Exhibit 99.1
2008 Financial Information First 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 |
(Fully-tax Equivalent Interest Rates and Interest Differential) | | |
| | | |
| Consolidated Statements of Income and Comprehensive Income | | Page 9 |
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| Consolidated Statements of Income and Comprehensive Income | | Page 10 |
(Linked Quarters) | | |
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| Asset Quality Information | | Page 11 |
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| Noninterest Income and Noninterest Expense Detail | | Page 12 |
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| Allowance for Loan Losses — Net Charge-off Detail | | Page 13 |
FirstMerit Corporation
III Cascade Plaza
Akron, Ohio 44308
Corporate Communications and Investor Relations
Thomas P. O’Malley
p.330-384-7109
FOR IMMEDIATE RELEASE
FirstMerit Corporation
Analysts/Media Contact: Thomas O’Malley
Director Corporate Communications/Investor Relations Officer
Phone: 330.384.7109
FirstMerit Reports First Quarter 2008 EPS Results of $0.39 per share
Akron, Ohio (April 22, 2008) — FirstMerit Corporation (Nasdaq: FMER) today announced first quarter 2008 net income of $31.4 million, or $0.39 per diluted share. This compares with $31.5 million, or $0.39 per diluted share, for the fourth quarter 2007 and $31.4 million, or $0.39 per diluted share, for the first quarter 2007.
Returns on average common equity (“ROE”) and average assets (“ROA”) for the first quarter 2008 were 13.56% and 1.22%, respectively, compared with 13.87% and 1.21% for the fourth quarter 2007 and 14.91% and 1.24% for the first quarter 2007.
“Revenue growth, expense control and credit quality performance in line with our expectations highlight our financial results. FirstMerit is positioned to profitably grow its balance sheet by winning new business and deepening existing customer relationships. We will execute our super community banking model with an aggressive sales approach tempered by our enhanced credit discipline,” said Paul G. Greig, Chairman and Chief Executive Officer of FirstMerit Corporation.
“Commercial lending activity supported asset growth this quarter while increases in both our capital levels and allowances for loan and credit losses further solidified the strength of our balance sheet.” Mr. Greig continued, “Our capital and reserve coverage provide our Company with a strong base for continued growth.”
Net interest margin was 3.60% for the first quarter of 2008 compared with 3.66% for the fourth quarter of 2007 and 3.58% for the first quarter of 2007. The Company reduced its funding costs compared with the fourth quarter of 2007 and the first quarter of 2007 due to declining average daily balances on higher cost deposits along with lower liability pricing from a falling interest rate environment. The lower liability costs did not fully mitigate corresponding lower loan yields compared with the fourth quarter of 2007 based on the timing and magnitude of Federal Reserve interest rate activity. During the first quarter of 2008 the Company increased its average core deposits, which excludes time deposits, by $70.0 million, or 1.59%, compared with the fourth quarter of 2007, and $37.2 million, or 0.84%, compared with the first quarter of 2007.
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FirstMerit Reports First Quarter 2008 EPS Results — 2
The mix shift in the Company’s deposit composition to a higher concentration of core deposits contributed to lower funding costs and provided a partial offset to decreased average earning asset yields in the first quarter of 2008. The Company’s investment portfolio yield decreased in the first quarter of 2008, to 4.91%, compared with 4.99% in the fourth quarter of 2007, and increased from 4.68% in the first quarter of 2007. The increased investment portfolio yields compared with the first quarter of 2007 positively impacted the year-over-year increase in the net interest margin.
Net interest income on a fully tax-equivalent (“FTE”) basis was $85.7 million in the first quarter 2008 compared with $87.6 million in the fourth quarter of 2007 and $83.2 million in the first quarter of 2007. The decrease in FTE net interest income compared with the fourth quarter 2007 resulted from contraction in the net interest margin, due to declining spreads on earning assets from the impact of three Federal Reserve Open Market Committee interest rate cuts totaling 200 basis points and one less day in the quarter. Net interest margin expansion and average earning asset growth led to increased FTE net interest income compared with the first quarter of 2007. Compared with the first quarter of 2007, average earning assets increased $143.7 million, or 1.52%.
Noninterest income net of securities transactions for the first quarter of 2008 was $52.3 million, an increase of $3.5 million, or 7.08%, from the fourth quarter of 2007 and an increase of $3.5 million, or 7.07%, from the first quarter of 2007. Included in noninterest income in the first quarter 2008 is a $7.9 million gain from the partial redemption of Visa, Inc. shares.
The primary changes in other income for the 2008 first quarter as compared to the first quarter of 2007, were as follows: trust department income was $5.5 million, down 2.61% primarily due to declines in the equity markets; service charges on deposits was $14.7 million, down 9.31% primarily attributable to fewer overdraft items and customer preferences to hold larger balances; credit card fees were $11.2 million, an increase of 3.80%; loan sales and servicing income was $1.4 million, a decrease of $0.3 million, primarily attributable to the current mortgage market environment; and bank owned life insurance income was $3.2 million, up 1.04% due to a tax free exchange of policies resulting in higher yields.
Other income, net of securities gains, as a percentage of net revenue for the first quarter of 2008 was 37.91% compared with 35.80% for fourth quarter of 2007 and 37.00% for the first quarter of 2007. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.
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FirstMerit Reports First Quarter 2008 EPS Results — 3
Noninterest expense for the first quarter of 2008 was $81.2 million, a decrease of $2.1 million, or 2.47%, from the fourth quarter of 2007 and a decrease of $0.2 million, or 0.36%, from the first quarter of 2007. For the three months ended March 31, 2008, decreases in operating costs compared to the first quarter 2007 occurred as follows: professional services fell $2.9 million, down 60.92% due in part to the consulting services necessary to remediate Bank Secrecy Act issues incurred in 2007 which were completed during the first quarter of 2008; other operating expense increased $2.4 million, up 16.90% primarily attributable to a litigation accrual and a loss on a joint equity investment.
Net charge-offs totaled $11.3 million, or 0.65% of average loans, in the first quarter of 2008 compared with $8.9 million, or 0.51% of average loans, in the fourth quarter 2007 and $3.5 million, or 0.21% of average loans, in the first quarter of 2007.
Nonperforming assets totaled $35.3 million at March 31, 2008, a decrease of $2.0 million, or 5.26%, compared with December 31, 2007. Nonperforming assets at March 31, 2008 represented 0.50% of period-end loans plus other real estate compared with 0.53% at December 31, 2007.
The allowance for loan losses totaled $94.4 million at March 31, 2008, an increase of $0.2 million from December 31, 2007. At March 31, 2008, the allowance for loan losses was 1.33% of period-end loans compared with 1.35% at December 31, 2007. 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 March 31, 2008 compared with 1.45% at December 31, 2007. The allowance for credit losses to nonperforming loans was 345.59% at March 31, 2008, compared with 323.22% at December 31, 2007.
