FOR IMMEDIATE RELEASE
FirstMerit Corporation
Analysts: Thomas O’Malley/Investor Relations Officer
Phone: 330.384.7109
Media Contact: Robert Townsend/Media Relations Officer
Phone: 330.384.7075
FirstMerit Reports First Quarter 2009 EPS of $0.34 Per Share
Akron, Ohio (April 28, 2009) — FirstMerit Corporation (Nasdaq: FMER) reported first quarter 2009 net income of $29.4 million, or $0.34 per diluted share. This compares with $29.1 million, or $0.36 per diluted share, for the fourth quarter 2008 and $31.4 million, or $0.39 per diluted share, for the first quarter 2008.
Returns on average common equity (“ROE”) and average assets (“ROA”) for the first quarter 2009 were 11.12% and 1.07%, respectively, compared with 12.47% and 1.08% for the fourth quarter 2008 and 13.56% and 1.22% for the first quarter 2008.
“FirstMerit is positioned to take advantage of the many opportunities within our footprint while facing the challenges of today’s economy,” said Paul G. Greig, chairman, president and CEO of FirstMerit Corporation. “Execution on our super community bank model continues to generate profitable organic growth in our core markets. Our first quarter performance delivered strong results for our shareholders.”
Net interest margin was 3.53% for the first quarter of 2009 compared with 3.82% for the fourth quarter of 2008 and 3.60% for the first quarter of 2008, reflecting a rapid decline in market interest rates late in the fourth quarter of 2008 and the impact on rates earned on loans repricing more quickly than the rates paid on interest-bearing deposits.
Average loans during the first quarter of 2009 increased $14.8 million, or 0.20%, compared to the fourth quarter of 2008 and $357.1 million, or 5.08%, compared with the first quarter of 2008. Increases in the respective periods were due to average commercial loan growth of $64.0 million, or 1.50%, and $395.5 million, or 10.03%.
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FirstMerit Reports First Quarter 2009 EPS Results / Page 2
Average deposits during the first quarter of 2009 decreased $28.4 million, or 0.37%, compared with the fourth quarter of 2008 and increased $314.0 million, or 4.28%, compared with the first quarter of 2008. During the first quarter of 2009 the Company increased its average core deposits, which excludes time deposits, by $260.5 million, or 5.43%, compared with the fourth quarter of 2008, and $593.4 million, or 13.28%, compared with the first quarter of 2008.
Average investments increased $283.6 million, or 11.34%, compared with the fourth quarter of 2008 and increased $276.8 million, or 11.04%, over the first quarter of 2008.
Net interest income on a fully tax-equivalent (“FTE”) basis was $88.6 million in the first quarter 2009 compared with $94.9 million in the fourth quarter of 2008 and $85.7 million in the first quarter of 2008. Compared with the fourth quarter of 2008, average earning assets increased $312.7 million, or 3.17% and $608.1 million or 6.35% compared to the first quarter of 2008.
Noninterest income net of securities transactions for the first quarter of 2009 was $55.2 million, an increase of $3.9 million, or 7.70%, from the fourth quarter of 2008 and an increase of $2.9 million, or 5.46%, from the first quarter of 2008. Included in noninterest income in the first quarter 2008 was a $7.9 million gain from the partial redemption of Visa, Inc. shares.
The primary changes in other income for the 2009 first quarter as compared to the first quarter of 2008 were as follows: trust income was $4.8 million, down 12.11% primarily due to declines in the equity markets; service charges on deposits was $14.2 million, down 3.89% primarily attributable to fewer overdraft items and customer preferences to hold larger balances; credit card fees were $11.1 million, down 0.65%; loan sales and servicing income was $2.3 million, an increase of $0.9 million, primarily attributable to refinancing in the current low rate mortgage market environment; bank owned life insurance income was $3.0 million, down 5.81%; and other operating income was $14.3 million, an increase of $11.4 million. Included in other operating income was $9.5 million, due to curtailment of the postretirement medical benefit plan for active employees.
Other income, net of securities gains, as a percentage of net revenue for the first quarter of 2009 was 38.39% compared with 35.07% for fourth quarter of 2008 and 37.91% for the first quarter of 2008. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.
Noninterest expense for the first quarter of 2009 was $83.2 million, a decrease of $5.0 million, or 5.71%, from the fourth quarter of 2008 and an increase of $2.0 million, or 2.42%, from the first quarter of 2008. For the three months ended March 31, 2009, increases in operating expenses compared to the first quarter 2008 were primarily attributable to an increase in professional services. Professional services were $3.5 million, up $1.6 million as compared to first quarter 2008.
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FirstMerit Reports First Quarter 2009 EPS Results / Page 3
During the first quarter of 2009, the Company improved its efficiency ratio to 57.81%, compared with 60.34% for the fourth quarter of 2008 and 58.69% for the first quarter of 2008.
“Expense management combined with a focus on revenue growth enhances our operating efficiencies,” commented Mr. Grieg. “For seven consecutive quarters we have increased total revenue over the prior year results.”
Net charge-offs totaled $15.6 million, or 0.86% of average loans, in the first quarter of 2009 compared with $15.2 million, or 0.82% of average loans, in the fourth quarter 2008 and $11.3 million, or 0.65% of average loans, in the first quarter of 2008.
Nonperforming assets totaled $76.2 million at March 31, 2009, an increase of $18.7 million, or 32.54%, compared with December 31, 2008 and $40.9 million, or 115.98%, compared with March 31, 2008. Nonperforming assets at March 31, 2009 represented 1.04% of period-end loans plus other real estate compared with 0.77% at December 31, 2008 and 0.50% at March 31, 2009.
The allowance for loan losses totaled $106.2 million at March 31, 2009, an increase of $2.5 million from December 31, 2008. At March 31, 2009, the allowance for loan losses was 1.45% of period-end loans compared with 1.40% at December 31, 2008 and 1.33% at March 31, 2008. 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 1.53% at March 31, 2009, compared with 1.49% at December 31, 2008 and 1.45% at March 31, 2008. The allowance for credit losses to nonperforming loans was 159.22% at March 31, 2009, compared with 211.38% at December 31, 2008 and 345.59% at March 31, 2008.
The Company’s total assets at March 31, 2009 were $11.0 billion, a decrease of $127.9 million, or 1.15%, compared with December 31, 2008 and an increase of $455.3 million, or 4.33%, compared with March 31, 2008. Commercial loan growth of $324.8 million, or 8.08%, compared with March, 31, 2008, provided the majority of the overall asset growth. Total loans decreased $74.9 million compared with December 31, 2008 and increased $278.0 million over March 31, 2008.
Total deposits were $7.7 billion at March 31, 2009, an increase of $80.5 million, or 1.06%, from December 31, 2008 and an increase of $255.5 million, or 3.44%, from March 31, 2008. The increase compared with March 31, 2008 was driven by an overall increase in savings and demand deposits. Core deposits totaled $5.3 billion at March 31, 2009, an increase of $464.6 million, or 9.65%, from December 31, 2008 and an increase of $713.2 million, or 15.61%, from March 31, 2008.
