SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NUMBER 0-10161

FIRSTMERIT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

OHIO
------------------------------------------------------
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

34-1339938
------------------------------------------------------
(I.R.S. EMPLOYER IDENTIFICATION NO.)

III CASCADE PLAZA, AKRON, OHIO 44308-1444 (330) 996-6300
- - -------------------------------------- ------------ -------------------
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) (TELEPHONE NUMBER)
OFFICES)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, NO PAR VALUE
- - --------------------------------------------------------------------------------
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. YES [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

State the approximate aggregate market value of the voting stock held by
non-affiliates of the registrant as of February 1, 1997: $1,093,842,488.

Indicate the number of shares outstanding of registrant's common stock as
of February 1, 1996: 31,910,209 Shares of Common Stock, No Par Value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement of FirstMerit Corporation, dated February
26, 1997, in Part III.
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PART I

ITEM 1. BUSINESS

Registrant, FirstMerit Corporation ("FirstMerit" or the "Corporation"), is
a multi-bank holding company organized in 1981 under the laws of the State of
Ohio and registered under the Bank Holding Company Act of 1956, as amended. The
executive offices of FirstMerit are located in Akron, Ohio.

FirstMerit is the sole shareholder of each of the following entities: First
National Bank of Ohio, a national banking association, Akron, Ohio ("First
National"), The Old Phoenix National Bank of Medina, a national banking
association, Medina, Ohio ("Old Phoenix"), EST National Bank, a national banking
association, Elyria, Ohio ("EST"), Peoples National Bank, a national banking
association, Wooster, Ohio ("Peoples Bank"), Citizens National Bank, a national
banking association, Canton, Ohio ("Citizens"), Peoples Bank, N.A., Ashtabula,
Ohio, a national banking association, Ashtabula, Ohio ("Peoples N.A."),
(collectively, the "Banks"), FirstMerit Credit Life Insurance Company, an
Arizona corporation ("FirstMerit Insurance"), FirstMerit Community Development
Corporation ("FirstMerit CDC"), Citizens Investment Corporation, an Ohio
corporation, and Citizens Savings Corporation of Stark County, an Ohio
corporation (all, collectively, the "Subsidiaries").

FirstMerit is in the process of merging the Banks under a single charter.
It is currently contemplated that this process will be completed in 1998. The
resulting institution will be First National.

In 1996, FirstMerit Trust Company, N.A., a national trust company, Naples,
Florida ("FirstMerit Trust"), expanded its charter and converted from a national
trust company to a national bank. Subsequently, FirstMerit Bank, FSB, a federal
savings association, Clearwater, Florida ("FirstMerit FSB"), was merged with
FirstMerit Trust under the name FirstMerit Bank, N.A. On December 31, 1996,
FirstMerit Bank N.A. was sold to the SouthTrust Corporation of Birmingham,
Alabama.

Although principally a regional banking organization, FirstMerit through
the Subsidiaries provides a wide range of banking, fiduciary, financial and
investment services to corporate, institutional and individual customers
throughout northern Ohio, including Ashtabula, Cuyahoga, Erie, Geauga, Lake,
Lorain, Medina, Portage, Stark, Summit and Wayne Counties. FirstMerit directs
the overall policies, including lending practices, and financial resources of
the Subsidiaries, but most day-to-day affairs of Subsidiaries are managed by
their own officers and directors, some of whom are also officers and directors
of FirstMerit. In addition to the customary services of accepting funds for
deposit and making loans, the Banks provide a wide range of specialized services
tailored to specific markets, including personal and corporate trust services,
personal financial services, cash management services and international banking
services. FirstMerit's non-banking direct and indirect subsidiaries provide
insurance sales services, reinsurance of credit life and accident and health
insurance on loans made by the Banks, securities brokerage services, personal
property and equipment lease financing and other financial services. FirstMerit
has recently reactivated the health and life insurance license of one of its
indirect subsidiaries.

At February 1, 1997, FirstMerit's Subsidiaries operated 128 full service
banking offices, and had 161 automated teller machines, located in 11 counties
in the State of Ohio, and employed approximately 2,330 full- and part-time
employees.

Presented in the following schedule is further specific information
concerning each of the financial institution Subsidiaries of FirstMerit as of
February 1, 1997:

NUMBER
SUBSIDIARY COUNTIES OF DATE OF DATE OF OF
INSTITUTION OPERATION ORGANIZATION BUSINESS AFFILIATION TYPE OF CHARTER OFFICES
- - ---------------- ---------------- ------------ ---------------- ----------- ---------------- ------

First National Stark, Summit 1947 Commercial bank 12/31/81 Federal 58
Bank of Ohio Cuyahoga, Lake with trust
and Portage services
The Old Phoenix Medina 1873 Commercial bank 12/31/81 Federal 15
National Bank with trust
of Medina services
EST National Lorain, Cuyahoga 1901 Commercial bank 12/12/83 Federal 19
Bank and Erie with trust
services

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Peoples National Wayne 1892 Commercial bank 10/26/88 Federal 5
Bank with trust
services
Citizens Stark 1933 Commercial bank 3/21/89 Federal 18
National Bank with trust
services
Peoples Bank, Ashtabula, 1890 Commercial bank 9/30/90 Federal 15
N.A. Geauga and Lake with trust
services

SUBSIDIARY OPERATIONS

Each Bank is engaged in commercial banking in its respective geographical
market. Commercial banking includes the acceptance of demand, savings and time
deposits and the granting of commercial and consumer loans for the financing of
both real and personal property. Other services include automated banking
programs, credit cards, the rental of safe deposit boxes, letters of credit,
leasing, discount brokerage and credit life insurance. The Banks also operate
trust departments which offer estate and trust services. Each Bank offers its
services primarily to consumers and small and medium size businesses in its
respective geographic market. None of the Banks are engaged in lending outside
the continental United States. None of the Banks are dependent upon any one
significant customer or a specific industry.

FirstMerit Insurance was formed in 1985 to engage in underwriting of credit
life and credit accident and health insurance directly related to the extension
of credit by the Banks to their customers.

FirstMerit CDC was established in 1994 to further the efforts of
FirstMerit's Subsidiaries in meeting the credit needs of their lending
communities, and the requirements of the Community Reinvestment Act ("CRA").
Congress enacted CRA to assure that banks and savings associations meet the
deposit and credit needs of their communities. Through a community development
corporation, financial institutions can meet these needs by non-traditional
activities such as acquiring, rehabilitating, or investing in real estate in low
to moderate income neighborhoods, and promoting the development of small
business.

The Banks in 1995 jointly organized and capitalized FirstMerit Mortgage
Corporation ("FirstMerit Mortgage"), which is located in Canton, Ohio, in
offices owned by Citizens. FirstMerit Mortgage is engaged in the business of
originating residential mortgage loans and providing mortgage loan servicing for
itself, the Banks and third parties.

First National is the parent corporation of two wholly-owned Ohio
corporations organized in 1993, FirstMerit Leasing Company ("FirstMerit
Leasing") and FirstMerit Securities, Inc. ("FirstMerit Securities"). FirstMerit
Leasing primarily provides equipment lease financing and related services, while
FirstMerit Securities primarily provides discount brokerage services to
customers of First National and other Subsidiaries.

ACQUISITIONS

FirstMerit engages on a regular basis in discussions concerning possible
acquisitions of other financial institutions. During 1995, FirstMerit acquired
control of Citizens Savings Bank of Canton, an Ohio savings association with its
principal offices in Canton, Ohio ("Citizens Savings"). FirstMerit acquired
Citizens Savings through the merger of The CIVISTA Corporation, the sole
shareholder of Citizens Savings ("CIVISTA"), with and into FirstMerit in
exchange for approximately 6,513,119 shares of FirstMerit common stock.
FirstMerit then immediately effected a merger of Citizens Savings into The First
National Bank in Massillon, a national bank subsidiary of FirstMerit, to form a
new national bank subsidiary called Citizens National Bank, with its principal
offices in Canton, Ohio.

When FirstMerit acquired control of Citizens Savings through the merger
with CIVISTA, it also acquired control of certain other wholly-owned
subsidiaries of CIVISTA, including Citizens Savings Corporation of Stark County
("CSC") and Citizens Investment Corporation ("CIC").

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Although FirstMerit is in the process of selling all assets, winding up the
affairs, and formally dissolving CSC, it still owns a large portion of an office
condominium in Stark County, and certain low to moderate income housing units.
CIC owns and has participated in the development of residential real estate in
La Quinta, California. FirstMerit also is in the process of selling all assets,
winding up the affairs, and formally dissolving CIC.

COMPETITION

The financial services industry is highly competitive. FirstMerit and its
Subsidiaries compete with other local, regional and national providers of
financial services such as other bank holding companies, commercial banks,
savings associations, credit unions, consumer and commercial finance companies,
equipment leasing companies, brokerage institutions, money market funds and
insurance companies. The Subsidiaries' primary financial institution competitors
include Bank One, National City Bank, KeyBank, Star Bank and The Fifth Third
Bank. Mergers between financial institutions within Ohio and in neighboring
states have added competitive pressure, which pressure has intensified due to
interstate banking which became permissible under the Interstate Banking and
Branching Efficiency Act of 1994. FirstMerit competes in its markets by offering
quality and innovative services at competitive prices.

REGULATION AND SUPERVISION

FirstMerit is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA"). Bank holding companies are subject to
regulation by the Federal Reserve. Under Federal Reserve policy, a bank holding
company is expected to act as a source of financial strength to each subsidiary
bank and to commit resources to support such subsidiary banks. The BHCA requires
the prior approval of the Federal Reserve in any case where a bank holding
company proposes to acquire direct or indirect ownership or control of more than
five percent (5%) of the voting shares of any bank that is not already
majority-owned by it, or to merge or consolidate with any other bank holding
company.

The BHCA also prohibits a bank holding company, with certain exceptions,
from acquiring more than five percent of the voting shares of any company that
is not a bank and from engaging in any business other than banking or managing
or controlling banks. Under the BHCA, the Federal Reserve is authorized to
approve the ownership of shares by a bank holding company in any company the
activities of which the Federal Reserve has determined to be so closely related
to banking or to managing or controlling banks as to be a proper incident
thereto. The Federal Reserve has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA. These
activities include: operating a savings association, mortgage company, finance
company, credit card company or factoring company; performing certain data
processing operations; providing investment and financial advice; and acting as
an insurance agent for certain types of credit-related insurance.

Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on extensions of credit to the
bank holding company or any of its subsidiaries, on investments in the stock or
other securities of the bank holding company or its subsidiaries and on the
taking of such stock or securities as collateral for loans to any borrower.
Further, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of any services.

FirstMerit is also under the jurisdiction of the Securities and Exchange
Commission and certain state securities commissions for matters relating to the
offering and sale of its securities. FirstMerit is subject to the disclosure and
regulatory requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, as administered by the Commission.

On September 29, 1994, President Clinton signed the Interstate Banking and
Branching Efficiency Act of 1994 ("Interstate Act"). The Interstate Act
generally permits nationwide interstate banking and branching commencing one
year after enactment. After that time an "adequately capitalized" and "well
managed" bank holding company may acquire a bank in any state, subject to
certain concentration limitations. No banking organization may control more than
ten percent of deposits nationwide or more than 30.0% of deposits in any one
state. Individual states may waive the 30.0% limitation. Beginning June 1, 1997,
interstate bank holding

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companies may consolidate banks they own in multiple states into a single branch
network, or acquire out-of-state banks as branches. States may authorize
interstate branching earlier than June 1, 1997, or may opt out of the process
altogether. De novo interstate branching is not authorized by the Interstate
Act, but states may specifically authorize it. States may also limit the
acquisition of newly-formed banks for a period of up to five years to restrict
effective de novo branching. The Interstate Act requires CRA compliance by
out-of-state branches and prohibits "deposit production offices" to ensure that
local savings are not diverted to other states. Institutions must maintain a
loan activity-to-deposit ratio within a host state at least equal to one-half of
the average percentage for all banks in the host state, otherwise the
institution's federal regulator may close the out-of-state branch and restrict
the institution from opening new branches in that state. Certain state laws,
such as those on intrastate branching, consumer protection and fair lending,
will still apply to out-of-state banks or branches. The Interstate Act is
expected to stimulate an already active merger environment in the banking
industry.

SUMMARY RESULTS OF OPERATIONS

As of December 31, 1996, FirstMerit's consolidated total assets were
$5,227,980,000. Earnings for FirstMerit in 1996 were $70,940,000, or $2.18 per
share, compared with $31,318,000, or $0.94 per share, for the year ended
December 31, 1995. The earnings reported for 1996 were impacted by the Savings
Association Insurance Fund (SAIF) recapitalization charge of $6,652,000,
recorded September 30, 1996. Excluding the SAIF charge, earnings were
$77,592,000, or $2.38 per share. As reported last year, net income for 1995
included expenses of $2,198,000 related to an early retirement program, costs of
$16,214,000 associated with the acquisition of The CIVISTA Corporation
("CIVISTA"), $11,596,000 of re-engineering charges and an extraordinary gain of
$5,599,000 from the sale of several apartment complexes formerly owned by a
subsidiary of CIVISTA. Excluding the unusual charges in 1995, earnings would
have been $61,326,000, or $1.83 per share. Total cash dividends paid to
shareholders for the entire year were $1.10, an increase of $0.08 per share over
the previously stated annual payments of $1.02.

