FirstMerit (FMER) 8-K FirstMerit Corporation Reports Fourth Quarter 2015 EPS Results

Fourth Quarter 2015 Supplemental Information

January

26, 2016

FIRSTMERIT

Corporation

Exhibit 99.2

2

Forward-Looking Statements Disclosure

This presentation may contain 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

Corporation, 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 Corporation's business, competitive

pressures, changes in accounting, tax or regulatory practices or requirements, and those risk factors detailed in the Corporation's periodic

reports filed with the Securities and Exchange Commission. The Corporation undertakes no obligation to release revisions to these forward-

looking statements or reflect events or circumstances after the date of this presentation.

These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure

of

the

registrant's

historical

or

future

financial

performance,

financial

position

or

cash

flows

that

excludes

amounts,

or

is

subject

to

adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented

in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or

includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly

comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United

States.

Pursuant

to

the

requirements

of

Regulation

G,

FirstMerit

Corporation

has

provided

reconciliations

within

the

slides,

as

necessary,

of

the non-GAAP financial measure to the most directly comparable GAAP financial measure.

3

Q4 2015 Financial Highlights

Change 4Q 2015 vs.

Income Statement

(In thousands, except per share amounts)

2015

4th Qtr

2015

3rd Qtr

2014

4th Qtr

2015

3rd Qtr

2014

4th Qtr

Net interest income TE

$

188,979

$

189,119

$

196,509

(0.07)%

(3.83)

TE adjustment

3,748

3,796

3,998

(1.26)

(6.25)

Provision for originated loan losses

12,487

10,402

8,662

20.04

44.16

Provision/(recapture) for acquired loan losses

1,503

144

3,407

943.75

(55.88)

Provision/(recapture) for FDIC acquired loan

losses

(379

3,729

1,228

(110.16)

(130.86)

Noninterest income

65,143

71,426

71,960

(8.80)

(9.47)

Noninterest expense

155,622

160,742

165,041

(3.19)

(5.71)

Net income

56,749

59,012

61,079

(3.83)

(7.09)

Diluted EPS

0.33

0.34

0.36

(2.94)

(8.33)

Key Ratios

ROA

0.89

0.93%

0.98%

(4.31)%

(9.16)

ROTCE

11.04

11.69

12.52

(5.56)

(11.82)

Net interest margin TE

3.30

3.33

3.56

(0.90)

(7.30)

Efficiency ratio

60.22

60.71

60.39

(0.81)

(0.28)

Tangible common equity to assets

8.24

8.31

7.98

(0.84)

3.26

Net charge-offs to average loans

0.33

0.24

0.12

37.50

175.00

NPAs to loans and other real estate

0.67

0.78

0.44

(14.10)

52.27

1

Net interest income on a taxable-equivalent basis (TE) is a non-GAAP financial measure.  Refer to the Non-GAAP financial measures reconciliation for a reconciliation to GAAP financial measures.

Increased total loan portfolio QoQ

by 

$277.7 million, or an annualized 7%,

despite reduction in acquired loan

portfolios.

Lower volume in acquired portfolios and

lower yields on earning assets primary

drivers of QoQ

margin compression.

Noninterest income decreased 8.80%

QoQ.

*

Denial by the FDIC in the fourth quarter

of four disputed claims of $6.0 million

claimed on the final commercial loss

share certificate at June 30, 2015.

Noninterest expense decreased 3.19%

QoQ.

Favorable re-estimation of certain

repurchase reserve liabilities.

Highlights

1

1

%

%

%

Average Balance Sheet

Total Average Loans Increased $161.6 million

(dollars in millions)

Total Average Deposits Increased $45.2 million

(dollars in millions)

Originated loans

Acquired loans

FDIC acquired loans

Savings & money markets

Interest bearing

Noninterest bearing

CDs & time

4

Change 4Q 2015 vs.

