Exhibit 99.1
2007 Financial Information Fourth Quarter
Table of Contents | ||
| Earnings Release | Pages 1-4 | |
| Consolidated Financial Highlights | Page 5 | |
| Consolidated Balance Sheets | Page 6 | |
| Average Consolidated Balance Sheets | Page 7 | |
| Average Consolidated Balance Sheets | Pages 8-9 | |
(Fully-tax Equivalent Interest Rates and Interest Differential) | ||
| Consolidated Statements of Income and Comprehensive Income | Page 10 | |
| Consolidated Statements of Income and Comprehensive Income | Page 11 | |
(Linked Quarters) | ||
| Asset Quality Information | Page 12 | |
| Noninterest Income and Noninterest Expense Detail | Page 13 | |
| Allowance for Loan Losses — Net Charge-off Detail | Page 14 |
FirstMerit Corporation
III Cascade Plaza
Akron, Ohio 44308
III Cascade Plaza
Akron, Ohio 44308
Investor Relations
Thomas P. O’Malley
p.330-384-7109
Thomas P. O’Malley
p.330-384-7109
For Release January 22, 2008, 7:30 a.m. EST
Analysts and Media: Thomas P. O’Malley (330) 384-7109
Analysts and Media: Thomas P. O’Malley (330) 384-7109
FirstMerit Reports Fourth Quarter and 2007 Full Year Results
2007 EPS of $1.53 Represents 29.7% Increase over Prior Year
4Q07 EPS of $0.39 is 2.6% Increase over 3Q07
4Q07 EPS of $0.39 is 2.6% Increase over 3Q07
AKRON, Ohio, — January 22, 2008 —FirstMerit Corporation (Nasdaq: FMER) today announced fourth quarter 2007 net income of $31.5 million, or $0.39 per diluted share. This compares with $6.1 million, or $0.07 per diluted share, for the prior-year quarter. For the full year 2007, the Company reported net income of $123.0 million, or $1.53 per diluted share, compared with $94.9 million, or $1.18 per diluted share in 2006.
Returns on average common equity (“ROE”) and average assets (“ROA”) for the fourth quarter 2007 were 13.87% and 1.21%, respectively, compared with 2.66% and 0.24% for the prior-year quarter.
Both fourth quarter and full year 2006 results were affected by the sale of $80.9 million of commercial assets in transactions completed during the first quarter of 2007.
“I am very pleased with the energy and execution of our personnel this past year. We are positioned to face a challenging environment and build from our successes by executing our business strategy. For the quarter, our credit performance remained sound, our net interest margin expanded, our revenue grew, and expenses were well controlled, said Paul G. Greig, Chairman and Chief Executive Officer of FirstMerit Corporation.
Mr. Greig continued, “We advanced on our primary objective of improving and restoring credit quality this year. Many elements beyond the sale of commercial assets, executed during the first quarter of 2007, factored into this improvement. Over the past year, we strengthened our portfolio management practices and procedures, changed the management structure of the credit department, added key personnel and aligned incentives throughout the organization to focus on credit quality.”
Net interest margin was 3.66% for the fourth quarter of 2007 compared with 3.61% for the third quarter of 2007 and 3.58% for the fourth quarter of 2006. The increases in net interest margin compared with the prior and year-ago quarters were led by decreases in funding costs. During the fourth quarter of 2007 the Company increased its average core deposits, which excludes time deposits, by $58.7 million, or 1.35%, and decreased certificates of deposits $198.9 million, or 6.33%.
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The Company’s deposit composition mix shift to a higher concentration of core deposits contributed to lower funding costs and an increased net interest margin. Despite the lower interest rate environment, the Company’s investment portfolio yields increased in the fourth quarter of 2007, to 4.99%, compared with 4.87% in the third quarter of 2007, and 4.39% in the fourth quarter of 2006. The increased investment portfolio yields partly offset lower loan portfolio yields this quarter. For the full year 2007, net interest margin was 3.62% compared with 3.71% for 2006.
Net interest income on a fully tax-equivalent (“FTE”) basis was $87.6 million in the fourth quarter 2007 compared with $86.6 million in the third quarter of 2007 and $84.5 million in the fourth quarter of 2006. The increase in FTE net interest income compared with the third quarter 2007 resulted from expansion in the net interest margin, which offset a decrease in average earning assets. Net interest margin expansion and average earning asset growth led to increased FTE net interest income compared with the fourth quarter of 2006. Compared with the fourth quarter of 2006, average earning assets increased $119.0 million, or 1.27%. FTE net interest income for the full year 2007 was $343.0 million, compared with $343.3 million in 2006. In 2007 average earning assets increased $221.5 million, or 2.39%, compared with 2006. Average loans grew $173.1 million, or 2.55%, driven by $181.5 million, or 4.98%, growth in average commercial loans.
Noninterest income net of securities transactions for the fourth quarter of 2007 was $48.9 million, a decrease of $0.3 million, or 0.52%, from the third quarter of 2007 and an increase of $0.5 million, or 1.12%, from the fourth quarter of 2006. For the full year 2007, noninterest income net of securities transactions totaled $195.8 million, an increase of $0.7 million, or 0.35%, compared with $195.1 million for 2006. Reflective of a strong fee base, other income, net of securities gains, as a percentage of net revenue for the fourth quarter of 2007 was 35.80% compared with 36.20% for third quarter of 2007 and 36.39% for the fourth quarter of 2006. For the full year 2007, other income, net of securities gains, as a percentage of net revenue was 36.34% compared with 36.24% for 2006. 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 2007 was $83.3 million, a decrease of $0.7 million, or 0.87%, from the third quarter of 2007 and a decrease of $0.7 million, or 0.82%, from the fourth quarter of 2006. Noninterest expense in the fourth quarter included $2.4 million of Visa contingency accrual related to Visa Inc. litigation matters that FirstMerit and other Visa member banks have direct and potential exposure to share with Visa. For the full year 2007, noninterest expenses totaled $330.2 million, an increase of $2.1 million, or 0.65%, compared with $328.1 million for the full year 2006.
Net charge-offs totaled $8.9 million, or 0.51% of average loans, in the fourth quarter of 2007 compared with $7.9 million, or 0.45% of average loans, in the third quarter 2007 and $18.6 million, or 1.06% of average loans, in the fourth quarter of 2006.
Nonperforming assets totaled $37.3 million at December 31, 2007, an increase of $3.1 million, or 8.96%, compared with September 30, 2007 and a decrease of $26.9 million, or 41.94%, compared with December 31, 2006. Of the December 31, 2007 total, $2.3
2
million represents both vacant land no longer considered for branch expansion and executive relocation property not related to loan portfolios. Nonperforming assets at December 31, 2007 represented 0.53% of period-end loans plus other real estate compared with 0.49% at September 30, 2007 and 0.93% at December 31, 2006.
The provision for loan losses increased to $9.3 million in the fourth quarter of 2007 compared with $7.3 million in the third quarter of 2007. For the prior-year quarter, the provision for loan losses was $44.2 million, reflecting the Company’s preparation to sell $73.7 million of commercial loans during the first quarter of 2007. For the full year of 2007, the provision for loan losses was $30.8 million, compared with $76.1 million for 2006.