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FirstMerit Reports First Quarter 2009 EPS Results / Page 4
Shareholders’ equity was $1,084.3 million at March 31, 2009, compared with $937.8 million at December 31, 2008 and $937.4 million at March 31, 2008. The Company increased its strong capital position as tangible common equity to assets was 7.56% at March 31, 2009, compared with 7.27% and 7.68% at December 31, 2008 and March 31, 2008, respectively. The common dividend per share paid in the first quarter 2009 was $0.29.
On January 9, 2009, the Company completed the sale to the Treasury of $125.0 million of newly issued FirstMerit non-voting preferred shares as part of the Treasury’s Troubled Assets Relief Program Capital Purchase Program. FirstMerit issued and sold to the Treasury for an aggregate purchase price of $125.0 million in cash 125,000 shares of FirstMerit’s Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share along with a warrant to purchase 952,260 shares of the Company’s common stock.
On April 22, 2009, the Company completed the repurchase of all 125,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A from the United States Department of the Treasury. The preferred shares were repurchased at a price of approximately $126.2 million, which includes accrued and unpaid dividends of approximately $1.2 million. The repurchase of the preferred stock will result in a charge to the Company’s retained earnings of approximately 4.7 million, representing the unaccreted difference between the carrying value of the preferred stock and the repurchase price. The Company is currently evaluating the repurchase of the warrant and does not anticipate that the repurchase of the warrant will have an impact on the Company’s net income or net income available to common shareholders.
The Company also announced today that its Board of Directors has declared a quarterly dividend of $0.16 per share on the Company’s common stock payable June 15, 2009 to shareholders of record on June 1, 2009. Shareholders of record on June 1, 2009, will also receive a $0.13 per share dividend of common stock. The change in the composition of the current dividend payment from all-cash will allow FirstMerit to retain as additional equity approximately $10.5 million per quarter, near term, which will serve to enhance the Company’s Tier I and tangible common equity ratios.
Mr. Greig said, “FirstMerit has a strong capital position, with a tangible common equity to asset ratio of 7.56% at the end of the first quarter. Given the current climate of economic uncertainty, the Board of Directors determined that it would be prudent and in the best interests of FirstMerit’s shareholders to further strengthen its capital position. Changing the composition of the dividend to part cash and part stock will enable us to increase our level of retained earnings in order to add to our already high levels of capital.”
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FirstMerit Reports First Quarter 2009 EPS Results / Page 5
First Quarter 2009 Conference Call
FirstMerit will host an earnings conference call on April 28, 2009, 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: 94237772. A replay of the conference call will be available at approximately 5:00 p.m., on April 28, 2009 through May 6, 2009, by dialing (800) 642-1687, and entering the PIN: 94237772.
About FirstMerit
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $11.0 billion as of March 31, 2009 and 158 banking offices and 172 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 |
| | | 2009 | | 2008 | | 2008 | | 2008 | | 2008 |
| EARNINGS | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr |
| |
| Net interest income FTE (a) | | $ | 88,577 | | | $ | 94,855 | | | $ | 92,659 | | | $ | 88,956 | | | $ | 85,695 | |
| Provision for loan losses | | | 18,065 | | | | 16,986 | | | | 15,531 | | | | 14,565 | | | | 11,521 | |
| Other income | | | 55,188 | | | | 52,795 | | | | 47,029 | | | | 48,758 | | | | 52,854 | |
| Other expenses | | | 83,203 | | | | 88,240 | | | | 80,609 | | | | 80,550 | | | | 81,234 | |
| FTE adjustment (a) | | | 1,683 | | | | 1,617 | | | | 1,538 | | | | 1,425 | | | | 1,396 | |
| Net income | | | 29,434 | | | | 29,136 | | | | 29,753 | | | | 29,153 | | | | 31,443 | |
| Diluted EPS | | | 0.34 | | | | 0.36 | | | | 0.37 | | | | 0.36 | | | | 0.39 | |
| | | | | | | | | | | | | | | | | | | | | |
| PERFORMANCE RATIOS | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (ROA) | | | 1.07 | % | | | 1.08 | % | | | 1.12 | % | | | 1.11 | % | | | 1.22 | % |
| Return on average common equity (ROE) | | | 11.12 | % | | | 12.47 | % | | | 12.73 | % | | | 12.31 | % | | | 13.56 | % |
| Net interest margin FTE (a) | | | 3.53 | % | | | 3.82 | % | | | 3.78 | % | | | 3.69 | % | | | 3.60 | % |
| Efficiency ratio | | | 57.81 | % | | | 60.34 | % | | | 57.64 | % | | | 58.38 | % | | | 58.69 | % |
| Number of full-time equivalent employees | | | 2,562 | | | | 2,575 | | | | 2,614 | | | | 2,679 | | | | 2,676 | |
| | | | | | | | | | | | | | | | | | | | | |
| MARKET DATA | | | | | | | | | | | | | | | | | | | | |
| Book value/common share | | $ | 11.78 | | | $ | 11.58 | | | $ | 11.44 | | | $ | 11.43 | | | $ | 11.59 | |
| Period-end common share mkt value | | | 18.20 | | | | 20.59 | | | | 21.00 | | | | 16.31 | | | | 20.66 | |
| Market as a % of book | | | 155 | % | | | 178 | % | | | 184 | % | | | 143 | % | | | 178 | % |
| Cash dividends/common share | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.29 | | | $ | 0.29 | |
| Common stock dividend payout ratio | | | 85.29 | % | | | 80.56 | % | | | 78.38 | % | | | 80.56 | % | | | 74.36 | % |
| Average basic common shares | | | 81,293 | | | | 80,972 | | | | 80,869 | | | | 80,855 | | | | 80,655 | |
| Average diluted common shares | | | 81,302 | | | | 80,981 | | | | 80,896 | | | | 80,898 | | | | 80,722 | |
| Period end common shares | | | 81,417 | | | | 80,960 | | | | 80,974 | | | | 80,846 | | | | 80,879 | |
| Common shares repurchased | | | 44,584 | | | | 18,900 | | | | 2,623 | | | | 34,380 | | | | 5,426 | |
| Common stock market capitalization | | $ | 1,481,789 | | | $ | 1,666,966 | | | $ | 1,700,454 | | | $ | 1,318,598 | | | $ | 1,670,960 | |
| | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY | | | | | | | | | | | | | | | | | | | | |
| Gross charge-offs | | $ | 18,936 | | | $ | 17,932 | | | $ | 14,957 | | | $ | 14,830 | | | $ | 14,669 | |
| Net charge-offs | | | 15,565 | | | | 15,236 | | | | 11,763 | | | | 10,737 | | | | 11,315 | |
| Allowance for loan losses | | | 106,257 | | | | 103,757 | | | | 102,007 | | | | 98,239 | | | | 94,411 | |
| Reserve for unfunded lending commitments | | | 6,019 | | | | 6,588 | | | | 6,493 | | | | 7,310 | | | | 7,903 | |
| Nonperforming assets (NPAs) | | | 76,243 | | | | 57,526 | | | | 43,491 | | | | 41,639 | | | | 35,301 | |
| Net charge-offs/average loans ratio | | | 0.86 | % | | | 0.82 | % | | | 0.64 | % | | | 0.60 | % | | | 0.65 | % |
| Allowance for loan losses/period-end loans | | | 1.45 | % | | | 1.40 | % | | | 1.38 | % | | | 1.36 | % | | | 1.33 | % |
| Allowance for credit losses/period-end loans | | | 1.53 | % | | | 1.49 | % | | | 1.47 | % | | | 1.46 | % | | | 1.45 | % |
| NPAs/loans and other real estate | | | 1.04 | % | | | 0.77 | % | | | 0.59 | % | | | 0.57 | % | | | 0.50 | % |
| Allowance for loan losses/nonperforming loans | | | 151.35 | % | | | 198.76 | % | | | 264.45 | % | | | 268.52 | % | | | 318.89 | % |
| Allowance for credit losses/nonperforming loans | | | 159.93 | % | | | 211.38 | % | | | 281.28 | % | | | 288.50 | % | | | 345.59 | % |
| | | | | | | | | | | | | | | | | | | | | |
| CAPITAL & LIQUIDITY | | | | | | | | | | | | | | | | | | | | |
| Period-end tangible common equity to assets | | | 7.56 | % | | | 7.27 | % | | | 7.45 | % | | | 7.52 | % | | | 7.68 | % |
| Average equity to assets | | | 9.66 | % | | | 8.66 | % | | | 8.79 | % | | | 9.06 | % | | | 8.98 | % |
| Average equity to loans | | | 14.54 | % | | | 12.62 | % | | | 12.76 | % | | | 13.34 | % | | | 13.27 | % |
| Average loans to deposits | | | 96.56 | % | | | 96.01 | % | | | 99.40 | % | | | 97.29 | % | | | 95.82 | % |
| |
| AVERAGE BALANCES | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 11,115,042 | | | $ | 10,731,029 | | | $ | 10,569,496 | | | $ | 10,520,469 | | | $ | 10,388,359 | |
| Deposits | | | 7,644,118 | | | | 7,672,560 | | | | 7,326,364 | | | | 7,339,506 | | | | 7,330,097 | |
| Loans | | | 7,381,019 | | | | 7,366,246 | | | | 7,282,333 | | | | 7,140,627 | | | | 7,023,928 | |
| Earning assets | | | 10,189,233 | | | | 9,876,488 | | | | 9,755,812 | | | | 9,704,252 | | | | 9,581,121 | |
| Shareholders’ equity | | | 1,073,276 | | | | 929,788 | | | | 929,495 | | | | 952,769 | | | | 932,405 | |
| | | | | | | | | | | | | | | | | | | | | |
| ENDING BALANCES | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 10,972,176 | | | $ | 11,100,026 | | | $ | 10,684,845 | | | $ | 10,564,752 | | | $ | 10,516,828 | |
| Deposits | | | 7,678,213 | | | | 7,597,679 | | | | 7,430,556 | | | | 7,277,184 | | | | 7,422,678 | |
| Loans | | | 7,350,763 | | | | 7,425,613 | | | | 7,381,592 | | | | 7,240,882 | | | | 7,072,797 | |
| Goodwill | | | 139,245 | | | | 139,245 | | | | 139,245 | | | | 139,245 | | | | 139,245 | |
| Intangible assets | | | 1,316 | | | | 1,403 | | | | 1,490 | | | | 1,577 | | | | 1,754 | |
| Earning assets | | | 10,108,403 | | | | 10,209,602 | | | | 9,840,951 | | | | 9,724,859 | | | | 9,688,270 | |
| Total shareholders’ equity | | | 1,084,269 | | | | 937,843 | | | | 926,078 | | | | 924,429 | | | | 937,439 | |
| | |
| 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. |
6
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited, except December 31, 2008, which is derived from the audited financial statements)
| | | | | | | | | | | | | |
| | | March 31, | | | December 31, | | | March 31, | |
| | | 2009 | | | 2008 | | | 2008 | |
ASSETS | | | | | | | | | | | | |
| Cash and due from banks | | $ | 179,397 | | | $ | 178,406 | | | $ | 200,852 | |
| Investment securities (at fair value) | | | 2,735,232 | | | | 2,772,848 | | | | 2,559,729 | |
| Loans held for sale | | | 22,408 | | | | 11,141 | | | | 55,744 | |
| Loans: | | | | | | | | | | | | |
| Commercial loans | | | 4,344,915 | | | | 4,352,730 | | | | 4,020,155 | |
| Mortgage loans | | | 524,909 | | | | 547,125 | | | | 575,479 | |
| Installment loans | | | 1,533,885 | | | | 1,574,587 | | | | 1,576,517 | |
| Home equity loans | | | 741,073 | | | | 733,832 | | | | 684,064 | |
| Credit card loans | | | 141,597 | | | | 149,745 | | | | 145,747 | |
| Leases | | | 64,384 | | | | 67,594 | | | | 70,835 | |
| | | | | | | | | | |
| Total loans | | | 7,350,763 | | | | 7,425,613 | | | | 7,072,797 | |
| Less allowance for loan losses | | | (106,257 | ) | | | (103,757 | ) | | | (94,411 | ) |
| | | | | | | | | | |
| Net loans | | | 7,244,506 | | | | 7,321,856 | | | | 6,978,386 | |
| Premises and equipment, net | | | 130,920 | | | | 133,184 | | | | 126,273 | |
| Goodwill | | | 139,245 | | | | 139,245 | | | | 139,245 | |
| Intangible assets | | | 1,316 | | | | 1,403 | | | | 1,754 | |
| Accrued interest receivable and other assets | | | 519,152 | | | | 541,943 | | | | 454,845 | |
| | | | | | | | | | |
| Total assets | | $ | 10,972,176 | | | $ | 11,100,026 | | | $ | 10,516,828 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | |
| Demand-non-interest bearing | | $ | 1,848,200 | | | $ | 1,637,534 | | | | 1,498,107 | |
| Demand-interest bearing | | | 669,789 | | | | 666,615 | | | | 703,319 | |
| Savings and money market accounts | | | 2,763,058 | | | | 2,512,331 | | | | 2,366,466 | |
| Certificates and other time deposits | | | 2,397,166 | | | | 2,781,199 | | | | 2,854,786 | |
| | | | | | | | | | |
| Total deposits | | | 7,678,213 | | | | 7,597,679 | | | | 7,422,678 | |
| | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 804,525 | | | | 921,390 | | | | 1,298,145 | |
| Wholesale borrowings | | | 1,134,152 | | | | 1,344,195 | | | | 653,618 | |
| Accrued taxes, expenses, and other liabilities | | | 271,017 | | | | 298,919 | | | | 204,948 | |
| | | | | | | | | | |
| Total liabilities | | | 9,887,907 | | | | 10,162,183 | | | | 9,579,389 | |
| | | | | | | | | | |
| 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 | | | — | | | | — | | | | — | |
| Fixed-Rate Cumulative Perpetual Preferred Stock, Series A, $1,000 liquidation preference; authorized and issued 125,000 shares | | | 120,622 | | | | — | | | | — | |