QTD Average Balances

(Dollars in thousands)

2015

4th Qtr

2015

3rd Qtr

2014

4th Qtr

2015

3rd Qtr

2014

4th Qtr

Cash & securities

$

415,756

$

457,317

$

500,559

(9.09)%

(16.94)%

Investments

6,820,863

6,783,921

6,614,291

0.54

3.12

Loans held for sale

5,028

4,929

16,708

2.01

(70.03)

Originated loans

13,863,910

13,528,268

12,306,171

2.48

12.66

Acquired loans

1,830,921

1,987,471

2,599,622

(7.88)

(29.57)

FDIC acquired loans

226,909

244,388

384,097

(7.15)

(40.92)

Allowance for loan losses

(151,192)

(147,136)

(138,540)

2.76

9.13

Other Assets

2,358,751

2,358,698

2,382,079

—

(0.98)

Total Assets

$

25,370,946

$

25,217,856

$

24,664,987

0.61%

2.86%

Noninterest bearing deposits

5,982,186

5,897,768

5,706,631

1.43

4.83

Interest bearing deposits

3,352,908

3,353,541

3,021,188

(0.02)

10.98

Savings and money market accounts

8,408,703

8,480,682

8,381,548

(0.85)

0.32

Certificates and other time deposits

2,258,996

2,225,595

2,341,280

1.50

(3.51)

Securities sold under agreements to

repurchase

1,131,659

1,109,924

1,241,948

1.96

(8.88)

Wholesale borrowings

402,679

377,594

450,587

6.64

(10.63)

Long-term debt

508,954

497,566

350,535

2.29

45.19

Other Liabilities

381,593

365,526

321,652

4.40

18.64

Equity

2,943,268

2,909,660

2,849,618

1.16

3.29

Total Liabilities and Equity

$

25,370,946

$

25,217,856

$

24,664,987

0.61%

2.86%

5

Yield on Average Loans

Net Interest Income and Margin Trends

Cost on Interest-bearing Liabilities

Net interest income (TE) for the quarter of $189.0 million remained

fairly constant compared to the prior quarter, demonstrating that

we continue to offset the expected decline in the acquired and

FDIC acquired loan portfolios with organic loan growth.

Fourth quarter NIM (TE) was 3.30%, down 3 bps from prior

quarter. Expected runoff in in the acquired and FDIC acquired

portfolios and slightly lower yields on earning assets were the

primary drivers of margin compression.

Highlights

4.27%

4.19%

4.39%

4.10%

4.06%

Net Interest Income & Net Interest Margin Trend (TE)

(dollars in millions)

6

Changes in Net Interest Margin

Fourth quarter net interest margin (TE) was 3.30%, down 3 bps from prior quarter.

Acquired Loans

Purchase Discount

7

1  The outstanding balance of impaired and nonimpaired acquired loans at the Acquisition Date were $1.1 billion and $4.0 billion, respectively.  The outstanding balance represents

the undiscounted sum of all amounts, including principal, interest, fees and penalties, owed to the investor at the reporting date, whether or not currently due or charged-off.

1

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

As of

Acquisition Date:

April 12, 2013

Impaired acquired loans

Loan balance

$

341,003

$

392,278

$

424,188

$

464,372

$

506,500

$

946,465

Remaining loan mark

56,294

65,030

68,024

76,059

83,291

126,750

Recorded investment

284,709

327,248

356,164

388,313

423,209

819,715

Discount

16.51%

16.58%

16.04%

16.38%

16.44%

13.39%

Nonimpaired acquired loans

Loan balance

$

1,511,198

$

1,647,246

$

1,808,924

$

2,012,836

$

2,142,390

$

4,017,304

Remaining loan mark

56,797

65,115

73,279

82,011

92,210

220,015

Recorded investment

1,454,401

1,582,131

1,735,645

1,930,825

2,050,180

3,797,289

Discount

3.76%

3.95%

4.05%

4.07%

4.30%

5.48%

Total acquired loans

Loan balance

$

1,852,201

$

2,039,524

$

2,233,112

$

2,477,208

$

2,648,890

$

4,963,769

Remaining loan mark

113,091

130,145

141,303

158,070

175,501

346,765

Recorded investment

1,739,110

1,909,379

2,091,809

2,319,138

2,473,389

4,617,004

Discount

6.11%

6.38%

6.33%

6.38%

6.63%

6.99%

8

Acquired Loans

Nonimpaired Acquired Loans -

Purchase Discount

Nonimpaired Acquired Loans -

Allowance

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Beginning balance

$

65,115

$

73,279

$

83,493

$

94,543

$

107,538

Scheduled accretion

(4,400)