The allowance for loan losses totaled $94.2 million at December 31, 2007, an increase of $0.4 million and $2.9 million from September 30, 2007 and December 31, 2006, respectively. At December 31, 2007, the allowance for loan losses was 1.35% of period-end loans compared with 1.34% at September 30, 2007 and 1.33% at December 31, 2006. 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 1.45% at December 31, 2007 compared with 1.44% at September 30, 2007 and 1.42% at December 31, 2006. The allowance for credit losses to nonperforming loans was 323.22% at December 31, 2007, compared with 339.04% on September 30, 2007, and 179.60% on December 31, 2006.
FirstMerit’s total assets at December 31, 2007 were $10.4 billion, a decrease of $0.5 million, or 0.01%, compared with September 30, 2007 and an increase of $154.7 million, or 1.51%, compared with December 31, 2006.
Total deposits were $7.3 billion at December 31, 2007, a decrease of $76.6 million, or 1.03%, from September 30, 2007 and a decrease of 167.2 million, or 2.23%, from December 31, 2006. Core deposits, totaled $4.5 billion at December 31, 2007, an increase of $182.0 million, or 4.21%, from September 30, 2007 and a decrease of $16.8 million, or 0.37%, from December 31, 2006. Commercial customer investment sweeps increased $158.1 million, or 20.74%, at December 31, 2007, compared with December 31, 2006.
Mr. Greig commented on the Company’s capital management strategies, “In the fourth quarter we continued our long history of dividend payments that are so highly valued by our shareholders. Additionally, we increased our capital position this quarter which, relative to peer banks on a tangible basis, is significantly stronger. Our current capital levels are in alignment with our commitment to managing risk, improving profitability and increasing shareholder value.”
Shareholders’ equity was $904.8 million at December 31, 2007, compared with $846.1 million at December 31, 2006, and the Company retains its strong capital position as tangible equity to assets was 7.44%. The common dividend per share paid in the fourth quarter 2007 was $0.29. For the full year 2007, the common dividend per share paid was $1.16 compared with $1.14 in 2006, an increase per share of $0.02, or 1.75%.
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Fourth Quarter 2007 Conference Call
FirstMerit will host an earnings conference call on January 22, 2008, 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 (888) 693-3477 ten minutes before start time and provide the reservation number: 30449862. A replay of the conference call will be available at approximately 4:30 p.m., on January 22, 2008 through January 29, 2008, by dialing (800) 642-1687, and entering the PIN: 30449862.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001220/FIRSTMERITLOGO)
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $10.4 billion as of December 31, 2007 and 160 banking offices and 176 ATMs in 25 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.
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.
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| FIRSTMERIT CORPORATION AND SUBSIDIARIES Consolidated Financial Highlights |  |
(Unaudited)
(Dollars in thousands)
(Dollars in thousands)
| Quarters | ||||||||||||||||||||
| 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||
EARNINGS | ||||||||||||||||||||
| Net interest income FTE (a) | $ | 87,647 | $ | 86,582 | $ | 85,593 | $ | 83,218 | $ | 84,502 | ||||||||||
| Provision for loan losses | 9,334 | 7,324 | 9,967 | 4,210 | 44,235 | |||||||||||||||
| Other income | 49,993 | 49,124 | 48,930 | 48,876 | 48,332 | |||||||||||||||
| Other expenses | 83,295 | 84,030 | 81,375 | 81,526 | 83,987 | |||||||||||||||
| FTE adjustment (a) | 1,486 | 1,428 | 1,368 | 1,212 | 919 | |||||||||||||||
| Net income | 31,459 | 30,262 | 29,885 | 31,421 | 6,117 | |||||||||||||||
| Diluted EPS | 0.39 | 0.38 | 0.37 | 0.39 | 0.07 | |||||||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||
| Return on average assets (ROA) | 1.21 | % | 1.16 | % | 1.16 | % | 1.24 | % | 0.24 | % | ||||||||||
| Return on average common equity (ROE) | 13.87 | % | 13.71 | % | 13.75 | % | 14.91 | % | 2.66 | % | ||||||||||
| Net interest margin FTE (a) | 3.66 | % | 3.61 | % | 3.62 | % | 3.58 | % | 3.58 | % | ||||||||||
| Efficiency ratio | 60.85 | % | 61.76 | % | 60.33 | % | 61.55 | % | 63.06 | % | ||||||||||
| Number of full-time equivalent employees | 2,688 | 2,704 | 2,725 | 2,751 | 2,755 | |||||||||||||||
| MARKET DATA | ||||||||||||||||||||
| Book value/common share | $ | 11.24 | $ | 11.00 | $ | 10.71 | $ | 10.78 | $ | 10.56 | ||||||||||
| Period-end common share mkt value | 20.01 | 19.76 | 20.93 | 21.11 | 24.14 | |||||||||||||||
| Market as a % of book | 178 | % | 180 | % | 195 | % | 196 | % | 229 | % | ||||||||||
| Cash dividends/common share | $ | 0.29 | $ | 0.29 | $ | 0.29 | $ | 0.29 | $ | 0.29 | ||||||||||
| Common stock dividend payout ratio | 74.36 | % | 76.32 | % | 78.38 | % | 74.36 | % | 414.29 | % | ||||||||||
| Average basic common shares | 80,477 | 80,467 | 80,426 | 80,113 | 80,091 | |||||||||||||||
| Average diluted common shares | 80,595 | 80,561 | 80,570 | 80,298 | 80,316 | |||||||||||||||
| Period end common shares | 80,482 | 80,467 | 80,477 | 80,112 | 80,101 | |||||||||||||||
| Common shares repurchased | 6,066 | 22,473 | 36,159 | 27,011 | 15,876 | |||||||||||||||
| Common stock market capitalization | $ | 1,610,445 | $ | 1,590,028 | $ | 1,684,384 | $ | 1,691,164 | $ | 1,933,638 | ||||||||||
| ASSET QUALITY | ||||||||||||||||||||
| Gross charge-offs | $ | 11,768 | $ | 12,347 | $ | 10,609 | $ | 9,424 | $ | 22,323 | ||||||||||
| Net charge-offs | 8,940 | 7,945 | 7,580 | 3,507 | 18,559 | |||||||||||||||
| Allowance for loan losses | 94,205 | 93,811 | 94,432 | 92,045 | 91,342 | |||||||||||||||
| Reserve for unfunded lending commitments | 7,394 | 7,409 | 6,553 | 6,746 | 6,294 | |||||||||||||||
| Nonperforming assets (NPAs) | 37,262 | 34,199 | 37,038 | 32,664 | 64,177 | |||||||||||||||
| Net charge-offs/average loans ratio | 0.51 | % | 0.45 | % | 0.43 | % | 0.21 | % | 1.06 | % | ||||||||||