FirstMerit’s total assets at March 31, 2008 were $10.5 billion, an increase of $116.2 million, or 1.12%, compared with December 31, 2007 and an increase of $169.7 million, or 1.64%, compared with March 31, 2007. Commercial loan growth of $113.7 million, or 2.91%, compared with December 31, 2007, and $220.0 million, or 5.79%, compared with March 31, 2007, provided the overall asset growth over both periods.
Total deposits were $7.4 billion at March 31, 2008, an increase of $90.9 million, or 1.24%, from December 31, 2007 and a decrease of $278.5 million, or 3.62%, from March 31, 2007. The decrease compared with March 31, 2007 was driven by lower large brokered and consumer CDs. Core deposits totaled $4.6 billion at March 31, 2008, an increase of $62.3 million, or 1.38%, from December 31, 2007 and a decrease of $8.8 million, or 0.19%, from March 31, 2007.
Shareholders’ equity was $937 million at March 31, 2008, compared with $917 million at December 31, 2007 and $864 million at March 31, 2007. The Company increased its strong capital position as tangible equity to assets was 7.68% at March 31, 2008, compared with 7.56% and 7.07% at December 31, 2007 and March 31, 2007, respectively. The common dividend per share paid in the first quarter 2008 was $0.29.
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FirstMerit Reports First Quarter 2008 EPS Results — 4
First Quarter 2008 Conference Call
FirstMerit will host an earnings conference call on April 22, 2008, at 2:00 p.m. EDT to provide an overview of first 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: 42926138. A replay of the conference call will be available at approximately 5:00 p.m., on April 22, 2008 through April, 29, 2008, by dialing (800) 642-1687, and entering the PIN: 42926138.
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $10.5 billion as of March 31, 2008 and 159 banking offices and 175 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) | |  |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarters |
| | | 2008 | | 2007 | | 2007 | | 2007 | | 2007 |
| EARNINGS | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr |
| |
| Net interest income FTE (a) | | $ | 85,695 | | | $ | 87,647 | | | $ | 86,582 | | | $ | 85,593 | | | $ | 83,218 | |
| Provision for loan losses | | | 11,521 | | | | 9,334 | | | | 7,324 | | | | 9,967 | | | | 4,210 | |
| Other income | | | 52,854 | | | | 49,993 | | | | 49,124 | | | | 48,930 | | | | 48,876 | |
| Other expenses | | | 81,234 | | | | 83,295 | | | | 84,030 | | | | 81,375 | | | | 81,526 | |
| FTE adjustment (a) | | | 1,396 | | | | 1,486 | | | | 1,428 | | | | 1,368 | | | | 1,212 | |
| Net income | | | 31,443 | | | | 31,459 | | | | 30,262 | | | | 29,885 | | | | 31,421 | |
| Diluted EPS | | | 0.39 | | | | 0.39 | | | | 0.38 | | | | 0.37 | | | | 0.39 | |
| | | | | | | | | | | | | | | | | | | | | |
| PERFORMANCE RATIOS | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (ROA) | | | 1.22 | % | | | 1.21 | % | | | 1.16 | % | | | 1.16 | % | | | 1.24 | % |
| Return on average common equity (ROE) | | | 13.56 | % | | | 13.87 | % | | | 13.71 | % | | | 13.75 | % | | | 14.91 | % |
| Net interest margin FTE (a) | | | 3.60 | % | | | 3.66 | % | | | 3.61 | % | | | 3.62 | % | | | 3.58 | % |
| Efficiency ratio | | | 58.69 | % | | | 60.85 | % | | | 61.76 | % | | | 60.33 | % | | | 61.55 | % |
| Number of full-time equivalent employees | | | 2,676 | | | | 2,688 | | | | 2,704 | | | | 2,725 | | | | 2,751 | |
| | | | | | | | | | | | | | | | | | | | | |
| MARKET DATA | | | | | | | | | | | | | | | | | | | | |
| Book value/common share | | $ | 11.59 | | | $ | 11.39 | | | $ | 11.00 | | | $ | 10.71 | | | $ | 10.78 | |
| Period-end common share mkt value | | | 20.66 | | | | 20.01 | | | | 19.76 | | | | 20.93 | | | | 21.11 | |
| Market as a % of book | | | 178 | % | | | 176 | % | | | 180 | % | | | 195 | % | | | 196 | % |
| Cash dividends/common share | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.29 | |
| Common stock dividend payout ratio | | | 74.36 | % | | | 74.36 | % | | | 76.32 | % | | | 78.38 | % | | | 74.36 | % |
| Average basic common shares | | | 80,655 | | | | 80,477 | | | | 80,467 | | | | 80,426 | | | | 80,113 | |
| Average diluted common shares | | | 80,722 | | | | 80,595 | | | | 80,561 | | | | 80,570 | | | | 80,298 | |
| Period end common shares | | | 80,879 | | | | 80,482 | | | | 80,467 | | | | 80,477 | | | | 80,112 | |
| Common shares repurchased | | | 5,426 | | | | 6,066 | | | | 22,473 | | | | 36,159 | | | | 27,011 | |
| Common stock market capitalization | | $ | 1,670,960 | | | $ | 1,610,445 | | | $ | 1,590,028 | | | $ | 1,684,384 | | | $ | 1,691,164 | |
| | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY | | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 14,669 | | | $ | 11,768 | | | $ | 12,347 | | | $ | 10,609 | | | $ | 9,424 | |
| Net charge-offs | | | 11,315 | | | | 8,940 | | | | 7,945 | | | | 7,580 | | | | 3,507 | |
| Allowance for loan losses | | | 94,411 | | | | 94,205 | | | | 93,811 | | | | 94,432 | | | | 92,045 | |
| Reserve for unfunded lending commitments | | | 7,903 | | | | 7,394 | | | | 7,409 | | | | 6,553 | | | | 6,746 | |
| Nonperforming assets (NPAs) | | | 35,301 | | | | 37,262 | | | | 34,199 | | | | 37,038 | | | | 32,664 | |
| Net charge-offs/average loans ratio | | | 0.65 | % | | | 0.51 | % | | | 0.45 | % | | | 0.43 | % | | | 0.21 | % |
| Allowance for loan losses/period-end loans | | | 1.33 | % | | | 1.35 | % | | | 1.34 | % | | | 1.34 | % | | | 1.32 | % |
| Allowance for credit losses/period-end loans | | | 1.45 | % | | | 1.45 | % | | | 1.44 | % | | | 1.43 | % | | | 1.42 | % |
| NPAs/loans and other real estate | | | 0.50 | % | | | 0.53 | % | | | 0.49 | % | | | 0.52 | % | | | 0.47 | % |
| Allowance for loan losses/nonperforming loans | | | 318.89 | % | | | 299.70 | % | | | 314.22 | % | | | 295.08 | % | | | 331.93 | % |