(4,937)

(5,756)

(6,955)

(7,395)

Pay-offs

(2,833)

(2,167)

(3,315)

(2,305)

(3,820)

Accelerated prepayments

(820)

(966)

(1,023)

(1,525)

(1,598)

Total Income

(8,053)

(8,070)

(10,094)

(10,785)

(12,813)

Charge offs

(265)

(94)

(120)

(265)

(182)

Ending balance

$

56,797

$

65,115

$

73,279

$

83,493

$

94,543

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Beginning balance

$

—

$

—

$

—

$

—

$

—

Charge offs

(2,956)

(2,878)

(2,774)

(3,436)

(3,249)

Recoveries

1,131

1,983

1,183

1,258

1,092

Provision for loan losses

1,825

895

1,591

2,178

2,157

Ending balance

$

—

$

—

$

—

$

—

$

—

Muni loans mark, classified as investments

............

$

858

$

923

$

1,002

$

1,483

$

2,333

Loans mark, classified as loans

..............................

55,939

64,192

72,277

82,010

92,210

Total mark on loans, above

.....................................

$

56,797

$

65,115

$

73,279

$

83,493

$

94,543

An allowance for nonimpaired acquired loans is estimated using a methodology similar to that used for originated loans.  The allowance determined for each nonimpaired acquired

loan is compared to the remaining fair value discount for that loan.  If the computed allowance is greater, the excess is added to the allowance through a provision for loan losses.  If

the computed allowance is less, no additional allowance is recognized.  Charge-offs and actual losses first reduce any remaining fair value discount for the loan and once the discount

is depleted, losses are applied against the allowance established for that loan.  Actual losses first reduce any remaining fair value discount for the loan.  Once the discount is fully

depleted, losses are applied against the allowance established for that loan. 

During the three months ended December 31, 2015, provision, equal to net charge-offs, of $1.8 million was recorded on nonimpaired acquired loans.  These charged-off loans were

mainly consumer loans that were written off in accordance with the Corporation's credit policies based on a predetermined number of days past due. As of December 31, 2015, the fair

value discount on acquired nonimpaired loans was greater than the required allowance, therefore, no allowance for acquired nonimpaired loan losses was recorded.

9

Acquired Loans

Impaired

Acquired

Loans

-

Accretable

Yield

and

Carrying

Amount

Impaired

Acquired

Loans

-

Allowance

The allowance for acquired impaired loans is determined by comparing the present value of the cash flows expected to be collected to the carrying amount for a given pool of loans. 

Management reforecasts the estimated cash flows expected to be collected on acquired impaired loans on a quarterly basis.  If the present value of expected cash flows for a pool is

less than its carrying value, impairment is recognized by an increase in the allowance and a charge to the provision for loan losses.  If the present value of expected cash flows for a

pool is greater than its carrying value, any previously established allowance is reversed and any remaining difference increases the accretable yield which will be taken into interest

income over the remaining life of the loan pool.

The first re-estimation of cash flows on the impaired loans since acquisition was completed in Q4 2013.   The re-estimation performed in Q4 2015 resulted in recapture of previous

impairment of $0.3 million.

