,390 | | | | 6.45 | % | | | 99,487 | | | | 6,707 | | | | 6.74 | % |
| Other securities | | | 250,221 | | | | 15,264 | | | | 6.10 | % | | | 255,568 | | | | 12,291 | | | | 4.81 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total investment securities and federal funds sold | | | 2,415,505 | | | | 103,861 | | | | 4.30 | % | | | 2,771,415 | | | | 110,812 | | | | 4.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans held for sale | | | 47,449 | | | | 3,153 | | | | 6.65 | % | | | 52,740 | | | | 2,854 | | | | 5.41 | % |
| Loans | | | 6,798,338 | | | | 499,746 | | | | 7.35 | % | | | 6,610,509 | | | | 430,402 | | | | 6.51 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 9,261,292 | | | | 606,760 | | | | 6.55 | % | | | 9,434,664 | | | | 544,068 | | | | 5.77 | % |
| Allowance for loan losses | | | (88,020 | ) | | | | | | | | | | | (94,118 | ) | | | | | | | | |
| Other assets | | | 770,714 | | | | | | | | | | | | 729,398 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 10,130,015 | | | | | | | | | | | | 10,264,429 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand — non-interest bearing | | $ | 1,434,539 | | | | — | | | | — | | | | 1,466,106 | | | | — | | | | — | |
| Demand — interest bearing | | | 818,735 | | | | 9,217 | | | | 1.13 | % | | | 827,829 | | | | 5,871 | | | | 0.71 | % |
| Savings and money market accounts | | | 2,271,654 | | | | 50,083 | | | | 2.20 | % | | | 2,356,813 | | | | 32,944 | | | | 1.40 | % |
| Certificates and other time deposits | | | 2,859,218 | | | | 123,877 | | | | 4.33 | % | | | 2,647,908 | | | | 86,764 | | | | 3.28 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,384,146 | | | | 183,177 | | | | 2.48 | % | | | 7,298,656 | | | | 125,579 | | | | 1.72 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 1,283,951 | | | | 56,151 | | | | 4.37 | % | | | 1,409,135 | | | | 45,423 | | | | 3.22 | % |
| Wholesale borrowings | | | 404,723 | | | | 24,140 | | | | 5.96 | % | | | 431,787 | | | | 21,449 | | | | 4.97 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest bearing liabilities | | | 7,638,281 | | | | 263,468 | | | | 3.45 | % | | | 7,673,472 | | | | 192,451 | | | | 2.51 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other liabilities | | | 167,266 | | | | | | | | | | | | 158,125 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | | | 889,929 | | | | | | | | | | | | 966,726 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 10,130,015 | | | | | | | | | | | | 10,264,429 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net yield on earning assets | | $ | 9,261,292 | | | | 343,292 | | | | 3.71 | % | | | 9,434,664 | | | | 351,617 | | | | 3.73 | % |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | | | | | 3.10 | % | | | | | | | | | | | 3.26 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
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.
11
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| | | | | | | | | | | | | | | | | |
| (Unaudited) | | Quarters ended | | | Twelve months ended | |
| (In thousands except per share data) | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| Interest income: | | | | | | | | | | | | | | | | |
| Interest and fees on loans, including held for sale | | $ | 131,683 | | | | 115,850 | | | | 502,763 | | | | 433,143 | |
| Interest and dividends on investment securities and federal funds sold | | | 25,795 | | | | 26,109 | | | | 101,078 | | | | 108,303 | |
| | | | | | | | | | | | | |
| Total interest income | | | 157,478 | | | | 141,959 | | | | 603,841 | | | | 541,446 | |
| | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | | | | | |
| Interest on deposits: | | | | | | | | | | | | | | | | |
| Demand-interest bearing | | | 2,031 | | | | 1,953 | | | | 9,217 | | | | 5,871 | |
| Savings and money market accounts | | | 14,068 | | | | 10,352 | | | | 50,083 | | | | 32,944 | |
| Certificates and other time deposits | | | 35,569 | | | | 23,831 | | | | 123,877 | | | | 86,764 | |
| Interest on securities sold under agreements to repurchase | | | 15,393 | | | | 13,423 | | | | 56,151 | | | | 45,423 | |
| Interest on wholesale borrowings | | | 6,834 | | | | 4,898 | | | | 24,140 | | | | 21,449 | |
| | | | | | | | | | | | | |
| Total interest expense | | | 73,895 | | | | 54,457 | | | | 263,468 | | | | 192,451 | |
| | | | | | | | | | | | | |
| Net interest income | | | 83,583 | | | | 87,502 | | | | 340,373 | | | | 348,995 | |