| Allowance for credit losses/nonperforming loans | | | 345.59 | % | | | 323.22 | % | | | 339.04 | % | | | 315.56 | % | | | 356.26 | % |
| | | | | | | | | | | | | | | | | | | | | |
| CAPITAL & LIQUIDITY | | | | | | | | | | | | | | | | | | | | |
| Period-end tangible equity to assets | | | 7.68 | % | | | 7.56 | % | | | 7.24 | % | | | 7.00 | % | | | 7.07 | % |
| Average equity to assets | | | 8.98 | % | | | 8.72 | % | | | 8.45 | % | | | 8.45 | % | | | 8.32 | % |
| Average equity to loans | | | 13.27 | % | | | 12.94 | % | | | 12.49 | % | | | 12.45 | % | | | 12.35 | % |
| Average loans to deposits | | | 95.82 | % | | | 94.71 | % | | | 93.74 | % | | | 93.18 | % | | | 92.47 | % |
| | | | | | | | | | | | | | | | | | | | | |
| AVERAGE BALANCES | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 10,388,359 | | | $ | 10,313,707 | | | $ | 10,360,739 | | | $ | 10,319,454 | | | $ | 10,276,241 | |
| Deposits | | | 7,330,097 | | | | 7,339,827 | | | | 7,479,960 | | | | 7,515,205 | | | | 7,481,969 | |
| Loans | | | 7,023,928 | | | | 6,951,544 | | | | 7,011,776 | | | | 7,002,750 | | | | 6,918,636 | |
| Earning assets | | | 9,581,121 | | | | 9,493,271 | | | | 9,513,230 | | | | 9,485,819 | | | | 9,437,418 | |
| Shareholders’ equity | | | 932,405 | | | | 899,624 | | | | 875,720 | | | | 871,554 | | | | 854,713 | |
| | | | | | | | | | | | | | | | | | | | | |
| ENDING BALANCES | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 10,516,828 | | | $ | 10,400,666 | | | $ | 10,407,765 | | | $ | 10,429,099 | | | $ | 10,347,121 | |
| Deposits | | | 7,422,678 | | | | 7,331,739 | | | | 7,408,296 | | | | 7,474,466 | | | | 7,701,202 | |
| Loans | | | 7,072,797 | | | | 7,001,886 | | | | 7,014,389 | | | | 7,052,390 | | | | 6,951,631 | |
| Goodwill | | | 139,245 | | | | 139,245 | | | | 139,245 | | | | 139,245 | | | | 139,245 | |
| Intangible assets | | | 1,754 | | | | 1,977 | | | | 2,200 | | | | 2,422 | | | | 2,644 | |
| Earning assets | | | 9,688,270 | | | | 9,509,680 | | | | 9,563,541 | | | | 9,545,752 | | | | 9,447,346 | |
| Total shareholders’ equity | | | 937,439 | | | | 916,977 | | | | 884,877 | | | | 862,265 | | | | 863,641 | |
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
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | |
(In thousands)
(Unaudited, except December 31, 2007, which is derived from the | | March 31, | | | December 31, | | | March 31, | |
| audited financial statements) | | 2008 | | | 2007 | | | 2007 | |
ASSETS | | | | | | | | | | | | |
| Cash and due from banks | | $ | 200,852 | | | $ | 207,335 | | | $ | 242,470 | |
| Investment securities (at fair value) and federal funds sold | | | 2,559,729 | | | | 2,460,453 | | | | 2,447,426 | |
| Loans held for sale | | | 55,744 | | | | 47,341 | | | | 48,289 | |
| Loans: | | | | | | | | | | | | |
| Commercial loans | | | 4,020,155 | | | | 3,906,448 | | | | 3,800,125 | |
| Mortgage loans | | | 575,479 | | | | 577,219 | | | | 598,390 | |
| Installment loans | | | 1,576,517 | | | | 1,598,832 | | | | 1,628,531 | |
| Home equity loans | | | 684,064 | | | | 691,922 | | | | 709,964 | |
| Credit card loans | | | 145,747 | | | | 153,732 | | | | 138,183 | |
| Leases | | | 70,835 | | | | 73,733 | | | | 76,438 | |
| | | | | | | | | | |
| Total loans | | | 7,072,797 | | | | 7,001,886 | | | | 6,951,631 | |
| Less allowance for loan losses | | | (94,411 | ) | | | (94,205 | ) | | | (92,045 | ) |
| | | | | | | | | | |
| Net loans | | | 6,978,386 | | | | 6,907,681 | | | | 6,859,586 | |
| Premises and equipment, net | | | 126,273 | | | | 130,469 | | | | 135,999 | |
| Goodwill | | | 139,245 | | | | 139,245 | | | | 139,245 | |
| Intangible assets | | | 1,754 | | | | 1,977 | | | | 2,644 | |
| Accrued interest receivable and other assets | | | 454,845 | | | | 506,165 | | | | 471,462 | |
| | | | | | | | | | |
| Total assets | | $ | 10,516,828 | | | $ | 10,400,666 | | | $ | 10,347,121 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | |
| Demand-non-interest bearing | | $ | 1,498,107 | | | $ | 1,482,480 | | | $ | 1,463,039 | |
| Demand-interest bearing | | | 703,319 | | | | 727,966 | | | | 779,790 | |
| Savings and money market accounts | | | 2,366,466 | | | | 2,295,147 | | | | 2,333,907 | |
| Certificates and other time deposits | | | 2,854,786 | | | | 2,826,146 | | | | 3,124,466 | |
| | | | | | | | | | |
| Total deposits | | | 7,422,678 | | | | 7,331,739 | | | | 7,701,202 | |
| | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 1,298,145 | | | | 1,256,080 | | | | 1,380,591 | |
| Wholesale borrowings | | | 653,618 | | | | 705,121 | | | | 208,744 | |
| Accrued taxes, expenses, and other liabilities | | | 204,948 | | | | 190,749 | | | | 192,943 | |
| | | | | | | | | | |
| Total liabilities | | | 9,579,389 | | | | 9,483,689 | | | | 9,483,480 | |
| | | | | | | | | | |
| 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 March 31, 2008, December 31, 2007 and March 31, 2007 | | | 127,937 | | | | 127,937 | | | | 127,937 | |
| Capital surplus | | | 91,387 | | | | 100,028 | | | | 108,073 | |
| Accumulated other comprehensive loss | | | (31,576 | ) | | | (43,085 | ) | | | (71,328 | ) |
| Retained earnings | | | 1,035,766 | | | | 1,027,775 | | | | 1,006,207 | |
| Treasury stock, at cost, 11,147,360, 11,543,882 and 11,914,435 shares at March 31, 2008, December 31, 2007 and March 31, 2007, respectively | | | (286,075 | ) | | | (295,678 | ) | | | (307,248 | ) |
| | | | | | | | | | |
| Total shareholders’ equity | | | 937,439 | | | | 916,977 | | | | 863,641 | |
| | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 10,516,828 | | | $ | 10,400,666 | | | $ | 10,347,121 | |
| | | | | | | | | | |
6
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FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Periods | |