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Beginning balance

$

4,199

$

4,950

$

7,493

$

7,457

$

6,206

Charge offs

—

—

—

—

—

Recoveries

—

—

—

—

—

Provision/(recapture) for loan losses

(322)

(751)

(2,543)

36

1,251

Ending balance

$

3,877

$

4,199

$

4,950

$

7,493

$

7,457

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

(Dollars in thousands)

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Beginning balance

$

104,287

$

327,248

$

112,031

$

356,164

$

118,756

$

388,313

$

119,450

$

423,209

$

126,424

$

479,050

Additions

—

—

—

—

—

—

—

—

—

—

Accretion

(9,329)

9,329

(9,924)

9,924

(10,285)

10,285

(11,218)

11,218

(11,834)

11,834

Net

Reclassifications

from

non-accretable

to

accretable

9,253

—

6,780

—

8,217

—

12,995

—

9,165

—

Payments, received, net

—

(51,868)

—

(38,840)

—

(42,434)

—

(46,114)

—

(67,675)

Disposals

(14,388)

—

(4,600)

—

(4,657)

—

(2,471)

—

(4,305)

—

Ending balance

$

89,823

$

284,709

$

104,287

$

327,248

$

112,031

$

356,164

$

118,756

$

388,313

$

119,450

$

423,209

10

FDIC Acquired Loans

Impaired FDIC Acquired Loans -

Accretable Yield and Carrying Amount

Impaired FDIC Acquired Loans  -

Allowance

Loss Share Receivable

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

(Dollars in thousands)

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Accretable

Yield

Carrying

Amount

Beginning balance

$

24,713

$

142,632

$

26,150

$

157,808

$

29,867

$

199,225

$

37,511

$

232,452

$

51,945

$

284,566

Accretion

(2,387)

2,387

(2,893)

2,893

(4,100)

4,100

(5,567)

5,567

(7,723)

7,723

Net Reclassifications from non-

accretable

to

accretable

953

—

1,785

—

2,136

—

(56)

—

(3,449)

—

Payments, received, net

—

(14,371)

—

(18,069)

—

(45,517)

—

(38,794)

—

(59,837)

Disposals

(371)

—

(329)

—

(1,753)

—

(2,021)

—

(3,262)

—

Ending balance

$

22,908

$

130,648

$

24,713

$

142,632

$

26,150

$

157,808

$

29,867

$

199,225

$

37,511

$

232,452

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Beginning balance

$

45,196

$

41,627

$

41,514

$

40,496

$

42,988

Net provision/(recapture)

(309)

3,986

928

4,225

313

Net (benefit)/recapture from FDIC loss share

(70)

(257)

(1,819)

(4,227)

915

Net provision/(recapture) for FDIC acquired loan

losses

(379)

3,729

(891)

(2)

1,228

Increase/(decrease) in loss share receivable

70

257

1,819

4,227

(915)

Loans charged

-off

(208)

(417)

(815)

(3,207)

(2,805)

Ending balance

$

44,679

$

45,196

$

41,627

$

41,514

$

40,496

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Beginning balance

$

10,926

$

11,820

$

20,005

$

22,033

$

30,746

Accretion

(385)

(384)

(1,185)

(2,187)

(3,963)

Net recapture of /(provision from) impairment

70

257

1,819

4,227

(915)

FDIC reimbursement

(390)

(679)

(8,713)

(4,013)

(4,507)

FDIC acquired loans paid in full

(274)

(88)

(106)

(55)

672

Ending balance

$

9,947

$

10,926

$

11,820

$

20,005

$

22,033

11

Nonperforming Asset Ratios

As of Q4 2015, Q3 2015, Q2 2015, and Q1 2015, $33.5 million, $40.0 million, $42.0

million, and $3.4 million, respectively, of OREO was no longer covered by FDIC loss share

agreements, and therefore, was included in NPAs. OREO that remains covered by FDIC

loss share agreements has considerable protection against credit risk and is not reported

as NPAs.

Asset Quality

Net Charge Offs & Provision for Loan Losses

(dollars in millions)

Highlights

Asset quality remains sound with low NPA levels and a robust

reserve to nonperforming loans level of 2.48 times. 

Originated provision for loan losses at $12.5 million exceeded net

charge offs this quarter by $1.1 million in support of continued

originated loan growth.