| Common stock, without par value: | | | | | | | | | | | | |
| authorized 300,000,000 shares; issued 92,026,350 at March 31, 2009, December 31, 2008 and March 31, 2008 | | | 127,937 | | | | 127,937 | | | | 127,937 | |
| Common stock warrant | | | 4,582 | | | | — | | | | — | |
| Capital surplus | | | 84,876 | | | | 94,802 | | | | 91,387 | |
| Accumulated other comprehensive loss | | | (38,634 | ) | | | (54,080 | ) | | | (31,576 | ) |
| Retained earnings | | | 1,057,681 | | | | 1,053,435 | | | | 1,035,766 | |
| Treasury stock, at cost, 10,609,284, 11,066,108 and 11,147,360 | | | | | | | | | | | | |
| shares at March 31, 2009, December 31, 2008 and March 31, 2008, respectively | | | (272,795 | ) | | | (284,251 | ) | | | (286,075 | ) |
| | | | | | | | | | |
| Total shareholders’ equity | | | 1,084,269 | | | | 937,843 | | | | 937,439 | |
| | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 10,972,176 | | | $ | 11,100,026 | | | $ | 10,516,828 | |
| | | | | | | | | | |
7
| | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS | | |
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Periods | |
| | | March 31, | | | December 31, | | | September 30, | | | June 30, | | | March 31, | |
| | | 2009 | | | 2008 | | | 2008 | | | 2008 | | | 2008 | |
ASSETS | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 209,922 | | | $ | 192,804 | | | $ | 171,370 | | | $ | 173,044 | | | $ | 171,028 | |
| Investment securities/fed funds sold | | | 2,784,966 | | | | 2,501,346 | | | | 2,461,431 | | | | 2,515,546 | | | | 2,508,125 | |
| Loans held for sale | | | 23,248 | | | | 8,896 | | | | 12,048 | | | | 48,079 | | | | 49,068 | |
| Loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial loans | | | 4,337,108 | | | | 4,273,123 | | | | 4,168,951 | | | | 4,069,305 | | | | 3,941,573 | |
| Mortgage loans | | | 536,498 | | | | 555,713 | | | | 569,293 | | | | 577,178 | | | | 584,000 | |
| Installment loans | | | 1,558,374 | | | | 1,596,053 | | | | 1,617,265 | | | | 1,584,825 | | | | 1,587,267 | |
| Home equity loans | | | 736,956 | | | | 722,466 | | | | 709,365 | | | | 692,567 | | | | 686,603 | |
| Credit card loans | | | 146,355 | | | | 150,133 | | | | 147,924 | | | | 147,242 | | | | 150,575 | |
| Leases | | | 65,728 | | | | 68,758 | | | | 69,535 | | | | 69,510 | | | | 73,910 | |
| | | | | | | | | | | | | | | | |
| Total loans | | | 7,381,019 | | | | 7,366,246 | | | | 7,282,333 | | | | 7,140,627 | | | | 7,023,928 | |
| Less allowance for loan losses | | | 102,533 | | | | 100,898 | | | | 98,091 | | | | 94,002 | | | | 93,804 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loans | | | 7,278,486 | | | | 7,265,348 | | | | 7,184,242 | | | | 7,046,625 | | | | 6,930,124 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 10,189,233 | | | | 9,876,488 | | | | 9,755,812 | | | | 9,704,252 | | | | 9,581,121 | |
| | | | | | | | | | | | | | | | | | | | | |
| Premises and equipment, net | | | 132,156 | | | | 130,511 | | | | 127,267 | | | | 126,488 | | | | 128,185 | |
| Accrued interest receivable and other assets | | | 686,264 | | | | 632,124 | | | | 613,138 | | | | 610,687 | | | | 601,829 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
TOTAL ASSETS | | $ | 11,115,042 | | | $ | 10,731,029 | | | $ | 10,569,496 | | | $ | 10,520,469 | | | $ | 10,388,359 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand-non-interest bearing | | $ | 1,767,885 | | | $ | 1,607,901 | | | $ | 1,545,427 | | | $ | 1,518,841 | | | $ | 1,446,889 | |
| Demand-interest bearing | | | 655,279 | | | | 658,208 | | | | 678,803 | | | | 709,922 | | | | 702,115 | |
| Savings and money market accounts | | | 2,638,166 | | | | 2,534,702 | | | | 2,373,995 | | | | 2,366,296 | | | | 2,318,899 | |
| Certificates and other time deposits | | | 2,582,788 | | | | 2,871,749 | | | | 2,728,139 | | | | 2,744,447 | | | | 2,862,194 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,644,118 | | | | 7,672,560 | | | | 7,326,364 | | | | 7,339,506 | | | | 7,330,097 | |
| | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 941,112 | | | | 1,168,438 | | | | 1,504,011 | | | | 1,312,436 | | | | 1,310,364 | |
| Wholesale borrowings | | | 1,151,777 | | | | 766,358 | | | | 634,226 | | | | 711,132 | | | | 618,572 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total funds | | | 9,737,007 | | | | 9,607,356 | | | | 9,464,601 | | | | 9,363,074 | | | | 9,259,033 | |
| Accrued taxes, expenses and other liabilities | | | 304,759 | | | | 193,885 | | | | 175,400 | | | | 204,626 | | | | 196,921 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 10,041,766 | | | | 9,801,241 | | | | 9,640,001 | | | | 9,567,700 | | | | 9,455,954 | |
| | | | | | | | | | | | | | | | | | | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | | 109,807 | | | | — | | | | — | | | | — | | | | — | |
| Common stock | | | 127,937 | | | | 127,937 | | | | 127,937 | | | | 127,937 | | | | 127,937 | |
| Common stock warrant | | | 4,175 | | | | — | | | | — | | | | — | | | | — | |
| Capital surplus | | | 86,872 | | | | 93,761 | | | | 93,381 | | | | 92,313 | | | | 96,048 | |
| Accumulated other comprehensive (loss) income | | | (49,477 | ) | | | (62,018 | ) | | | (54,000 | ) | | | (40,757 | ) | | | (32,170 | ) |
| Retained earnings | | | 1,069,948 | | | | 1,053,992 | | | | 1,048,452 | | | | 1,059,840 | | | | 1,032,036 | |
| Treasury stock | | | (275,986 | ) | | | (283,884 | ) | | | (286,275 | ) | | | (286,564 | ) | | | (291,446 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total shareholders’ equity | | | 1,073,276 | | | | 929,788 | | | | 929,495 | | | | 952,769 | | | | 932,405 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 11,115,042 | | | $ | 10,731,029 | | | $ | 10,569,496 | | | $ | 10,520,469 | | | $ | 10,388,359 | |
| | | | | | | | | | | | | | | | |
8
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND
SUBSIDIARIES
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Year ended | | | Three months ended | |
| | | March 31, 2009 | | | December 31, 2008 | | | March 31, 2008 | |