On a fully-tax equivalent basis, net interest income was $254,015,000, up
6% from last year. The improved net interest margin of 4.98% compared to 4.56%
in 1995 was primarily responsible for the rise in net interest income. Other
income for the year was $82,496,000, an increase of $13,979,000 or 20% over the
prior year. Included in 1996 other income were net proceeds of $13,210,000 from
sales of affiliate branches and $490,000 from the sale of FirstMerit Bank, N.A.
in Clearwater, Florida. Higher trust income, service charges on depositors'
accounts, and credit card fees also contributed to the improvement in other
income. Other expenses were $209,702,000 compared to $227,779,000 in 1995.
Included in the 1996 figure is the previously mentioned pre-tax SAIF assessment
of $10,235,000. Other expenses for 1995 included portions of the early
retirement, CIVISTA acquisition, and re-engineering charges totaling $22,404,000
on a pre-tax basis.

During 1996, the Corporation recorded a provision for possible loan losses
of $17,751,000, a ten percent reduction from last year's provision of
$19,763,000. The provisions in both years address the continuing shift in
FirstMerit's loan portfolio from residential mortgages into commercial and
consumer loans, which historically have higher loss rates. Nonperforming assets
were 0.29% of total loans and other real estate compared to 0.37% one year ago.
The allowance for loan losses as a percentage of outstanding loans was 1.35% at
December 31, 1996 and 1.24% at December 31, 1995.

ITEM 2. PROPERTIES

FIRSTMERIT CORPORATION

FirstMerit's executive offices and certain holding company operational
facilities, totaling 88,546 square feet, are leased from First National.
FirstMerit relocated its executive offices in 1994 to III Cascade, a seven-story
office building located in downtown Akron, Ohio. During 1993, a long-term
leasehold interest in III Cascade was acquired by an Ohio general partnership
(the "Partnership"), the general partners of which are FirstMerit and a Delaware
corporation subsidiary of Banc One Capital Corporation. FirstMerit does not
control the Partnership. The City of Akron is the lessor of the property. First
National has subleased all of the premises of III Cascade from the Partnership,
and FirstMerit subleases a portion of the premises from First National.

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The facilities owned or leased by FirstMerit and its Subsidiaries are
considered by management to be adequate, and neither the location nor unexpired
term of any lease is considered material to the business of FirstMerit.

FIRST NATIONAL BANK OF OHIO

The principal executive offices of First National are located in its
28-story main office building located at 106 South Main Street, Akron, Ohio,
which is owned by First National. First National is the principal tenant of the
building occupying approximately one-half of a total of 215,000 square feet of
the building, with the remaining portion leased to tenants unrelated to First
National. The properties occupied by 30 of First National's other branches are
owned by First National, while the properties occupied by its remaining 27
branches are leased with various expiration dates. There is no mortgage debt
owing on any of the above property owned by First National. First National also
owns automated teller machines, on-line teller terminals and other computers and
related equipment for use in its business. In 1996 First National completed
major renovations to its main office building. First National renovated all
space which it occupies in the building, as well as all public areas.

First National also owns 19.5 acres near downtown Akron, on which is
located FirstMerit's Operations Center. The Operations Center is occupied and
operated by FirstMerit Services Division, an operating division of FirstMerit.
The Operations Center primarily provides computer and communications
technology-based services to FirstMerit and the Subsidiaries, and also markets
its services to non-affiliated institutions. There is no mortgage debt owing on
the Operations Center property. In connection with its Operations Center, the
Services Division has a disaster recovery center at a remote site on leased
property.

The Trust Department of First National is located in Main Place, a
four-story office building located in downtown Akron. The Trust Department
occupies 29,099 square feet of leased space in Main Place.

THE OLD PHOENIX NATIONAL BANK OF MEDINA

The principal executive offices of Old Phoenix are located in its main
office building at 39 Public Square, Medina, Ohio. The building which houses its
executive offices is leased by Old Phoenix. The properties occupied by five of
Old Phoenix's branches are owned by Old Phoenix, while the properties occupied
by its remaining nine branches are the subject of various lease obligations
having various expiration dates. These facilities are leased from IRT
Properties, a publicly-held real estate investment trust. Old Phoenix also owns
automated teller machines, on-line teller terminals and other related equipment.
The computer operations of Old Phoenix are provided through FirstMerit.

EST NATIONAL BANK

The principal executive offices of EST are located in its main office
building at 105 Court Street, Elyria, Ohio, which is owned by EST. EST occupies
approximately one-half of the total available space in the building. EST owns
the land and buildings occupied by 13 of its banking offices. The remaining five
banking offices are the subject of lease obligations with various lessors and
varying lease terms and expiration dates. EST also has automated teller machines
and on-line teller terminals. The computer operations of EST are provided
through FirstMerit.

PEOPLES NATIONAL BANK

The principal executive offices of Peoples Bank are located in its main
office building at 121 North Market Street, Wooster, Ohio, which is owned by
Peoples Bank. The properties occupied by two of Peoples Bank branches are owned
by Peoples Bank, while the properties occupied by its remaining two branches are
leased at various expiration dates. No mortgage debt exists on the above
property owned by Peoples Bank. Peoples Bank also has automated teller machines
and on-line terminals. The computer operations of Peoples Bank are provided
through FirstMerit.

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CITIZENS NATIONAL BANK

The principal executive offices of Citizens are located in its main office
building at 100 Central Plaza South, Canton, Ohio, which is leased by Citizens.
Citizens owns the properties occupied by eight of its other banking offices,
while the properties occupied by the remaining seven are leased under different
leases with various expiration dates. Citizens also maintains a trust office and
private banking office at two additional leased locations. Citizens also has
automated teller machines and on-line terminals. The computer operations of
Citizens are provided through FirstMerit.

PEOPLES BANK, N.A.

The principal executive offices of Peoples N.A. are located in its office
at 6725 Center Street, Mentor, Ohio, which is owned by Peoples N.A. Peoples N.A.
owns the properties occupied by five of its other branches, while the properties
occupied by its remaining nine branches are leased at various expiration dates.
Peoples N.A. also leases the property occupied by a loan production office. No
mortgage debt exists on the above property owned by Peoples N.A. Peoples N.A.
also has automated teller machines and on-line terminals. The computer
operations of Peoples N.A. are provided through FirstMerit.

CITIZENS SAVINGS CORPORATION OF STARK COUNTY

CSC owns a large portion of an office condominium in Stark County, Ohio and
certain low to moderate income housing units.

FIRSTMERIT MORTGAGE CORPORATION

The Banks in 1995 jointly organized and capitalized FirstMerit Mortgage,
which is engaged in the business of originating residential mortgage loans and
providing mortgage loan servicing for itself, the Banks and third parties.
FirstMerit Mortgage conducts its business in property owned by Citizens located
at 4455 Hills and Dales Road, Canton, Ohio.

ITEM 3. LEGAL PROCEEDINGS

The nature of FirstMerit's business results in a certain amount of
litigation. Accordingly, FirstMerit and its subsidiaries are subject to various
pending and threatened lawsuits in which claims for monetary damages are
asserted. Management, after consultation with legal counsel, is of the opinion
that the ultimate liability of such pending matters would not have a material
adverse effect on FirstMerit's financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of 1996 to a vote of
security holders of FirstMerit.

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EXECUTIVE OFFICERS OF REGISTRANT

The following persons are the executive officers of FirstMerit as of
February 28, 1997. Unless otherwise designated, they are officers of FirstMerit,
and unless otherwise stated, they have held their indicated positions for the
past five years.

DATE
APPOINTED TO
NAME AGE FIRSTMERIT POSITION AND BUSINESS EXPERIENCE
- - --------------------- ------ ------------- -----------------------------------------------

John R. Cochran 54 03-01-95 President and Chief Executive Officer since
March 1, 1995; previously President and Chief
Executive Officer of Norwest Bank Nebraska,
N.A.
John R. Macso 50 11-08-90 Executive Vice President; President and Chief
Executive Officer of First National since
August 1, 1995; previously Executive Vice
President of First National since August 18,
1994; previously Senior Loan/Credit Officer
FirstMerit since August 1, 1991; previously
President and Chief Executive Officer of
Peoples N.A.
Robert P. Brecht 46 08-09-91 Executive Vice President; previously Executive
Vice President of First National since July 20,
1995; previously President and Chief Executive
Officer of Peoples N.A. since August 1, 1991;
previously Executive Vice President and Senior
Vice President of Peoples N.A.
Jack R. Gravo 50 02-16-95 Executive Vice President; previously President
and Chief Executive Officer of Citizens since
February 1, 1995; previously President of The
CIVISTA Corporation
Bruce M. Kephart 45 07-25-95 Executive Vice President; President and Chief
Executive Officer of Peoples N.A. since July
25, 1995; previously Vice President, Bank One,
Cleveland, N.A.
George P. Paidas 49 04-13-94 Executive Vice President; President and Chief
Executive Officer of Old Phoenix since March 9,
1994; previously Executive Vice President of
Old Phoenix
W. Daniel Waldron 55 04-11-84 Executive Vice President; President and Chief
Executive Officer of EST since April 16, 1994;
previously President and Chief Executive
Officer of Peoples Bank
Gregory R. Bean 45 04-10-91 Senior Vice President; Senior Vice President
and Senior Trust Officer of First National
Gary J. Elek 45 02-11-88 Senior Vice President and Treasurer
Terry E. Patton 48 04-10-85 Senior Vice President, Counsel and Secretary;
Senior Vice President, Counsel and Secretary of
First National

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DATE
APPOINTED TO
NAME AGE FIRSTMERIT POSITION AND BUSINESS EXPERIENCE
- - --------------------- ------ ------------- -----------------------------------------------

William E. Stansifer 49 10-02-95 Senior Vice President since October 2, 1995;
previously Senior Vice President, Banking
Credit Policy Office, Norwest Corporation.

Carrie L. Tolstedt 37 05-22-95 Executive Vice President since August 1, 1996;
President and Chief Executive Officer of
Citizens National Bank since August 1, 1996,
President and Chief Executive Officer of
Peoples National Bank since March 25, 1996;
previously Senior Vice President since 1995;
previously Senior Vice President of Norwest
Bank Nebraska, N.A. since July 1993; previously
Vice President Norwest Bank Nebraska, N.A.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The outstanding shares of FirstMerit Common Stock are quoted on the Nasdaq
National Market System. The following table contains bid and cash dividend
information for FirstMerit Common Stock for the two most recent fiscal years:

STOCK PERFORMANCE AND DIVIDENDS
BIDS PER SHARE
QUARTER DIVIDEND BOOK
ENDING HIGH LOW RATE VALUE*

03-31-95 $25.50 $21.44 $0.2500 $15.73
06-30-95 26.75 22.50 0.2500 16.04
09-30-95 27.25 24.50 0.2500 16.24
12-31-95 30.50 24.50 0.2700 16.23
03-31-96 32.50 27.75 0.2700 16.20
06-30-96 32.00 30.00 0.2700 16.13
09-30-96 32.00 28.25 0.2700 16.20
12-31-96 36.00 31.25 0.2900 16.39

* Based upon number of shares outstanding at the end of each quarter.

This table sets forth the high and low closing bid quotations, dividend
rates and book values per share for the calendar periods indicated. These
quotations furnished by the National Quotations Bureau Incorporated; represent
prices between dealers, do not include retail markup, markdowns, or commissions,
and may not represent actual transactions.

On February 1, 1997 there were approximately 6,976 shareholders of record
of FirstMerit Common Stock.