| Net charge-offs and allowance related to loans held for sale/average loans ratio | 0.51 | % | 0.45 | % | 0.43 | % | 0.21 | % | 1.40 | % | ||||||||||
| Allowance for loan losses/period-end loans | 1.35 | % | 1.34 | % | 1.34 | % | 1.32 | % | 1.33 | % | ||||||||||
| Allowance for credit losses/period-end loans | 1.45 | % | 1.44 | % | 1.43 | % | 1.42 | % | 1.42 | % | ||||||||||
| NPAs/loans and other real estate | 0.53 | % | 0.49 | % | 0.52 | % | 0.47 | % | 0.93 | % | ||||||||||
| Allowance for loan losses/nonperforming loans | 299.70 | % | 314.22 | % | 295.08 | % | 331.93 | % | 168.03 | % | ||||||||||
| Allowance for credit losses/nonperforming loan | 323.22 | % | 339.04 | % | 315.56 | % | 356.26 | % | 179.60 | % | ||||||||||
| CAPITAL & LIQUIDITY | ||||||||||||||||||||
| Period-end tangible equity to assets | 7.44 | % | 7.24 | % | 7.00 | % | 7.07 | % | 6.96 | % | ||||||||||
| Average equity to assets | 8.72 | % | 8.45 | % | 8.45 | % | 8.32 | % | 8.91 | % | ||||||||||
| Average equity to loans | 12.94 | % | 12.49 | % | 12.45 | % | 12.35 | % | 13.17 | % | ||||||||||
| Average loans to deposits | 94.71 | % | 93.74 | % | 93.18 | % | 92.47 | % | 92.97 | % | ||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||
| Assets | $ | 10,313,707 | $ | 10,360,739 | $ | 10,319,454 | $ | 10,276,241 | $ | 10,227,154 | ||||||||||
| Deposits | 7,339,827 | 7,479,960 | 7,515,205 | 7,481,969 | 7,440,331 | |||||||||||||||
| Loans | 6,951,544 | 7,011,776 | 7,002,750 | 6,918,636 | 6,917,572 | |||||||||||||||
| Earning assets | 9,493,271 | 9,513,230 | 9,485,819 | 9,437,418 | 9,374,223 | |||||||||||||||
| Shareholders’ equity | 899,624 | 875,720 | 871,554 | 854,713 | 911,348 | |||||||||||||||
| ENDING BALANCES | ||||||||||||||||||||
| Assets | $ | 10,407,230 | $ | 10,407,765 | $ | 10,429,099 | $ | 10,347,121 | $ | 10,252,572 | ||||||||||
| Deposits | 7,331,739 | 7,408,296 | 7,474,466 | 7,701,202 | 7,498,921 | |||||||||||||||
| Loans | 7,001,886 | 7,014,389 | 7,052,390 | 6,951,631 | 6,878,873 | |||||||||||||||
| Goodwill | 139,245 | 139,245 | 139,245 | 139,245 | 139,245 | |||||||||||||||
| Intangible assets | 1,977 | 2,200 | 2,422 | 2,644 | 2,865 | |||||||||||||||
| Earning assets | 9,509,680 | 9,563,541 | 9,545,752 | 9,447,346 | 9,382,033 | |||||||||||||||
| Total shareholders’ equity | 904,786 | 884,877 | 862,265 | 863,641 | 846,111 | |||||||||||||||
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.
5
CONSOLIDATED BALANCE SHEETS
FIRSTMERIT CORPORATION AND SUBSIDIARIES
| December 31, | ||||||||
| 2007 | 2006 | |||||||
| (In thousands) | ||||||||
ASSETS | ||||||||
| Cash and due from banks | $ | 207,335 | $ | 200,204 | ||||
| Investment securities (at market value) and federal funds sold | 2,460,453 | 2,407,888 | ||||||
| Loans held for sale | 47,341 | 95,272 | ||||||
| Loans: | ||||||||
| Commercial loans | 3,906,448 | 3,694,121 | ||||||
| Mortgage loans | 577,219 | 608,008 | ||||||
| Installment loans | 1,598,832 | 1,619,747 | ||||||
| Home equity loans | 691,922 | 731,473 | ||||||
| Credit card loans | 153,732 | 147,553 | ||||||
| Leases | 73,733 | 77,971 | ||||||
| Total loans | 7,001,886 | 6,878,873 | ||||||
| Allowance for loan losses | (94,205 | ) | (91,342 | ) | ||||
| Net loans | 6,907,681 | 6,787,531 | ||||||
| Premises and equipment, net | 113,993 | 122,954 | ||||||
| Goodwill | 139,245 | 139,245 | ||||||
| Other intangible assets | 1,977 | 2,865 | ||||||
| Accrued interest receivable and other assets | 529,205 | 496,613 | ||||||
| Total assets | $ | 10,407,230 | $ | 10,252,572 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Deposits: | ||||||||
| Demand-non-interest bearing | $ | 1,482,480 | $ | 1,455,097 | ||||
| Demand-interest bearing | 727,966 | 799,571 | ||||||
| Savings and money market accounts | 2,295,147 | 2,267,686 | ||||||
| Certificates and other time deposits | 2,826,146 | 2,976,567 | ||||||
| Total deposits | 7,331,739 | 7,498,921 | ||||||
| Securities sold under agreements to repurchase | 1,256,080 | 1,261,821 | ||||||
| Wholesale borrowings | 705,121 | 464,227 | ||||||
| Accrued taxes, expenses, and other liabilities | 209,504 | 181,492 | ||||||
| Total liabilities | 9,502,444 | 9,406,461 | ||||||
| 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, 2007 and 2006 | 127,937 | 127,937 | ||||||
| Capital surplus | 100,028 | 106,916 | ||||||
| Accumulated other comprehensive loss | (55,276 | ) | (79,508 | ) | ||||
| Retained earnings | 1,027,775 | 998,079 | ||||||
| Treasury stock, at cost, 11,543,882 and 11,925,803 shares, at December 31, 2007 and 2006, respectively | (295,678 | ) | (307,313 | ) | ||||
| Total shareholders’ equity | 904,786 | 846,111 | ||||||
| Total liabilities and shareholders’ equity | $ | 10,407,230 | $ | 10,252,572 | ||||
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| FIRSTMERIT CORPORATION AND SUBSIDIARIES AVERAGE CONSOLIDATED BALANCE SHEETS | |
(Unaudited)
(Dollars in thousands)
(Dollars in thousands)
| Quarterly Periods | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 175,164 | $ | 180,426 | $ | 177,524 | $ | 179,566 | $ | 175,735 | ||||||||||
| Investment securities/fed funds sold | 2,494,975 | 2,455,777 | 2,440,015 | 2,429,539 | 2,410,879 | |||||||||||||||
| Loans held for sale | 46,752 | 45,677 | 43,054 | 89,243 | 45,772 | |||||||||||||||
| Loans: | ||||||||||||||||||||
| Commercial loans | 3,839,242 | 3,868,235 | 3,845,395 | 3,749,067 | 3,730,110 | |||||||||||||||
| Mortgage loans | 581,370 | 586,911 | 596,758 | 607,602 | 614,204 | |||||||||||||||
| Installment loans | 1,615,035 | 1,640,380 | 1,636,669 | 1,622,324 | 1,625,962 | |||||||||||||||
| Home equity loans | 696,259 | 704,499 | 711,113 | 717,806 | 738,630 | |||||||||||||||
| Credit card loans | 149,466 | 143,312 | 141,294 | 143,853 | 144,351 | |||||||||||||||
| Leases | 70,172 | 68,439 | 71,521 | 77,984 | 64,315 | |||||||||||||||
| Total loans | 6,951,544 | 7,011,776 | 7,002,750 | 6,918,636 | 6,917,572 | |||||||||||||||
| Less allowance for loan losses | 92,667 | 94,393 | 92,298 | 91,256 | 88,175 | |||||||||||||||