| (Unaudited) | | March 31, | | | December 31, | | | September 30, | | | June 30, | | | March 31, | |
| (Dollars in thousands) | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
ASSETS | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 171,028 | | | $ | 175,164 | | | $ | 180,426 | | | $ | 177,524 | | | $ | 179,566 | |
| Investment securities/fed funds sold | | | 2,508,125 | | | | 2,494,975 | | | | 2,455,777 | | | | 2,440,015 | | | | 2,429,539 | |
| Loans held for sale | | | 49,068 | | | | 46,752 | | | | 45,677 | | | | 43,054 | | | | 89,243 | |
| Loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial loans | | | 3,941,573 | | | | 3,839,242 | | | | 3,868,235 | | | | 3,845,395 | | | | 3,749,067 | |
| Mortgage loans | | | 584,000 | | | | 581,370 | | | | 586,911 | | | | 596,758 | | | | 607,602 | |
| Installment loans | | | 1,587,267 | | | | 1,615,035 | | | | 1,640,380 | | | | 1,636,669 | | | | 1,622,324 | |
| Home equity loans | | | 686,603 | | | | 696,259 | | | | 704,499 | | | | 711,113 | | | | 717,806 | |
| Credit card loans | | | 150,575 | | | | 149,466 | | | | 143,312 | | | | 141,294 | | | | 143,853 | |
| Leases | | | 73,910 | | | | 70,172 | | | | 68,439 | | | | 71,521 | | | | 77,984 | |
| | | | | | | | | | | | | | | | |
| Total loans | | | 7,023,928 | | | | 6,951,544 | | | | 7,011,776 | | | | 7,002,750 | | | | 6,918,636 | |
| Less allowance for loan losses | | | 93,804 | | | | 92,667 | | | | 94,393 | | | | 92,298 | | | | 91,256 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loans | | | 6,930,124 | | | | 6,858,877 | | | | 6,917,383 | | | | 6,910,452 | | | | 6,827,380 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 9,581,121 | | | | 9,493,271 | | | | 9,513,230 | | | | 9,485,819 | | | | 9,437,418 | |
| | | | | | | | | | | | | | | | | | | | | |
| Premises and equipment, net | | | 128,185 | | | | 132,129 | | | | 133,303 | | | | 135,255 | | | | 137,530 | |
| Accrued interest receivable and other assets | | | 601,829 | | | | 605,810 | | | | 628,173 | | | | 613,154 | | | | 612,983 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
TOTAL ASSETS | | $ | 10,388,359 | | | $ | 10,313,707 | | | $ | 10,360,739 | | | $ | 10,319,454 | | | $ | 10,276,241 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand-non-interest bearing | | $ | 1,446,889 | | | $ | 1,435,358 | | | $ | 1,400,848 | | | $ | 1,408,827 | | | $ | 1,389,455 | |
| Demand-interest bearing | | | 702,115 | | | | 699,675 | | | | 714,216 | | | | 763,907 | | | | 756,678 | |
| Savings and money market accounts | | | 2,318,899 | | | | 2,262,818 | | | | 2,224,048 | | | | 2,293,567 | | | | 2,284,549 | |
| Certificates and other time deposits | | | 2,862,194 | | | | 2,941,976 | | | | 3,140,848 | | | | 3,048,904 | | | | 3,051,287 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,330,097 | | | | 7,339,827 | | | | 7,479,960 | | | | 7,515,205 | | | | 7,481,969 | |
| | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 1,310,364 | | | | 1,517,241 | | | | 1,555,235 | | | | 1,458,982 | | | | 1,352,961 | |
| Wholesale borrowings | | | 618,572 | | | | 369,685 | | | | 256,356 | | | | 280,914 | | | | 399,638 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total funds | | | 9,259,033 | | | | 9,226,753 | | | | 9,291,551 | | | | 9,255,101 | | | | 9,234,568 | |
| Accrued taxes, expenses and other liabilities | | | 196,921 | | | | 187,330 | | | | 193,468 | | | | 192,799 | | | | 186,960 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 9,455,954 | | | | 9,414,083 | | | | 9,485,019 | | | | 9,447,900 | | | | 9,421,528 | |
| | | | | | | | | | | | | | | | | | | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | |
| Common stock | | | 127,937 | | | | 127,937 | | | | 127,937 | | | | 127,937 | | | | 127,937 | |
| Capital surplus | | | 96,048 | | | | 99,749 | | | | 100,511 | | | | 102,355 | | | | 107,178 | |
| Accumulated other comprehensive (loss) income | | | (32,170 | ) | | | (60,430 | ) | | | (77,215 | ) | | | (72,170 | ) | | | (76,926 | ) |
| Retained earnings | | | 1,032,036 | | | | 1,028,170 | | | | 1,020,979 | | | | 1,012,675 | | | | 1,003,605 | |
| Treasury stock | | | (291,446 | ) | | | (295,802 | ) | | | (296,492 | ) | | | (299,243 | ) | | | (307,081 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total shareholders’ equity | | | 932,405 | | | | 899,624 | | | | 875,720 | | | | 871,554 | | | | 854,713 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 10,388,359 | | | $ | 10,313,707 | | | $ | 10,360,739 | | | $ | 10,319,454 | | | $ | 10,276,241 | |
| | | | | | | | | | | | | | | | |
7
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 | |
| | | March 31, 2008 | | | December 31, 2007 | | | March 31, 2007 | |
| | | Average | | | | | | | Average | | | Average | | | | | | | Average | | | Average | | | | | | | Average | |
| (Dollars in thousands) | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 171,028 | | | | | | | | | | | $ | 178,164 | | | | | | | | | | | $ | 179,566 | | | | | | | | | |
| Investment securities and federal funds sold: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury securities and U.S. Government agency obligations (taxable) | | | 2,004,597 | | | | 23,295 | | | | 4.67 | % | | | 1,955,049 | | | | 85,544 | | | | 4.38 | % | | | 1,955,704 | | | | 20,222 | | | | 4.19 | % |
| Obligations of states and political subdivisions (tax exempt) | | | 280,919 | | | | 4,263 | | | | 6.10 | % | | | 255,461 | | | | 15,595 | | | | 6.10 | % | | | 222,381 | | | | 3,382 | | | | 6.17 | % |
| Other securities and federal funds sold | | | 222,609 | | | | 3,050 | | | | 5.51 | % | | | 244,749 | | | | 17,127 | | | | 7.00 | % | | | 251,454 | | | | 4,421 | | | | 7.13 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total investment securities and federal funds sold | | | 2,508,125 | | | | 30,608 | | | | 4.91 | % | | | 2,455,259 | | | | 118,266 | | | | 4.82 | % | | | 2,429,539 | | | | 28,025 | | | | 4.68 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans held for sale | | | 49,068 | | | | 672 | | | | 5.51 | % | | | 56,036 | | | | 3,050 | | | | 5.44 | % | | | 89,243 | | | | 763 | | | | 3.47 | % |