| Provision for loan losses | | | 44,235 | | | | 16,260 | | | | 76,112 | | | | 43,820 | |
| | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 39,348 | | | | 71,242 | | | | 264,261 | | | | 305,175 | |
| | | | | | | | | | | | | |
| Other income: | | | | | | | | | | | | | | | | |
| Trust department income | | | 5,794 | | | | 5,430 | | | | 22,653 | | | | 22,134 | |
| Service charges on deposits | | | 18,198 | | | | 17,884 | | | | 71,524 | | | | 69,065 | |
| Credit card fees | | | 11,325 | | | | 10,601 | | | | 44,725 | | | | 40,972 | |
| ATM and other service fees | | | 3,135 | | | | 3,157 | | | | 12,817 | | | | 12,867 | |
| Bank owned life insurance income | | | 3,001 | | | | 3,092 | | | | 14,339 | | | | 12,264 | |
| Investment services and insurance | | | 2,011 | | | | 2,696 | | | | 9,820 | | | | 10,608 | |
| Investment securities gains, net | | | — | | | | 39 | | | | 22 | | | | 1,926 | |
| Loan sales and servicing income | | | 1,504 | | | | 1,668 | | | | 7,513 | | | | 6,397 | |
| Other operating income | | | 3,364 | | | | 3,019 | | | | 11,735 | | | | 14,233 | |
| | | | | | | | | | | | | |
| Total other income | | | 48,332 | | | | 47,586 | | | | 195,148 | | | | 190,466 | |
| | | | | | | | | | | | | |
| Other expenses: | | | | | | | | | | | | | | | | |
| Salaries, wages, pension and employee benefits | | | 43,700 | | | | 40,790 | | | | 176,700 | | | | 163,683 | |
| Net occupancy expense | | | 6,143 | | | | 5,746 | | | | 24,814 | | | | 23,730 | |
| Equipment expense | | | 3,030 | | | | 4,152 | | | | 11,999 | | | | 13,301 | |
| Stationery, supplies and postage | | | 2,633 | | | | 2,546 | | | | 9,912 | | | | 10,050 | |
| Bankcard, loan processing and other costs | | | 7,508 | | | | 7,042 | | | | 28,211 | | | | 24,012 | |
| Professional services | | | 5,000 | | | | 3,389 | | | | 16,971 | | | | 12,014 | |
| Amortization of intangibles | | | 222 | | | | 222 | | | | 889 | | | | 889 | |
| Other operating expense | | | 15,751 | | | | 15,387 | | | | 58,591 | | | | 65,829 | |
| | | | | | | | | | | | | |
| Total other expenses | | | 83,987 | | | | 79,274 | | | | 328,087 | | | | 313,508 | |
| | | | | | | | | | | | | |
| Income before federal income tax expense | | | 3,693 | | | | 39,554 | | | | 131,322 | | | | 182,133 | |
| Federal income tax expense | | | (2,424 | ) | | | 11,898 | | | | 36,376 | | | | 51,650 | |
| | | | | | | | | | | | | |
| Net income | | $ | 6,117 | | | | 27,656 | | | | 94,946 | | | | 130,483 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Other comprehensive income (loss), net of taxes | | | | | | | | | | | | | | | | |
| Unrealized securities’ holding gain (loss), net of taxes | | | 2,516 | | | | (5,632 | ) | | | 7,984 | | | | (24,788 | ) |
| Unrealized hedging gain (loss), net of taxes | | | — | | | | (104 | ) | | | (747 | ) | | | 747 | |
| Minimum pension liability adjustment, net of taxes | | | (43,881 | ) | | | (3,166 | ) | | | (43,881 | ) | | | (3,349 | ) |
| Less: reclassification adjustment for securities’ gains losses realized in net income, net of taxes | | | — | | | | 25 | | | | 14 | | | | 1,252 | |
| | | | | | | | | | | | | |
| Total other comprehensive income (loss), net of taxes | | | (41,365 | ) | | | (8,927 | ) | | | (36,658 | ) | | | (28,642 | ) |
| | | | | | | | | | | | | |
| Comprehensive income | | $ | (35,248 | ) | | | 18,729 | | | | 58,288 | | | | 101,841 | |
| | | | | | | | | | | | | |
| Net income applicable to common shares | | $ | 6,117 | | | | 27,656 | | | | 94,946 | | | | 130,483 | |
| | | | | | | | | | | | | |
| Net income used in diluted EPS calculation | | $ | 6,121 | | | | 27,653 | | | | 94,964 | | | | 130,501 | |
| | | | | | | | | | | | | |
| Weighted average number of common shares outstanding — basic | | | 80,091 | | | | 82,786 | | | | 80,128 | | | | 83,490 | |
| | | | | | | | | | | | | |
| Weighted average number of common shares outstanding — diluted | | | 80,316 | | | | 83,082 | | | | 80,352 | | | | 83,844 | |
| | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.07 | | | | 0.33 | | | | 1.18 | | | | 1.56 | |
| | | | | | | | | | | | | |
| Diluted earnings per share | | $ | 0.07 | | | | 0.34 | | | | 1.18 | | | | 1.56 | |
| | | | | | | | | | | | | |
| Dividend per share | | $ | 0.29 | | | | 0.28 | | | | 1.14 | | | | 1.10 | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements.