| | | Average | | | | | | | Average | | | Average | | | | | | | Average | | | Average | | | | | | | Average | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 209,922 | | | | | | | | | | | $ | 177,089 | | | | | | | | | | | $ | 171,028 | | | | | | | | | |
| Investment securities and federal funds sold: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury securities and U.S. Government agency obligations (taxable) | | | 2,251,028 | | | | 25,954 | | | | 4.68 | % | | | 1,985,026 | | | | 94,260 | | | | 4.75 | % | | | 2,004,597 | | | | 23,295 | | | | 4.67 | % |
| Obligations of states and political subdivisions (tax exempt) | | | 320,943 | | | | 4,914 | | | | 6.21 | % | | | 294,724 | | | | 17,910 | | | | 6.08 | % | | | 280,919 | | | | 4,263 | | | | 6.10 | % |
| Other securities and federal funds sold | | | 212,995 | | | | 2,341 | | | | 4.46 | % | | | 216,794 | | | | 11,326 | | | | 5.22 | % | | | 222,609 | | | | 3,050 | | | | 5.51 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total investment securities and federal funds sold | | | 2,784,966 | | | | 33,209 | | | | 4.84 | % | | | 2,496,544 | | | | 123,496 | | | | 4.95 | % | | | 2,508,125 | | | | 30,608 | | | | 4.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans held for sale | | | 23,248 | | | | 322 | | | | 5.62 | % | | | 29,419 | | | | 1,602 | | | | 5.45 | % | | | 49,068 | | | | 672 | | | | 5.51 | % |
| Loans | | | 7,381,019 | | | | 87,508 | | | | 4.81 | % | | | 7,203,946 | | | | 434,704 | | | | 6.03 | % | | | 7,023,928 | | | | 115,640 | | | | 6.62 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total earning assets | | | 10,189,233 | | | | 121,039 | | | | 4.82 | % | | | 9,729,909 | | | | 559,802 | | | | 5.75 | % | | | 9,581,121 | | | | 146,920 | | | | 6.17 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | | (102,533 | ) | | | | | | | | | | | (96,714 | ) | | | | | | | | | | | (93,804 | ) | | | | | | | | |
| Other assets | | | 818,420 | | | | | | | | | | | | 739,158 | | | | | | | | | | | | 730,014 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 11,115,042 | | | | | | | | | | | $ | 10,549,442 | | | | | | | | | | | $ | 10,388,359 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | �� | | | | | | |
| Demand — non-interest bearing | | $ | 1,767,885 | | | | — | | | | — | | | $ | 1,530,021 | | | | — | | | | — | | | $ | 1,446,889 | | | | — | | | | — | |
| Demand — interest bearing | | | 655,279 | | | | 155 | | | | 0.10 | % | | | 687,160 | | | | 2,514 | | | | 0.37 | % | | | 702,115 | | | | 964 | | | | 0.55 | % |
| Savings and money market accounts | | | 2,638,166 | | | | 5,377 | | | | 0.83 | % | | | 2,398,778 | | | | 29,839 | | | | 1.24 | % | | | 2,318,899 | | | | 9,643 | | | | 1.67 | % |
| Certificates and other time deposits | | | 2,582,788 | | | | 18,588 | | | | 2.92 | % | | | 2,801,623 | | | | 105,853 | | | | 3.78 | % | | | 2,862,194 | | | | 31,987 | | | | 4.49 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | 7,644,118 | | | | 24,120 | | | | 1.28 | % | | | 7,417,582 | | | | 138,206 | | | | 1.86 | % | | | 7,330,097 | | | | 42,594 | | | | 2.34 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 941,112 | | | | 999 | | | | 0.43 | % | | | 1,343,441 | | | | 31,857 | | | | 2.37 | % | | | 1,310,364 | | | | 11,542 | | | | 3.54 | % |
| Wholesale borrowings | | | 1,151,777 | | | | 7,343 | | | | 2.59 | % | | | 663,109 | | | | 27,574 | | | | 4.16 | % | | | 618,572 | | | | 7,089 | | | | 4.61 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest bearing liabilities | | | 7,969,122 | | | | 32,462 | | | | 1.65 | % | | | 7,894,111 | | | | 197,637 | | | | 2.50 | % | | | 7,812,144 | | | | 61,225 | | | | 3.15 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other liabilities | | | 304,759 | | | | | | | | | | | | 189,222 | | | | | | | | | | | | 196,921 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | | | 1,073,276 | | | | | | | | | | | | 936,088 | | | | | | | | | | | | 932,405 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 11,115,042 | | | | | | | | | | | $ | 10,549,442 | | | | | | | | | | | $ | 10,388,359 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net yield on earning assets | | $ | 10,189,233 | | | | 88,577 | | | | 3.53 | % | | $ | 9,729,909 | | | | 362,165 | | | | 3.72 | % | | $ | 9,581,121 | | | | 85,695 | | | | 3.60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | | | | | 3.17 | % | | | | | | | | | | | 3.25 | % | | | | | | | | | | | 3.02 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| 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. |
9
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands except per share data)
| | | | | | | | | |
| | | Quarters ended | |
| | | March 31, | |
| | | 2009 | | | 2008 | |
| Interest income: | | | | | | | | |
| Interest and fees on loans, including held for sale | | $ | 87,799 | | | $ | 116,288 | |
| Interest and dividends on investment securities and federal funds sold | | | 31,557 | | | | 29,236 | |
| | | | | | | |
| Total interest income | | | 119,356 | | | | 145,524 | |
| | | | | | | |
| Interest expense: | | | | | | | | |
| Interest on deposits: | | | | | | | | |
| Demand-interest bearing | | | 155 | | | | 964 | |
| Savings and money market accounts | | | 5,377 | | | | 9,643 | |
| Certificates and other time deposits | | | 18,588 | | | | 31,987 | |
| Interest on securities sold under agreements to repurchase | | | 999 | | | | 11,542 | |
| Interest on wholesale borrowings | | | 7,343 | | | | 7,089 | |
| | | | | | | |
| Total interest expense | | | 32,462 | | | | 61,225 | |
| | | | | | | |
| Net interest income | | | 86,894 | | | | 84,299 | |
| Provision for loan losses | | | 18,065 | | | | 11,521 | |
| | | | | | | |
| Net interest income after provision for loan losses | | | 68,829 | | | | 72,778 | |
| | | | | | | |
| Other income: | | | | | | | | |
| Trust department income | | | 4,790 | | | | 5,450 | |
| Service charges on deposits | | | 14,163 | | | | 14,736 | |
| Credit card fees | | | 11,084 | | | | 11,157 | |
| ATM and other service fees | | | 2,606 | | | | 2,794 | |
| Bank owned life insurance income | | | 3,015 | | | | 3,201 | |
| Investment services and insurance | | | 2,918 | | | | 2,865 | |
| Investment securities gains, net | | | — | | | | 524 | |
| Loan sales and servicing income | | | 2,335 | | | | 1,391 | |
