EXHIBIT 99.1
[FIRSTMERIT CORPORATION LOGO]
For Release February 7, 2006
ANALYSTS: TOM O'MALLEY MEDIA: JACQUE SIR LOUIS
(330) 384-7109 (330) 849-8877
FIRSTMERIT CORPORATION ANNOUNCES REVISION OF FOURTH QUARTER
AND FULL YEAR 2005 EARNINGS RELATED TO RECLASSIFICATION
OF A COMMERCIAL CREDIT RELATIONSHIP
FULL YEAR 2005 DILUTED EPS REDUCED BY $0.04 TO $1.56
AKRON, Ohio, February 7, 2006 -- FirstMerit Corporation (Nasdaq: FMER) announced
today a revision to its fourth quarter and full years 2005 earnings based on a
charge of $3.5 million after-tax, or $0.04 per diluted share, due to an
increased loan loss provision expense recorded in the fourth quarter of 2005.
The increase is related to a subsequent event that provided the Company with
additional information on one criticized commercial relationship, originally
downgraded to criticized asset status during the fourth quarter of 2005. The
information was received by the Company after its earnings release on January
19, 2006.
Earnings per diluted share for the fourth quarter and full year 2005 were
affected by the $3.5 million charge. The revised full year 2005 net income is
$130.5 million, or $1.56 per diluted share, instead of $134.0 million, or $1.60
per share, as originally reported on January 19, 2006. This compares with $103.2
million, or $1.21 per diluted share, for 2004. For the fourth quarter of 2005,
FirstMerit is reporting revised net income of $27.7 million, or $0.34 per
diluted share, instead of $31.2 million, or $0.38 per diluted share, as
originally reported, compared with $28.4 million or $0.33 per share, for the
prior-year quarter.
In late January, after further review of the borrower's financial condition,
FirstMerit concluded that the borrower's financial condition was significantly
worse than what previously had been represented to the bank. Based on this
analysis, FirstMerit concluded that the financial schedules for December 31,
2005 included in the January 19, 2006 earnings release did not reflect the full
scope of impairment to this credit relationship. The Company's revised
nonperforming assets at December 31, 2005, are $72.3 million, instead of $60.7
million as previously reported. The estimate of loss related to this commercial
relationship is now fully reflected with the additional loan loss provision
expense.
These changes are reflected in the schedules that are part of this release and
will also be reflected in the financial statements and supplementary data to be
filed with FirstMerit's Form 10-K for the fiscal year ended December 31, 2005,
which FirstMerit intends to file on or about March 2, 2006.
FirstMerit Corporation is a diversified financial services company headquartered
in Akron, Ohio, with assets of $10.2 billion as of December 31, 2005 and 160
banking offices in 24 Ohio and Western Pennsylvania counties. FirstMerit
provides a complete range of banking and other financial services to consumers
and businesses through its core operations. Principal wholly-owned subsidiaries
include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation, FirstMerit
Title Agency, Ltd., FirstMerit Credit Life Insurance Company, 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.
FIRSTMERIT CORPORATION AND SUBSIDIARIES [FIRSTMERIT CORPORATION LOGO]
CONSOLIDATED FINANCIAL HIGHLIGHTS
QUARTERS
---------------------------------------------------------------------------
(Unaudited) 2005 2005 2005 2005 2004
(Dollars in thousands) 4th QTR 3rd QTR 2nd QTR 1st QTR 4th QTR
----------- ---------- ---------- ---------- ----------
EARNINGS