12
| | |
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME—LINKED QUARTERS | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Results | |
| (Unaudited) | | 2006 | | | 2006 | | | 2006 | | | 2006 | | | 2005 | |
| (Dollars in thousands, except share data) | | 4th Q | | | 3rd Q | | | 2nd Q | | | 1st Q | | | 4th Q | |
| Interest and fees on loans, including held for sale | | $ | 131,683 | | | | 129,890 | | | | 123,450 | | | | 117,740 | | | | 115,850 | |
| Interest and dividends — securities and federal funds sold | | | 25,795 | | | | 25,131 | | | | 24,820 | | | | 25,332 | | | | 26,109 | |
| | | | | | | | | | | | | | | | |
| Total interest income | | | 157,478 | | | | 155,021 | | | | 148,270 | | | | 143,072 | | | | 141,959 | |
| | | | | | | | | | | | | | | | |
| Interest on deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand-interest bearing | | | 2,031 | | | | 2,241 | | | | 2,583 | | | | 2,362 | | | | 1,953 | |
| Savings and money market accounts | | | 14,068 | | | | 13,188 | | | | 12,079 | | | | 10,748 | | | | 10,352 | |
| Certificates and other time deposits | | | 35,569 | | | | 32,881 | | | | 29,326 | | | | 26,101 | | | | 23,831 | |
| Securities sold under agreements to repurchase | | | 15,393 | | | | 15,878 | | | | 12,957 | | | | 11,923 | | | | 13,423 | |
| Wholesale borrowings | | | 6,834 | | | | 5,746 | | | | 5,595 | | | | 5,965 | | | | 4,898 | |
| | | | | | | | | | | | | | | | |
| Total interest expense | | | 73,895 | | | | 69,934 | | | | 62,540 | | | | 57,099 | | | | 54,457 | |
| | | | | | | | | | | | | | | | |
| Net interest income | | | 83,583 | | | | 85,087 | | | | 85,730 | | | | 85,973 | | | | 87,502 | |
| Provision for loan losses | | | 44,235 | | | | 12,612 | | | | 13,159 | | | | 6,106 | | | | 16,260 | |
| | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 39,348 | | | | 72,475 | | | | 72,571 | | | | 79,867 | | | | 71,242 | |
| | | | | | | | | | | | | | | | |
| Other income: | | | | | | | | | | | | | | | | | | | | |
| Trust department income | | | 5,794 | | | | 5,721 | | | | 5,744 | | | | 5,394 | | | | 5,430 | |
| Service charges on deposits | | | 18,198 | | | | 19,250 | | | | 18,010 | | | | 16,066 | | | | 17,884 | |
| Credit card fees | | | 11,325 | | | | 11,251 | | | | 11,478 | | | | 10,671 | | | | 10,601 | |
| ATM and other service fees | | | 3,135 | | | | 3,301 | | | | 3,273 | | | | 3,108 | | | | 3,157 | |
| Bank owned life insurance income | | | 3,001 | | | | 3,042 | | | | 5,310 | | | | 2,986 | | | | 3,092 | |
| Investment services and insurance | | | 2,011 | | | | 2,631 | | | | 2,581 | | | | 2,597 | | | | 2,696 | |
| Investment securities gains (losses), net | | | — | | | | 2 | | | | 4 | | | | 16 | | | | 39 | |
| Loan sales and servicing income | | | 1,504 | | | | 1,731 | | | | 2,833 | | | | 1,445 | | | | 1,668 | |
| Other operating income | | | 3,364 | | | | 2,412 | | | | 2,845 | | | | 3,114 | | | | 3,019 | |
| | | | | | | | | | | | | | | | |
| Total other income | | | 48,332 | | | | 49,341 | | | | 52,078 | | | | 45,397 | | | | 47,586 | |
| | | | | | | | | | | | | | | | |
| Other expenses: | | | | | | | | | | | | | | | | | | | | |
| Salaries, wages, pension and employee benefits | | | 43,700 | | | | 43,248 | | | | 46,721 | | | | 43,031 | | | | 40,790 | |
| Net occupancy expense | | | 6,143 | | | | 6,002 | | | | 6,120 | | | | 6,549 | | | | 5,746 | |