| Gain on Visa Inc. redemption | | | — | | | | 7,898 | |
| Gain on post medical retirement curtailment | | | 9,543 | | | | — | |
| Other operating income | | | 4,734 | | | | 2,838 | |
| | | | | | | |
| Total other income | | | 55,188 | | | | 52,854 | |
| | | | | | | |
| Other expenses: | | | | | | | | |
| Salaries, wages, pension and employee benefits | | | 42,682 | | | | 43,065 | |
| Net occupancy expense | | | 6,871 | | | | 6,754 | |
| Equipment expense | | | 5,797 | | | | 6,194 | |
| Stationery, supplies and postage | | | 2,275 | | | | 2,325 | |
| Bankcard, loan processing and other costs | | | 7,842 | | | | 7,244 | |
| Professional services | | | 3,480 | | | | 1,887 | |
| Amortization of intangibles | | | 87 | | | | 223 | |
| Other operating expense | | | 14,169 | | | | 13,542 | |
| | | | | | | |
| Total other expenses | | | 83,203 | | | | 81,234 | |
| | | | | | | |
| Income before federal income tax expense | | | 40,814 | | | | 44,398 | |
| Federal income tax expense | | | 11,380 | | | | 12,955 | |
| | | | | | | |
| Net income | | $ | 29,434 | | | $ | 31,443 | |
| | | | | | | |
| | | | | | | | | |
| Other comprehensive income, net of taxes | | | | | | | | |
| Unrealized securities’ holding (loss) gain, net of taxes | | $ | 15,817 | | | $ | 11,610 | |
| Unrealized hedging gain (loss), net of taxes | | | (94 | ) | | | (633 | ) |
| Minimum pension liability adjustment, net of taxes | | | (277 | ) | | | 873 | |
| Less: reclassification adjustment for securities’ gain realized in net income, net of taxes | | | — | | | | 341 | |
| | | | | | | |
| Total other comprehensive (loss) gain, net of taxes | | | 15,446 | | | | 11,509 | |
| | | | | | | |
| Comprehensive income | | $ | 44,880 | | | $ | 42,952 | |
| | | | | | | |
| Net income applicable to common shares | | $ | 27,563 | | | $ | 31,443 | |
| | | | | | | |
| Net income used in diluted EPS calculation | | $ | 27,563 | | | $ | 31,447 | |
| | | | | | | |
| Weighted average number of common shares outstanding — basic | | | 81,293 | | | | 80,655 | |
| | | | | | | |
| Weighted average number of common shares outstanding — diluted | | | 81,302 | | | | 80,722 | |
| | | | | | | |
| Basic earnings per share | | $ | 0.34 | | | $ | 0.39 | |
| | | | | | | |
| Diluted earnings per share | | $ | 0.34 | | | $ | 0.39 | |
| | | | | | | |
| Dividend per share | | $ | 0.29 | | | $ | 0.29 | |
| | | | | | | |
10
| | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME—LINKED QUARTERS | | |
| | | | | |
(Unaudited)
(Dollars in thousands, except share data) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Results | |
| | | 2009 | | | 2008 | | | 2008 | | | 2008 | | | 2008 | |
| | | 1st Q | | | 4th Q | | | 3rd Q | | | 2nd Q | | | 1st Q | |
| Interest and fees on loans, including held for sale | | $ | 87,799 | | | $ | 105,463 | | | $ | 107,927 | | | $ | 106,516 | | | $ | 116,288 | |
| Interest and dividends — securities and federal funds sold | | | 31,557 | | | | 29,918 | | | | 29,223 | | | | 29,255 | | | | 29,236 | |
| | | | | | | | | | | | | | | | |
| Total interest income | | | 119,356 | | | | 135,381 | | | | 137,150 | | | | 135,771 | | | | 145,524 | |
| | | | | | | | | | | | | | | | |
| Interest on deposits: | | | | | | | | | | | | | | | | | | | | |
| Demand-interest bearing | | | 155 | | | | 370 | | | | 589 | | | | 591 | | | | 964 | |
| Savings and money market accounts | | | 5,377 | | | | 6,764 | | | | 6,932 | | | | 6,500 | | | | 9,643 | |
| Certificates and other time deposits | | | 18,588 | | | | 23,816 | | | | 23,463 | | | | 26,587 | | | | 31,987 | |
| Securities sold under agreements to repurchase | | | 999 | | | | 3,752 | | | | 8,244 | | | | 8,319 | | | | 11,542 | |
| Wholesale borrowings | | | 7,343 | | | | 7,441 | | | | 6,801 | | | | 6,243 | | | | 7,089 | |
| | | | | | | | | | | | | | | | |
| Total interest expense | | | 32,462 | | | | 42,143 | | | | 46,029 | | | | 48,240 | | | | 61,225 | |
| | | | | | | | | | | | | | | | |
| Net interest income | | | 86,894 | | | | 93,238 | | | | 91,121 | | | | 87,531 | | | | 84,299 | |
| Provision for loan losses | | | 18,065 | | | | 16,986 | | | | 15,531 | | | | 14,565 | | | | 11,521 | |
| | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 68,829 | | | | 76,252 | | | | 75,590 | | | | 72,966 | | | | 72,778 | |
| | | | | | | | | | | | | | | | |
| Other income: | | | | | | | | | | | | | | | | | | | | |
| Trust department income | | | 4,790 | | | | 5,291 | | | | 5,562 | | | | 5,824 | | | | 5,450 | |
| Service charges on deposits | | | 14,163 | | | | 15,450 | | | | 16,648 | | | | 16,028 | | | | 14,736 | |
| Credit card fees | | | 11,084 | | | | 11,667 | | | | 12,084 | | | | 12,146 | | | | 11,157 | |
| ATM and other service fees | | | 2,606 | | | | 2,613 | | | | 2,717 | | | | 2,770 | | | | 2,794 | |
| Bank owned life insurance income | | | 3,015 | | | | 2,451 | | | | 3,139 | | | | 3,217 | | | | 3,201 | |
| Investment services and insurance | | | 2,918 | | | | 1,949 | | | | 2,899 | | | | 2,790 | | | | 2,865 | |
| Investment securities gains, net | | | — | | | | 1,555 | | | | — | | | | 47 | | | | 524 | |
| Loan sales and servicing income | | | 2,335 | | | | 2,294 | | | | 1,370 | | | | 1,885 | | | | 1,391 | |
| Gain on Visa Inc. | | | — | | | | 5,768 | | | | — | | | | — | | | | 7,898 | |
| Other operating income | | | 14,277 | | | | 3,757 | | | | 2,610 | | | | 4,051 | | | | 2,838 | |
| | | | | | | | | | | | | | | | |
| Total other income | | | 55,188 | | | | 52,795 | | | | 47,029 | | | | 48,758 | | | | 52,854 | |
| | | | | | | | | | | | | | | | |
| Other expenses: | | | | | | | | | | | | | | | | | | | | |
| Salaries, wages, pension and employee benefits | | | 42,682 | | | | 46,991 | | | | 45,043 | | | | 44,364 | | | | 43,065 | |
| Net occupancy expense | | | 6,871 | | | | 5,950 | | | | 5,741 | | | | 6,204 | | | | 6,754 | |
| Equipment expense | | | 5,797 | | | | 6,139 | | | | 5,962 | | | | 5,842 | | | | 6,194 | |
| Stationery, supplies and postage | | | 2,275 | | | | 2,458 | | | | 2,347 | | | | 2,242 | | | | 2,325 | |
| Bankcard, loan processing and other costs | | | 7,842 | | | | 7,359 | | | | 7,497 | | | | 7,356 | | | | 7,244 | |
| Professional services | | | 3,480 | | | | 3,261 | | | | 3,966 | | | | 2,581 | | | | 1,887 | |