NPAs decreased $12.6 million, or 11.73%, over the prior quarter.

Allowance for Originated Loan Losses

(dollars in millions)

12

Noninterest Income

Change 4Q 2015 vs.

(Dollars in thousands)

2015

4th Qtr

2015

3rd Qtr

2014

4th Qtr

2015

3rd Qtr

2014

4th Qtr

Trust department income

$

10,208

$

10,948

$

9,831

(6.76)%

3.83%

Service charges on deposits

16,793

17,295

17,597

(2.90)

(4.57)

Credit card fees

13,931

13,939

13,305

(0.06)

4.70

ATM and other service fees

6,626

6,518

6,181

1.66

7.20

Bank owned life insurance income

3,836

4,622

7,337

(17.01)

(47.72)

Investment services and insurance

3,816

4,032

4,171

(5.36)

(8.51)

Investment securities gains/(losses), net

(5)

41

16

(112.20)

(131.25)

Loan sales and servicing income

2,276

2,414

3,112

(5.72)

(26.86)

Other operating income

7,662

11,617

10,410

(34.04)

(26.40)

Total noninterest income

$

65,143

$

71,426

$

71,960

(8.80)%

(9.47)

Noninterest income decreased $6.3 million, or

8.80%, QoQ.

Other operating income decreased $4.0

million QoQ.

Denial by the FDIC in the fourth quarter of

four disputed claims of $6.0 million

claimed on the final commercial loss

share certificate at June 30, 2015.

Highlights

Noninterest Income Trend

(dollars in millions)

%

13

Noninterest Expense

Change 4Q 2015 vs.

(Dollars in thousands)

2015

4th Qtr

2015

3rd Qtr

2014

4th Qtr

2015

3rd Qtr

2014

4th Qtr

Salaries and wages

$

68,151

$

68,775

$

71,638

(0.91)%

(4.87)%

Pension and employee benefits

18,339

16,997

18,261

7.90

0.43

Net occupancy expense

12,716

13,540

14,188

(6.09)

(10.37)

Equipment expense

12,074

12,235

12,133

(1.32)

(0.49)

Taxes, other than federal income taxes

2,096

2,003

1,661

4.64

26.19

Stationary, supplies and postage

3,222

3,304

3,767

(2.48)

(14.47)

Bankcard, loan processing and other costs

11,146

12,335

11,830

(9.64)

(5.78)

Advertising

3,386

4,278

3,586

(20.85)

(5.58)

Professional services

5,056

5,154

6,440

(1.90)

(21.49)

Telephone

2,530

2,480

2,779

2.02

(8.96)

Amortization of intangibles

2,598

2,598

2,933

—

(11.42)

FDIC expense

5,252

5,234

5,989

0.34

(12.31)

Other operating expenses

9,056

11,809

9,836

(23.31)

(7.93)

Total noninterest expense

$

155,622

$

160,742

$

165,041

(3.19)

(5.71)

Noninterest expense decreased $5.1 million,

or 3.19%, QoQ

Salaries and wages down year over year

due to fewer full time equivalent

employees.

Favorable re-estimation of certain

repurchase reserve liabilities.

The efficiency ratio remained fairly constant

QoQ

at 60.22%, compared to 60.71% in the

prior quarter.

Highlights

Noninterest Expense Trend

(dollars in millions)

%

%

14

$14.1 billion Originated Loan Portfolio

December

31, 2015

Change 4Q 2015

vs.

Period end balances

(Dollars in thousands)

2015

4th Qtr

2015

3rd Qtr

2014

4th Qtr

C&I

$

5,793,408

4.9%

11.9%

CRE

2,077,344

(0.6)

(1.9)

Construction

645,337

4.2

20.0

Leases

491,741

6.5

32.8

Total commercial

9,007,830

3.6%

9.8%

Mortgage

689,045

2.3

10.2

Installment

2,990,349

3.1

24.9

Home equity

1,248,438

3.0

12.4

Credit card

182,843

7.3

11.2

Total consumer

5,110,675

3.1%

19.0%

Total originated loan

portfolio

$

14,118,505

3.4%

13.0%

Diversified Originated Loan Portfolio

1

1 Excludes acquired and FDIC acquired loans.

15

Average Originated Commercial Loans

1

Commercial production showed continued growth. 