| Net loans | 6,858,877 | 6,917,383 | 6,910,452 | 6,827,380 | 6,829,397 | |||||||||||||||
| Total earning assets | 9,493,271 | 9,513,230 | 9,485,819 | 9,437,418 | 9,374,223 | |||||||||||||||
| Premises and equipment, net | 115,673 | 117,970 | 119,818 | 121,988 | 121,956 | |||||||||||||||
| Accrued interest receivable and other assets | 622,266 | 643,506 | 628,591 | 628,525 | 643,415 | |||||||||||||||
TOTAL ASSETS | $ | 10,313,707 | $ | 10,360,739 | $ | 10,319,454 | $ | 10,276,241 | $ | 10,227,154 | ||||||||||
LIABILITIES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Demand-non-interest bearing | $ | 1,435,358 | $ | 1,400,848 | $ | 1,408,827 | $ | 1,389,455 | $ | 1,413,682 | ||||||||||
| Demand-interest bearing | 699,675 | 714,216 | 763,907 | 756,678 | 767,430 | |||||||||||||||
| Savings and money market accounts | 2,262,818 | 2,224,048 | 2,293,567 | 2,284,549 | 2,267,268 | |||||||||||||||
| Certificates and other time deposits | 2,941,976 | 3,140,848 | 3,048,904 | 3,051,287 | 2,991,951 | |||||||||||||||
| Total deposits | 7,339,827 | 7,479,960 | 7,515,205 | 7,481,969 | 7,440,331 | |||||||||||||||
| Securities sold under agreements to repurchase | 1,517,241 | 1,555,235 | 1,458,982 | 1,352,961 | 1,269,873 | |||||||||||||||
| Wholesale borrowings | 369,685 | 256,356 | 280,914 | 399,638 | 446,950 | |||||||||||||||
| Total funds | 9,226,753 | 9,291,551 | 9,255,101 | 9,234,568 | 9,157,154 | |||||||||||||||
| Accrued taxes, expenses and other liabilities | 187,330 | 193,468 | 192,799 | 186,960 | 158,652 | |||||||||||||||
| Total liabilities | 9,414,083 | 9,485,019 | 9,447,900 | 9,421,528 | 9,315,806 | |||||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Preferred stock | — | — | — | — | — | |||||||||||||||
| Common stock | 127,937 | 127,937 | 127,937 | 127,937 | 127,937 | |||||||||||||||
| Capital surplus | 99,749 | 100,511 | 102,355 | 107,178 | 106,339 | |||||||||||||||
| Accumulated other comprehensive (loss) income | (60,430 | ) | (77,215 | ) | (72,170 | ) | (76,926 | ) | (36,045 | ) | ||||||||||
| Retained earnings | 1,028,170 | 1,020,979 | 1,012,675 | 1,003,605 | 1,020,518 | |||||||||||||||
| Treasury stock | (295,802 | ) | (296,492 | ) | (299,243 | ) | (307,081 | ) | (307,401 | ) | ||||||||||
| Total shareholders’ equity | 899,624 | 875,720 | 871,554 | 854,713 | 911,348 | |||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,313,707 | $ | 10,360,739 | $ | 10,319,454 | $ | 10,276,241 | $ | 10,227,154 | ||||||||||
7
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
| Three months ended | Year ended | Three months ended | ||||||||||||||||||||||||||||||||||
| December 31, 2007 | December 31, 2006 | December 31, 2006 | ||||||||||||||||||||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 175,164 | $ | 186,029 | $ | 175,735 | ||||||||||||||||||||||||||||||
| Investment securities and federal funds sold: | ||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and U.S. Government agency obligations (taxable) | 1,977,627 | 22,949 | 4.60 | % | 2,050,736 | 81,207 | 3.96 | % | 1,996,290 | 20,246 | 4.02 | % | ||||||||||||||||||||||||
| Obligations of states and political subdivisions (tax exempt) | 276,989 | 4,249 | 6.09 | % | 114,548 | 7,390 | 6.45 | % | 163,815 | 2,448 | 5.93 | % | ||||||||||||||||||||||||
| Other securities and federal funds sold | 240,359 | 4,154 | 6.86 | % | 250,221 | 15,264 | 6.10 | % | 250,774 | 3,987 | 6.31 | % | ||||||||||||||||||||||||
| Total investment securities and federal funds sold | 2,494,975 | 31,352 | 4.99 | % | 2,415,505 | 103,861 | 4.30 | % | 2,410,879 | 26,681 | 4.39 | % | ||||||||||||||||||||||||
| Loans held for sale | 46,752 | 760 | 6.45 | % | 47,449 | 3,153 | 6.65 | % | 45,772 | 743 | 6.44 | % | ||||||||||||||||||||||||
| Loans | 6,951,544 | 127,343 | 7.27 | % | 6,798,338 | 499,746 | 7.35 | % | 6,917,572 | 130,973 | 7.51 | % | ||||||||||||||||||||||||
| Total earning assets | 9,493,271 | 159,455 | 6.66 | % | 9,261,292 | 606,760 | 6.55 | % | 9,374,223 | 158,397 | 6.70 | % | ||||||||||||||||||||||||
| Allowance for loan losses | (92,667 | ) | (88,020 | ) | (88,175 | ) | ||||||||||||||||||||||||||||||
| Other assets | 737,939 | 770,714 | 765,371 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 10,313,707 | $ | 10,130,015 | $ | 10,227,154 | ||||||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||
| Demand - non-interest bearing | $ | 1,435,358 | — | — | $ | 1,434,539 | — | — | $ | 1,413,682 | — | — | ||||||||||||||||||||||||
| Demand — interest bearing | 699,675 | 1,352 | 0.77 | % | 818,735 | 9,217 | 1.13 | % | 767,430 | 2,031 | 1.05 | % | ||||||||||||||||||||||||
| Savings and money market accounts | 2,262,818 | 12,667 | 2.22 | % | 2,271,654 | 50,083 | 2.20 | % | 2,267,268 | 14,068 | 2.46 | % | ||||||||||||||||||||||||
| Certificates and other time deposits | 2,941,976 | 35,290 | 4.76 | % | 2,859,218 | 123,877 | 4.33 | % | 2,991,951 | 35,569 | 4.72 | % | ||||||||||||||||||||||||
| Total deposits | 7,339,827 | 49,309 | 2.67 | % | 7,384,146 | 183,177 | 2.48 | % | 7,440,331 | 51,668 | 2.76 | % | ||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 1,517,241 | 16,994 | 4.44 | % | 1,283,951 | 56,151 | 4.37 | % | 1,269,873 | 15,393 | 4.81 | % | ||||||||||||||||||||||||
| Wholesale borrowings | 369,685 | 5,505 | 5.91 | % | 404,723 | 24,140 | 5.96 | % | 446,950 | 6,834 | 6.07 | % | ||||||||||||||||||||||||
| Total interest bearing liabilities | 7,791,395 | 71,808 | 3.66 | % | 7,638,281 | 263,468 | 3.45 | % | 7,743,472 | 73,895 | 3.79 | % | ||||||||||||||||||||||||
| Other liabilities | 187,330 | 167,266 | 158,652 | |||||||||||||||||||||||||||||||||
| Shareholders’ equity | 899,624 | 889,929 | 911,348 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 10,313,707 | $ | 10,130,015 | $ | 10,227,154 | ||||||||||||||||||||||||||||||
| Net yield on earning assets | $ | 9,493,271 | 87,647 | 3.66 | % | $ | 9,261,292 | 343,292 | 3.71 | % | $ | 9,374,223 | 84,502 | 3.58 | % | |||||||||||||||||||||
| Interest rate spread | 3.00 | % | 3.10 | % | 2.92 | % | ||||||||||||||||||||||||||||||
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.