| Amortization of intangibles | | | 87 | | | | 87 | | | | 86 | | | | 177 | | | | 223 | |
| Other operating expense | | | 14,169 | | | | 15,995 | | | | 9,967 | | | | 11,784 | | | | 13,542 | |
| | | | | | | | | | | | | | | | |
| Total other expenses | | | 83,203 | | | | 88,240 | | | | 80,609 | | | | 80,550 | | | | 81,234 | |
| | | | | | | | | | | | | | | | |
| Income before income tax expense | | | 40,814 | | | | 40,807 | | | | 42,010 | | | | 41,174 | | | | 44,398 | |
| Federal income taxes | | | 11,380 | | | | 11,671 | | | | 12,257 | | | | 12,021 | | | | 12,955 | |
| | | | | | | | | | | | | | | | |
| Net income | | $ | 29,434 | | | $ | 29,136 | | | $ | 29,753 | | | $ | 29,153 | | | $ | 31,443 | |
| | | | | | | | | | | | | | | | |
| Other comprehensive income (loss), net of taxes | | | 15,446 | | | | 5,110 | | | | (7,756 | ) | | | (19,858 | ) | | | 11,509 | |
| | | | | | | | | | | | | | | | |
| Comprehensive income | | $ | 44,880 | | | $ | 34,246 | | | $ | 21,997 | | | $ | 9,295 | | | $ | 42,952 | |
| | | | | | | | | | | | | | | | |
| Net income applicable to common shares | | $ | 27,563 | | | $ | 29,136 | | | $ | 29,753 | | | $ | 29,153 | | | $ | 31,443 | |
| | | | | | | | | | | | | | | | |
| Adjusted net income used in diluted EPS calculation | | $ | 27,563 | | | $ | 29,136 | | | $ | 29,753 | | | $ | 29,154 | | | $ | 31,447 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares — basic | | | 81,293 | | | | 80,972 | | | | 80,869 | | | | 80,855 | | | | 80,655 | |
| | | | | | | | | | | | | | | | |
| Weighted-average common shares — diluted | | | 81,302 | | | | 80,981 | | | | 80,896 | | | | 80,898 | | | | 80,722 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.34 | | | $ | 0.36 | | | $ | 0.37 | | | $ | 0.36 | | | $ | 0.39 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted net income per share | | $ | 0.34 | | | $ | 0.36 | | | $ | 0.37 | | | $ | 0.36 | | | $ | 0.39 | |
| | | | | | | | | | | | | | | | |
11
| | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION | | |
| | | | |
| | | | | |
| (Unaudited, except December 31, 2008 annual period which | | | | |
is derived from the audited financial statements)
(Dollars in thousands, except ratios) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Periods | | | Annual Period | |
| | | Mar 31 | | | Dec 31 | | | Sept 30 | | | Jun 30 | | | Mar 31 | | | Dec 31 | |
| | | 2009 | | | 2008 | | | 2008 | | | 2008 | | | 2008 | | | 2008 | |
Allowance for Credit Losses | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses, beginning of period | | $ | 103,757 | | | $ | 102,007 | | | $ | 98,239 | | | $ | 94,411 | | | $ | 94,205 | | | $ | 94,205 | |
| Provision for loan losses | | | 18,065 | | | | 16,986 | | | | 15,531 | | | | 14,565 | | | | 11,521 | | | | 58,603 | |
| Charge-offs | | | 18,936 | | | | 17,932 | | | | 14,957 | | | | 14,830 | | | | 14,669 | | | | 62,388 | |
| Recoveries | | | 3,371 | | | | 2,696 | | | | 3,194 | | | | 4,093 | | | | 3,354 | | | | 13,337 | |
| | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 15,565 | | | | 15,236 | | | | 11,763 | | | | 10,737 | | | | 11,315 | | | | 49,051 | |
| | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses, end of period | | $ | 106,257 | | | $ | 103,757 | | | $ | 102,007 | | | $ | 98,239 | | | $ | 94,411 | | | $ | 103,757 | |
| | | | | | | | | | | | | | | | | | | |
| Reserve for unfunded lending commitments, beginning of period | | $ | 6,588 | | | $ | 6,493 | | | $ | 7,310 | | | $ | 7,903 | | | $ | 7,394 | | | $ | 7,394 | |
| Provision for credit losses | | | (569 | ) | | | 95 | | | | (817 | ) | | | (593 | ) | | | 509 | | | | (806 | ) |
| | | | | | | | | | | | | | | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 6,019 | | | $ | 6,588 | | | $ | 6,493 | | | $ | 7,310 | | | $ | 7,903 | | | $ | 6,588 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for Credit Losses | | $ | 112,276 | | | $ | 110,345 | | | $ | 108,500 | | | $ | 105,549 | | | $ | 102,314 | | | $ | 110,345 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Ratios | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Provision for loan losses as a % of average loans | | | 0.99 | % | | | 0.92 | % | | | 0.85 | % | | | 0.82 | % | | | 0.66 | % | | | 0.81 | % |
| Provision for credit losses as a % of average loans | | | (0.03 | )% | | | 0.01 | % | | | (0.04 | )% | | | (0.03 | )% | | | 0.03 | % | | | (0.01 | )% |
| Net charge-offs as a % of average loans | | | 0.86 | % | | | 0.82 | % | | | 0.64 | % | | | 0.60 | % | | | 0.65 | % | | | 0.68 | % |
| Allowance for loan losses as a % of period-end loans | | | 1.45 | % | | | 1.40 | % | | | 1.38 | % | | | 1.36 | % | | | 1.33 | % | | | 1.40 | % |
| Allowance for credit losses as a % of period-end loans | | | 1.53 | % | | | 1.49 | % | | | 1.47 | % | | | 1.46 | % | | | 1.45 | % | | | 1.49 | % |
| Allowance for loan losses as a % of nonperforming loans | | | 151.35 | % | | | 198.76 | % | | | 264.45 | % | | | 268.52 | % | | | 318.89 | % | | | 198.76 | % |
| Allowance for credit losses as a % of nonperforming loans | | | 159.93 | % | | | 211.38 | % | | | 281.28 | % | | | 288.50 | % | | | 345.59 | % | | | 211.38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Asset Quality | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual | | $ | 54,070 | | | $ | 40,195 | | | $ | 29,245 | | | $ | 26,702 | | | $ | 19,777 | | | $ | 40,195 | |
| Other nonperforming loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual | | | 16,134 | | | | 12,007 | | | | 9,328 | | | | 9,884 | | | | 9,829 | | | | 12,007 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming loans | | | 70,204 | | | | 52,202 | | | | 38,573 | | | | 36,586 | | | | 29,606 | | | | 52,202 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other real estate (“ORE”) | | | 6,039 | | | | 5,324 | | | | 4,918 | | | | 5,053 | | | | 5,695 | | | | 5,324 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming assets (“NPAs”) | | $ | 76,243 | | | $ | 57,526 | | | $ | 43,491 | | | $ | 41,639 | | | $ | 35,301 | | | $ | 57,526 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| NPAs as % of period-end loans + ORE | | | 1.04 | % | | | 0.77 | % | | | 0.59 | % | | | 0.57 | % | | | 0.50 | % | | | 0.77 | % |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Past due 90 days or more & accruing interest | | $ | 18,602 | | | $ | 23,928 | | | $ | 16,241 | | | $ | 10,654 | | | $ | 10,931 | | | $ | 23,928 | |