Composition of Average Originated CRE Loans

December

31, 2015

1 Excludes acquired and FDIC acquired loans.

Highlights

Average Originated Commercial Loans

(dollars in millions)

16

Average Originated Consumer Loans

1

The originated consumer loan portfolios showed

strong growth QoQ.  Total originated consumer loans

were up $198.3 million, or 4.09%, from the prior

quarter. 

Leading the growth was installment, up $133.7

million, or 4.75%, reflecting our continued success

in expanding the Citizens' indirect recreational

lending into our legacy markets and expanding our

indirect auto lending into Michigan and Wisconsin.

Home equity loans were up $37.9 million, or

3.17%, over the prior quarter. 

Although small, the card portfolio has showed

continued growth QoQ

of $7.4 million, or 4.38%,

as a result of consistent execution of our plan to

grow this high-quality portfolio across our new

customer base.

Average Originated Consumer Loans

(dollars in millions)

1 Excludes acquired and FDIC acquired loans.

Highlights

17

Investment Portfolio Summary

Investment Security Mix (Book Value $6.6 billion)

2015

4th Qtr

2015

3rd Qtr

2014

4th Qtr

Market value

$

6,624

$

6,652

$

6,421

Yield

2.32

2.31%

2.34%

Duration

3.34

3.35

4.25

Quarterly purchases

$

425

$

240

$

241

% Chg NII

Year 1

Year 2

Cumulative

+ 100 Bps

2.31%

5.01%

3.64%

+ 200 Bps

4.38

9.46

6.88

$ Chg NII

Year 1

Year 2

Cumulative

+ 100 Bps

$

17.0

$

35.9

$

52.9

+ 200 Bps

32.3

67.7

100.1

Interest Rate Sensitivity

(dollars in millions)

Portfolio Statistics

(dollars in millions)

18

Deposits

Average Deposits

December

31, 2015

Highlights

Continue to successfully execute on our core deposit

generation and retention strategy. 

Average

core

deposits

increased

$11.8

million

QoQ

and

were 88.71% of the total average deposit base.

Total deposits costs remain low at 19 bps. 

19

Capital Position

Highlights

Under Basel III, all regulatory capital ratios remained in

excess of well-capitalized limits.

Quarterly common stock dividend remained constant at

$0.17 per share.

1 See Reconciliation of Non-GAAP Measures.

2 The Basel III capital rules, effective January 1, 2015, replaced tier 1 common equity and the associated tier 1 common equity ratio with common equity tier 1 ("CET1") capital and the CET1 risk-based capital ratio. 

December

31, 2015 figures are preliminary and presented on a Basel III basis and reflect transitional capital requirements and phase-in provisions, including the standardized approach for calculating risk

weighted assets.

Common Stock Dividend Payout Ratio

Tangible Common Equity to Tangible Assets

Common Equity Tier 1

1,2

20

Reconciliation of Non-GAAP Measures: Tangible common equity and total assets 

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Shareholders’ equity (GAAP)

$

2,940,095

$

2,937,300

$

2,887,957

$

2,888,786

$

2,834,281

Less:

Preferred stock

100,000

100,000

100,000

100,000

100,000

Common shareholders' equity (non-GAAP)

2,840,095

2,837,300

2,787,957

2,788,786

2,734,281

Less:

Intangible assets

60,628

63,226

65,824

68,422

71,020

Goodwill

741,740

741,740

741,740

741,740

741,740

Tangible common equity (non-GAAP)

2,037,727

2,032,334

1,980,393

1,978,624

1,921,521

Total assets (GAAP)

$

25,524,604

$

25,246,917

$

25,297,014

$

25,118,120

$

24,902,347

Less:

Intangible assets

60,628

63,226

65,824

68,422

71,020

Goodwill

741,740

741,740

741,740

741,740

741,740

Tangible assets (non-GAAP)

$

24,722,236

$

24,441,951

$

24,489,450

$

24,307,958

$

24,089,587

Tangible common equity to tangible assets ratio (non-GAAP)

8.24

8.31

8.09

8.14

7.98

The table below presents computations of tangible common equity, tangible assets and the tangible common equity to tangible assets ratio, which

are all considered non-GAAP measures. The table below also reconciles the U.S. GAAP performance measures to the corresponding non-GAAP

measures. Management uses these non-GAAP financial measures to assess the quality of capital and believes that investors may find them useful

in their analysis of the Corporation. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not

audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical

tools, and should not be considered in isolation, or as a substitute for analysis of results as reported under GAAP. These non-GAAP measures are

not necessarily comparable to similar measures that may be represented by other companies.

%

%

%

%

%

21

Reconciliation of Non-GAAP Measures: Capital Position

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Shareholders’ equity (GAAP)

$

2,940,095

$

2,937,300

$

2,887,957

$

2,888,786

$

2,834,281

Less:

Goodwill

741,740

741,740

741,740

741,740

741,740

Regulatory and other adjustments

79,330

120,751

116,315

140,706

88,080

Tier 1 capital (non-GAAP)

2,119,025

2,074,809

2,029,902

2,006,340

2,004,461

Less:

Preferred stock

100,000

100,000

100,000

100,000

100,000

Trust preferred securities

—

—

—

—

—

Plus:

Tier 1 capital adjustments

100,000

100,000

100,000

100,000

—

CET1 capital (non-GAAP)

1 (Basel III)

$

2,119,025

2,074,809

$

2,029,902

$2,006,340

N/A

Tier 1 common equity (non-GAAP)

1 (Basel I)

N/A

N/A

N/A

N/A

1,904,461

Plus:

Tier 2 adjustments

614,023

614,193

609,041

591,018

649,432

Total risk-based capital (non-GAAP)

$

2,733,048

$

2,689,002

$

2,638,943

$

2,597,358

$

2,653,893

The table below presents computations of Tier 1, total risk-based and CET1 capital which are all considered non-GAAP measures. The table below

also reconciles the U.S. GAAP capital measures to the corresponding non-GAAP measures. Management uses these non-GAAP financial

measures to assess the adequacy of capital and believes that regulators and investors may find them useful in their analysis of the Corporation.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP

financial

measures

are

frequently

used

by

regulators

and

investors

to

evaluate

a

company,

they

have

limitations

as

analytical

tools,

and

should

not

be considered in isolation, or as a substitute for analysis of results as reported under GAAP. These non-GAAP measures are not necessarily

comparable to similar measures that may be represented by other companies.

1 The Basel III capital rules, effective January 1, 2015, replaced tier 1 common equity and the associated tier 1 common equity ratio with common equity tier 1 ("CET1") capital and

the CET1 risk-based capital ratio. December 31, 2015 figures are preliminary and presented on a Basel III basis and reflect transitional capital requirements and phase-in provisions,

including the standardized approach for calculating risk weighted assets.  2014 amounts and ratios are reported on a Basel I basis.

22

Reconciliation of Non-GAAP Measures: Adjusted net income

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Net income (GAAP)

$

56,749

$

59,012

$

56,584

$

57,139

$

61,079

Net income adjustments

Plus:

Restructure expenses, net of taxes

(200)

—

—

1,149

564

Branch closure costs, net of taxes

—

—

1,149

783

—

Adjusted net income (non-GAAP)

56,549

59,012

57,733

59,071

61,643

Annualized net income (GAAP)

225,145

234,124

226,958

231,730

242,324

Annualized adjusted net income (non-GAAP)

224,352

234,124

231,566

239,566

244,562

Average assets (GAAP)

25,370,946

25,217,856

25,129,859

24,905,094

24,664,987

Average equity (GAAP)