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ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

FIRSTMERIT CORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

Results of Operations
Interest income............. $ 411,745 416,627 371,018 361,208 385,089 410,833
Conversion to fully-tax
equivalent............... 3,043 3,840 4,590 5,264 5,679 6,977
---------- --------- --------- --------- --------- ---------
Interest income*............ 414,788 420,467 375,608 366,472 390,768 417,810
Interest expense............ 160,773 180,933 140,181 135,149 167,405 227,892
---------- --------- --------- --------- --------- ---------
Net interest income*........ 254,015 239,534 235,427 231,323 223,363 189,918
Provision for possible loan
losses................... 17,751 19,763 4,624 8,056 18,965 12,750
Other income................ 82,496 68,517 70,656 71,909 68,591 65,854
Other expense............... 209,702 227,779 193,410 187,945 175,286 167,495
---------- --------- --------- --------- --------- ---------
Income before federal income
taxes*................... 109,058 60,509 108,049 107,231 97,703 75,527
Federal income taxes........ 35,075 30,950 32,110 33,335 29,194 20,210
Fully-tax equivalent
adjustment............... 3,043 3,840 4,590 5,264 5,679 6,977
---------- --------- --------- --------- --------- ---------
Federal income taxes*....... 38,118 34,790 36,700 38,599 34,873 27,187
---------- --------- --------- --------- --------- ---------
Income before extraordinary
item........................ 70,940 25,719 71,349 68,632 62,830 48,340
Extraordinary item -- gain on
disposition of assets after
combination (net of tax
effect) .................... -- 5,599 -- -- -- --
---------- --------- --------- --------- --------- ---------
Net income.................... $ 70,940 31,318 71,349 68,632 62,830 48,340
========== ========= ========= ========= ========= =========
Per share:
Income before
extraordinary item..... $ 2.18 0.77 2.14 2.07 1.89 1.46
Extraordinary item (net
of tax effect)......... -- 0.17 -- -- -- --
---------- --------- --------- --------- --------- ---------
Net income............... 2.18 0.94 2.14 2.07 1.89 1.46
========== ========= ========= ========= ========= =========
Cash dividends........... $ 1.10 1.02 0.98 0.87 0.79 0.77
Dividend payout ratio....... 50.56% 132.68% 45.72% 42.13% 41.71% 52.78%
Average Ratios Return on total
assets...................... 1.29% 0.55% 1.32% 1.34% 1.28% 1.01%
Return on shareholders'
equity................... 13.44% 5.93% 13.86% 14.30% 14.46% 12.07%
Shareholders' equity to
total assets............. 9.64% 9.34% 9.56% 9.38% 8.86% 8.40%
Balance Sheet Data
Total assets (at December
31)...................... $5,227,980 5,596,521 5,722,573 5,179,298 5,054,267 4,855,127
Daily averages:
Total assets............. $5,478,482 5,654,811 5,385,758 5,113,854 4,907,738 4,768,971
Earning assets........... 5,095,929 5,249,598 4,993,972 4,691,001 4,510,951 4,392,020
Deposits and other
funds.................. 4,879,343 5,058,333 4,820,339 4,581,960 4,416,929 4,314,717
Shareholders' equity..... 527,899 528,038 514,860 479,792 434,604 400,474
<FN>
- - ---------------

*Fully-tax equivalent basis

9
11

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE YEARS ENDED 1996, 1995, 1994

The following commentary presents Management's discussion and analysis of
the Corporation's financial condition and results of operations. The review
highlights the principal factors affecting earnings and the significant changes
in balance sheet items for the years 1996, 1995 and 1994. Financial information
for prior years is presented when appropriate. The objective of this financial
review is to enhance the reader's understanding of the accompanying tables and
charts, the consolidated financial statements, notes to financial statements,
and financial statistics appearing elsewhere in this report. Where applicable,
this discussion also reflects Management's insights of known events and trends
that have or may reasonably be expected to have a material effect on the
Corporation's operations and financial condition.

All financial data has been restated to give effect to acquisitions
accounted for on a pooling of interests basis and stock splits in previous
periods. The results of other bank and branch acquisitions, accounted for as
purchases, have been included effective with the respective dates of
acquisition.

EARNINGS SUMMARY

FirstMerit Corporation's net income for 1996 totaled $70,940,000, or $2.18
per share, compared with $31,318,000, or $0.94 per share, earned in 1995. The
Savings Association Insurance Fund (SAIF) recapitalization charge of $6,652,000,
recorded September 30, 1996, had a significant impact on 1996 earnings.
Excluding the SAIF charge, earnings were $77,592,000, or $2.38 per share. Net
income for 1995 included several one-time charges and an extraordinary gain.
Without the one-time charges, 1995 earnings would have been $61,326,000, or
$1.83 per share.

As reported last year end, 1995 net income contained expenses of $2,198,000
related to an early retirement program, costs of $16,214,000 associated with the
acquisition of The CIVISTA Corporation ("CIVISTA"), an extraordinary gain of
$5,599,000 from the sale of several apartment complexes acquired by the
Corporation in its acquisition of CIVISTA, and $11,596,000 of reengineering
charges implemented to improve overall operating efficiencies, improve branch
network productivity, and centralize operations. The implementation of these
programs contributed significantly to FirstMerit's 1996 success.

Return on average equity for the year was 14.70% and return on average
assets was 1.42%, when the SAIF charge was not considered. The comparable ratios
for 1995, excluding the prior year one-time charges, were 11.35% and 1.10%,
respectively. For the quarter, return on equity was 14.48% versus 2.34% in 1995
and return on assets was 1.39% compared to 0.23% for the same period last year.

Net interest income, on a fully-tax equivalent basis, was $254,015,000, up
6% from last year. The improved net interest margin of 4.98% compared to 4.56%
in 1995 was primarily responsible for the rise in net interest income.

Other income for the year was $82,496,000, an increase of $13,979,000 or
20% over the prior year. Included in 1996 other income were net proceeds of
$13,210,000 from sales of affiliate branches and $490,000 from the sale of
FirstMerit Bank, N.A. in Clearwater, Florida. Higher trust income, service
charges on depositors' accounts, and credit card fees also contributed to the
improvement in other income.

Other expenses were $209,702,000 compared to $227,779,000 in 1995. Included
in the 1996 figure is the pretax SAIF assessment of $10,235,000. Other expenses
for 1995 included portions of the early retirement, CIVISTA acquisition, and
reengineering charges totaling $22,404,000 on a pretax basis. The efficiency
ratio, excluding unusual charges in both years, was approximately 59% in 1996
versus 66% for 1995. The improvement in the efficiency ratio is directly
attributable to the reengineering plan developed in 1995 that focused on
improving overall efficiencies, improving branch network productivity, and
centralizing operations.

10
12

0.37% one year ago. The allowance for loan losses as a percentage of outstanding
loans was 1.35% at December 31, 1996 and 1.24% at December 31, 1995.

As reported in November 1996, FirstMerit increased its regular quarterly
cash dividend 7% from $0.27 per share to $0.29 per share. In September 1996, the
Corporation implemented its second share repurchase plan. On a combined basis,
the two plans authorize repurchase of up to 3,000,000 shares of FirstMerit's
outstanding common stock. Through December 31, 1996, approximately 1,800,000
shares have been repurchased in the open market and through privately negotiated
transactions.

The following table summarizes the changes in earnings per share for 1996
and 1995.

1996/ 1995/
(DOLLARS) 1995 1994
- - --------------------------------------------- -------- --------

CHANGES IN EARNINGS PER SHARE
Net income for 1996 and 1995,
respectively............................ $ 0.94 2.14
Increases (decreases) attributable to:
Net interest income -- taxable
equivalent............................ 0.45 0.12
Provision for possible loan losses...... 0.06 (0.45)
Trust services.......................... 0.05 (0.08)
Service charges on deposit accounts..... 0.12 0.00
Credit card fees........................ 0.06 0.03
Securities (losses), net................ (0.07) 0.00
Other income............................ 0.28 (0.02)
Salaries and employee benefits.......... 0.41 (0.27)
Net occupancy expense................... (0.03) (0.09)
Equipment expense....................... 0.02 (0.04)
Other expenses.......................... (0.32) (0.15)
Charges related to CIVISTA
acquisition........................... 0.48 (0.48)
Extraordinary gain -- disposition of
assets................................ (0.17) 0.17
Federal income taxes -- taxable
equivalent............................ (0.10) 0.06
------ ------
Net change in net income................ 1.24 (1.20)
------ ------
Net income per share.................... $ 2.18 0.94
====== ======

NET INTEREST INCOME

Net interest income, the difference between interest and loan fee income on
earning assets and the interest paid on deposits and borrowed funds, is the
principal source of earnings for the Corporation. Throughout this discussion net
interest income is presented on a fully taxable equivalent (FTE) basis which
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 is affected by market interest rates on both earning
assets and interest bearing liabilities, the level of earning assets being
funded by interest bearing liabilities, non-interest bearing liabilities and
equity, and the growth in earning assets. The following table shows the
allocation to assets, the source of funding and their respective interest
spreads.

1996
------------------------------------
AVERAGE NET
EARNING INTEREST INTEREST
ASSETS SPREAD INCOME
---------- -------- --------
(DOLLARS IN THOUSANDS)

Interest-bearing liabilities..................... $4,134,241 4.25% 175,705
Non-interest-bearing liabilities and equity...... 961,688 8.14%* 78,310
---------- -------
$5,095,929 254,015
========== =======

11
13

1995
------------------------------------
AVERAGE NET
EARNING INTEREST INTEREST
ASSETS SPREAD INCOME
---------- -------- --------

Interest-bearing liabilities $4,333,046 3.83% 166,123
Non-interest-bearing liabilities and equity 916,552 8.01%* 73,411
---------- -------
$5,249,598 239,534
========== =======

1994
------------------------------------
AVERAGE NET
EARNING INTEREST INTEREST
ASSETS SPREAD INCOME
---------- -------- --------

Interest-bearing liabilities $4,153,870 4.15% 172,240
Non-interest-bearing liabilities and equity 840,102 7.52%* 63,187
---------- -------
$4,993,972 235,427
========== =======
<FN>
- - ---------------

*Yield on earning assets

Net interest income increased $14.5 million, or 6.0%, to $254.0 million in
1996 compared to $239.5 million in 1995. The increase occurred because the
decline in interest expense was greater than the reduction in interest income.
Specifically, interest income fell $5.7 million while interest expense decreased
$20.2 million, or 11%.

Interest income was lower than last year because earning assets fell 2.9%
or $153.7 million. Sales of affiliate branches in markets where FirstMerit did
not hold a dominant market share, the sale of FirstMerit Bank, N.A. in
Clearwater, Florida and sales and maturities of investment securities
contributed to the decline in assets. The average yield on earning assets
increased 13 basis points from 8.01% to 8.14% during 1996.

Lower interest expense was due to fewer interest bearing liabilities and a
reduced cost of funds. Also contributing to less interest expense was a shift in
the composition of customer deposits as earning assets funded by non-interest
bearing liabilities and equity increased from 17.5% in 1995 and 16.8% in 1994 to
18.9% in 1996.

The following table provides an analysis of the effect of changes in
interest rates and volumes on net interest income in 1996 and 1995.

12
14

CHANGES IN NET INTEREST DIFFERENTIAL --
FULLY-TAX EQUIVALENT RATE/VOLUME ANALYSIS

YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1996 AND 1995 1995 AND 1994
---------------------------- --------------------------
INCREASE (DECREASE) IN INCREASE (DECREASE) IN
INTEREST INCOME/EXPENSE INTEREST INCOME/EXPENSE
---------------------------- --------------------------
YIELD/ YIELD/
VOLUME RATE TOTAL VOLUME RATE TOTAL
-------- ------- ------- ------- ------- ------
(DOLLARS IN THOUSANDS)

INTEREST INCOME
Investment securities:
Taxable............................... $ (7,124) (213) (7,337) (9,676) 5,571 (4,105)
Tax-exempt............................ (1,590) (375) (1,965) (1,759) 117 (1,642)
Loans................................... (485) 4,855 4,370 40,054 11,039 51,093
Federal funds sold...................... (135) (612) (747) (2,529) 2,042 (487)
-------- ------- ------- ------ ------ ------
Total interest income................... (9,334) 3,655 (5,679) 26,090 18,769 44,859
-------- ------- ------- ------ ------ ------
INTEREST EXPENSE
Interest on deposits:
Demand-interest bearing............... 366 (1,729) (1,363) (742) (485) (1,227)
Savings............................... (2,677) (3,315) (5,992) (4,988) 54 (4,934)
Certificates and other time
deposits........................... (574) (1,565) (2,139) 9,583 19,407 28,990
Federal funds purchased, securities sold
under agreements to repurchase and
other borrowings...................... (4,563) (6,103) (10,666) 13,793 4,129 17,922
-------- ------- ------- ------ ------ ------
Total interest expense.................. (7,448) (12,712) (20,160) 17,646 23,105 40,751
-------- ------- ------- ------ ------ ------
Net interest income..................... $ (1,886) 16,367 14,481 8,444 (4,336) 4,108
======== ======= ======= ====== ====== ======

- - ---------------

Note: The rate volume variance has been allocated entirely to volume.

Total interest income decreased by $5.7 million in 1996 or 1.4% compared to
1995, which increased 11.9% from 1994. The 1996 decrease resulted from a decline
in earning assets that was partially offset by an improved earning asset yield.
Sales and maturities of investment securities contributed $8.7 million or 93.4%
to the total drop in average earning assets of $9.3 million. The 13 basis point
improvement in the earning asset yield, from 8.01% to 8.14%, was entirely due to
higher rates earned on loans during 1996. A higher yield on loans contributed
$4.9 million more to interest income in 1996 when compared to the prior year.
The increased yield earned on loans was primarily due to a change in the loan
portfolio mix from residential mortgages to higher yielding commercial and
consumer loans. Lower yields on federal funds sold and investment securities
resulted in $1.2 million less interest income than the prior year.

Interest expense decreased $20.2 million or 11.1% compared to last year,
which increased 29.1% compared to 1994. Lower average savings and other
borrowing balances lessened interest expense by $2.7 million and $4.6 million,
respectively, and were responsible for 97.2% of the total decline caused by
fewer outstandings. Lower rates paid on all interest bearing liabilities
resulted in a $12.7 million decline in 1996 interest expense. Reduced rates paid
on other borrowings lowered interest expense by $6.1 million, or 48.0% of the
total drop in interest expense caused by decreased interest rates. Lower savings
rates accounted for another $3.3 million or 26.1% of the decline in interest
expense due to lower deposit yields.