| | | | | | | | | | | | | | | | | | | |
12
| | |
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL | | |
| | | | |
| | | | | |
(Unaudited)
(Dollars in thousands) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2008 | | | 2008 | | | 2008 | | | 2008 | |
| | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | |
QUARTERLY OTHER INCOME DETAIL | | | | | | | | | | | | | | | | | | | | |
| |
| Trust department income | | $ | 4,790 | | | $ | 5,291 | | | $ | 5,562 | | | $ | 5,824 | | | $ | 5,450 | |
| Service charges on deposits | | | 14,163 | | | | 15,450 | | | | 16,648 | | | | 16,028 | | | | 14,736 | |
| Credit card fees | | | 11,084 | | | | 11,667 | | | | 12,084 | | | | 12,146 | | | | 11,157 | |
| ATM and other service fees | | | 2,606 | | | | 2,613 | | | | 2,717 | | | | 2,770 | | | | 2,794 | |
| Bank owned life insurance income | | | 3,015 | | | | 2,451 | | | | 3,139 | | | | 3,217 | | | | 3,201 | |
| Investment services and insurance | | | 2,918 | | | | 1,949 | | | | 2,899 | | | | 2,790 | | | | 2,865 | |
| Investment securities gains, net | | | — | | | | 1,555 | | | | — | | | | 47 | | | | 524 | |
| Loan sales and servicing income | | | 2,335 | | | | 2,294 | | | | 1,370 | | | | 1,885 | | | | 1,391 | |
| Gain on Visa Inc. | | | — | | | | 5,768 | | | | — | | | | — | | | | 7,898 | |
| Gain on post medical retirement curtailment | | | 9,543 | | | | — | | | | — | | | | — | | | | 0 | |
| Other operating income | | | 4,734 | | | | 3,757 | | | | 2,610 | | | | 4,051 | | | | 2,838 | |
| | | | | | | | | | | | | | | | |
| |
| Total Other Income | | $ | 55,188 | | | $ | 52,795 | | | $ | 47,029 | | | $ | 48,758 | | | $ | 52,854 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2008 | | | 2008 | | | 2008 | | | 2008 | |
| | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | | | 1st Qtr | |
QUARTERLY OTHER EXPENSES DETAIL | | | | | | | | | | | | | | | | | | | | |
| |
| Salaries, wages, pension and employee benefits | | $ | 42,682 | | | $ | 46,991 | | | $ | 45,043 | | | $ | 44,364 | | | $ | 43,065 | |
| Net occupancy expense | | | 6,871 | | | | 5,950 | | | | 5,741 | | | | 6,204 | | | | 6,754 | |
| Equipment expense | | | 5,797 | | | | 6,139 | | | | 5,962 | | | | 5,842 | | | | 6,194 | |
| Taxes, other than federal income taxes | | | 1,626 | | | | 1,463 | | | | 1,714 | | | | 1,701 | | | | 1,702 | |
| Stationery, supplies and postage | | | 2,275 | | | | 2,458 | | | | 2,347 | | | | 2,242 | | | | 2,325 | |
| Bankcard, loan processing and other costs | | | 7,842 | | | | 7,359 | | | | 7,497 | | | | 7,356 | | | | 7,244 | |
| Advertising | | | 1,971 | | | | 1,863 | | | | 2,476 | | | | 2,489 | | | | 2,666 | |
| Professional services | | | 3,480 | | | | 3,261 | | | | 3,966 | | | | 2,581 | | | | 1,887 | |
| Telephone | | | 1,014 | | | | 978 | | | | 956 | | | | 994 | | | | 1,019 | |
| Amortization of intangibles | | | 87 | | | | 87 | | | | 86 | | | | 177 | | | | 223 | |
| Other operating expense | | | 9,558 | | | | 11,691 | | | | 4,821 | | | | 6,600 | | | | 8,155 | |
| | | | | | | | | | | | | | | | |
| |
| Total Other Expenses | | $ | 83,203 | | | $ | 88,240 | | | $ | 80,609 | | | $ | 80,550 | | | $ | 81,234 | |
| | | | | | | | | | | | | | | | |
13
| | |
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES — Net Charge-off Detail | | |
| | | | |
| | | | | |
(Unaudited)
(Dollars in thousands) | | | | |
| | | | | | | | | | | | | |
| | | Quarters ended | | | Year ended | |
| | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | | | 2008 | |
| Allowance for loan losses — beginning of period | | $ | 103,757 | | | $ | 94,205 | | | $ | 94,205 | |
| Loans charged off: | | | | | | | | | | | | |
| Commercial | | | 4,554 | | | | 3,453 | | | | 16,318 | |
| Mortgage | | | 923 | | | | 1,280 | | | | 4,696 | |
| Installment | | | 8,438 | | | | 6,004 | | | | 24,740 | |
| Home equity | | | 1,535 | | | | 1,066 | | | | 4,153 | |
| Credit cards | | | 2,967 | | | | 2,293 | | | | 9,821 | |
| Leases | | | — | | | | — | | | | 26 | |
| Overdrafts | | | 519 | | | | 573 | | | | 2,634 | |
| | | | | | | | | | |
| Total | | | 18,936 | | | | 14,669 | | | | 62,388 | |
| | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | |
| Commercial | | | 224 | | | | 722 | | | | 2,388 | |
| Mortgage | | | 26 | | | | 32 | | | | 76 | |
| Installment | | | 2,401 | | | | 1,742 | | | | 7,071 | |
| Home equity | | | 85 | | | | 100 | | | | 851 | |
| Credit cards | | | 387 | | | | 459 | | | | 1,831 | |
| Manufactured housing | | | 53 | | | | 72 | | | | 247 | |
| Leases | | | 5 | | | | 38 | | | | 104 | |
| Overdrafts | | | 190 | | | | 189 | | | | 769 | |
| | | | | | | | | | |
| Total | | | 3,371 | | | | 3,354 | | | | 13,337 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Net charge-offs | | | 15,565 | | | | 11,315 | | | | 49,051 | |
| Provision for loan losses | | | 18,065 | | | | 11,521 | | | | 58,603 | |
| | | | | | | | | | |
| Allowance for loan losses — end of period | | $ | 106,257 | | | $ | 94,411 | | | $ | 103,757 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Average loans outstanding | | $ | 7,381,019 | | | $ | 7,023,928 | | | $ | 7,203,946 | |
| | | | | | | | | | |
| Ratio to average loans: | | | | | | | | | | | | |
| (Annualized) net charge-offs | | | 0.86 | % | | | 0.65 | % | | | 0.68 | % |
| | | | | | | | | | |
| Provision for loan losses | | | 0.99 | % | | | 0.66 | % | | | 0.81 | % |
| | | | | | | | | | |
| Loans outstanding — period-end | | $ | 7,350,763 | | | $ | 7,072,797 | | | $ | 7,425,613 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Allowance for credit losses: | | $ | 112,276 | | | $ | 102,314 | | | $ | 110,345 | |
| | | | | | | | | | |
| As a multiple of (annualized) net charge-offs | | | 1.78 | | | | 2.25 | | | | 2.25 | |
| | | | | | | | | | |
| Allowance for loan losses: | | | | | | | | | | | | |
| As a percent of period-end loans outstanding | | | 1.45 | % | | | 1.33 | % | | | 1.40 | % |
| | | | | | | | | | |
| As a multiple of (annualized) net charge-offs | | | 1.68 | | | | 2.07 | | | | 2.12 | |
| | | | | | | | | | |
14