Net interest income FTE (a) $ 88,152 88,347 88,432 86,685 87,993
Provision for loan losses 16,260 9,974 5,972 11,614 9,358
Other income 47,586 47,846 50,095 44,939 39,402
Other expenses 79,274 78,926 79,397 75,911 80,279
FTE adjustment (a) 650 641 655 675 669
Net income 27,656 36,594 36,145 30,088 28,369
Diluted EPS 0.34 0.43 0.43 0.36 0.33
PERFORMANCE RATIOS
Return on average assets (ROA) 1.07% 1.41% 1.40% 1.19% 1.12%
Return on average common equity (ROE) 11.52% 14.90% 15.07% 12.48% 11.49%
Net interest margin FTE (a) 3.73% 3.70% 3.74% 3.73% 3.76%
Efficiency ratio 58.26% 57.81% 57.14% 58.33% 60.69%
Number of full-time equivalent employees 3,057 3,073 3,078 3,081 3,158
MARKET DATA
Book value/common share $ 11.39 11.65 11.69 11.32 11.66
Period-end common share mkt value 25.91 26.79 26.11 26.76 28.49
Market as a % of book 228% 230% 223% 236% 244%
Cash dividends/common share $ 0.28 0.28 0.27 0.27 0.27
Common stock dividend payout ratio 82.35% 65.12% 62.79% 75.00% 81.82%
Average basic common shares 82,786 83,489 83,603 84,097 84,286
Average diluted common shares 83,082 83,978 83,890 84,497 84,777
Period end common shares 82,335 83,442 83,522 83,612 84,191
Common shares repurchased 1,228,293 178,872 145,143 816,208 197,235
Common stock market capitalization $ 2,133,300 2,235,411 2,180,759 2,237,457 2,398,602
ASSET QUALITY
Gross charge-offs $ 22,736 14,207 15,422 16,740 17,873
Net charge-offs 18,379 10,002 10,278 11,795 12,553
Allowance for loan losses (b) 90,661 92,780 92,808 97,115 97,296
Reserve for unfunded lending commitments (b) 6,072 5,857 5,785 6,479 5,774
Nonperforming assets (NPAs) 72,257 51,398 53,985 46,703 45,891
Net charge-off/average loans ratio 1.09% 0.60% 0.62% 0.74% 0.78%
Allowance for loan losses/period-end loans 1.36% 1.39% 1.40% 1.49% 1.51%
Allowance for credit losses/period-end loans (c) 1.45% 1.47% 1.49% 1.59% 1.60%
NPAs/loans and other real estate 1.08% 0.77% 0.82% 0.71% 0.71%
Allowance for loan losses/nonperforming loans 145.61% 221.46% 208.74% 235.71% 240.14%
Allowance for credit losses/nonperforming loans (c) 155.36% 235.44% 221.76% 251.44% 254.39%
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 7.93% 8.17% 8.19% 7.93% 8.39%
Average equity to assets 9.33% 9.46% 9.32% 9.56% 9.70%
Average equity to loans 14.22% 14.66% 14.58% 15.06% 15.26%
Average loans to deposits 92.11% 91.73% 90.16% 88.27% 86.69%
AVERAGE BALANCES
Assets (b) $10,211,619 10,295,827 10,329,167 10,226,765 10,120,109
Deposits 7,273,980 7,245,562 7,321,860 7,354,689 7,421,815
Loans 6,699,997 6,646,112 6,601,204 6,492,044 6,434,115
Earning assets 9,368,139 9,465,288 9,489,431 9,421,693 9,314,744
Shareholders' equity 952,715 974,147 962,239 977,888 982,147
ENDING BALANCES
Assets (b) $10,161,317 10,290,243 10,314,268 10,274,154 10,122,627
Deposits 7,233,650 7,352,026 7,173,857 7,324,551 7,365,447
Loans 6,681,243 6,695,290 6,611,011 6,530,546 6,433,083
Goodwill 139,245 139,245 139,245 139,245 139,245
Intangible assets 3,756 3,978 4,200 4,424 4,647
Earning assets 9,270,305 9,429,183 9,492,583 9,453,738 9,343,491
Total shareholders' equity 937,580 972,348 976,016 946,731 981,257
- ----------
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.
(b) - As of December 31, 2004, the reserve for unfunded lending commitments
has been reclassified from the allowance for loan losses to other
liabilities. Amounts presented prior to December 31, 2004, have been
reclassified to conform to the current presentation.
(c) - The allowance for credit losses is the sum of the allowance for loan
losses and the reserve for unfunded lending commitments.