The net interest margin is calculated by dividing net interest income FTE
by average earning assets. As with net interest income, the net interest margin
is affected by the level and mix of earning assets, the proportion of earning
assets funded by non-interest bearing liabilities and the interest rate spread.
In addition, the net interest margin is impacted by changes in federal income
tax rates and regulations as they affect the tax equivalent adjustment.

13
15

The net interest margin for 1996 was 4.98% compared to 4.56% in 1995 and
4.71% in 1994. As mentioned earlier in this discussion, even though interest
rates were lower in 1996, the yield on earning assets increased due to a shift
in FirstMerit's loan portfolio toward higher yielding commercial and consumer
loans. The cost of funding the earning assets decreased 29 basis points from
4.18% in 1995 to 3.89% in 1996. The combination of a higher yield on earning
assets and a lower cost of funding boosted the Corporation's net interest income
and net interest margin significantly, and was principally responsible for the
increases in both categories as earning assets declined 2.9% during the year.

1996 1995 1994
---------- --------- ---------
(DOLLARS IN THOUSANDS)

Net interest income............................ $ 250,972 235,694 230,837
Tax equivalent adjustment...................... 3,043 3,840 4,590
---------- --------- ---------
Net interest income -- FTE..................... $ 254,015 239,534 235,427
========== ========= =========
Average earning assets......................... $5,095,929 5,249,598 4,993,972
---------- --------- ---------
Net interest margin............................ 4.98% 4.56% 4.71%
========== ========= =========

OTHER INCOME

Other income totaled $82.5 million in 1996, an increase of $14.0 million or
20.4% over 1995 and 16.8% over 1994.

1996 1995 1994
------- ------ ------
(DOLLARS IN THOUSANDS)

Trust fees............................................. $12,182 10,712 13,423
Service charges on deposits............................ 24,372 20,622 20,482
Credit card fees....................................... 11,415 9,372 8,254
Service fees -- other.................................. 6,184 5,724 5,395
Mortgage sales and servicing........................... 4,863 3,236 1,817
Securities gains (losses).............................. (1,776) 539 653
Other operating income................................. 25,256 18,312 20,632
------- ------ ------
$82,496 68,517 70,656
======= ====== ======

Trust fees increased $1.5 million or 13.7% to $12.2 million in 1996. Trust
fees for 1994 included nonrecurring fees of approximately $2.5 million. Service
charges on deposits rose $3.8 million or 18.2% compared to last year.
Contributing to the increase was the implementation of standard service charges
and procedures among affiliate banks as well as changes to the deposit product
lines. Service charges accounted for 35.4% of total other income when net gains
from sales of affiliate branches and FirstMerit Bank, N.A. in Clearwater,
Florida are excluded. Credit card fees increased $2.0 million during 1996
further illustrating the shift of the Corporation's loan portfolio from
residential mortgage loans to consumer and commercial credits.

Income from mortgage sales and servicing rose $1.6 million, or 50.3%, to
$4.9 million for the year. The net increase was a result of implementation of
Statement of Financial Accounting Standards No. 122 "Accounting for Mortgage
Servicing Rights," which added $2.3 million in 1996, and fewer loan sales during
the year, compared to 1995, which lowered this category by approximately $0.7
million. The Corporation's practice is to sell all fixed rate thirty year
residential mortgage loans originated while retaining the servicing for these
loans.

Securities losses were $1.8 million for 1996 compared to gains of $0.5
million in 1995. The Corporation sold certain securities at a loss, principally
in the fourth quarter, to reinvest the proceeds into higher yielding assets for
1997 and future years.

14
16

Other operating income was $25.3 million, $7.0 million higher than the
$18.3 million earned in 1995. Net gains on sales of affiliate branches accounted
for $13.2 million and the sale of FirstMerit Bank, N.A. in Clearwater, Florida
added another $0.5 million to 1996's total.

Total other income, excluding the net gain on branch sales of $13.2
million, covered 34.7% of other expenses, excluding the Savings Association
Insurance Fund ("SAIF") recapitalization charge of $10.2 million. Adjusted
coverage ratios for 1995 and 1994 were 30.1% and 36.5%, respectively. Unusual
charges for both 1996 and 1995 are discussed in more detail in the "Other
Expense" section of this Annual Report as well as in Note 18 to the consolidated
financial statements.

OTHER EXPENSES

Other expenses were $209.7 million in 1996 compared to $227.8 million in
1995 and $193.4 million in 1994. Both 1996 and 1995 contained unusual charges.
In 1996, the Corporation recorded a $10.2 million SAIF recapitalization charge.
Excluding the one-time SAIF assessment, other expenses would have been $199.5
million. Other expenses for 1995 included nonrecurring costs associated with an
early retirement program, the CIVISTA acquisition, and reengineering charges
that totaled $22.4 million. If unusual charges for both 1996 and 1995 are not
considered, other expenses for 1996 were $5.9 million less than the comparable
1995 total.

OTHER EXPENSES

1996 1995 1994
-------- ------- -------
(DOLLARS IN THOUSANDS)

Salaries and wages.................................. $ 72,572 80,501 75,476
Pension and benefits................................ 21,982 27,234 23,273
-------- ------- -------
Salaries, wages, pension and benefits............... 94,554 107,735 98,749
Net occupancy expense............................... 17,468 16,598 13,446
Equipment expense................................... 12,894 13,417 12,231
Taxes, other than federal income taxes.............. 6,625 6,026 6,995
Stationery, supplies and postage.................... 10,862 10,777 8,808
Bankcard, loan processing, and other fees........... 12,789 11,422 9,557
Advertising......................................... 6,866 5,766 3,191
Professional services............................... 4,297 7,911 4,722
Telephone........................................... 3,654 3,807 3,095
FDIC assessment..................................... 12,943 7,052 9,833
Amortization of intangibles......................... 3,148 3,534 3,878
Other operating expenses............................ 23,602 33,734 18,905
-------- ------- -------
Total other expenses................................ $209,702 227,779 193,410
-------- ------- -------

Salaries, wages, pension and benefits totaled $94.6 million in 1996, a
decline of $13.2 million or 12.2% from 1995 and 4.2% less than 1994. Included in
these costs for 1995 were severance and related charges of $4.1 million and an
early retirement charge of $3.9 million. Excluding these expenses, 1996
salaries, wages, pension and benefits were still $5.1 million or 5.1% less than
the prior year's adjusted total. The current year reduction was attributable to
the actions taken in 1995 to reengineer the Corporation's retail delivery
systems and consolidate back-room operations. In 1996, the Corporation spent
30.3 cents in benefits for every dollar of salary and wages compared to 30.5
cents in 1995, excluding the severance and early retirement charges, and 30.8
cents in 1994.

The Corporation has a benefit plan which presently provides postretirement
medical and life insurance for retired employees. The Corporation reserves the
right to terminate or make additional plan changes at any time. The
Corporation's accumulated postretirement benefit obligation (APBO) as of January
1, 1993 totaled $19.0 million, and is being amortized over twenty years at an
annual cost of $0.9 million.

Professional services totaled $4.3 million in 1996 compared to $7.9 million
in 1995 and $4.7 million in 1994. In 1995, external support groups were used to
help develop the reengineering plan to improve operating

15
17

efficiencies, increase revenues and shareholder value, and to help train our
employees to effectively sell our new products and services.

On January 1, 1994, the FDIC implemented a risk-based assessment system for
depository institutions. Under the system, the annual assessment rate for each
insured institution is determined on the basis of both capital and supervisory
measures, and can range from 23 cents to 31 cents per one hundred dollars of
deposits. During the third quarter of 1995, the FDIC reduced the effective rate
of the annual assessment on Bank Insurance Fund ("BIF") deposits to
approximately 4 cents per one hundred dollars of deposits.

As mentioned earlier in this section, the Corporation's FDIC assessment for
1996 included a one-time recapitalization of the Savings Association Insurance
Fund totaling $10.2 million. Excluding the one-time charge, FDIC expense would
have been $2.7 million. The adjusted expense of $2.7 million is considerably
less than the 1995 and 1994 amounts due to the reduction in the effective rate
applicable to Bank Insurance Fund ("BIF") deposits.

Other operating expenses amounted to $23.6 million in 1996 compared to
$33.7 million last year and $18.9 million in 1994. Included in 1995 costs were
$4.6 million of severance payments and fees paid to financial advisors as part
of the CIVISTA acquisition as well as $6.6 million of reengineering charges for
the adjustment to the value of buildings, equipment and other assets.

FEDERAL INCOME TAX

Federal income tax expense totaled $35.1 million in 1996 compared to $34.0
million in 1995, when tax expense of $3.0 million associated with the
extraordinary gain is included, and $32.1 million in 1994. In 1996 the effective
federal income tax rate for the Corporation equaled 33.1% compared to 52.0% in
1995 and 31.0% in 1994.

The effective tax rate in 1995 was higher than normally seen due to the
recapture of the bad debt reserve totaling approximately $12.4 million, and the
nondeductibility of certain professional fees associated with the CIVISTA
acquisition.

INVESTMENT SECURITIES

The investment portfolio is maintained by the Corporation to provide
liquidity, earnings, and as a means of diversifying risk. In accordance with the
Financial Accounting Standards Board Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," securities are required to be
classified as held-to-maturity, available-for-sale, or trading. All investment
securities are currently classified as availablefor-sale. In this
classification, adjustment to fair value of the securities available-for-sale in
the form of unrealized holding gains and losses, is excluded from earnings and
reported net of taxes in a separate component of shareholders' equity. The
adjustments to reduce fair value at December 31, 1996 and December 31, 1995 were
$3.4 million and $2.0 million, respectively. Higher interest rates at the end of
1996 accounted for the increase in the fair market adjustment.

At December 31, 1996, investment securities totaled $1,187.5 million
compared with $1,403.1 million one year earlier, a decline of 15.4%. Investment
securities totaled $1,610.4 million at the end of 1994.

During 1996 approximately $343.6 million in securities were sold for which
a net loss of $1.8 million was realized. The sales and resultant losses occurred
as the Corporation restructured portions of its investment portfolio.

A summary of investment securities' carrying value is presented below as of
December 31, 1996, 1995 and 1994. Presented with the summary is a maturity
distribution schedule with corresponding weighted average yields.

16
18

CARRYING VALUE OF INVESTMENT SECURITIES

DECEMBER 31,
--------------------------------------
1996 1995 1994
---------- --------- ---------
(DOLLARS IN THOUSANDS)

U.S. Treasury and Government agency
obligations.................................. $ 655,741 864,967 1,072,464
Obligations of states and political
subdivisions................................. 93,587 108,842 129,280
Mortgage-backed securities..................... 325,277 331,556 306,711
Other securities............................... 112,919 97,694 101,905
---------- --------- ---------
$1,187,524 1,403,059 1,610,360
========== ========= =========

OVER ONE YEAR OVER FIVE YEARS
ONE YEAR OR LESS THROUGH FIVE YEARS THROUGH TEN YEARS OVER TEN YEARS
------------------- ------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
AMOUNT YIELDS AMOUNT YIELDS AMOUNT YIELDS AMOUNT YIELDS
-------- -------- -------- -------- -------- -------- -------- --------

U.S. Treasury securities........... $ 85,403 5.67% 117,354 5.85% -- -- -- --
U.S. Government agency
obligations...................... 26,044 6.13% 176,782 6.04% 52,709 6.26% 197,449 6.14%
Obligations of states and
political subdivisions........... 32,337 6.91%* 34,397 7.32%* 19,026 8.11%* 7,827 9.20%*
Mortgage-backed securities......... 6,453 7.71% 27,830 6.35% 55,095 6.83% 235,899 7.04%
Other securities................... 1,063 7.73% 2,497 7.55% 1,356 6.04% 108,003 7.02%
-------- ---- ------- ---- ------- ---- ------- ----
$151,300 6.12% 358,860 6.14% 128,186 6.78% 549,178 6.74%
======== ==== ======= ==== ======= ==== ======= ====
Percent of total................... 12.74% 30.22% 10.79% 46.25%
======== ======= ======= =======
<FN>
- - ---------------

* Fully-taxable equivalent based upon federal income tax structure applicable at
December 31, 1996.

The yield on the portfolio was 6.32% in 1996 compared to 6.37% in 1995 and
6.03% in 1994. The current year reduction in the investment portfolio funded
increases in loan portfolios and the sale of branch deposits.

LOANS

Total loans outstanding at December 31, 1996 decreased 3.0% compared to one
year ago or $3,656.0 million compared to $3,770.4 million. A breakdown by
category is presented below, along with a maturity summary of commercial,
financial and agricultural loans.