2,943,268

2,909,660

2,892,432

2,866,362

2,849,618

Average tangible common equity (non-GAAP)

2,039,639

2,003,423

1,983,603

1,954,930

1,935,435

Return on average assets (GAAP)

0.89%

0.93%

0.90%

0.93%

0.98

Adjusted return on average assets (non-GAAP)

0.88%

0.93%

0.92%

0.96%

0.99

Return on average equity (GAAP)

7.65%

8.05%

7.85%

8.08%

8.50

Adjusted return on average equity (non-GAAP)

7.62%

8.05%

8.01%

8.36%

8.58

Return on average tangible common equity (non-GAAP)

11.04%

11.69%

11.44%

11.85%

12.52

Adjusted return on average tangible common equity (non-GAAP)

11.00%

11.69%

11.67%

12.25%

12.64

The following table presents net income as reported (GAAP) excluding the impact of acquisition related costs incurred during 2014 to arrive at

adjusted net income. Management believes these adjustments increase comparability of period-to-period results and uses these measures to assess

performance

and

believes

investors

may

find

them

useful

in

their

analysis

of

the

Corporation.

It

is

possible

that

the

activities

related

to

the

adjustments may recur; however, Management does not consider the activities related to the adjustments to be indications of ongoing operations.

Return on average tangible common shareholders' equity is a non-GAAP measure that calculates the return on average common shareholders' equity

excluding goodwill and intangible assets. This measure is useful for evaluating the performance of a business consistently, whether acquired or

developed internally.  Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although

these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not

be considered in isolation, or as a substitute for analysis of results as reported under GAAP. These non-GAAP measures are not necessarily

comparable to similar measures that may be represented by other companies.

23

Reconciliation of Non-GAAP Measures: Non-operating items

(Dollars in thousands)

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Net interest income (TE) (non-GAAP)

$

188,979

$

189,119

$

189,018

$

189,554

$

196,509

Noninterest income (GAAP)

65,143

71,426

66,582

65,847

71,960

Noninterest income adjustments:

Gains/(losses) on sales of securities

(5

41

567

354

16

Branch closure costs

—

—

1,768

1,205

—

Adjusted noninterest income (non-GAAP)

65,148

71,385

67,783

66,698

71,944

Adjusted total revenue, TE excluding securities gains/(losses) (non-GAAP)

254,127

260,504

256,801

256,252

268,453

Noninterest expense (GAAP)

155,622

160,742

161,674

160,652

165,041

Noninterest expense adjustments:

Less:

Amortization of intangible assets

2,598

2,598

2,598

2,598

2,933

Restructure expenses

(307

—

—

1,767

868

Branch closures costs and acquisition related expenses

—

—

—

—

—

Adjusted noninterest expense (non-GAAP)

153,331

158,144

159,076

156,287

161,240

Fee income ratio, as reported (non-GAAP)

25.64

27.40

25.88

25.68%

26.80%

Efficiency ratio, as reported, excluding amortization of intangible assets and securities gains

(losses) (non-GAAP)

60.22

60.71

62.37

61.97%

60.39%

Efficiency ratio, as adjusted (non-GAAP)

60.34

60.71

61.95

60.99%

60.06%

The table below presents non-interest income and noninterest expense (GAAP) excluding certain adjustments to arrive at adjusted noninterest

income and noninterest expense (non-GAAP).  The Corporation believes that the exclusion of these adjustments provides a meaningful base for

period-to-period comparisons, which Management believes will assist investors in analyzing the operating results of the Corporation. These non-

GAAP

financial

measures

are

also

used

by

Management

to

assess

the

performance

of

the

Corporation's

business.

It

is

possible

that

the

activities

related to the adjustments may recur; however, Management does not consider the activities related to the adjustments to be indications of ongoing

operations. The Corporation believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of

the Corporation on the same basis as that applied by Management.

Fourth Quarter 2015 Supplemental Information

January

26, 2016

FIRSTMERIT

Corporation