Page 1
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited, except December 31, 2004, which is derived from the December 31, December 31,
audited financial statements) 2005 2004
- ------------------------------------------------------------------- -------------- ------------
ASSETS
Cash and due from banks $ 225,953 169,052
Investment securities (at fair value) and federal funds sold 2,546,496 2,862,015
Loans held for sale 42,566 48,393
Loans:
Commercial loans 3,533,399 3,290,819
Mortgage loans 628,581 639,715
Installment loans 1,524,355 1,592,781
Home equity loans 778,697 676,230
Credit card loans 145,592 145,042
Leases 70,619 88,496
-------------- ----------
Total loans 6,681,243 6,433,083
Less allowance for loan losses (90,661) (97,296)
-------------- ----------
Net loans 6,590,582 6,335,787
Premises and equipment, net 120,420 121,198
Goodwill 139,245 139,245
Intangible assets 3,756 4,647
Accrued interest receivable and other assets 492,299 442,290
-------------- ----------
Total assets $ 10,161,317 10,122,627
============== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-non-interest bearing $ 1,523,731 1,470,543
Demand-interest bearing 830,248 841,595
Savings and money market accounts 2,304,177 2,384,510
Certificates and other time deposits 2,575,494 2,668,799
-------------- ----------
Total deposits 7,233,650 7,365,447
-------------- ----------
Securities sold under agreements to repurchase 1,426,037 1,336,471
Wholesale borrowings 401,104 300,220
Accrued taxes, expenses, and other liabilities 162,946 139,232
-------------- ----------
Total liabilities 9,223,737 9,141,370
-------------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, without par value:
authorized and unissued 7,000,000 shares -- --
Preferred stock, Series A, without par value:
designated 800,000 shares; none outstanding -- --
Convertible preferred stock, Series B, without par value:
designated 220,000 shares; none outstanding -- --
Common stock, without par value:
authorized 300,000,000 shares; issued 92,026,350 at
December 31, 2005 and December 31, 2004 127,937 127,937
Capital surplus 108,210 110,513
Accumulated other comprehensive loss (42,850) (14,208)
Retained earnings 994,487 956,802
Treasury stock, at cost, 9,691,424 and 7,835,399
shares at December 31, 2005, December 31, 2004, respectively (250,204) (199,787)
-------------- ----------
Total shareholders' equity 937,580 981,257
-------------- ----------
Total liabilities and shareholders' equity $ 10,161,317 10,122,627
============== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
FIRSTMERIT CORPORATION AND SUBSIDIARIES [FIRSTMERIT CORPORATION LOGO]
AVERAGE CONSOLIDATED BALANCE SHEETS
Quarterly Periods
-----------------------------------------------------------------------------
(Unaudited) December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2005 2005 2005 2005 2004
------------ ------------- -------- --------- ------------
ASSETS
Cash and due from banks $ 192,189 197,412 197,548 190,740 198,077
Investment securities/fed funds sold 2,619,248 2,764,724 2,833,818 2,876,415 2,831,253
Loans held for sale 48,894 54,452 54,409 53,234 49,376
Loans:
Commercial loans 3,519,807 3,441,231 3,434,946 3,346,425 3,272,545
Mortgage loans 637,877 641,532 641,865 646,528 642,569
Installment loans 1,556,212 1,594,801 1,601,775 1,598,953 1,612,132
Home equity loans 772,757 754,492 704,054 674,913 670,366
Credit card loans 142,743 140,873 137,919 141,440 141,953
Leases 70,601 73,183 80,645 83,785 94,550
------------ ---------- ---------- ---------- ----------
Total loans 6,699,997 6,646,112 6,601,204 6,492,044 6,434,115
Less allowance for loan losses (a) 91,916 91,852 96,342 96,438 99,675
------------ ---------- ---------- ---------- ----------
Net loans 6,608,081 6,554,260 6,504,862 6,395,606 6,334,440
Total earning assets 9,368,139 9,465,288 9,489,431 9,421,693 9,314,744
Premises and equipment, net 117,387 117,471 118,392 119,916 121,147
Accrued interest receivable and other assets 625,820 607,508 620,138 590,854 585,816
------------ ---------- ---------- ---------- ----------
TOTAL ASSETS $ 10,211,619 10,295,827 10,329,167 10,226,765 10,120,109
============ ========== ========== ========== ==========
LIABILITIES
Deposits:
Demand-non-interest bearing $ 1,488,679 1,457,487 1,470,673 1,447,226 1,462,830
Demand-interest bearing 817,009 838,549 834,708 820,974 829,650
Savings and money market accounts 2,332,528 2,333,331 2,370,280 2,392,023 2,423,790
Certificates and other time deposits 2,635,764 2,616,195 2,646,199 2,694,466 2,705,545
------------ ---------- ---------- ---------- ----------
Total deposits 7,273,980 7,245,562 7,321,860 7,354,689 7,421,815
Securities sold under agreements to repurchase 1,443,740 1,478,857 1,385,644 1,326,242 1,262,156
Wholesale borrowings 375,167 442,035 498,088 412,149 300,550
------------ ---------- ---------- ---------- ----------
Total funds 9,092,887 9,166,454 9,205,592 9,093,080 8,984,521
Accrued taxes, expenses and other liabilities (a) 166,017 155,226 161,336 155,797 153,441
------------ ---------- ---------- ---------- ----------
Total liabilities 9,258,904 9,321,680 9,366,928 9,248,877 9,137,962
SHAREHOLDERS' EQUITY
Preferred stock -- -- -- -- --
Common stock 127,937 127,937 127,937 127,937 127,937
Capital surplus 108,303 108,564 108,559 108,478 110,217
Accumulated other comprehensive (loss) income (39,834) (25,682) (26,883) (16,998) (12,559)
Retained earnings 994,301 982,419 968,408 960,740 953,566
Treasury stock (237,992) (219,091) (215,782) (202,269) (197,014)
------------ ---------- ---------- ---------- ----------
Total shareholders' equity 952,715 974,147 962,239 977,888 982,147
------------ ---------- ---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,211,619 10,295,827 10,329,167 10,226,765 10,120,109
============ ========== ========== ========== ==========
- ----------
(a) As of December 31, 2004, the reserve for unfunded lending commitments has
been reclassified from the allowance for loan losses. Amounts presented
prior to December 31, 2004 have been reclassified to conform to the
current presentation.