DECEMBER 31,
-------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)

Commercial, financial and
agricultural............ $ 748,858 588,864 467,428 430,118 423,170 403,238
Installments to
individuals............. 811,561 777,990 800,441 632,354 556,256 559,601
Real estate............... 1,936,342 2,223,561 2,261,283 2,016,491 2,031,969 2,014,305
Lease financing........... 159,237 179,951 158,737 56,903 19,399 17,213
---------- --------- --------- --------- --------- ---------
Total loans............. 3,655,998 3,770,366 3,687,889 3,135,866 3,030,794 2,994,357
Less allowance for
possible loan losses.... 49,336 46,840 35,834 35,030 31,592 26,162
---------- --------- --------- --------- --------- ---------
Net loans............... $3,606,662 3,723,526 3,652,055 3,100,836 2,999,202 2,968,195
========== ========= ========= ========= ========= =========

17
19

DECEMBER 31, 1996
-------------------------
COMMERCIAL, FINANCIAL AND
AGRICULTURAL
-------------------------

Due in one year or less......................................................... $ 398,435
Due after one year but within five years........................................ 236,507
Due after five years............................................................ 113,916
---------
Total....................................................................... $ 748,858
=========
Loans due after one year with interest at a predetermined fixed rate............ 151,582
Loans due after one year with interest at a floating rate....................... 198,841
---------
Total....................................................................... $ 350,423
=========

Real estate loans at December 31, 1996 totaled $1,936.3 million or 53.0% of
total loans outstanding compared to 59.0% one year ago. Residential loans (1-4
family dwellings) totaled $998.8 million, home equity loans $196.4 million,
construction loans $126.4 million and commercial real estate loans $614.7
million. The year-end real estate totals point out the shift in the composition
of the Corporation's loan portfolio from residential real estate to higher
yielding commercial and consumer loans.

Commercial real estate loans include both commercial loans where real
estate has been taken as collateral as well as loans for commercial real estate.
The majority of commercial real estate loans are to owner occupants where cash
flow to service debt is derived from the occupying business cash flow instead of
normal building rents. These loans are generally part of an overall relationship
with existing customers primarily within northeast Ohio.

Consumer loans or loans to individuals increased 4.3% compared to last year
and accounted for 22.2% of total loans compared to 20.6% in 1995.

Commercial, financial, and agricultural loans increased 27.2% during 1996
and make-up 20.5% of total outstanding loans compared to 15.6% last year. Again,
the increase in consumer and commercial loans is evidence of FirstMerit's
shifting loan portfolio.

The decline in lease financing loans from $180.0 million in 1995 to $159.2
million at December 31, 1996 is primarily due to decreased originations in the
highly competitive auto lease business. Auto leases totaled $74.0 million with
equipment leasing totaling $81.8 million, and leveraged leases were $3.5 million
at year-end 1996.

There is no concentration of loans in any particular industry or group of
industries. Most of the Corporation's business activity is with customers
located within the state of Ohio.

ASSET QUALITY

Making a loan to earn an interest spread inherently includes taking the
risk of not getting repaid. Successful management of credit risk requires making
good underwriting decisions, carefully administering the loan portfolio and
diligently collecting delinquent accounts.

The Corporation's Credit Policy Division manages credit risk by
establishing common credit policies for its subsidiary banks, participating in
approval of their largest loans, conducting reviews of their loan portfolios,
providing them with centralized consumer underwriting, collections and loan
operations services, and overseeing their loan workouts.

The Corporation's objective is to minimize losses from its commercial
lending activities and to maintain consumer losses at acceptable levels that are
stable and consistent with growth and profitability objectives.

Effective December 31, 1995, the Corporation adopted Statement of Financial
Accounting Standard No. 114," Accounting by Creditors for Impairment of a Loan,"
and Statement No. 118, an amendment of Statement No. 114, "Accounting by
Creditors for Impairment of a loan -- Income Recognition and Disclosures." These
statements prescribe how the allowance for loan losses related to impaired loans
should be

18
20

determined and the required disclosures. Impaired loans are loans for which,
based on current information or events, it is probable that a creditor will be
unable to collect all amounts due according to the contractual terms of the loan
agreement. Impaired loans must be valued based on the present value of the
loans' expected future cash flows at the loans' effective interest rates, at the
loans' observable market price, or the fair value of the loan collateral.

NON-PERFORMING ASSETS

Non-performing assets consist of :

- NON-ACCRUAL LOANS on which interest is no longer accrued because its
collection is doubtful.

- RESTRUCTURED LOANS on which, due to deterioration in the borrower's
financial condition, the original terms have been modified in favor of
the borrower or either principal or interest has been forgiven.

- OTHER REAL ESTATE (OREO) acquired through foreclosure in satisfaction of
a loan.

DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------- ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)

Impaired Loans:
Non-accrual................................. $ 9,579 7,373 10,517 N/A N/A N/A
Restructured................................ 92 1,548 2,026 N/A N/A N/A
------- ------ ------ ------ ------ ------
Total impaired loans...................... 9,671 8,921 12,543 N/A N/A N/A
Other Loans:
Non-accrual................................. 787 3,918 3,108 12,040 21,903 23,324
Restructured................................ -- -- -- 6,176 3,972 7,049
------- ------ ------ ------ ------ ------
Total Other non-performing loans.......... 787 3,918 3,108 18,216 25,875 30,373
------- ------ ------ ------ ------ ------
Total non-performing loans................ 10,458 12,839 15,651 18,216 25,875 30,373
------- ------ ------ ------ ------ ------
Other real estate owned....................... 118 1,059 10,393 8,637 18,750 17,305
Total non-performing assets............... 10,576 13,898 26,044 26,853 44,625 47,678
======= ====== ====== ====== ====== ======
Loans past due 90 days or more accruing
interest.................................... $ 8,380 7,252 3,569 4,122 6,593 5,843
======= ====== ====== ====== ====== ======
Total non-performing assets as a percent of
total loans................................. 0.29% 0.37% 0.70% 0.85% 1.46% 1.61%
======= ====== ====== ====== ====== ======
<FN>
- - ---------------

N/A = Not Available

Under the Corporation's credit policies and practices, all non-accrual and
restructured commercial, agricultural, construction, and commercial real estate
loans, meet the definition of impaired loans under Statement No.'s 114 and 118.
Impaired loans as defined by Statements 114 and 118 exclude certain consumer
loans, residential real estate loans, and leases classified as non-accrual.
Consumer installment loans are charged off when they reach 120 days past due.
Credit card loans are charged off when they reach 180 days past due. When any
other loan becomes 90 days past due, it is placed on non-accrual status unless
it is well secured and in the process of collection. Any losses are charged
against the allowance for possible loan losses as soon as they are identified.

Non-performing assets at December 31, 1996 totaled $10.6 million, down from
$13.9 million in 1995 and $26.0 million in 1994. As a percentage of total loans
outstanding plus OREO, non-performing assets were 0.29% at year-end 1996
compared to 0.37% in 1995 and 0.70% in 1994. The average balances of impaired
loans for the years ended December 31, 1996 and 1995 were $9.3 million and $10.7
million, respectively.

For the year ended December 31, 1996, impaired assets earned $622,000 in
interest income. Had they not been impaired, they would have earned $1.2
million. For the same period, total non-performing loans earned $662,000 in
interest income. Had they paid in accordance with the payment terms in force
prior to being considered impaired, on non-accrual status, or restructured, they
would have earned $1.3 million.

In addition to non-performing loans and loans 90 days past due and still
accruing interest, Management identified potential problem loans totaling $23.7
million at December 31, 1996. These loans are closely

19
21

monitored for any further deterioration in the borrowers' financial condition
and for the borrowers' ability to comply with terms of the loans.

ALLOWANCE FOR POSSIBLE LOAN LOSSES

The Corporation maintains what Management believes is an adequate allowance
for possible loan losses. The Parent Company and the subsidiary banks regularly
analyze the adequacy of their allowances through ongoing reviews of trends in
risk ratings, delinquencies, non-performing assets, charge-offs, economic
conditions, and changes in the composition of the loan portfolio.

At year end the Corporation boosted its allowance for possible loan losses
in response to the continuing shift of its portfolio out of residential mortgage
loans and into commercial and consumer loans, which historically have exhibited
higher loss rates. During the year, consumer delinquencies continued at high
levels and losses in the consumer portfolio were higher than in the recent past.
Management felt it was prudent to increase the allowance at year end to ensure
its adequacy for changes that have occurred and will continue to occur in the
loan portfolio.

At December 31, 1996, the allowance was $49.3 million or 1.35% of loans
outstanding compared to $46.8 million or 1.24% in 1995 and $35.8 million or
0.97% in 1994. The allowance equaled 471.75% of non-performing loans at December
31, 1996 compared to 364.8% in 1995. The allowance for possible loan losses
related to impaired loans at December 31, 1996 and December 31, 1995 totaled
$1,913,000 and $676,000, respectively.

Net charge-offs were $15.3 million in 1996 compared to $8.8 million in 1995
and $3.8 million in 1994. As a percentage of average loans outstanding, net
charge-offs equaled 0.40% in 1996, 0.23% in 1995 and 0.11% in 1994. Losses are
charged against the allowances as soon as they are identified.

A six-year summary of activity follows:

DECEMBER 31,
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)

Allowance for possible loan losses at
beginning of year........................ $ 46,840 35,834 35,030 31,592 26,162 24,840
Loans charged off:
Commercial, financial and agricultural... 2,665 3,145 1,479 1,686 5,887 3,553
Installment to individuals............... 16,637 8,578 5,476 5,936 7,950 7,197
Real estate.............................. 224 883 720 977 3,625 3,539
Lease financing.......................... 1,315 319 20 28 229 230
Decrease from sale of subsidiary......... 389 -- -- -- -- --
---------- --------- --------- --------- --------- ---------
Total.................................. 21,230 12,925 7,695 8,627 17,691 14,519
---------- --------- --------- --------- --------- ---------
Recoveries:
Commercial, financial and agricultural... 450 569 719 1,334 1,068 711
Installment to individuals............... 5,117 3,382 3,029 2,548 2,518 2,250
Real estate.............................. 202 129 106 95 528 110
Lease financing.......................... 206 88 21 32 42 20
---------- --------- --------- --------- --------- ---------
Total.................................. 5,975 4,168 3,875 4,009 4,156 3,091
---------- --------- --------- --------- --------- ---------
Net charge-offs............................ 15,255 8,757 3,820 4,618 13,535 11,428
---------- --------- --------- --------- --------- ---------
Provision for possible loan losses......... 17,751 19,763 4,624 8,056 18,965 12,750
---------- --------- --------- --------- --------- ---------
Allowance for possible loan losses at end
of year.................................. $ 49,336 $ 46,840 35,834 35,030 31,592 26,162
========== ========= ========= ========= ========= =========
Average loans outstanding.................. $3,812,900 3,818,486 3,350,162 3,104,406 3,000,216 2,930,129
========== ========= ========= ========= ========= =========
Ratio to average loans:
Net charge-offs.......................... 0.40% 0.23% 0.11% 0.15% 0.45% 0.39%
Provision for possible loan losses....... 0.47% 0.52% 0.14% 0.26% 0.63% 0.44%
Allowance for possible loan losses at end
of year................................ 1.29% 1.23% 1.07% 1.13% 1.05% 0.89%
========== ========= ========= ========= ========= =========
Loans outstanding at end of year........... $3,655,998 3,770,366 3,687,889 3,135,866 3,030,794 2,994,357
========== ========= ========= ========= ========= =========
Allowance for possible loan losses:
As a percent of loans outstanding at end
of year................................ 1.35% 1.24% 0.97% 1.12% 1.04% 0.87%
As a multiple of net charge-offs......... 3.23 5.35 9.38 7.59 2.33 2.29
========== ========= ========= ========= ========= =========

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22

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

AS OF DECEMBER 31, 1996
-------------------------
ALLOWANCE
AS PERCENT OF
LOAN CATEGORY
AMOUNT OUTSTANDINGS
------- -------------
(DOLLARS IN THOUSANDS)

Commercial, financial, and agricultural...................... $14,962 2.00%
Real estate.................................................. 11,784 0.61%
Installment.................................................. 21,303 2.62%
Lease financing.............................................. 1,287 0.81%
------- ------
$49,336
=======

DEPOSITS

Average deposits for 1996 totaled $4,363.8 million, a decrease of 1.9% and
1.8% compared to 1995 and 1994 levels, respectively. Sales of affiliate branches
and their respective deposits, and the strength of the stock market during 1996
were factors in the overall decline in deposit balances. The success of the
Corporation's "free-checking" campaigns brought in additional demand deposits
that partially offset the overall decline in deposits and contributed to an
improved cost of funds and net interest margin.

As market interest rates decreased during the year, and the stock market
strengthened, savings deposits were withdrawn and reinvested in equity funds not
held by the Corporation. Specifically, the decline in average savings deposits
from $1,514.4 million in 1995 to $1,399.0 million in 1996 accounted for more
than 100% of the decline in total average deposits.

Average demand deposits, including both interest-bearing and
noninterest-bearing categories, totaled $1,192.6 million for the year, an
increase of 3.5% over last year's average. Additionally, the average rate paid
on interest-bearing demand deposits decreased 41 basis points to 1.75%. The
combination of higher demand deposit balances and a lower yield contributed
positively to the Corporation's decrease in total cost of funds.

Certificates and other time deposits ("CDs") averaged $1,772.2 million for
1996, down less than one percent from 1995's average of $1,782.8 million. The
average yield paid on CDs declined 9 basis points from 5.47% in 1995 to 5.38% in
1996.