| Equipment expense | | | 3,030 | | | | 3,097 | | | | 2,914 | | | | 2,958 | | | | 4,152 | |
| Stationery, supplies and postage | | | 2,633 | | | | 2,423 | | | | 2,403 | | | | 2,453 | | | | 2,546 | |
| Bankcard, loan processing and other costs | | | 7,508 | | | | 7,459 | | | | 7,417 | | | | 5,827 | | | | 7,042 | |
| Professional services | | | 5,000 | | | | 5,470 | | | | 3,738 | | | | 2,763 | | | | 3,389 | |
| Amortization of intangibles | | | 222 | | | | 222 | | | | 222 | | | | 223 | | | | 222 | |
| Other operating expense | | | 15,751 | | | | 9,062 | | | | 15,683 | | | | 18,095 | | | | 15,387 | |
| | | | | | | | | | | | | | | | |
| Total other expenses | | | 83,987 | | | | 76,983 | | | | 85,218 | | | | 81,899 | | | | 79,274 | |
| | | | | | | | | | | | | | | | |
| Income before income tax expense | | | 3,693 | | | | 44,833 | | | | 39,431 | | | | 43,365 | | | | 39,554 | |
| Federal income taxes | | | (2,424 | ) | | | 13,629 | | | | 11,770 | | | | 13,401 | | | | 11,898 | |
| | | | | | | | | | | | | | | | |
| Net income | | $ | 6,117 | | | | 31,204 | | | | 27,661 | | | | 29,964 | | | | 27,656 | |
| | | | | | | | | | | | | | | | |
| Other comprehensive income (loss), net of taxes | | | (41,365 | ) | | | 23,870 | | | | (8,618 | ) | | | (10,545 | ) | | | (8,927 | ) |
| | | | | | | | | | | | | | | | |
| Comprehensive income | | $ | (35,248 | ) | | | 55,074 | | | | 19,043 | | | | 19,419 | | | | 18,729 | |
| | | | | | | | | | | | | | | | |
| Net income applicable to common shares | | | 6,117 | | | | 31,204 | | | | 27,661 | | | | 29,964 | | | | 27,656 | |
| | | | | | | | | | | | | | | | |
| Adjusted net income used in diluted EPS calculation | | | 6,121 | | | | 31,209 | | | | 27,666 | | | | 29,968 | | | | 27,653 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares — basic | | | 80,091 | | | | 80,066 | | | | 79,983 | | | | 80,374 | | | | 82,786 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares — diluted | | | 80,316 | | | | 80,262 | | | | 80,203 | | | | 80,648 | | | | 83,082 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.07 | | | | 0.39 | | | | 0.35 | | | | 0.37 | | | | 0.33 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted net income per share | | $ | 0.07 | | | | 0.39 | | | | 0.35 | | | | 0.37 | | | | 0.34 | |
| | | | | | | | | | | | | | | | |
13
| | |
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Periods | | | Annual Period | |
(Unaudited, except December 31, 2005 annual period which
is derived from the audited financial statements) | | 31-Dec | | | Sep 30 | | | June 30 | | | Mar 31 | | | Dec 31 | | | Dec 31 | |
| (Dollars in thousands, except ratios) | | 2006 | | | 2006 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | |
Allowance for Credit Losses | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses, beginning of period | | $ | 88,755 | | | | 87,727 | | | | 87,589 | | | | 90,661 | | | | 92,780 | | | | 97,296 | |
| Allowance related to loans held for sale | | | (23,089 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| Provision for loan losses | | | 44,235 | | | | 12,612 | | | | 13,159 | | | | 6,106 | | | | 16,260 | | | | 43,820 | |
| Charge-offs | | | 22,323 | | | | 15,453 | | | | 18,038 | | | | 14,914 | | | | 22,736 | | | | 69,105 | |
| Recoveries | | | 3,764 | | | | 3,869 | | | | 5,017 | | | | 5,736 | | | | 4,357 | | | | 18,650 | |
| | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 18,559 | | | | 11,584 | | | | 13,021 | | | | 9,178 | | | | 18,379 | | | | 50,455 | |
| | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses, end of period | | $ | 91,342 | | | | 88,755 | | | | 87,727 | | | | 87,589 | | | | 90,661 | | | | 90,661 | |
| | | | | | | | | | | | | | | | | | | |
| Reserve for unfunded lending commitments, beginning of period | | $ | 6,307 | | | | 5,716 | | | | 5,853 | | | | 6,072 | | | | 5,857 | | | | 5,774 | |
| Provision for credit losses | | | (13 | ) | | | 591 | | | | (137 | ) | | | (219 | ) | | | 215 | | | | 298 | |
| | | | | | | | | | | | | | | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 6,294 | | | | 6,307 | | | | 5,716 | | | | 5,853 | | | | 6,072 | | | | 6,072 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for Credit Losses | | $ | 97,636 | | | | 95,062 | | | | 93,443 | | | | 93,442 | | | | 96,733 | | | | 96,733 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Ratios | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Provision for loan losses as a % of average loans | | | 2.54 | % | | | 0.73 | % | | | 0.78 | % | | | 0.37 | % | | | 0.96 | % | | | 0.66 | % |
| Provision for credit losses as a % of average loans | | | 0.00 | % | | | 0.03 | % | | | -0.01 | % | | | -0.01 | % | | | 0.01 | % | | | 0.00 | % |
| Net charge-offs as a % of average loans | | | 1.06 | % | | | 0.67 | % | | | 0.78 | % | | | 0.56 | % | | | 1.09 | % | | | 0.76 | % |
| Net charge-offs and allowance related to loans held for sale as a % of average loans | | | 1.40 | % | | | 0.67 | % | | | 0.78 | % | | | 0.56 | % | | | 1.09 | % | | | 0.76 | % |
| Allowance for loan losses as a % of period-end loans | | | 1.33 | % | | | 1.28 | % | | | 1.29 | % | | | 1.31 | % | | | 1.36 | % | | | 1.36 | % |
| Allowance for credit losses as a % of period-end loans | | | 1.42 | % | | | 1.37 | % | | | 1.37 | % | | | 1.40 | % | | | 1.45 | % | | | 1.45 | % |
| Allowance for loan losses as a % of nonperforming loans | | | 168.03 | % | | | 143.73 | % | | | 174.80 | % | | | 136.22 | % | | | 145.61 | % | | | 145.61 | % |
| Allowance for credit losses as a % of nonperforming loans | | | 179.60 | % | | | 153.94 | % | | | 186.19 | % | | | 145.32 | % | | | 155.36 | % | | | 155.36 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Asset Quality | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual | | $ | 45,045 | | | | 52,621 | | | | 41,927 | | | | 56,258 | | | | 54,176 | | | | 54,176 | |
| Other nonperforming loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual | | | 9,317 | | | | 9,132 | | | | 8,261 | | | | 8,044 | | | | 8,086 | | | | 8,086 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming loans | | | 54,362 | | | | 61,753 | | | | 50,188 | | | | 64,302 | | | | 62,262 | | | | 62,262 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other real estate (“ORE”) | | | 9,815 | | | | 10,711 | | | | 8,598 | | | | 8,639 | | | | 9,995 | | | | 9,995 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming assets (“NPAs”) | | $ | 64,177 | | | | 72,464 | | | | 58,786 | | | | 72,941 | | | | 72,257 | | | | 72,257 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NPAs as % of period-end loans + ORE | | | 0.93 | % | | | 1.05 | % | | | 0.86 | % | | | 1.09 | % | | | 1.08 | % | | | 1.08 | % |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Past due 90 days or more & accruing interest | | $ | 16,860 | | | | 15,311 | | | | 16,483 | | | | 18,640 | | | | 17,931 | | | | 17,931 | |