AVERAGE CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FULLY-TAX EQUIVALENT INTEREST RATES AND INTEREST DIFFERENTIAL
FIRSTMERIT CORPORATION AND SUBSIDIARIES Three months ended Three months ended
---------------------------------- -----------------------------
(Dollars in thousands) December 31, 2005 September 30, 2005
---------------------------------- -----------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------ ----------- ------- ---------- -------- --------
ASSETS
Cash and due from banks $ 192,189 197,412
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government
agency obligations (taxable) 2,266,774 21,651 3.79% 2,408,219 22,621 3.73%
Obligations of states and political subdivisions
(tax exempt) 97,395 1,633 6.65% 99,273 1,638 6.55%
Other securities and federal funds sold 255,079 3,437 5.35% 257,232 3,056 4.71%
------------ -------- ---------- -------
Total investment securities and federal funds
sold 2,619,248 26,721 4.05% 2,764,724 27,315 3.92%
Loans held for sale 48,894 762 6.18% 54,452 660 4.81%
Loans 6,699,997 115,126 6.82% 6,646,112 110,535 6.60%
------------ -------- ---------- -------
Total earning assets 9,368,139 142,609 6.04% 9,465,288 138,510 5.81%
Allowance for loan losses (91,916) (91,852)
Other assets 743,207 724,979
------------ ----------
Total assets $ 10,211,619 10,295,827
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $ 1,488,679 -- -- 1,457,487 -- --
Demand - interest bearing 817,009 1,953 0.95% 838,549 1,732 0.82%
Savings and money market accounts 2,332,528 10,352 1.76% 2,333,331 8,700 1.48%
Certificates and other time deposits 2,635,764 23,831 3.59% 2,616,195 21,637 3.28%
------------ -------- ---------- -------
Total deposits 7,273,980 36,136 1.97% 7,245,562 32,069 1.76%
Securities sold under agreements to repurchase 1,443,740 13,423 3.69% 1,478,857 12,535 3.36%
Wholesale borrowings 375,167 4,898 5.18% 442,035 5,559 4.99%
------------ -------- ---------- -------
Total interest bearing liabilities 7,604,208 54,457 2.84% 7,708,967 50,163 2.58%
Other liabilities 166,017 155,226
Shareholders' equity 952,715 974,147
------------ ----------
Total liabilities and shareholders' equity $ 10,211,619 10,295,827
============ ==========
Net yield on earning assets $ 9,368,139 88,152 3.73% 9,465,288 88,347 3.70%
============ ======= ==== ========== ======= =====
Interest rate spread 3.20% 3.22%
==== ====
FIRSTMERIT CORPORATION AND SUBSIDIARIES Three months ended Three months ended
--------------------------- ---------------------------------
(Dollars in thousands) June 30, 2005 March 31, 2005
--------------------------- ---------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
---------- -------- ------- ----------- ---------- -------
ASSETS
Cash and due from banks 197,548 190,740
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government
agency obligations (taxable) 2,478,319 23,722 3.84% 2,518,784 23,818 3.83%
Obligations of states and political subdivisions
(tax exempt) 99,756 1,673 6.73% 101,571 1,763 7.04%
Other securities and federal funds sold 255,743 3,037 4.76% 256,060 2,763 4.38%
---------- ------- ----------- --------
Total investment securities and federal funds
sold 2,833,818 28,432 4.02% 2,876,415 28,344 4.00%
Loans held for sale 54,409 804 5.93% 53,234 627 4.78%
Loans 6,601,204 105,196 6.39% 6,492,044 99,546 6.22%
---------- ------- ----------- --------
Total earning assets 9,489,431 134,432 5.68% 9,421,693 128,517 5.53%
Allowance for loan losses (96,342) (96,438)
Other assets 738,530 710,770
---------- -----------
Total assets 10,329,167 10,226,765
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing 1,470,673 -- -- 1,447,226 -- --
Demand - interest bearing 834,708 1,230 0.59% 820,974 956 0.47%
Savings and money market accounts 2,370,280 7,517 1.27% 2,392,023 6,375 1.08%
Certificates and other time deposits 2,646,199 20,696 3.14% 2,694,466 20,600 3.10%
---------- ------- ----------- --------
Total deposits 7,321,860 29,443 1.61% 7,354,689 27,931 1.54%
Securities sold under agreements to repurchase 1,385,644 10,624 3.08% 1,326,242 8,841 2.70%
Wholesale borrowings 498,088 5,933 4.78% 412,149 5,059 4.98%
---------- ------- ----------- --------
Total interest bearing liabilities 7,734,919 46,000 2.39% 7,645,854 41,831 2.22%
Other liabilities 161,336 155,797
Shareholders' equity 962,239 977,888
---------- -----------
Total liabilities and shareholders' equity 10,329,167 10,226,765
========== ===========
Net yield on earning assets 9,489,431 88,432 3.74% 9,421,693 86,686 3.73%
========== ======= ===== =========== ======= ====