| Loans | | | 7,023,928 | | | | 115,640 | | | | 6.62 | % | | | 6,971,464 | | | | 521,172 | | | | 7.48 | % | | | 6,918,636 | | | | 129,359 | | | | 7.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 9,581,121 | | | | 146,920 | | | | 6.17 | % | | | 9,482,759 | | | | 642,488 | | | | 6.78 | % | | | 9,437,418 | | | | 158,147 | | | | 6.80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | | (93,804 | ) | | | | | | | | | | | (92,662 | ) | | | | | | | | | | | (91,256 | ) | | | | | | | | |
| Other assets | | | 730,014 | | | | | | | | | | | | 750,527 | | | | | | | | | | | | 750,513 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 10,388,359 | | | | | | | | | | | $ | 10,318,788 | | | | | | | | | | | $ | 10,276,241 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand — non-interest bearing | | $ | 1,446,889 | | | | — | | | | — | | | $ | 1,408,726 | | | | — | | | | — | | | $ | 1,389,455 | | | | — | | | | — | |
| Demand — interest bearing | | | 702,115 | | | | 964 | | | | 0.55 | % | | | 733,410 | | | | 6,824 | | | | 0.93 | % | | | 756,678 | | | | 1,919 | | | | 1.03 | % |
| Savings and money market accounts | | | 2,318,899 | | | | 9,643 | | | | 1.67 | % | | | 2,266,070 | | | | 54,166 | | | | 2.39 | % | | | 2,284,549 | | | | 14,006 | | | | 2.49 | % |
| Certificates and other time deposits | | | 2,862,194 | | | | 31,987 | | | | 4.49 | % | | | 3,045,715 | | | | 146,559 | | | | 4.81 | % | | | 3,051,287 | | | | 36,080 | | | | 4.80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,330,097 | | | | 42,594 | | | | 2.34 | % | | | 7,453,921 | | | | 207,549 | | | | 2.78 | % | | | 7,481,969 | | | | 52,005 | | | | 2.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 1,310,364 | | | | 11,542 | | | | 3.54 | % | | | 1,471,785 | | | | 71,298 | | | | 4.84 | % | | | 1,352,961 | | | | 16,785 | | | | 5.03 | % |
| Wholesale borrowings | | | 618,572 | | | | 7,089 | | | | 4.61 | % | | | 326,460 | | | | 20,601 | | | | 6.31 | % | | | 399,638 | | | | 6,139 | | | | 6.23 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest bearing liabilities | | | 7,812,144 | | | | 61,225 | | | | 3.15 | % | | | 7,843,440 | | | | 299,448 | | | | 3.82 | % | | | 7,845,113 | | | | 74,929 | | | | 3.87 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other liabilities | | | 196,921 | | | | | | | | | | | | 191,096 | | | | | | | | | | | | 186,960 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | | | 932,405 | | | | | | | | | | | | 875,526 | | | | | | | | | | | | 854,713 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 10,388,359 | | | | | | | | | | | $ | 10,318,788 | | | | | | | | | | | $ | 10,276,241 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net yield on earning assets | | $ | 9,581,121 | | | | 85,695 | | | | 3.60 | % | | $ | 9,482,759 | | | | 343,040 | | | | 3.62 | % | | $ | 9,437,418 | | | | 83,218 | | | | 3.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | | | | | 3.02 | % | | | | | | | | | | | 2.96 | % | | | | | | | | | | | 2.93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| 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
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| | | | | | | | | |
| | | Quarters ended | |
| (Unaudited) | | March 31, | |
| (In thousands except per share data) | | 2008 | | | 2007 | |
| Interest income: | | | | | | | | |
| Interest and fees on loans, including held for sale | | $ | 116,288 | | | $ | 130,089 | |
| Interest and dividends on investment securities and federal funds sold | | | 29,236 | | | | 26,846 | |
| | | | | | | |
| Total interest income | | | 145,524 | | | | 156,935 | |
| | | | | | | |
| Interest expense: | | | | | | | | |
| Interest on deposits: | | | | | | | | |
| Demand-interest bearing | | | 964 | | | | 1,919 | |
| Savings and money market accounts | | | 9,643 | | | | 14,006 | |
| Certificates and other time deposits | | | 31,987 | | | | 36,080 | |
| Interest on securities sold under agreements to repurchase | | | 11,542 | | | | 16,785 | |
| Interest on wholesale borrowings | | | 7,089 | | | | 6,139 | |
| | | | | | | |
| Total interest expense | | | 61,225 | | | | 74,929 | |
| | | | | | | |
| Net interest income | | | 84,299 | | | | 82,006 | |
| Provision for loan losses | | | 11,521 | | | | 4,210 | |
| | | | | | | |
| Net interest income after provision for loan losses | | | 72,778 | | | | 77,796 | |
| | | | | | | |
| Other income: | | | | | | | | |
| Trust department income | | | 5,450 | | | | 5,596 | |
| Service charges on deposits | | | 14,736 | | | | 16,249 | |
| Credit card fees | | | 11,157 | | | | 11,099 | |
| ATM and other service fees | | | 2,794 | | | | 3,071 | |
| Bank owned life insurance income | | | 3,201 | | | | 3,168 | |
| Investment services and insurance | | | 2,865 | | | | 2,453 | |
| Investment securities gains, net | | | 524 | | | | — | |
| Loan sales and servicing income | | | 1,391 | | | | 5,438 | |
| Other operating income | | | 10,736 | | | | 1,802 | |
| | | | | | | |
| Total other income | | | 52,854 | | | | 48,876 | |
| | | | | | | |
| Other expenses: | | | | | | | | |
| Salaries, wages, pension and employee benefits | | | 43,065 | | | | 42,500 | |
| Net occupancy expense | | | 6,754 | | | | 6,686 | |
| Equipment expense | | | 2,901 | | | | 3,084 | |
| Stationery, supplies and postage | | | 2,325 | | | | 2,333 | |
| Bankcard, loan processing and other costs | | | 7,244 | | | | 7,470 | |
| Professional services | | | 1,887 | | | | 4,829 | |
| Amortization of intangibles | | | 223 | | | | 223 | |
| Other operating expense | | | 16,835 | | | | 14,401 | |