| | | | | | | | | | | | | | | | | | | |
14
| | | |
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL | | |
| | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | 2006 | | | 2006 | | | 2006 | | | 2006 | | | 2005 | |
| (Dollars in thousands) | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | | | 4th Qtr | |
QUARTERLY OTHER INCOME DETAIL | | | | | | | | | | | | | | | | | | | | |
| Trust department income | | $ | 5,794 | | | | 5,721 | | | | 5,744 | | | | 5,394 | | | | 5,430 | |
| Service charges on deposits | | | 18,198 | | | | 19,250 | | | | 18,010 | | | | 16,066 | | | | 17,884 | |
| Credit card fees | | | 11,325 | | | | 11,251 | | | | 11,478 | | | | 10,671 | | | | 10,601 | |
| ATM and other service fees | | | 3,135 | | | | 3,301 | | | | 3,273 | | | | 3,108 | | | | 3,157 | |
| Bank owned life insurance income | | | 3,001 | | | | 3,042 | | | | 5,310 | | | | 2,986 | | | | 3,092 | |
| Investment services and insurance | | | 2,011 | | | | 2,631 | | | | 2,581 | | | | 2,597 | | | | 2,696 | |
| Investment securities gains (losses), net | | | — | | | | 2 | | | | 4 | | | | 16 | | | | 39 | |
| Loan sales and servicing income | | | 1,504 | | | | 1,731 | | | | 2,833 | | | | 1,445 | | | | 1,668 | |
| Other operating income | | | 3,364 | | | | 2,412 | | | | 2,845 | | | | 3,114 | | | | 3,019 | |
| | | | | | | | | | | | | | | | |
| |
| Total Other Income | | $ | 48,332 | | | | 49,341 | | | | 52,078 | | | | 45,397 | | | | 47,586 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2006 | | | 2006 | | | 2006 | | | 2005 | |
| | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | | | 4th Qtr | |
QUARTERLY OTHER EXPENSES DETAIL | | | | | | | | | | | | | | | | | | | | |
| Salaries, wages, pension and employee benefits | | $ | 43,700 | | | | 43,248 | | | | 46,721 | | | | 43,031 | | | | 40,790 | |
| Net occupancy expense | | | 6,143 | | | | 6,002 | | | | 6,120 | | | | 6,549 | | | | 5,746 | |
| Equipment expense | | | 3,030 | | | | 3,097 | | | | 2,914 | | | | 2,958 | | | | 4,152 | |
| Taxes, other than federal income taxes | | | 1,753 | | | | (7,703 | ) | | | 1,802 | | | | 1,819 | | | | 1,578 | |
| Stationery, supplies and postage | | | 2,633 | | | | 2,423 | | | | 2,403 | | | | 2,453 | | | | 2,546 | |
| Bankcard, loan processing and other costs | | | 7,508 | | | | 7,459 | | | | 7,417 | | | | 5,827 | | | | 7,042 | |
| Advertising | | | 798 | | | | 1,152 | | | | 2,369 | | | | 2,766 | | | | 1,415 | |
| Professional services | | | 5,000 | | | | 5,470 | | | | 3,738 | | | | 2,763 | | | | 3,389 | |
| Telephone | | | 1,362 | | | | 1,138 | | | | 1,094 | | | | 1,128 | | | | 1,136 | |
| Amortization of intangibles | | | 222 | | | | 222 | | | | 222 | | | | 223 | | | | 222 | |
| Other operating expense | | | 11,838 | | | | 14,475 | | | | 10,418 | | | | 12,382 | | | | 11,258 | |
| | | | | | | | | | | | | | | | |
| |
| Total Other Expenses | | $ | 83,987 | | | | 76,983 | | | | 85,218 | | | | 81,899 | | | | 79,274 | |
| | | | | | | | | | | | | | | | |
15
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES — Net Charge-off Detail | | |
| | | | | | | | | | | | | | | | | |
| | | Quarters ended | | | Year ended | |
| (Unaudited) | | December 31, | | | December 31, | |
| (Dollars in thousands) | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| Allowance for loan losses — beginning of period | | $ | 88,755 | | | | 92,780 | | | | 90,661 | | | | 97,296 | |