Interest rate spread 3.30% 3.31%
==== ====
Notes: Interest income on tax-exempt securities and loans have been adjusted to
a fully-taxable equivalent basis. 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 basis is not an accounting principle generally accepted
in the United States of America. Nonaccrual loans have been included in the
average balances.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME [FIRSTMERIT CORPORATION LOGO]
(Unaudited)
Quarters ended Twelve months ended
(In thousands except per share data) December 31, December 31,
------------------ ------------------
2005 2004 2005 2004
--------- ------- -------- -------
Interest income:
Interest and fees on loans, including held for sale $ 115,850 98,792 433,143 385,919
Interest and dividends on investment securities and federal funds sold 26,109 26,590 108,303 111,476
--------- ------- -------- -------
Total interest income 141,959 125,382 541,446 497,395
--------- ------- -------- -------
Interest expense:
Interest on deposits:
Demand-interest bearing 1,953 704 5,871 2,152
Savings and money market accounts 10,352 5,310 32,944 19,145
Certificates and other time deposits 23,831 20,463 86,764 81,540
Interest on securities sold under agreements to repurchase 13,423 7,182 45,423 26,259
Interest on wholesale borrowings 4,898 4,399 21,449 17,494
--------- ------- -------- -------
Total interest expense 54,457 38,058 192,451 146,590
--------- ------- -------- -------
Net interest income 87,502 87,324 348,995 350,805
Provision for loan losses 16,260 9,358 43,820 73,923
--------- ------- -------- -------
Net interest income after provision for loan losses 71,242 77,966 305,175 276,882
--------- ------- -------- -------
Other income:
Trust department income 5,430 5,315 22,134 21,595
Service charges on deposits 17,884 15,135 69,065 62,162
Credit card fees 10,601 9,937 40,972 37,728
ATM and other service fees 3,157 2,892 12,867 11,879
Bank owned life insurance income 3,092 3,113 12,264 12,314
Investment services and insurance 2,696 2,560 10,608 12,850
Manufactured housing income 3 10 148 165
Investment securities gains, net 39 (4,508) 1,926 (2,997)
Loan sales and servicing income 1,668 2,033 6,397 6,075
Other operating income 3,016 2,915 14,085 12,514
--------- ------- -------- -------
Total other income 47,586 39,402 190,466 174,285
--------- ------- -------- -------
Other expenses:
Salaries, wages, pension and employee benefits 40,790 40,756 163,683 160,052
Net occupancy expense 5,746 5,468 23,730 22,557
Equipment expense 4,152 3,347 13,301 13,345
Stationery, supplies and postage 2,546 2,821 10,050 10,716
Bankcard, loan processing and other costs 7,042 6,355 24,012 24,307
Professional services 3,389 3,785 12,014 13,688
Amortization of intangibles 222 222 889 889
Other operating expense 15,387 17,525 65,829 66,375
--------- ------- -------- -------
Total other expenses 79,274 80,279 313,508 311,929
--------- ------- -------- -------
Income before income tax expense 39,554 37,089 182,133 139,238
Federal income taxes 11,898 8,720 51,650 36,024
--------- ------- -------- -------
Net income $ 27,656 28,369 130,483 103,214
========= ======= ======== =======
Other comprehensive income (loss), net of taxes
Unrealized securities' holding gains (losses), net of taxes (5,736) (3,751) (24,041) (6,679)
Minimum pension liability adjustment, net of taxes (3,166) (2) (3,349) (2)
Less: reclassification adjustment for securities' gains (losses) realized in net income,
net of taxes 25 845 1,252 (1,948)
--------- ------- -------- -------
Total other comprehensive income (loss), net of taxes (8,927) (4,598) (28,642) (4,733)
--------- ------- -------- -------
Comprehensive income $ 18,729 23,771 101,841 98,481
========= ======= ======== =======
Net income applicable to common shares $ 27,656 28,369 130,483 103,214
========= ======= ======== =======
Net income used in diluted EPS calculation $ 27,659 28,377 130,501 103,244
========= ======= ======== =======
Weighted average number of common shares outstanding - basic 82,786 84,286 83,490 84,601
========= ======= ======== =======
Weighted average number of common shares outstanding - diluted 83,082 84,777 83,844 84,996
========= ======= ======== =======
Basic earnings per share $ 0.33 0.34 1.56 1.22
========= ======= ======== =======
Diluted earnings per share $ 0.34 0.33 1.56 1.21
========= ======= ======== =======
Dividend per share $ 0.28 0.27 1.10 1.06
========= ======= ======== =======
- ----------
Note: Certain prior year balances have been reclassified to conform to the
current year presentation.