| | | | | | | |
| Total other expenses | | | 81,234 | | | | 81,526 | |
| | | | | | | |
| Income before federal income tax expense | | | 44,398 | | | | 45,146 | |
| Federal income tax expense | | | 12,955 | | | | 13,725 | |
| | | | | | | |
| Net income | | $ | 31,443 | | | | 31,421 | |
| | | | | | | |
| | | | | | | | | |
| Other comprehensive income (loss), net of taxes | | | | | | | | |
| Unrealized securities’ holding gain (loss), net of taxes | | $ | 11,610 | | | | 8,113 | |
| Unrealized hedging gain (loss), net of taxes | | | (633 | ) | | | 67 | |
| Minimum pension liability adjustment, net of taxes | | | 873 | | | | — | |
| Less: reclassification adjustment for securities’ gains losses realized in net income, net of taxes | | | 341 | | | | — | |
| | | | | | | |
| Total other comprehensive income (loss), net of taxes | | | 11,509 | | | | 8,180 | |
| | | | | | | |
| Comprehensive income | | $ | 42,952 | | | | 39,601 | |
| | | | | | | |
| Net income applicable to common shares | | $ | 31,443 | | | | 31,421 | |
| | | | | | | |
| Net income used in diluted EPS calculation | | $ | 31,447 | | | | 31,425 | |
| | | | | | | |
| Weighted average number of common shares outstanding — basic | | | 80,655 | | | | 80,113 | |
| | | | | | | |
| Weighted average number of common shares outstanding — diluted | | | 80,722 | | | | 80,298 | |
| | | | | | | |
| Basic earnings per share | | $ | 0.39 | | | | 0.39 | |
| | | | | | | |
| Diluted earnings per share | | $ | 0.39 | | | | 0.39 | |
| | | | | | | |
| Dividend per share | | $ | 0.29 | | | | 0.29 | |
| | | | | | | |
9
| | |
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME—LINKED
QUARTERS | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Results | |
| (Unaudited) | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
| (Dollars in thousands, except share data) | | 1st Q | | | 4th Q | | | 3rd Q | | | 2nd Q | | | 1st Q | |
| Interest and fees on loans, including held for sale | | $ | 116,288 | | | $ | 128,078 | | | $ | 133,860 | | | $ | 132,076 | | | $ | 130,089 | |
| Interest and dividends — securities and federal funds sold | | | 29,236 | | | | 29,891 | | | | 28,771 | | | | 27,383 | | | | 26,846 | |
| | | | | | | | | | | | | | | | |
| Total interest income | | | 145,524 | | | | 157,969 | | | | 162,631 | | | | 159,459 | | | | 156,935 | |
| | | | | | | | | | | | | | | | |
| Interest on deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand-interest bearing | | | 964 | | | | 1,352 | | | | 1,677 | | | | 1,876 | | | | 1,919 | |
| Savings and money market accounts | | | 9,643 | | | | 12,667 | | | | 13,501 | | | | 13,992 | | | | 14,006 | |
| Certificates and other time deposits | | | 31,987 | | | | 35,290 | | | | 38,464 | | | | 36,725 | | | | 36,080 | |
| Securities sold under agreements to repurchase | | | 11,542 | | | | 16,994 | | | | 19,514 | | | | 18,005 | | | | 16,785 | |
| Wholesale borrowings | | | 7,089 | | | | 5,505 | | | | 4,321 | | | | 4,636 | | | | 6,139 | |
| | | | | | | | | | | | | | | | |
| Total interest expense | | | 61,225 | | | | 71,808 | | | | 77,477 | | | | 75,234 | | | | 74,929 | |
| | | | | | | | | | | | | | | | |
| Net interest income | | | 84,299 | | | | 86,161 | | | | 85,154 | | | | 84,225 | | | | 82,006 | |
| Provision for loan losses | | | 11,521 | | | | 9,334 | | | | 7,324 | | | | 9,967 | | | | 4,210 | |
| | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 72,778 | | | | 76,827 | | | | 77,830 | | | | 74,258 | | | | 77,796 | |
| | | | | | | | | | | | | | | | |
| Other income: | | | | | | | | | | | | | | | | | | | | |
| Trust department income | | | 5,450 | | | | 5,896 | | | | 5,657 | | | | 6,096 | | | | 5,596 | |
| Service charges on deposits | | | 14,736 | | | | 17,067 | | | | 17,003 | | | | 17,055 | | | | 16,249 | |
| Credit card fees | | | 11,157 | | | | 12,012 | | | | 11,679 | | | | 11,712 | | | | 11,099 | |
| ATM and other service fees | | | 2,794 | | | | 3,055 | | | | 3,306 | | | | 3,189 | | | | 3,071 | |
| Bank owned life insurance income | | | 3,201 | | | | 3,283 | | | | 3,735 | | | | 3,290 | | | | 3,168 | |
| Investment services and insurance | | | 2,865 | | | | 3,121 | | | | 3,007 | | | | 2,660 | | | | 2,453 | |
| Investment securities gains (losses), net | | | 524 | | | | 1,122 | | | | — | | | | 1 | | | | — | |
| Loan sales and servicing income | | | 1,391 | | | | 1,551 | | | | 1,411 | | | | 1,911 | | | | 5,438 | |
| Other operating income | | | 10,736 | | | | 2,886 | | | | 3,326 | | | | 3,016 | | | | 1,802 | |
| | | | | | | | | | | | | | | | |
| Total other income | | | 52,854 | | | | 49,993 | | | | 49,124 | | | | 48,930 | | | | 48,876 | |
| | | | | | | | | | | | | | | | |
| Other expenses: | | | | | | | | | | | | | | | | | | | | |
| Salaries, wages, pension and employee benefits | | | 43,065 | | | | 43,087 | | | | 41,332 | | | | 43,538 | | | | 42,500 | |
| Net occupancy expense | | | 6,754 | | | | 6,284 | | | | 6,188 | | | | 6,521 | | | | 6,686 | |
| Equipment expense | | | 2,901 | | | | 2,886 | | | | 2,958 | | | | 2,851 | | | | 3,084 | |
| Stationery, supplies and postage | | | 2,325 | | | | 2,388 | | | | 2,463 | | | | 2,252 | | | | 2,333 | |
| Bankcard, loan processing and other costs | | | 7,244 | | | | 7,482 | | | | 7,222 | | | | 7,607 | | | | 7,470 | |
| Professional services | | | 1,887 | | | | 3,588 | | | | 2,923 | | | | 4,525 | | | | 4,829 | |
| Amortization of intangibles | | | 223 | | | | 222 | | | | 222 | | | | 222 | | | | 223 | |
| Other operating expense | | | 16,835 | | | | 17,358 | | | | 20,722 | | | | 13,859 | | | | 14,401 | |
| | | | | | | | | | | | | | | | |
| Total other expenses | | | 81,234 | | | | 83,295 | | | | 84,030 | | | | 81,375 | | | | 81,526 | |
| | | | | | | | | | | | | | | | |
| Income before income tax expense | | | 44,398 | | | | 43,525 | | | | 42,924 | | | | 41,813 | | | | 45,146 | |