8
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
| Twelve months ended | Twelve months ended | |||||||||||||||||||||||
| December 31, 2007 | December 31, 2006 | |||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
| Cash and due from banks | $ | 178,164 | 186,029 | |||||||||||||||||||||
| Investment securities and federal funds sold: | ||||||||||||||||||||||||
| U.S. Treasury securities and U.S. Government agency obligations (taxable) | 1,955,049 | 85,544 | 4.38 | % | 2,050,736 | 81,207 | 3.96 | % | ||||||||||||||||
| Obligations of states and political subdivisions (tax exempt) | 255,461 | 15,595 | 6.10 | % | 114,548 | 7,390 | 6.45 | % | ||||||||||||||||
| Other securities and federal funds sold | 244,749 | 17,127 | 7.00 | % | 250,221 | 15,264 | 6.10 | % | ||||||||||||||||
| Total investment securities and federal funds sold | 2,455,259 | 118,266 | 4.82 | % | 2,415,505 | 103,861 | 4.30 | % | ||||||||||||||||
| Loans held for sale | 56,036 | 3,050 | 5.44 | % | 47,449 | 3,153 | 6.65 | % | ||||||||||||||||
| Loans | 6,971,464 | 521,172 | 7.48 | % | 6,798,338 | 499,746 | 7.35 | % | ||||||||||||||||
| Total earning assets | 9,482,759 | 642,488 | 6.78 | % | 9,261,292 | 606,760 | 6.55 | % | ||||||||||||||||
| Allowance for loan losses | (92,662 | ) | (88,020 | ) | ||||||||||||||||||||
| Other assets | 750,527 | 770,714 | ||||||||||||||||||||||
| Total assets | $ | 10,318,788 | 10,130,015 | |||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Demand — non-interest bearing | $ | 1,408,726 | — | — | 1,434,539 | — | — | |||||||||||||||||
| Demand — interest bearing | 733,410 | 6,824 | 0.93 | % | 818,735 | 9,217 | 1.13 | % | ||||||||||||||||
| Savings and money market accounts | 2,266,070 | 54,166 | 2.39 | % | 2,271,654 | 50,083 | 2.20 | % | ||||||||||||||||
| Certificates and other time deposits | 3,045,715 | 146,559 | 4.81 | % | 2,859,218 | 123,877 | 4.33 | % | ||||||||||||||||
| Total deposits | 7,453,921 | 207,549 | 2.78 | % | 7,384,146 | 183,177 | 2.48 | % | ||||||||||||||||
| Securities sold under agreements to repurchase | 1,471,785 | 71,298 | 4.84 | % | 1,283,951 | 56,151 | 4.37 | % | ||||||||||||||||
| Wholesale borrowings | 326,460 | 20,601 | 6.31 | % | 404,723 | 24,140 | 5.96 | % | ||||||||||||||||
| Total interest bearing liabilities | 7,843,440 | 299,448 | 3.82 | % | 7,638,281 | 263,468 | 3.45 | % | ||||||||||||||||
| Other liabilities | 191,096 | 167,266 | ||||||||||||||||||||||
| Shareholders’ equity | 875,526 | 889,929 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 10,318,788 | 10,130,015 | |||||||||||||||||||||
| Net yield on earning assets | $ | 9,482,759 | 343,040 | 3.62 | % | 9,261,292 | 343,292 | 3.71 | % | |||||||||||||||
| Interest rate spread | 2.96 | % | 3.10 | % | ||||||||||||||||||||
| Note: | Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis. | |
| Nonaccrual loans have been included in the average balances. |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands except per share data)
(In thousands except per share data)
| Quarters ended | Twelve months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Interest income: | ||||||||||||||||
| Interest and fees on loans, including held for sale | $ | 128,078 | $ | 131,683 | $ | 524,103 | $ | 502,763 | ||||||||
| Interest and dividends on investment securities and federal funds sold | 29,891 | 25,795 | 112,891 | 101,078 | ||||||||||||
| Total interest income | 157,969 | 157,478 | 636,994 | 603,841 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Interest on deposits: | ||||||||||||||||
| Demand-interest bearing | 1,352 | 2,031 | 6,824 | 9,217 | ||||||||||||
| Savings and money market accounts | 12,667 | 14,068 | 54,166 | 50,083 | ||||||||||||
| Certificates and other time deposits | 35,290 | 35,569 | 146,559 | 123,877 | ||||||||||||
| Interest on securities sold under agreements to repurchase | 16,994 | 15,393 | 71,298 | 56,151 | ||||||||||||
| Interest on wholesale borrowings | 5,505 | 6,834 | 20,601 | 24,140 | ||||||||||||
| Total interest expense | 71,808 | 73,895 | 299,448 | 263,468 | ||||||||||||
| Net interest income | 86,161 | 83,583 | 337,546 | 340,373 | ||||||||||||
| Provision for loan losses | 9,334 | 44,235 | 30,835 | 76,112 | ||||||||||||
| Net interest income after provision for loan losses | 76,827 | 39,348 | 306,711 | 264,261 | ||||||||||||
| Other income: | ||||||||||||||||
| Trust department income | 5,896 | 5,794 | 23,245 | 22,653 | ||||||||||||
| Service charges on deposits | 17,067 | 18,198 | 67,374 | 71,524 | ||||||||||||
| Credit card fees | 12,012 | 11,325 | 46,502 | 44,725 | ||||||||||||
| ATM and other service fees | 3,055 | 3,135 | 12,621 | 12,817 | ||||||||||||
| Bank owned life insurance income | 3,283 | 3,001 | 13,476 | 14,339 | ||||||||||||
| Investment services and insurance | 3,121 | 2,011 | 11,241 | 9,820 | ||||||||||||
| Investment securities gains, net | 1,122 | — | 1,123 | 22 | ||||||||||||
| Loan sales and servicing income | 1,551 | 1,504 | 10,311 | 7,513 | ||||||||||||
| Other operating income | 2,886 | 3,364 | 11,030 | 11,735 | ||||||||||||
| Total other income | 49,993 | 48,332 | 196,923 | 195,148 | ||||||||||||
| Other expenses: | ||||||||||||||||
| Salaries, wages, pension and employee benefits | 43,087 | 43,700 | 170,457 | 176,700 | ||||||||||||