CDs accounted for 40.6% of average deposits in 1996 compared to 40.1% in
1995. Savings equaled 32.1% and 34.0% in 1996 and 1995, respectively, and demand
deposits, both interest and non-interest bearing, were 27.3% and 25.9%,
respectively.

The average cost of deposits and other borrowings was down 29 basis points
compared to one year ago, or 3.89% in 1996 compared to 4.18% last year.

YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1996 1995 1994
-------------------- ------------------- -------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
---------- ------- --------- ------- --------- -------
(DOLLARS IN THOUSANDS)

Demand deposits--
non-interest bearing........ $ 745,102 -- 725,287 -- 666,469 --
Demand deposits--
interest bearing............ 447,524 1.75% 426,608 2.16% 460,994 2.26%
Savings deposits.............. 1,399,011 2.32% 1,514,374 2.54% 1,710,909 2.54%
Certificates and
other time deposits......... 1,772,150 5.38% 1,782,817 5.47% 1,607,616 4.26%
---------- --------- ---------
$4,363,787 4,449,086 4,445,988
========== ========= =========

21
23

The following table summarizes the certificates and other time deposits in
amounts of $0.1 million or more as of December 31, 1996, by time remaining until
maturity.

AMOUNT
--------

Maturing in:
Under 3 months.................................................................... $160,000
3 to 6 months..................................................................... 44,658
6 to 12 months.................................................................... 31,505
Over 12 months.................................................................... 35,471
---------
$271,634
=========

INTEREST RATE SENSITIVITY

Interest rate sensitivity measures the potential exposure of earnings and
capital to changes in market interest rates. The Corporation has a policy which
provides guidelines in the management of interest rate risk. This policy is
reviewed periodically to ensure it complies to trends within the financial
markets and within the industry.

The analysis presented below divides interest bearing assets and
liabilities into maturity categories and measures the "GAP" between maturing
assets and liabilities in each category. The Corporation analyzes the historical
sensitivity of its interest bearing transaction accounts to determine the
portion which it classifies as interest rate sensitive versus the portion
classified over one year. The analysis shows that liabilities maturing within
one year exceed assets maturing within the same period by a moderate amount. The
Corporation uses the GAP analysis and other tools to monitor rate risk.

At December 31, 1996 the Corporation was in a moderate asset-sensitive
position as illustrated in the following table:

31-60 61-90 91-180 181-365 OVER 1
1-30 DAYS DAYS DAYS DAYS DAYS YEAR TOTAL
---------- -------- -------- ------- ------- --------- ---------
(DOLLARS IN THOUSANDS)

Interest Earning Assets:
Loans and leases................. $1,289,843 37,516 65,118 139,295 310,780 1,764,110 3,606,662
Investment securities............ 120,688 17,937 52,608 83,324 137,389 775,578 1,187,524
Federal funds sold............... 15,450 100 -- -- -- -- 15,550
---------- -------- -------- ------- ------- --------- ---------
Total Interest Earning Assets...... $1,425,981 55,553 117,726 222,619 448,169 2,539,688 4,809,736
---------- -------- -------- ------- ------- --------- ---------
Interest-Bearing Liabilities:
Demand -- Interest bearing....... $ 2,548 2,548 2,614 -- -- 442,477 450,187
Savings.......................... 108,841 108,841 119,188 -- -- 972,405 1,309,275
Certificates and other time
deposits....................... 324,023 146,905 120,075 304,352 337,884 412,403 1,645,642
Securities sold under agreement
to repurchase and other
borrowings..................... 379,603 37 6,180 256 20,525 17,100 423,701
---------- -------- -------- ------- ------- --------- ---------
Total Interest Bearing
Liabilities...................... $ 815,015 258,331 248,057 304,608 358,409 1,844,385 3,828,805
---------- -------- -------- ------- ------- --------- ---------
Total GAP.......................... $ 610,966 (202,778) (130,331) (81,989) 89,760 695,303 980,931
========== ======== ======== ======= ======= ========= =========
Cumulative GAP..................... $ 610,966 $408,188 277,857 195,868 285,628 980,931
========== ======== ======== ======= ======= =========

CAPITAL RESOURCES

Shareholders' equity at December 31, 1996 totaled $523.7 million compared
to $542.9 million at December 31, 1995, a decrease of 3.5%. The Corporation's
stock repurchase program, detailed in the "Earnings Summary" portion of
Management's Discussion and Analysis, reduced equity during 1996.

22
24

AS OF DECEMBER 31,
----------------------------------------------------------
1996 1995 1994
---------------- ---------------- ----------------
(IN THOUSANDS)

Total equity............................ $523,707 10.02% 542,881 9.70% 523,319 9.14%
Common equity........................... 523,707 10.02% 542,881 9.70% 523,319 9.14%
Tangible common equity (a.)............. 519,950 9.95% 536,934 9.60% 504,337 8.84%
Tier 1 capital (b.)..................... 523,911 12.63% 538,032 14.53% 537,999 15.32%
Total risk-based capital (c.)........... 573,247 13.82% 584,872 15.80% 573,833 16.34%
Leverage (d.)........................... 523,911 9.63% 538,032 9.66% 537,999 9.53%
<FN>
- - ---------------

a) Common equity less all intangibles; computed as a ratio to total assets less
intangible assets.

b) Shareholders' equity less goodwill; computed as a ratio to risk-adjusted
assets, as defined in the 1992 risk-based capital guidelines/

c) Tier 1 capital plus qualifying loan loss allowance, computed as a ratio to
risk-adjusted assets, as defined in the 1992 risk-based capital guidelines.

d) Tier 1 capital; computed as a ratio to the latest quarter's average assets
less goodwill.

The Federal Deposit Insurance Corporation Act of 1991 ("FDICIA") set
capital guidelines for a financial institution to be considered
"well-capitalized." These guidelines require a risk-based capital ratio of 10%,
a Tier I capital ratio of 6% and a leverage ratio of 5%. At December 31, 1996,
the Corporation's risk-based capital equaled 13.82% of risk-adjusted assets, its
Tier I capital ratio equaled 12.63% and its leverage ratio equaled 9.63%.

The Corporation's Board of Directors declared a 2-for-1 split of the
Corporation's common stock on August 19, 1993. The split was paid to
shareholders of record as of August 30, 1993.

During 1996, the Corporation's Directors increased the quarterly cash
dividend, marking the fifteenth consecutive year of annual increases since the
Corporation's formation in 1981. The cash dividend of $.29 paid has an indicated
annual rate of $1.16 per share. Over the past five years the dividend has
increased at an annual rate of approximately 8%.

LIQUIDITY

The Corporation's primary source of liquidity is its strong core deposit
base, raised through its retail branch system, along with a strong capital base.
These funds, along with investment securities, provide the ability to meet the
needs of depositors while funding new loan demand and existing commitments.

The banking subsidiaries individually maintain sufficient liquidity in the
form of temporary investments and a short-term maturity structure within the
investment portfolio, along with cash flow from loan repayment. Asset growth in
the banking subsidiaries is funded by the growth of core deposits.

Reliance on borrowed funds decreased during the year as maturing investment
portfolio securities were used to fund deposit withdrawals and repay borrowings.
During the year, the Corporation sold, for liquidity purposes, approximately
$200 million of fixed and adjustable rate residential real estate loans. The
loan sales improved liquidity while restructuring the balance sheet to higher
yielding assets.

The liquidity needs of the Parent Company, primarily cash dividends and
other corporate purposes, are met through cash, short-term investments and
dividends from banking subsidiaries.

Management is not aware of any trend or event, other than noted above,
which will result in or that is reasonably likely to occur that would result in
a material increase or decrease in the Corporation's liquidity.

REGULATION AND SUPERVISION

A strict uniform system of capital-based regulation of financial
institutions became effective on December 19, 1992. Under this system, there are
five different categories of capitalization, with "prompt corrective actions"
and significant operational restrictions imposed on institutions that are
capital deficient

23
25

under the categories. The five categories are: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized.

To be considered well capitalized an institution must have a total
risk-based capital ratio of at least 10%, a Tier I capital ratio of at least 6%,
a leverage capital ratio of 5%, and must not be subject to any order or
directive requiring the institution to improve its capital level. An adequately
capitalized institution has a total risk-based capital ratio of at least 8%, a
Tier I capital ratio of at least 4% and a leverage capital ratio of at least 4%.
Institutions with lower capital levels are deemed to be undercapitalized,
significantly undercapitalized or critically undercapitalized, depending on
their actual capital levels. The appropriate federal regulatory agency may also
downgrade an institution to the next lower capital category upon a determination
that the institution is in an unsafe or unsound practice. Institutions are
required to monitor closely their capital levels and to notify their appropriate
regulatory agency of any basis for a change in capital category. At December 31,
1996, the Parent Company and its subsidiaries all exceeded the minimum capital
levels of the adequately capitalized category.

EFFECTS OF INFLATION

The assets and liabilities of the Corporation are primarily monetary in
nature and are more directly affected by the fluctuation in interest rates than
inflation. Movement in interest rates is a result of the perceived changes in
inflation as well as monetary and fiscal policies. Interest rates and inflation
do not move with the same velocity or within the same time frame, therefore, a
direct relationship to the inflation rate cannot be shown. The financial
information presented in this annual report, based on historical data, has a
direct correlation to the influence of market levels of interest rates.
Therefore, Management believes that there is no material benefit in presenting a
statement of financial data adjusted for inflationary changes.

FORWARD-LOOKING STATEMENTS -- SAFE HARBOR STATEMENT

Information in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section above and within this report, which
is not historical or factual in nature, and which relates to expectations for
future shifts in loan portfolio to consumer and commercial loans, increase in
core deposit base, allowance for loan losses, demands for FirstMerit services
and products, future services and products to be offered, increased numbers of
customers, and like items, constitute forward-looking statements that involve a
number of risks and uncertainties. The following factors are among the factors
that could cause actual results to differ materially from the forward-looking
statements: general economic conditions, including their impact on capital
expenditures; business conditions in the banking industry; the regulatory
environment; rapidly changing technology and evolving banking industry
standards; competitive factors, including increased competition with regional
and national financial institutions; new service and product offerings by
competitors and price pressures; and like items.

FirstMerit cautions that any forward-looking statements contained in this
report, in a report incorporated by reference to this report, or made by
management of FirstMerit in this report, in other reports and filings, in press
releases and in oral statements, involve risks and uncertainties and are subject
to change based upon the factors listed above and like items. Actual results
could differ materially from those expressed or implied, and therefore the
forward-looking statements should be considered in light of these factors.
FirstMerit may from time to time issue other forward-looking statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and accompanying notes, and the
reports of management and independent auditors, are set forth immediately
following Item 9 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

FirstMerit has had no disagreement with its accountants on accounting and
financial disclosure matters and has not changed accountants during the two year
period ending December 31, 1996.

24
26

CONSOLIDATED BALANCE SHEETS

FIRSTMERIT CORPORATION AND SUBSIDIARIES

DECEMBER 31,
-------------------------
1996 1995
---------- -----------
(IN THOUSANDS)

ASSETS
Investment securities (at market value)............................ $1,187,524 1,403,059
Federal funds sold................................................. 15,550 12,575
Loans.............................................................. 3,655,998 3,770,366
Less allowance for possible loan losses............................ 49,336 46,840
---------- ---------
Net loans....................................................... 3,606,662 3,723,526
---------- ---------
Total earning assets............................................ 4,809,736 5,139,160
---------- ---------
Cash and due from banks............................................ 222,164 287,671
Premises and equipment, net........................................ 102,139 94,158
Accrued interest receivable and other assets....................... 93,941 75,532
---------- ---------
$5,227,980 5,596,521
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-non-interest bearing..................................... $ 799,771 810,948
Demand-interest bearing......................................... 450,187 432,409
Savings......................................................... 1,309,275 1,454,876
Certificates and other time deposits............................ 1,645,642 1,803,692
---------- ---------
Total deposits.................................................. 4,204,875 4,501,925
---------- ---------
Securities sold under agreements to repurchase and other
borrowings...................................................... 423,701 486,958
Accrued taxes, expenses, and other liabilities..................... 75,697 64,757
---------- ---------
Total liabilities............................................... 4,704,273 5,053,640
---------- ---------
Commitments and contingencies...................................... -- --
Shareholders' equity:
Preferred stock, without par value: authorized and unissued
7,000,000 shares............................................... -- --
Common stock, without par value: authorized 80,000,000 shares;
issued 33,859,875 and 33,614,487 shares, respectively.......... 107,343 103,861
Treasury stock, 1,903,482 and 122,870 shares, respectively...... (59,258) (2,963)
Net unrealized holding (losses) on available for sale
securities..................................................... (2,217) (1,292)
Retained earnings............................................... 477,839 443,275
---------- ---------
Total shareholders' equity...................................... 523,707 542,881
---------- ---------
$5,227,980 5,596,521
========== =========

See accompanying notes to consolidated financial statements.