| Federal income taxes | | | 12,955 | | | | 12,066 | | | | 12,662 | | | | 11,928 | | | | 13,725 | |
| | | | | | | | | | | | | | | | |
| Net income | | $ | 31,443 | | | $ | 31,459 | | | $ | 30,262 | | | $ | 29,885 | | | $ | 31,421 | |
| | | | | | | | | | | | | | | | |
| Other comprehensive income (loss), net of taxes | | | 11,509 | | | | 23,267 | | | | 15,721 | | | | (10,745 | ) | | | 8,180 | |
| | | | | | | | | | | | | | | | |
| Comprehensive income | | $ | 42,952 | | | $ | 54,726 | | | $ | 45,983 | | | $ | 19,140 | | | $ | 39,601 | |
| | | | | | | | | | | | | | | | |
| Net income applicable to common shares | | $ | 31,443 | | | $ | 31,459 | | | $ | 30,262 | | | $ | 29,885 | | | $ | 31,421 | |
| | | | | | | | | | | | | | | | |
| Adjusted net income used in diluted EPS calculation | | $ | 31,447 | | | $ | 31,463 | | | $ | 30,266 | | | $ | 29,889 | | | $ | 31,425 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares — basic | | | 80,655 | | | | 80,477 | | | | 80,467 | | | | 80,426 | | | | 80,113 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares — diluted | | | 80,722 | | | | 80,595 | | | | 80,561 | | | | 80,570 | | | | 80,298 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.39 | | | $ | 0.39 | | | $ | 0.38 | | | $ | 0.37 | | | $ | 0.39 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted net income per share | | $ | 0.39 | | | $ | 0.39 | | | $ | 0.38 | | | $ | 0.37 | | | $ | 0.39 | |
| | | | | | | | | | | | | | | | |
10
| | |
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
(Unaudited, except December 31, 2007
annual period which is derived from | | Quarterly Periods | | | Annual Period | |
| the audited financial statements) | | Mar 31 | | | Dec 31 | | | Sept 30 | | | June 30 | | | Mar 31 | | | Dec 31 | |
| (Dollars in thousands, except ratios) | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
Allowance for Credit Losses | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses, beginning of period | | $ | 94,205 | | | $ | 93,811 | | | $ | 94,432 | | | $ | 92,045 | | | $ | 91,342 | | | $ | 91,342 | |
| Provision for loan losses | | | 11,521 | | | | 9,334 | | | | 7,324 | | | | 9,967 | | | | 4,210 | | | | 30,835 | |
| Charge-offs | | | 14,669 | | | | 11,768 | | | | 12,347 | | | | 10,609 | | | | 9,424 | | | | 44,148 | |
| Recoveries | | | 3,354 | | | | 2,828 | | | | 4,402 | | | | 3,029 | | | | 5,917 | | | | 16,176 | |
| | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 11,315 | | | | 8,940 | | | | 7,945 | | | | 7,580 | | | | 3,507 | | | | 27,972 | |
| | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses, end of period | | $ | 94,411 | | | $ | 94,205 | | | $ | 93,811 | | | $ | 94,432 | | | $ | 92,045 | | | $ | 94,205 | |
| | | | | | | | | | | | | | | | | | | |
| Reserve for unfunded lending commitments, beginning of period | | $ | 7,394 | | | $ | 7,409 | | | $ | 6,553 | | | $ | 6,746 | | | $ | 6,294 | | | $ | 6,294 | |
| Provision for credit losses | | | 509 | | | | (15 | ) | | | 856 | | | | (193 | ) | | | 452 | | | | 1,100 | |
| | | | | | | | | | | | | | | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 7,903 | | | $ | 7,394 | | | $ | 7,409 | | | $ | 6,553 | | | $ | 6,746 | | | $ | 7,394 | |
| | | | | | | | | | | | | | | | | | | |
| Allowance for Credit Losses | | $ | 102,314 | | | $ | 101,599 | | | $ | 101,220 | | | $ | 100,985 | | | $ | 98,791 | | | $ | 101,599 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Ratios | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Provision for loan losses as a % of average loans | | | 0.66 | % | | | 0.53 | % | | | 0.41 | % | | | 0.57 | % | | | 0.25 | % | | | 0.44 | % |
| Provision for credit losses as a % of average loans | | | 0.03 | % | | | 0.00 | % | | | 0.05 | % | | | -0.01 | % | | | 0.03 | % | | | 0.02 | % |
| Net charge-offs as a % of average loans | | | 0.65 | % | | | 0.51 | % | | | 0.45 | % | | | 0.43 | % | | | 0.21 | % | | | 0.40 | % |
| Allowance for loan losses as a % of period-end loans | | | 1.33 | % | | | 1.35 | % | | | 1.34 | % | | | 1.34 | % | | | 1.32 | % | | | 1.35 | % |
| Allowance for credit losses as a % of period-end loans | | | 1.45 | % | | | 1.45 | % | | | 1.44 | % | | | 1.43 | % | | | 1.42 | % | | | 1.45 | % |
| Allowance for loan losses as a % of nonperforming loans | | | 318.89 | % | | | 299.70 | % | | | 314.22 | % | | | 295.08 | % | | | 331.93 | % | | | 299.70 | % |
| Allowance for credit losses as a % of nonperforming loans | | | 345.59 | % | | | 323.22 | % | | | 339.04 | % | | | 315.56 | % | | | 356.26 | % | | | 323.22 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Asset Quality | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual | | $ | 19,777 | | | $ | 21,513 | | | $ | 20,165 | | | $ | 20,877 | | | $ | 17,049 | | | $ | 21,513 | |
| Other nonperforming loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual | | | 9,829 | | | | 9,920 | | | | 9,690 | | | | 11,125 | | | | 10,681 | | | | 9,920 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming loans | | | 29,606 | | | | 31,433 | | | | 29,855 | | | | 32,002 | | | | 27,730 | | | | 31,433 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other real estate (“ORE”) | | | 5,695 | | | | 5,829 | | | | 4,344 | | | | 5,036 | | | | 4,934 | | | | 5,829 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming assets (“NPAs”) | | $ | 35,301 | | | $ | 37,262 | | | $ | 34,199 | | | $ | 37,038 | | | $ | 32,664 | | | $ | 37,262 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NPAs as % of period-end loans + ORE | | | 0.50 | % | | | 0.53 | % | | | 0.49 | % | | | 0.52 | % | | | 0.47 | % | | | 0.53 | % |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Past due 90 days or more & accruing interest | | $ | 10,931 | | | $ | 11,702 | | | $ | 13,107 | | | $ | 10,536 | | | $ | 15,209 | | | $ | 11,702 | |