The accompanying notes are an integral part of the consolidated financial
statements.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME---LINKED QUARTERS [FIRSTMERIT CORPORATION LOGO]
(Unaudited)
QUARTERLY RESULTS
---------------------------------------------
(Dollars in thousands, except share data) 2005 2005 2005 2005 2004
4th Q 3rd Q 2nd Q 1st Q 4th Q
--------- ------- ------- ------- -------
Interest and fees on loans, including held for sale $ 115,850 111,169 105,975 100,149 98,792
Interest and dividends - securities and federal funds sold 26,109 26,700 27,802 27,692 26,590
--------- ------- ------- ------- -------
Total interest income 141,959 137,869 133,777 127,841 125,382
--------- ------- ------- ------- -------
Interest on deposits:
Demand-interest bearing 1,953 1,732 1,230 956 704
Savings and money market accounts 10,352 8,700 7,517 6,375 5,310
Certificates and other time deposits 23,831 21,637 20,696 20,600 20,463
Securities sold under agreements to repurchase 13,423 12,535 10,624 8,841 7,182
Wholesale borrowings 4,898 5,559 5,933 5,059 4,399
--------- ------- ------- ------- -------
Total interest expense 54,457 50,163 46,000 41,831 38,058
--------- ------- ------- ------- -------
Net interest income 87,502 87,706 87,777 86,010 87,324
Provision for loan losses 16,260 9,974 5,972 11,614 9,358
--------- ------- ------- ------- -------
Net interest income after provision for loan losses 71,242 77,732 81,805 74,396 77,966
--------- ------- ------- ------- -------
Other income:
Trust department income 5,430 5,515 5,684 5,505 5,315
Service charges on deposits 17,884 18,561 17,800 14,820 15,135
Credit card fees 10,601 10,437 10,523 9,411 9,937
ATM and other service fees 3,157 3,453 3,298 2,959 2,892
Bank owned life insurance income 3,092 3,074 3,024 3,074 3,113
Investment services and insurance 2,696 2,226 2,828 2,858 2,560
Manufactured housing income 3 3 40 102 10
Investment securities gains (losses), net 39 40 (25) 1,872 (4,508)
Loan sales and servicing income 1,668 2,076 1,520 1,133 2,033
Other operating income 3,016 2,461 5,403 3,205 2,915
--------- ------- ------- ------- -------
Total other income 47,586 47,846 50,095 44,939 39,402
--------- ------- ------- ------- -------
Other expenses:
Salaries, wages, pension and employee benefits 40,790 42,149 41,351 39,393 40,756
Net occupancy expense 5,746 5,567 5,881 6,536 5,468
Equipment expense 4,152 2,962 3,002 3,185 3,347
Stationery, supplies and postage 2,546 2,559 2,484 2,461 2,821
Bankcard, loan processing and other costs 7,042 5,802 5,444 5,724 6,355
Professional services 3,389 2,632 3,843 2,150 3,785
Amortization of intangibles 222 222 222 223 222
Other operating expense 15,387 17,033 17,170 16,239 17,525
--------- ------- ------- ------- -------
Total other expenses 79,274 78,926 79,397 75,911 80,279
--------- ------- ------- ------- -------
Income before income tax expense 39,554 46,652 52,503 43,424 37,089
Federal income taxes 11,898 10,058 16,358 13,336 8,720
--------- ------- ------- ------- -------
Net income $ 27,656 36,594 36,145 30,088 28,369
--------- ------- ------- ------- -------
Other comprehensive income (loss), net of taxes (8,927) (14,272) 18,540 (23,983) (823)
--------- ------- ------- ------- -------
Comprehensive income $ 18,729 22,322 54,685 6,105 27,546
--------- ------- ------- ------- -------
Net income applicable to common shares 27,656 36,594 36,145 30,088 28,369
--------- ------- ------- ------- -------
Adjusted net income used in diluted EPS calculation 27,659 36,601 36,152 30,095 28,377
--------- ------- ------- ------- -------
Weighted-average common shares - basic 82,786 83,489 83,603 84,097 84,286
--------- ------- ------- ------- -------