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27

CONSOLIDATED STATEMENTS OF INCOME

FIRSTMERIT CORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE
DATA)

Interest income:
Interest and fees on loans............................... $330,309 325,763 274,498
Interest and dividends on investment securities:
Taxable............................................... 75,498 82,836 86,941
Exempt from federal income taxes...................... 5,004 6,347 7,411
-------- -------- --------
80,502 89,183 94,352
Interest on federal funds sold........................... 934 1,681 2,168
-------- -------- --------
Total interest income................................. 411,745 416,627 371,018
-------- -------- --------
Interest expense:
Interest on deposits:
Demand-interest bearing............................... 7,839 9,202 10,429
Savings............................................... 32,446 38,438 43,372
Certificates and other time deposits.................. 95,379 97,518 68,528
Interest on securities sold under agreements to
repurchase and other borrowings....................... 25,109 35,775 17,852
-------- -------- --------
Total interest expense................................ 160,773 180,933 140,181
-------- -------- --------
Net interest income................................... 250,972 235,694 230,837
Provision for possible loan losses......................... 17,751 19,763 4,624
-------- -------- --------
Net interest income after provision for possible loan
losses.............................................. 233,221 215,931 226,213
-------- -------- --------
Other income:
Trust department......................................... 12,182 10,712 13,423
Service charges on deposits.............................. 24,372 20,622 20,482
Credit card fees......................................... 11,415 9,372 8,254
Investment securities gains (losses), net................ (1,776) 539 653
Other operating income................................... 36,303 27,272 27,844
-------- -------- --------
Total other income.................................... 82,496 68,517 70,656
-------- -------- --------
Other expenses:
Salaries, wages, pension and employee benefits........... 94,554 107,735 98,749
Net occupancy expense.................................... 17,468 16,598 13,446
Equipment expense........................................ 12,894 13,417 12,231
Other operating expenses................................. 84,786 90,029 68,984
-------- -------- --------
Total other expenses.................................. 209,702 227,779 193,410
-------- -------- --------
Income before federal income taxes and extraordinary
item................................................ 106,015 56,669 103,459
Federal income taxes....................................... 35,075 30,950 32,110
-------- -------- --------
Income before extraordinary item...................... 70,940 25,719 71,349
-------- -------- --------
Extraordinary item -- gain on disposition of assets after
business combination (net of income tax effect of
$3,015).................................................. -- 5,599 --
-------- -------- --------
Net income............................................ $ 70,940 31,318 71,349
======== ======== ========
Weighted average number of common shares outstanding....... 32,608 33,454 33,289
======== ======== ========
Per share data based on average number of shares
outstanding:
Income before extraordinary item...................... $ 2.18 0.77 2.14
Extraordinary item.................................... -- 0.17 --
-------- -------- --------
Net income per share....................................... $ 2.18 0.94 2.14
======== ======== ========

See accompanying notes to consolidated financial statements.

26
28

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FIRSTMERIT CORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
--------------------------------------------------------------------
NET UNREALIZED
HOLDING (LOSSES) TOTAL
COMMON TREASURY AVAILABLE-FOR- RETAINED SHAREHOLDERS'
STOCK STOCK SALE SECURITIES EARNINGS EQUITY
-------- -------- ------------------- -------- -------------
(IN THOUSANDS EXCEPT PER SHARE DATA)

Balance at December 31, 1993..... $ 96,593 (601) -- 404,129 500,121
Net income..................... -- -- -- 71,349 71,349
Cash dividends ($.98 per
share)...................... -- -- -- (28,836) (28,836)
Stock options exercised........ 3,983 -- -- -- 3,983
Treasury shares purchased...... -- (93) -- -- (93)
Market adjustment investment
securities.................. -- -- (23,205) -- (23,205)
-------- ------- ------- ------- -------
Balance at December 31, 1994..... 100,576 (694) (23,205) 446,642 523,319
Net income..................... -- -- -- 31,318 31,318
Cash dividends ($1.02 per
share)...................... -- -- -- (35,299) (35,299)
Stock options exercised........ 3,285 -- -- -- 3,285
Treasury shares purchased...... -- (2,269) -- -- (2,269)
Market adjustment investment
securities.................. -- -- 21,913 -- 21,913
Acquisition adjustment of
fiscal year................. -- -- -- 614 614
-------- ------- ------- ------- -------
Balance at December 31, 1995..... 103,861 (2,963) (1,292) 443,275 542,881
Net income..................... -- -- -- 70,940 70,940
Cash dividends ($1.10 per
share)...................... -- -- -- (36,376) (36,376)
Stock options exercised........ 3,482 -- -- -- 3,482
Treasury shares purchased...... -- (56,295) -- -- (56,295)
Market adjustment investment
securities.................. -- -- (925) -- (925)
Acquisition adjustment of
fiscal year................. -- -- -- -- 0
-------- ------- ------- ------- -------
Balance at December 31, 1996..... $107,343 (59,258) (2,217) 477,839 523,707
======== ======= ======= ======= =======

See accompanying notes to consolidated financial statements.

27
29

CONSOLIDATED STATEMENTS OF CASH FLOWS

FIRSTMERIT CORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- --------- ---------
(IN THOUSANDS)

OPERATING ACTIVITIES
Net income.................................................. $ 70,940 31,318 71,349
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for possible loan losses..................... 17,751 19,763 4,624
Provision for depreciation and amortization............ 10,120 8,862 8,353
Amortization of investment securities premiums, net.... 4,491 2,592 3,188
Amortization of income for lease financing............. (12,656) (8,586) (6,810)
(Gains) losses on sales of investment securities,
net.................................................. 1,776 (539) (653)
Extraordinary gain on dispositions..................... -- (5,599) --
Gain on sale of affiliate branches..................... (13,210) -- --
Deferred federal income taxes.......................... 15,549 2,305 11,172
(Increase) decrease in interest receivable............. 2,657 2,356 (5,002)
Increase in interest payable........................... 183 5,913 3,698
Amortization of values ascribed to acquired
intangibles.......................................... 3,148 3,153 3,878
Other increases (decreases)............................ (28,508) 41,282 (22,043)
--------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 72,241 102,820 71,752
--------- -------- --------
INVESTING ACTIVITIES
Dispositions of investment securities:
Available-for-sale -- sales............................... 343,600 98,688 56,673
Held-to-maturity -- maturities............................ -- 432,729 389,234
Available-for-sale -- maturities.......................... 301,468 200,895 184,294
Purchases of investment securities held-to-maturity......... -- (55,507) (263,518)
Purchases of investment securities available-for-sale....... (437,223) (437,840) (435,630)
Net (increase) decrease in federal funds sold............... (2,975) 1,125 60,888
Net (increase) decrease in loans and leases................. 111,769 (82,646) (549,033)
Purchases of premises and equipment......................... (22,405) (27,949) (17,255)
Sales of premises and equipment............................. 4,304 16,766 3,234
Sales of affiliate branches................................. 13,210 -- --
--------- -------- --------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES............ 311,748 146,259 (571,113)
--------- -------- --------
FINANCING ACTIVITIES
Net decrease in demand, NOW and savings deposits............ (139,000) (143,226) (21,539)
Net increase (decrease) in time deposits.................... (158,050) 103,694 133,315
Net increase (decrease) in securities sold under repurchase
agreements and other borrowings........................... (63,257) (125,666) 412,726
Cash dividends.............................................. (36,376) (35,299) (28,836)
Purchase of treasury shares................................. (56,295) (2,269) (93)
Proceeds from exercise of stock options..................... 3,482 3,285 3,983
--------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES............ (449,496) (199,481) 499,556
Increase (decrease) in cash and cash equivalents............ (65,507) 49,598 195
--------- -------- --------
Cash and cash equivalents at beginning of year.............. 287,671 238,073 237,878
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 222,164 287,671 238,073
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Amortized cost of the held-to-maturity investment portfolio
transferred to the available-for-sale portfolio........... $ -- 578,624 --
========= ======== ========
Cash paid during the year for:
Interest, net of amounts capitalized................... $ 91,158 100,740 97,836
Income taxes........................................... $ 18,293 22,099 31,100
========= ======== ========

See accompanying notes to consolidated financial statements.

28
30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FIRSTMERIT CORPORATION AND SUBSIDIARIES

DECEMBER 31, 1996, 1995 AND 1994

(DOLLARS IN THOUSANDS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of FirstMerit Corporation and its
subsidiaries (the "Corporation") conform to generally accepted accounting
principles and to general practices within the banking industry. The
Corporation's activities are considered to be a single industry segment for
financial reporting purposes. The following is a description of the more
significant accounting policies:

(a) Principles of Consolidation

The consolidated financial statements include the accounts of
FirstMerit Corporation (the "Parent Company") and its wholly-owned
subsidiaries: Citizens Investment Corporation, Citizens National Bank,
Citizens Savings Corporation of Stark County, EST National Bank, First
National Bank of Ohio, FirstMerit Community Development Corporation,
FirstMerit Credit Life Insurance Company, Old Phoenix National Bank of
Medina, Peoples Bank, N.A., and Peoples National Bank. The results of
operations of two former wholly-owned subsidiaries, FirstMerit Bank,
N.A. and FirstMerit Trust Company, N.A., are included in the
consolidated statements of income through December 30, 1996. These
former subsidiaries were sold December 31, 1996. All significant
intercompany balances and transactions have been eliminated in
consolidation.

(b) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and related notes. Actual results could differ from those
estimates.

Debt and equity securities are classified as held-to-maturity,
available-for-sale, or trading. Securities classified as
held-to-maturity are measured at amortized or historical cost,
securities available-for-sale and trading at fair value. Adjustment to
fair value of the securities available-for-sale, in the form of
unrealized holding gains and losses, is excluded from earnings and
reported net of tax as a separate component of shareholders' equity.
Adjustment to fair value of securities classified as trading is
included in earnings. Gains or losses on the sales of investment
securities are recognized upon realization and are determined by the
specific identification method.

Effective December 31, 1995, the Corporation designated the entire
investment portfolio as available-for-sale. Classification as
available-for-sale allows the Corporation to sell securities to fund
liquidity and manage the Corporation's interest rate risk.

Prior to December 31, 1995, the Corporation had designated a portion
of its investment portfolio as held-to-maturity. The Corporation does
not maintain a trading account.

(d) Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, balances on deposit
with correspondent banks and checks in the process of collection.

(e) Premises and Equipment

Premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is computed on the
straight-line and declining balance methods over the estimated useful
lives of the assets. Amortization of leasehold improvements is
computed on the straight-line method based on lease terms or useful
lives, whichever is less.

29
31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

(f) Loans

Impaired loans are loans for which, based on current information or
events, it is probable that the Corporation will be unable to collect
all amounts due according to the contractual terms of the loan
agreement. Impaired loans are valued based on the present value of the
loans' expected future cash flows at the loans' effective interest
rates, at the loans' observable market price, or the fair value of the
loan collateral.

(g) Interest and Fees on Loans

Interest income on loans is generally accrued on the principal
balances of loans outstanding using the "simple-interest" method. Loan
origination fees and certain direct origination costs are deferred and
amortized, generally over the contractual life of the related loans
using a level yield method. Interest is not accrued on loans for which
circumstances indicate collection is questionable.

(h) Provision for Possible Loan Losses

The provision for possible loan losses charged to operating expenses
is determined based on Management's evaluation of the loan portfolios
and the adequacy of the allowance for possible loan losses under
current economic conditions and such other factors which, in
Management's judgement, deserve current recognition.

(i) Lease Financing

The Corporation leases equipment to customers on both a direct and
leveraged lease basis. The net investment in financing leases includes
the aggregate amount of lease payments to be received and the
estimated residual values of the equipment, less unearned income and
non-recourse debt pertaining to leveraged leases. Income from lease
financing is recognized over the lives of the leases on an approximate
level rate of return on the unrecovered investment. Residual values of
leased assets are reviewed on an annual basis for reasonableness.
Declines in residual values judged to be other than temporary are
recognized in the period such determinations are made.

(j) Mortgage Servicing Fees

The Corporation generally records loan administration fees earned for
servicing loans for investors as income is collected. Earned servicing
fees and late fees related to delinquent loan payments are also
recorded as income is collected.

(k) Federal Income Taxes

The Corporation follows the asset and liability method of accounting
for income taxes. Deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing
assets and liabilities. The effect of a change in tax rates is
recognized in income in the period of the enactment date.

(l) Value Ascribed to Acquired Intangibles

The value ascribed to acquired intangibles, including core deposit
premiums, results from the excess of cost over fair value of net
assets acquired in acquisitions of financial institutions. Such values
are being amortized over periods ranging from 10 to 25 years, which
represent the estimated remaining lives of the long-term interest
bearing assets acquired. Amortization is generally computed on an
accelerated basis based on the expected reduction in the carrying
value of such acquired assets. If no significant amount of long-term
interest bearing assets is acquired, such value is amortized over the
estimated life of the acquired deposit base, with amortization periods
ranging from 10 to 15 years.

30
32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

(m) Trust Department Assets and Income

Property held by the Corporation in a fiduciary or other capacity for
trust customers is not included in the accompanying consolidated
financial statements, since such items are not assets of the
Corporation. Trust income is reported generally on a cash basis which
approximates the accrual basis of accounting.

(n) Per Share Data

The per share data is based on the weighted average number of shares
of common stock and common stock equivalents outstanding during each
year.