| | | | | | | | | | | | | | | | | | | |
11
| | |
| | | |
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL | | |
| | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
| (Dollars in thousands) | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | |
QUARTERLY OTHER INCOME DETAIL | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Trust department income | | $ | 5,450 | | | $ | 5,896 | | | $ | 5,657 | | | $ | 6,096 | | | $ | 5,596 | |
| Service charges on deposits | | | 14,736 | | | | 17,067 | | | | 17,003 | | | | 17,055 | | | | 16,249 | |
| Credit card fees | | | 11,157 | | | | 12,012 | | | | 11,679 | | | | 11,712 | | | | 11,099 | |
| ATM and other service fees | | | 2,794 | | | | 3,055 | | | | 3,306 | | | | 3,189 | | | | 3,071 | |
| Bank owned life insurance income | | | 3,201 | | | | 3,283 | | | | 3,735 | | | | 3,290 | | | | 3,168 | |
| Investment services and insurance | | | 2,865 | | | | 3,121 | | | | 3,007 | | | | 2,660 | | | | 2,453 | |
| Investment securities gains (losses), net | | | 524 | | | | 1,122 | | | | — | | | | 1 | | | | — | |
| Loan sales and servicing income | | | 1,391 | | | | 1,551 | | | | 1,411 | | | | 1,911 | | | | 5,438 | |
| Visa redemption | | | 7,898 | | | | — | | | | — | | | | — | | | | — | |
| Other operating income | | | 2,838 | | | | 2,886 | | | | 3,326 | | | | 3,016 | | | | 1,802 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total Other Income | | $ | 52,854 | | | $ | 49,993 | | | $ | 49,124 | | | $ | 48,930 | | | $ | 48,876 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
| | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | |
QUARTERLY OTHER EXPENSES DETAIL | | | | | | | | | | | | | | | | | | | | |
| |
| Salaries, wages, pension and employee benefits | | $ | 43,065 | | | $ | 43,087 | | | $ | 41,332 | | | $ | 43,538 | | | $ | 42,500 | |
| Net occupancy expense | | | 6,754 | | | | 6,284 | | | | 6,188 | | | | 6,521 | | | | 6,686 | |
| Equipment expense | | | 2,901 | | | | 2,886 | | | | 2,958 | | | | 2,851 | | | | 3,084 | |
| Taxes, other than federal income taxes | | | 1,702 | | | | 1,274 | | | | 1,984 | | | | 1,655 | | | | 1,662 | |
| Stationery, supplies and postage | | | 2,325 | | | | 2,388 | | | | 2,463 | | | | 2,252 | | | | 2,333 | |
| Bankcard, loan processing and other costs | | | 7,244 | | | | 7,482 | | | | 7,222 | | | | 7,607 | | | | 7,470 | |
| Advertising | | | 2,666 | | | | 2,989 | | | | 3,332 | | | | 1,260 | | | | 1,420 | |
| Professional services | | | 1,887 | | | | 3,588 | | | | 2,923 | | | | 4,525 | | | | 4,829 | |
| Telephone | | | 1,019 | | | | 1,006 | | | | 1,142 | | | | 1,094 | | | | 1,120 | |
| Amortization of intangibles | | | 223 | | | | 222 | | | | 222 | | | | 222 | | | | 223 | |
| Other operating expense | | | 11,448 | | | | 12,089 | | | | 14,264 | | | | 9,850 | | | | 10,199 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total Other Expenses | | $ | 81,234 | | | $ | 83,295 | | | $ | 84,030 | | | $ | 81,375 | | | $ | 81,526 | |
| | | | | | | | | | | | | | | | |
12
| | |
| | | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES — Net Charge-off Detail | | |
| | | | | | | | | | | | | |
| | | Quarters ended | | | Year ended | |
| (Unaudited) | | March 31, | | | December 31, | |
| (Dollars in thousands) | | 2008 | | | 2007 | | | 2007 | |
| Allowance for loan losses — beginning of period | | $ | 94,205 | | | $ | 91,342 | | | $ | 91,342 | |
| Loans charged off: | | | | | | | | | | | | |
| Commercial | | | 3,453 | | | | 448 | | | | 7,856 | |
| Mortgage | | | 1,280 | | | | 990 | | | | 5,026 | |
| Installment | | | 6,004 | | | | 4,746 | | | | 18,343 | |
| Home equity | | | 1,066 | | | | 820 | | | | 4,151 | |
| Credit cards | | | 2,293 | | | | 2,399 | | | | 8,497 | |
| Leases | | | — | | | | 21 | | | | 41 | |
| Overdrafts | | | 573 | | | | — | | | | 234 | |
| | | | | | | | | | |
| Total | | | 14,669 | | | | 9,424 | | | | 44,148 | |
| | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | |
| Commercial | | | 722 | | | | 2,878 | | | | 4,351 | |
| Mortgage | | | 32 | | | | 8 | | | | 44 | |
| Installment | | | 1,742 | | | | 2,114 | | | | 8,021 | |
| Home equity | | | 100 | | | | 257 | | | | 1,265 | |
| Credit cards | | | 459 | | | | 474 | | | | 1,842 | |
| Manufactured housing | | | 72 | | | | 112 | | | | 323 | |
| Leases | | | 38 | | | | 74 | | | | 286 | |
| Overdrafts | | | 189 | | | | — | | | | 44 | |
| | | | | | | | | | |
| Total | | | 3,354 | | | | 5,917 | | | | 16,176 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Net charge-offs | | | 11,315 | | | | 3,507 | | | | 27,972 | |
| Provision for loan losses | | | 11,521 | | | | 4,210 | | | | 30,835 | |
| | | | | | | | | | |
| Allowance for loan losses — end of period | | $ | 94,411 | | | $ | 92,045 | | | $ | 94,205 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Average loans outstanding | | $ | 7,023,928 | | | | 6,918,636 | | | | 6,971,464 | |
| | | | | | | | | | |
| Ratio to average loans: | | | | | | | | | | | | |
| (Annualized) net charge-offs | | | 0.65 | % | | | 0.21 | % | | | 0.40 | % |
| | | | | | | | | | |
| Provision for loan losses | | | 0.66 | % | | | 0.25 | % | | | 0.44 | % |
| | | | | | | | | | |
| Loans outstanding — period-end | | $ | 7,072,797 | | | $ | 6,951,631 | | | $ | 7,001,886 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Allowance for credit losses: | | $ | 102,314 | | | $ | 98,791 | | | $ | 101,599 | |
| | | | | | | | | | |
| As a multiple of (annualized) net charge-offs | | | 2.25 | | | | 6.95 | | | | 3.63 | |
| | | | | | | | | | |
| Allowance for loan losses: | | | | | | | | | | | | |
| As a percent of period-end loans outstanding | | | 1.33 | % | | | 1.32 | % | | | 1.35 | % |
| | | | | | | | | | |
| As a multiple of (annualized) net charge-offs | | | 2.07 | | | | 6.47 | | | | 3.37 | |
| | | | | | | | | | |
13