| Net occupancy expense | 6,284 | 6,143 | 25,679 | 24,814 | ||||||||||||
| Equipment expense | 2,886 | 3,030 | 11,779 | 11,999 | ||||||||||||
| Stationery, supplies and postage | 2,388 | 2,633 | 9,436 | 9,912 | ||||||||||||
| Bankcard, loan processing and other costs | 7,482 | 7,508 | 29,781 | 28,211 | ||||||||||||
| Professional services | 3,588 | 5,000 | 15,865 | 16,971 | ||||||||||||
| Amortization of intangibles | 222 | 222 | 889 | 889 | ||||||||||||
| Other operating expense | 17,358 | 15,751 | 66,340 | 58,591 | ||||||||||||
| Total other expenses | 83,295 | 83,987 | 330,226 | 328,087 | ||||||||||||
| Income before federal income tax expense | 43,525 | 3,693 | 173,408 | 131,322 | ||||||||||||
| Federal income tax expense | 12,066 | (2,424 | ) | 50,381 | 36,376 | |||||||||||
| Net income | $ | 31,459 | $ | 6,117 | $ | 123,027 | $ | 94,946 | ||||||||
| Other comprehensive income (loss), net of taxes | ||||||||||||||||
| Unrealized securities’ holding gain (loss), net of taxes | $ | 11,271 | $ | 2,516 | $ | 22,716 | $ | 7,984 | ||||||||
| Unrealized hedging gain (loss), net of taxes | (340 | ) | — | (1,249 | ) | (747 | ) | |||||||||
| Minimum pension liability adjustment, net of taxes | 874 | (43,881 | ) | 3,495 | (2,559 | ) | ||||||||||
| Less: reclassification adjustment for securities’ gains losses realized in net income, net of taxes | 729 | — | 730 | 14 | ||||||||||||
| Total other comprehensive income (loss), net of taxes | 11,076 | (41,365 | ) | 24,232 | 4,664 | |||||||||||
| Comprehensive income | $ | 42,535 | $ | (35,248 | ) | $ | 147,259 | $ | 99,610 | |||||||
| Net income applicable to common shares | $ | 31,459 | $ | 6,117 | $ | 123,027 | $ | 94,946 | ||||||||
| Net income used in diluted EPS calculation | $ | 31,463 | $ | 6,121 | $ | 123,043 | $ | 94,964 | ||||||||
| Weighted average number of common shares outstanding — basic | 80,477 | 80,091 | 80,372 | 80,128 | ||||||||||||
| Weighted average number of common shares outstanding — diluted | 80,595 | 80,316 | 80,510 | 80,352 | ||||||||||||
| Basic earnings per share | $ | 0.39 | $ | 0.07 | $ | 1.53 | $ | 1.18 | ||||||||
| Diluted earnings per share | $ | 0.39 | $ | 0.07 | $ | 1.53 | $ | 1.18 | ||||||||
| Dividend per share | $ | 0.29 | $ | 0.29 | $ | 1.16 | $ | 1.14 | ||||||||
10
| FIRSTMERIT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME—LINKED QUARTERS | |
(Unaudited)
(Dollars in thousands, except share data)
(Dollars in thousands, except share data)
| Quarterly Results | ||||||||||||||||||||
| 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
| 4th Q | 3rd Q | 2nd Q | 1st Q | 4th Q | ||||||||||||||||
| Interest and fees on loans, including held for sale | $ | 128,078 | $ | 133,860 | $ | 132,076 | $ | 130,089 | $ | 131,683 | ||||||||||
| Interest and dividends — securities and federal funds sold | 29,891 | 28,771 | 27,383 | 26,846 | 25,795 | |||||||||||||||
| Total interest income | 157,969 | 162,631 | 159,459 | 156,935 | 157,478 | |||||||||||||||
| Interest on deposits: | ||||||||||||||||||||
| Demand-interest bearing | 1,352 | 1,677 | 1,876 | 1,919 | 2,031 | |||||||||||||||
| Savings and money market accounts | 12,667 | 13,501 | 13,992 | 14,006 | 14,068 | |||||||||||||||
| Certificates and other time deposits | 35,290 | 38,464 | 36,725 | 36,080 | 35,569 | |||||||||||||||
| Securities sold under agreements to repurchase | 16,994 | 19,514 | 18,005 | 16,785 | 15,393 | |||||||||||||||
| Wholesale borrowings | 5,505 | 4,321 | 4,636 | 6,139 | 6,834 | |||||||||||||||
| Total interest expense | �� | 71,808 | 77,477 | 75,234 | 74,929 | 73,895 | ||||||||||||||
| Net interest income | 86,161 | 85,154 | 84,225 | 82,006 | 83,583 | |||||||||||||||
| Provision for loan losses | 9,334 | 7,324 | 9,967 | 4,210 | 44,235 | |||||||||||||||
| Net interest income after provision for loan losses | 76,827 | 77,830 | 74,258 | 77,796 | 39,348 | |||||||||||||||
| Other income: | ||||||||||||||||||||
| Trust department income | 5,896 | 5,657 | 6,096 | 5,596 | 5,794 | |||||||||||||||
| Service charges on deposits | 17,067 | 17,003 | 17,055 | 16,249 | 18,198 | |||||||||||||||
| Credit card fees | 12,012 | 11,679 | 11,712 | 11,099 | 11,325 | |||||||||||||||
| ATM and other service fees | 3,055 | 3,306 | 3,189 | 3,071 | 3,135 | |||||||||||||||
| Bank owned life insurance income | 3,283 | 3,735 | 3,290 | 3,168 | 3,001 | |||||||||||||||
| Investment services and insurance | 3,121 | 3,007 | 2,660 | 2,453 | 2,011 | |||||||||||||||
| Investment securities gains (losses), net | 1,122 | — | 1 | — | — | |||||||||||||||
| Loan sales and servicing income | 1,551 | 1,411 | 1,911 | 5,438 | 1,504 | |||||||||||||||
| Other operating income | 2,886 | 3,326 | 3,016 | 1,802 | 3,364 | |||||||||||||||
| Total other income | 49,993 | 49,124 | 48,930 | 48,876 | 48,332 | |||||||||||||||
| Other expenses: | ||||||||||||||||||||
| Salaries, wages, pension and employee benefits | 43,087 | 41,332 | 43,538 | 42,500 | 43,700 | |||||||||||||||
| Net occupancy expense | 6,284 | 6,188 | 6,521 | 6,686 | 6,143 | |||||||||||||||
| Equipment expense | 2,886 | 2,958 | 2,851 | 3,084 | 3,030 | |||||||||||||||
| Stationery, supplies and postage | 2,388 | 2,463 | 2,252 | 2,333 | 2,633 | |||||||||||||||
| Bankcard, loan processing and other costs | 7,482 | 7,222 | 7,607 | 7,470 | 7,508 | |||||||||||||||