Weighted-average common shares - diluted 83,082 83,978 83,890 84,497 84,777
--------- ------- ------- ------- -------
Basic net income per share $ 0.33 0.44 0.43 0.36 0.34
========= ======= ======= ======= =======
Diluted net income per share $ 0.34 0.43 0.43 0.36 0.33
========= ======= ======= ======= =======
Note: Certain prior year balances have been reclassified to conform to the
current year presentation.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION [FIRSTMERIT CORPORATION LOGO]
(Unaudited, except December 31, 2004 annual period which
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
Quarterly Periods Annual Period
-----------------------------------------------------------------
Dec 31 Sep 30 June 30 Mar 31 Dec 31 Dec 31
ALLOWANCE FOR CREDIT LOSSES (a) 2005 2005 2005 2005 2004 2004
- --------------------------------------------------------- ------- ------ ------- ------- ------- -------
Allowance for loan losses, beginning of period (b) $92,780 92,808 97,115 97,296 100,491 91,459
Allowance related to loans sold - - - - - (12,671)
Provision for loan losses 16,260 9,974 5,971 11,614 9,358 73,923
Charge-offs 22,736 14,207 15,422 16,740 17,873 78,999
Recoveries 4,357 4,205 5,144 4,945 5,320 23,584
------- ------ ------- ------- ------- -------
Net charge-offs 18,379 10,002 10,278 11,795 12,553 55,415
------- ------ ------- ------- ------- -------
Allowance for loan losses, end of period $90,661 92,780 92,808 97,115 97,296 97,296
======= ====== ======= ======= ======= =======
Reserve for unfunded lending commitments,
beginning of period (b) $ 5,857 5,785 6,479 5,774 5,619 6,094
Provision for credit losses 215 72 (694) 705 155 (320)
------- ------ ------- ------- ------- -------
Reserve for unfunded lending commitments,
end of period $ 6,072 5,857 5,785 6,479 5,774 5,774
======= ====== ======= ======= ======= =======
Allowance for Credit Losses $96,733 98,637 98,593 103,594 103,070 103,070
======= ====== ======= ======= ======= =======
RATIOS (a) (b)
`
Provision for loan losses as a % of average loans 0.96% 0.60% 0.36% 0.73% 0.58% 1.13%
Provision for credit losses as a % of average loans 0.01% 0.00% -0.04% 0.04% 0.01% 0.00%
Net charge-offs as a % of average loans 1.09% 0.60% 0.62% 0.74% 0.78% 0.85%
Allowance for loan losses as a % of period-end loans 1.36% 1.39% 1.40% 1.49% 1.51% 1.51%
Allowance for credit losses as a % of period-end loans 1.45% 1.47% 1.49% 1.59% 1.60% 1.60%
Allowance for loan losses as a % of nonperforming loans 145.61% 221.46% 208.74% 235.71% 240.14% 240.14%
Allowance for credit losses as a % of nonperforming loans 155.36% 235.44% 221.76% 251.44% 254.39% 254.39%
ASSET QUALITY
Impaired loans:
Nonaccrual $54,176 34,144 38,124 34,207 33,831 33,831
Other nonperforming loans:
Nonaccrual 8,086 7,751 6,336 6,994 6,685 6,685
------- ------ ------- ------- ------- -------
Total nonperforming loans 62,262 41,895 44,460 41,201 40,516 40,516
Other real estate ("ORE") 9,995 9,503 9,525 5,502 5,375 5,375
------- ------ ------- ------- ------- -------
Total nonperforming assets ("NPAs") $72,257 51,398 53,985 46,703 45,891 45,891
======= ====== ======= ======= ======= =======
NPAs as % of period-end loans + ORE 1.08% 0.77% 0.82% 0.71% 0.71% 0.71%
======= ====== ======= ======= ======= =======
Past due 90 days or more & accruing interest $17,931 21,451 17,969 22,899 20,703 20,703
======= ====== ======= ======= ======= =======
(a) The allowance for credit losses is the sum of the allowance for loan
losses and the reserve for unfunded lending commitments.
(b) As of December 31, 2004, the reserve for unfunded lending commitments has
been reclassified from the allowance for loan losses. Amounts presented
prior to December 31, 2004 have been reclassified to conform to the
current presentation.