| Loans charged off: | | | | | | | | | | | | | | | | |
| Commercial | | | 9,745 | | | | 7,891 | | | | 32,628 | | | | 19,349 | |
| Mortgage | | | 513 | | | | 639 | | | | 1,670 | | | | 1,721 | |
| Installment | | | 5,296 | | | | 9,063 | | | | 20,682 | | | | 29,307 | |
| Home equity | | | 969 | | | | 1,099 | | | | 3,847 | | | | 4,340 | |
| Credit cards | | | 2,254 | | | | 3,586 | | | | 8,294 | | | | 11,320 | |
| Leases | | | 3,546 | | | | 458 | | | | 3,607 | | | | 3,068 | |
| | | | | | | | | | | | | |
| Total | | | 22,323 | | | | 22,736 | | | | 70,728 | | | | 69,105 | |
| | | | | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | | | | | |
| Commercial | | | 786 | | | | 1,256 | | | | 3,734 | | | | 4,166 | |
| Mortgage | | | 47 | | | | 13 | | | | 142 | | | | 190 | |
| Installment | | | 2,010 | | | | 1,878 | | | | 10,340 | | | | 9,495 | |
| Home equity | | | 275 | | | | 374 | | | | 1,293 | | | | 1,302 | |
| Credit cards | | | 504 | | | | 489 | | | | 2,123 | | | | 2,348 | |
| Manufactured housing | | | 79 | | | | 203 | | | | 451 | | | | 710 | |
| Leases | | | 63 | | | | 144 | | | | 303 | | | | 439 | |
| | | | | | | | | | | | | |
| Total | | | 3,764 | | | | 4,357 | | | | 18,386 | | | | 18,650 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 18,559 | | | | 18,379 | | | | 52,342 | | | | 50,455 | |
| Provision for loan losses | | | 44,235 | | | | 16,260 | | | | 76,112 | | | | 43,820 | |
| Allowance related to loans held for sale | | | (23,089 | ) | | | — | | | | (23,089 | ) | | | — | |
| | | | | | | | | | | | | |
| Allowance for loan losses — end of period | | $ | 91,342 | | | | 90,661 | | | | 91,342 | | | | 90,661 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Average loans outstanding | | $ | 6,917,572 | | | | 6,699,997 | | | | 6,798,338 | | | | 6,610,509 | |
| | | | | | | | | | | | | |
| Ratio to average loans: | | | | | | | | | | | | | | | | |
| (Annualized) net charge-offs | | | 1.06 | % | | | 1.09 | % | | | 0.77 | % | | | 0.76 | % |
| | | | | | | | | | | | | |
| (Annualized) net charge-offs and allowance related to loans held for sale | | | 1.40 | % | | | 1.09 | % | | | 1.11 | % | | | 0.76 | % |
| | | | | | | | | | | | | |
| Provision for loan losses | | | 2.54 | % | | | 0.96 | % | | | 1.12 | % | | | 0.66 | % |
| | | | | | | | | | | | | |
| Loans outstanding — period-end | | $ | 6,878,873 | | | | 6,667,327 | | | | 6,878,873 | | | | 6,667,327 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Allowance for credit losses: | | | 97,636 | | | | 96,733 | | | | 97,636 | | | | 96,733 | |
| | | | | | | | | | | | | |
| As a multiple of (annualized) net charge-offs | | | 1.33 | | | | 1.33 | | | | 1.87 | | | | 1.92 | |
| | | | | | | | | | | | | |
| As a multiple of (annualized) net charge-offs and allowance related to loans held for sale | | | 1.01 | | | | 1.33 | | | | 1.29 | | | | 1.92 | |
| | | | | | | | | | | | | |
| Allowance for loan losses: | | | | | | | | | | | | | | | | |
| As a percent of period-end loans outstanding | | | 1.33 | % | | | 1.36 | % | | | 1.33 | % | | | 1.36 | % |
| | | | | | | | | | | | | |
| As a multiple of (annualized) net charge-offs | | | 1.24 | | | | 1.24 | | | | 1.75 | | | | 1.80 | |
| | | | | | | | | | | | | |
| As a multiple of (annualized) net charge-offs and allowance related to loans held for sale | | | 0.94 | | | | 1.24 | | | | 1.21 | | | | 1.80 | |
| | | | | | | | | | | | | |
16