| Professional services | 3,588 | 2,923 | 4,525 | 4,829 | 5,000 | |||||||||||||||
| Amortization of intangibles | 222 | 222 | 222 | 223 | 222 | |||||||||||||||
| Other operating expense | 17,358 | 20,722 | 13,859 | 14,401 | 15,751 | |||||||||||||||
| Total other expenses | 83,295 | 84,030 | 81,375 | 81,526 | 83,987 | |||||||||||||||
| Income before income tax expense | 43,525 | 42,924 | 41,813 | 45,146 | 3,693 | |||||||||||||||
| Federal income taxes | 12,066 | 12,662 | 11,928 | 13,725 | (2,424 | ) | ||||||||||||||
| Net income | $ | 31,459 | $ | 30,262 | $ | 29,885 | $ | 31,421 | $ | 6,117 | ||||||||||
| Other comprehensive income (loss), net of taxes | 11,076 | 15,721 | (10,745 | ) | 8,180 | (41,365 | ) | |||||||||||||
| Comprehensive income | $ | 42,535 | $ | 45,983 | $ | 19,140 | $ | 39,601 | $ | (35,248 | ) | |||||||||
| Net income applicable to common shares | 31,459 | 30,262 | 29,885 | 31,421 | 6,117 | |||||||||||||||
| Adjusted net income used in diluted EPS calculation | 31,463 | 30,266 | 29,889 | 31,425 | 6,121 | |||||||||||||||
| Weighted-average common shares — basic | 80,477 | 80,467 | 80,426 | 80,113 | 80,091 | |||||||||||||||
| Weighted-average common shares — diluted | 80,595 | 80,561 | 80,570 | 80,298 | 80,316 | |||||||||||||||
| Basic net income per share | $ | 0.39 | $ | 0.38 | $ | 0.37 | $ | 0.39 | $ | 0.07 | ||||||||||
| Diluted net income per share | $ | 0.39 | $ | 0.38 | $ | 0.37 | $ | 0.39 | $ | 0.07 | ||||||||||
11
| FIRSTMERIT CORPORATION AND SUBSIDIARIES ASSET QUALITY INFORMATION | |
(Unaudited, except December 31, 2006 annual period which
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
| Quarterly Periods | Annual Period | |||||||||||||||||||||||
| Dec 31 | Sept 30 | June 30 | Mar 31 | Dec 31 | Dec 31 | |||||||||||||||||||
| 2007 | 2007 | 2007 | 2007 | 2006 | 2006 | |||||||||||||||||||
Allowance for Credit Losses | ||||||||||||||||||||||||
| Allowance for loan losses, beginning of period | $ | 93,811 | $ | 94,432 | $ | 92,045 | $ | 91,342 | $ | 88,755 | $ | 90,661 | ||||||||||||
| Allowance related to loans held for sale | — | — | — | — | (23,089 | ) | (23,089 | ) | ||||||||||||||||
| Provision for loan losses | 9,334 | 7,324 | 9,967 | 4,210 | 44,235 | 76,112 | ||||||||||||||||||
| Charge-offs | 11,768 | 12,347 | 10,609 | 9,424 | 22,323 | 70,728 | ||||||||||||||||||
| Recoveries | 2,828 | 4,402 | 3,029 | 5,917 | 3,764 | 18,386 | ||||||||||||||||||
| Net charge-offs | 8,940 | 7,945 | 7,580 | 3,507 | 18,559 | 52,342 | ||||||||||||||||||
| Allowance for loan losses, end of period | $ | 94,205 | $ | 93,811 | $ | 94,432 | $ | 92,045 | $ | 91,342 | $ | 91,342 | ||||||||||||
| Reserve for unfunded lending commitments, beginning of period | $ | 7,409 | $ | 6,553 | $ | 6,746 | $ | 6,294 | $ | 6,307 | $ | 6,072 | ||||||||||||
| Provision for credit losses | (15 | ) | 856 | (193 | ) | 452 | (13 | ) | 222 | |||||||||||||||
| Reserve for unfunded lending commitments, end of period | $ | 7,394 | $ | 7,409 | $ | 6,553 | $ | 6,746 | $ | 6,294 | $ | 6,294 | ||||||||||||
| Allowance for Credit Losses | $ | 101,599 | $ | 101,220 | $ | 100,985 | $ | 98,791 | $ | 97,636 | $ | 97,636 | ||||||||||||
Ratios | ||||||||||||||||||||||||
| Provision for loan losses as a % of average loans | 0.53 | % | 0.41 | % | 0.57 | % | 0.25 | % | 2.54 | % | 1.12 | % | ||||||||||||
| Provision for credit losses as a % of average loans | 0.00 | % | 0.05 | % | -0.01 | % | 0.03 | % | 0.00 | % | 0.00 | % | ||||||||||||
| Net charge-offs as a % of average loans | 0.51 | % | 0.45 | % | 0.43 | % | 0.21 | % | 1.06 | % | 0.77 | % | ||||||||||||
| Net charge-offs and allowance related to loans held for sale as a % of average loans | 0.51 | % | 0.45 | % | 0.43 | % | 0.21 | % | 1.40 | % | 1.11 | % | ||||||||||||
| Allowance for loan losses as a % of period-end loans | 1.35 | % | 1.34 | % | 1.34 | % | 1.32 | % | 1.33 | % | 1.33 | % | ||||||||||||
| Allowance for credit losses as a % of period-end loans | 1.45 | % | 1.44 | % | 1.43 | % | 1.42 | % | 1.42 | % | 1.42 | % | ||||||||||||
| Allowance for loan losses as a % of nonperforming loans | 299.70 | % | 314.22 | % | 295.08 | % | 331.93 | % | 168.03 | % | 168.03 | % | ||||||||||||
| Allowance for credit losses as a % of nonperforming loans | 323.22 | % | 339.04 | % | 315.56 | % | 356.26 | % | 179.60 | % | 179.60 | % | ||||||||||||
Asset Quality | ||||||||||||||||||||||||
| Impaired loans: | ||||||||||||||||||||||||
| Nonaccrual | $ | 21,513 | $ | 20,165 | $ | 20,877 | $ | 17,049 | $ | 45,045 | $ | 45,045 | ||||||||||||
| Other nonperforming loans: | ||||||||||||||||||||||||
| Nonaccrual | 9,920 | 9,690 | 11,125 | 10,681 | 9,317 | 9,317 | ||||||||||||||||||
| Total nonperforming loans | 31,433 | 29,855 | 32,002 | 27,730 | 54,362 | 54,362 | ||||||||||||||||||
| Other real estate (“ORE”) | 5,829 | 4,344 | 5,036 | 4,934 | 9,815 | 9,815 | ||||||||||||||||||
| Total nonperforming assets (“NPAs”) | $ | 37,262 | $ | 34,199 | $ | 37,038 | $ | 32,664 | $ | 64,177 | $ | 64,177 | ||||||||||||
| NPAs as % of period-end loans + ORE | 0.53 | % | 0.49 | % | 0.52 | % | 0.47 | % | 0.93 | % | 0.93 | % | ||||||||||||
| Past due 90 days or more & accruing interest | $ | 11,702 | $ | 13,107 | $ | 10,536 | $ | 15,209 | $ | 16,860 | $ | 16,860 | ||||||||||||