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST [FIRSTMERIT CORPORATION LOGO]
EXPENSE DETAIL
(Unaudited)
(Dollars in thousands)
2005 2005 2005 2005 2004
QUARTERLY OTHER INCOME DETAIL 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- -------
Trust department income $ 5,430 5,515 5,684 5,505 5,315
Service charges on deposits 17,884 18,561 17,800 14,820 15,135
Credit card fees 10,601 10,437 10,523 9,411 9,937
ATM and other service fees 3,157 3,453 3,298 2,959 2,892
Bank owned life insurance income 3,092 3,074 3,024 3,074 3,113
Investment services and insurance 2,696 2,226 2,828 2,858 2,560
Manufactured housing income 3 3 40 102 10
Investment securities gains (losses), net 39 40 (25) 1,872 (4,508)
Loan sales and servicing income 1,668 2,076 1,520 1,133 2,033
Other operating income 3,016 2,461 5,403 3,205 2,915
------- ------- ------- ------- -------
Total Other Income $47,586 47,846 50,095 44,939 39,402
======= ======= ======= ======= =======
2005 2005 2005 2005 2004
QUARTERLY OTHER EXPENSES DETAIL 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- -------
Salaries, wages, pension and employee benefits $40,790 42,149 41,351 39,393 40,756
Net occupancy expense 5,746 5,567 5,881 6,536 5,468
Equipment expense 4,152 2,962 3,002 3,185 3,347
Taxes, other than federal income taxes 1,578 849 880 735 908
Stationery, supplies and postage 2,546 2,559 2,484 2,461 2,821
Bankcard, loan processing and other costs 7,042 5,802 5,444 5,724 6,355
Advertising 1,415 1,863 3,182 1,244 2,984
Professional services 3,389 2,632 3,843 2,150 3,785
Telephone 1,136 1,206 1,095 1,119 1,204
Amortization of intangibles 222 222 222 223 222
Other operating expense 11,258 13,115 12,013 13,141 12,429
------- ------- ------- ------- -------
Total Other Expenses $79,274 78,926 79,397 75,911 80,279
======= ======= ======= ======= =======
FIRSTMERIT CORPORATION AND SUBSIDIARIES ALLOWANCE FOR LOAN LOSSES - NET
CHARGE-OFF DETAIL [FIRSTMERIT CORPORATION LOGO]
(Unaudited)
(Dollars in thousands)
Quarters ended Year ended
December 31, December 31,
------------------------- -------------------------
2005 2004 2005 2004
---------- --------- --------- ---------
Allowance for loan losses - beginning of period (a) $ 92,780 100,491 97,296 91,459
Loans charged off:
Commercial 7,890 4,245 19,349 25,073
Mortgage 639 576 1,721 1,174
Installment 9,063 9,196 29,307 35,958
Home equity 1,099 763 4,340 3,085
Credit cards 3,587 2,549 11,320 11,254
Manufactured housing - - - 443
Leases 458 544 3,068 2,012
---------- --------- --------- ---------
Total 22,736 17,873 69,105 78,999
---------- --------- --------- ---------
Recoveries:
Commercial 1,256 1,227 4,166 6,068
Mortgage 13 - 190 42
Installment 1,878 2,757 9,495 11,545
Home equity 374 357 1,302 1,430
Credit cards 489 655 2,348 2,920
Manufactured housing 203 192 710 1,088
Leases 144 122 439 491
---------- --------- --------- ---------
Total 4,357 5,320 18,650 23,584
---------- --------- --------- ---------
Net charge-offs 18,379 12,553 50,455 55,415
Allowance related to loans sold - - - (12,671)
Provision for loan losses 16,260 9,358 43,820 73,923
---------- --------- --------- ---------
Allowance for loan losses - end of period $ 90,661 97,296 90,661 97,296
========== ========= ========= =========
Average loans outstanding $6,699,997 6,434,115 6,610,509 6,493,472
========== ========= ========= =========
Ratio to average loans:
(Annualized) net charge-offs 1.09% 0.78% 0.76% 0.85%
========== ========= ========= =========
Provision for loan losses 0.96% 0.58% 0.66% 1.14%
========== ========= ========= =========
Loans outstanding - period-end $6,681,243 6,433,083 6,681,243 6,433,083
========== ========= ========= =========
Allowance for loan losses:
As a percent of period-end loans outstanding 1.36% 1.51% 1.36% 1.51%
========== ========= ========= =========
As a multiple of (annualized) net charge-offs 1.24 1.95 1.80 1.76
========== ========= ========= =========
As a multiple of (annualized) net charge-offs
and allowance related to loans sold 1.24 1.95 1.80 1.43
========== ========= ========= =========
(a) As of December 31, 2004, the reserve for unfunded lending commitments has
been reclassified from the allowance for loan losses to other liabilities.
Amounts presented prior to December 31, 2004 have been reclassified to
conform to the current presentation.