12
| FIRSTMERIT CORPORATION NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL | |
(Unaudited)
(Dollars in thousands)
(Dollars in thousands)
| 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||
QUARTERLY OTHER INCOME DETAIL | ||||||||||||||||||||
| Trust department income | $ | 5,896 | $ | 5,657 | $ | 6,096 | $ | 5,596 | $ | 5,794 | ||||||||||
| Service charges on deposits | 17,067 | 17,003 | 17,055 | 16,249 | 18,198 | |||||||||||||||
| Credit card fees | 12,012 | 11,679 | 11,712 | 11,099 | 11,325 | |||||||||||||||
| ATM and other service fees | 3,055 | 3,306 | 3,189 | 3,071 | 3,135 | |||||||||||||||
| Bank owned life insurance income | 3,283 | 3,735 | 3,290 | 3,168 | 3,001 | |||||||||||||||
| Investment services and insurance | 3,121 | 3,007 | 2,660 | 2,453 | 2,011 | |||||||||||||||
| Investment securities gains (losses), net | 1,122 | — | 1 | — | — | |||||||||||||||
| Loan sales and servicing income | 1,551 | 1,411 | 1,911 | 5,438 | 1,504 | |||||||||||||||
| Other operating income | 2,886 | 3,326 | 3,016 | 1,802 | 3,364 | |||||||||||||||
| Total Other Income | $ | 49,993 | $ | 49,124 | $ | 48,930 | $ | 48,876 | $ | 48,332 | ||||||||||
| 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||
QUARTERLY OTHER EXPENSES DETAIL | ||||||||||||||||||||
| Salaries, wages, pension and employee benefits | $ | 43,087 | $ | 41,332 | $ | 43,538 | $ | 42,500 | $ | 43,700 | ||||||||||
| Net occupancy expense | 6,284 | 6,188 | 6,521 | 6,686 | 6,143 | |||||||||||||||
| Equipment expense | 2,886 | 2,958 | 2,851 | 3,084 | 3,030 | |||||||||||||||
| Taxes, other than federal income taxes | 1,274 | 1,984 | 1,655 | 1,662 | 1,753 | |||||||||||||||
| Stationery, supplies and postage | 2,388 | 2,463 | 2,252 | 2,333 | 2,633 | |||||||||||||||
| Bankcard, loan processing and other costs | 7,482 | 7,222 | 7,607 | 7,470 | 7,508 | |||||||||||||||
| Advertising | 2,989 | 3,332 | 1,260 | 1,420 | 798 | |||||||||||||||
| Professional services | 3,588 | 2,923 | 4,525 | 4,829 | 5,000 | |||||||||||||||
| Telephone | 1,006 | 1,142 | 1,094 | 1,120 | 1,362 | |||||||||||||||
| Amortization of intangibles | 222 | 222 | 222 | 223 | 222 | |||||||||||||||
| Other operating expense | 12,089 | 14,264 | 9,850 | 10,199 | 11,838 | |||||||||||||||
| Total Other Expenses | $ | 83,295 | $ | 84,030 | $ | 81,375 | $ | 81,526 | $ | 83,987 | ||||||||||
13
| FIRSTMERIT CORPORATION AND SUBSIDIARIES ALLOWANCE FOR LOAN LOSSES — Net Charge-off Detail | |
(Unaudited)
(Dollars in thousands)
(Dollars in thousands)
| Quarters ended | Year ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Allowance for loan losses — beginning of period | $ | 93,811 | 88,755 | 91,342 | 90,661 | |||||||||||
| Loans charged off: | ||||||||||||||||
| Commercial | 2,969 | 9,745 | 7,856 | 32,628 | ||||||||||||
| Mortgage | 958 | 513 | 5,026 | 1,670 | ||||||||||||
| Installment | 4,745 | 5,296 | 18,343 | 20,682 | ||||||||||||
| Home equity | 758 | 969 | 4,151 | 3,847 | ||||||||||||
| Credit cards | 2,104 | 2,254 | 8,497 | 8,294 | ||||||||||||
| Leases | — | 3,546 | 41 | 3,607 | ||||||||||||
| Overdrafts | 234 | — | 234 | — | ||||||||||||
| Total | 11,768 | 22,323 | 44,148 | 70,728 | ||||||||||||
| Recoveries: | ||||||||||||||||
| Commercial | 357 | 786 | 4,351 | 3,734 | ||||||||||||
| Mortgage | 36 | 47 | 44 | 142 | ||||||||||||
| Installment | 1,705 | 2,010 | 8,021 | 10,340 | ||||||||||||
| Home equity | 182 | 275 | 1,265 | 1,293 | ||||||||||||
| Credit cards | 390 | 504 | 1,842 | 2,123 | ||||||||||||
| Manufactured housing | 71 | 79 | 323 | 451 | ||||||||||||
| Leases | 43 | 63 | 286 | 303 | ||||||||||||
| Overdrafts | 44 | — | 44 | — | ||||||||||||
| Total | 2,828 | 3,764 | 16,176 | 18,386 | ||||||||||||
| Net charge-offs | 8,940 | 18,559 | 27,972 | 52,342 | ||||||||||||
| Provision for loan losses | 9,334 | 44,235 | 30,835 | 76,112 | ||||||||||||
| Allowance related to loans held for sale | — | (23,089 | ) | — | (23,089 | ) | ||||||||||
| Allowance for loan losses — end of period | $ | 94,205 | 91,342 | 94,205 | 91,342 | |||||||||||
| Average loans outstanding | $ | 6,951,544 | 6,917,572 | 6,971,464 | 6,798,338 | |||||||||||
| Ratio to average loans: | ||||||||||||||||
| (Annualized) net charge-offs | 0.51 | % | 1.06 | % | 0.40 | % | 0.77 | % | ||||||||
| (Annualized) net charge-offs and allowance related to loans held for sale | 0.51 | % | 1.40 | % | 0.40 | % | 1.11 | % | ||||||||
| Provision for loan losses | 0.53 | % | 2.54 | % | 0.44 | % | 1.12 | % | ||||||||
| Loans outstanding — period-end | $ | 7,001,886 | 6,878,873 | 7,001,886 | 6,878,873 | |||||||||||
| Allowance for credit losses: | 101,599 | 97,636 | 101,599 | 97,636 | ||||||||||||
| As a multiple of (annualized) net charge-offs | 2.86 | 1.33 | 3.63 | 1.87 | ||||||||||||
| As a multiple of (annualized) net charge-offs and allowance related to loans held for sale | 2.86 | 1.01 | 3.63 | 1.29 | ||||||||||||
| Allowance for loan losses: | ||||||||||||||||
| As a percent of period-end loans outstanding | 1.35 | % | 1.33 | % | 1.35 | % | 1.33 | % | ||||||||
| As a multiple of (annualized) net charge-offs | 2.66 | 1.24 | 3.37 | 1.75 | ||||||||||||
| As a multiple of (annualized) net charge-offs and allowance related to loans held for sale | 2.66 | 0.94 | 3.37 | 1.21 | ||||||||||||
14