(o) Reclassifications

Certain previously reported amounts have been reclassified to conform
to the current reporting presentation.

2. ACQUISITIONS

On January 31, 1995, the Corporation acquired The CIVISTA Corporation, a
savings and loan holding company headquartered in Canton, Ohio ("CIVISTA"), in
exchange for approximately 6,513,119 shares of the Corporation's common stock.
The transaction was accounted for as a pooling of interests. As a result of
CIVISTA's fiscal year which ended September 30, the Corporation made an
acquisition adjustment to shareholders' equity of $614, which represented
CIVISTA's net income for the three month period ended December 31, 1994. The
accompanying consolidated financial statements for all periods presented have
been restated to account for the acquisition.

Details of the results of operations of the previously separate
corporations including CIVISTA operating results for its fiscal year ended
September 30, 1994 are as follows:

FIRSTMERIT
CORPORATION CIVISTA COMBINED
----------- ------- --------

Interest income..................................... $ 316,809 54,209 371,018
Net interest income................................. $ 200,932 29,905 230,837
Net income.......................................... $ 60,301 11,048 71,349

The Corporation incurred a one-time charge of approximately $16.2 million
($0.48 per share) in the first quarter of 1995 related to the loss of certain
tax benefits as a result of converting CIVISTA's thrift operations to national
bank operations as well as other expenses related to the merger.

Great Northern Financial Corporation, a savings and loan holding company
located in Barberton, Ohio, was acquired on April 22, 1994, in exchange for
approximately 1,882,440 shares of the Corporation's common stock. The
transaction was accounted for as a pooling of interests. The accompanying
consolidated financial statements for all periods presented have been restated
to account for the acquisition.

31
33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

3. INVESTMENT SECURITIES

Investment securities are composed of:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ---------

December 31, 1996
Available for sale:
U.S. Treasury securities and U.S. Government
agency obligations......................... $ 660,199 1,517 5,975 655,741
Obligations of state and political
subdivisions............................... 93,694 547 654 93,587
Mortgage-backed securities................... 324,818 2,458 1,999 325,277
Other securities............................. 112,224 1,434 739 112,919
---------- ------ ------ ---------
$1,190,935 5,956 9,367 1,187,524
========== ====== ====== =========
December 31, 1995
Available for sale:
U.S. Treasury securities and U.S. Government
agency obligations......................... $ 870,412 3,852 9,297 864,967
Obligations of state and political
subdivisions............................... 108,435 914 507 108,842
Mortgage-backed securities................... 329,099 4,163 1,706 331,556
Other securities............................. 97,101 1,152 559 97,694
---------- ------ ------ ---------
$1,405,047 10,081 12,069 1,403,059
========== ====== ====== =========

Effective December 31, 1995, the Corporation transferred all
held-to-maturity investments to available-for-sale. As a result of this
transfer, unrealized holding losses on available-for-sale securities were
reduced by the after-tax amount of $1.2 million.

The amortized cost and market value of investment securities including
mortgage-backed securities at December 31, 1996, by contractual maturity, are
shown below. Expected maturities will differ from contractual maturities based
on the issuers' rights to call or prepay obligations with or without call or
prepayment penalties.

AMORTIZED MARKET
COST VALUE
---------- ---------

Due in one year or less.............................................. $ 151,358 151,300
Due after one year through five years................................ 358,652 358,860
Due after five years................................................. 129,067 128,186
through ten years.................................................. 551,858 549,178
---------- ---------
$1,190,935 1,187,524
========== =========

Proceeds from sales of investment securities during the years December 31,
1996 and 1995 were $343,600 and $98,688, respectively. Gross gains of $2,003 and
$1,384 and gross losses of $3,779 and $845 were realized on these sales,
respectively.

The carrying value of investment securities pledged to secure trust and
public deposits and for purposes required or permitted by law amounted to
$724,886 and $741,185 at December 31, 1996 and 1995, respectively.

32
34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

4. LOANS

Loans consist of the following:

DECEMBER 31,
------------------------
1996 1995
---------- ---------

Commercial, financial and agricultural............................... $ 748,858 588,864
Loans to individuals, net of unearned income......................... 811,561 777,990
Real estate.......................................................... 1,936,342 2,223,561
Lease financing...................................................... 159,237 179,951
---------- ---------
$3,655,998 3,770,366
========== =========

The Corporation grants loans principally to customers located within the
State of Ohio.

Information with respect to impaired loans is as follows:

DECEMBER 31,
------------------
1996 1995
------ -----

Impaired Loans........................................................... $9,671 8,921
Allowance for Possible Loan Losses....................................... $1,913 676
Interest Recognized...................................................... $ 622 55
====== =====

Earned interest on impaired loans is recognized as income is collected.

The Corporation makes loans to officers and directors on substantially the
same terms and conditions as transactions with other parties. An analysis of
loan activity with related parties for the years ended December 31, 1996 and
1995 is summarized as follows:

1996 1995
-------- --------

Aggregate amount at beginning of year.................................. $ 34,173 46,311
Additions (deductions):
New loans............................................................ 16,549 14,493
Repayments........................................................... (10,235) (9,446)
Changes in directors and their affiliations.......................... (3,412) (17,185)
-------- -------
Aggregate amount at end of year........................................ $ 37,075 34,173
======== =======

5. ALLOWANCE FOR POSSIBLE LOAN LOSSES

Transactions in the allowance for possible loan losses are summarized as
follows:

YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------

Balance at beginning of year............................... $ 46,840 35,834 35,030
Additions (deductions):
Provision for possible loan
losses................................................ 17,751 19,763 4,624
Loans charged off........................................ (20,841) (12,925) (7,695)
Recoveries on loans previously charged off............... 5,975 4,168 3,875
Decrease from sale of subsidiary......................... (389) -- --
-------- -------- --------
Balance at end of year..................................... $ 49,336 $ 46,840 $ 35,834
======== ======== ========

33
35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

6. MORTGAGE SERVICING RIGHTS AND MORTGAGE SERVICING

In accordance with Statement of Financial Accounting Standards No. 122
"Accounting for Mortgage Servicing Rights," when the Corporation intends to sell
originated or purchased loans and retain the related servicing rights, it
allocates a portion of the total costs of the loans to the servicing rights
based on estimated fair value. Fair value is estimated based on market prices,
when available, or the present value of future net servicing income, adjusted
for such factors as discount rates and prepayments. Servicing rights are
amortized over the average life of the loans using the straight-line method.

The components of mortgage servicing rights are as follows:

Balance at January 1, 1996, net....................................... $ 15
Additions............................................................. 2,434
Scheduled amortization................................................ (148)
Less: allowance for impairment........................................ 0
------
Balance at December 31, 1996.......................................... $2,301
======

In 1996, the Corporation's income before federal income taxes was increased
by approximately $2.3 million as a result of the adoption of SFAS No. 122. The
consolidated financial statements for 1995 and 1994 were prepared in accordance
with Statement of Financial Accounting Standards No. 65 "Accounting for Certain
Mortgage Banking Activities," which provided for servicing rights to be recorded
on purchased loans, but not originated loans.

SFAS No. 122 also requires the Corporation to assess its capitalized
servicing rights for impairment based on their current fair value. As permitted
by SFAS No. 122, the Corporation disaggregates its servicing rights portfolio
based on loan type and interest rate which are the predominant risk
characteristics of the underlying loans. If any impairment results after current
market assumptions are applied, the value of the servicing rights is reduced
through the use of a valuation allowance.

At December 31, 1996 and 1995, the Corporation serviced for others
approximately $871 million and $717 million, respectively. The following table
provides servicing information for 1996:

1996
---------

Balance January 1, 1996............................................ $ 716,852
Additions:
Loans originated and sold to investors........................... 126,861
Existing loans sold to investors................................. 167,746
Reductions:
Sale of servicing rights......................................... --
Loans sold servicing released.................................... --
Regular amortization, prepayments and foreclosures............... (140,402)
---------
Balance December 31, 1996.......................................... $ 871,057
=========

7. RESTRICTIONS ON CASH AND DIVIDENDS

The average balance on deposit with the Federal Reserve Bank to satisfy
reserve requirements amounted to $7,306 during 1996. The level of this balance
is based upon amounts and types of customers' deposits held by the banking
subsidiaries of the Corporation. In addition, deposits are maintained with other
banks at levels determined by Management based upon the volumes of activity and
prevailing interest rates to compensate for check-clearing, safekeeping,
collection and other bank services performed by these banks. At December 31,
1996, cash and due from banks included $5,155 deposited with the Federal Reserve
Bank and other banks for these reasons.

34
36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Dividends paid by the subsidiaries are the principal source of funds to
enable the payment of dividends by the Corporation to its shareholders. These
payments by the subsidiaries in 1997 are restricted by the regulatory agencies
principally to the total of 1997 net income. Regulatory approval must be
obtained for the payment of dividends of any greater amount.

8. PREMISES AND EQUIPMENT

The components of premises and equipment are as follows:

DECEMBER 31, ESTIMATED
--------------------- USEFUL
1996 1995 LIVES
-------- -------- ---------

Land...................................................... $ 11,425 11,450 --
Buildings................................................. 81,642 82,012 10-35 yrs
Equipment................................................. 58,126 55,926 3-15 yrs
Leasehold improvements.................................... 13,124 13,346 1-20 yrs
-------- ------- --------
164,317 162,734
Less accumulated depreciation and amortization............ 62,178 68,576
-------- -------
$102,139 94,158
======== =======

Amounts included in other expenses for depreciation and amortization
aggregated $10,120, $8,862 and $8,353 for the years ended December 31, 1996,
1995 and 1994, respectively.

At December 31, 1996, the Corporation was obligated for rental commitments
under noncancelable operating leases on branch offices and equipment as follows:

YEARS ENDING LEASE
DECEMBER 31, COMMITMENTS
- - ------------ -----------

1997 $ 8,389
1998 7,405
1999 6,532
2000 4,065
2001 4,570
2002-2009 12,304
-------
$43,265
=======

Rentals paid under noncancelable operating leases amounted to $8,819,
$9,574 and $7,325 in 1996, 1995 and 1994, respectively.

9. CERTIFICATES AND OTHER TIME DEPOSITS

The aggregate amounts of certificates and other time deposits of $100 and
over at December 31, 1996 and 1995 were $271,634 and $230,429, respectively.
Interest expense on these certificates and time deposits amounted to $13,016 in
1996, $14,360 in 1995, and $9,406 in 1994.

10. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER BORROWINGS

At December 31, 1996 and 1995, securities sold under agreements to
repurchase totaled $368,566 and $336,083, respectively. The average balance of
securities sold under agreements to repurchase and other borrowings for the
years ended December 31, 1996 and 1995, amounted to $515,556 and $609,247,
respectively. In 1996, the weighted average annual interest rate amounted to
4.87%, compared to 5.87% in 1995. The maximum amount of these borrowings at any
month end amounted to $608,782 in 1996 and $740,586 in 1995.

35
37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

At December 31, 1996, and 1995, the Corporation had $55,135 and $75,875,
respectively, of Federal Home Loan Bank ("FHLB") advances. The 1996 balance
includes: $37,000 that have maturities within one year with interest rates of
5.38% to 6.15%; $12,017 with maturities over one year to five years with
interest rates of 4.65% to 6.40%; and $6,118 over five years with interest rates
of 4.75% to 8.10%.

Residential mortgage loans totaling $82,702 and $107,813 at December 31,
1996 and 1995, respectively, were pledged to secure FHLB advances.

11. FEDERAL INCOME TAXES

Federal income taxes are comprised of the following:

YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
------- ------- -------

Taxes currently payable....................................... $19,526 31,660 20,938
Deferred expense.............................................. 15,549 2,305 11,172
------- ------ ------
$35,075 33,965 32,110

Actual Federal income tax expense differs from expected Federal income tax
as shown below:

YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
----- ----- -----

Statutory rate.................................................. 35.0% 35.0% 35.0%
Increase (decrease) in rate due to:
Interest income on tax-exempt securities and tax-free loans,
net........................................................ -1.9% -3.8% -3.0%
Goodwill amortization......................................... 1.5% 0.9% 0.7%
Reduction to excess tax reserves.............................. -1.4% -0.4% -3.0%
Exercise of options at acquisition............................ 0.0% -0.3% -2.0%
Loan loss recapture at acquisition............................ 0.0% 19.0% 3.0%
Merger expenses at acquisition................................ 0.0% 1.4% 0.0%
Other......................................................... -0.1% 0.2% 0.3%
----- ----- -----
Effective tax rates............................................. 33.1% 52.0% 31.0%
===== ===== =====

For 1996, 1995 and 1994, the deferred income tax expense results from
temporary differences in the recognition of income and expense for Federal
income tax and financial reporting purposes. The sources and tax effect of these
temporary differences are presented below:

YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
------- ------- -------

Loan loss provision........................................... $ 6,323 (2,205) (254)
Depreciation.................................................. (232) 375 (72)
Deferred loan fees, net....................................... 631 1,487 261
Leasing....................................................... 6,708 8,442 9,638
FAS 106 postretirement benefits............................... (1,012) (434) (755)
FAS 87 pension expense........................................ 1,678 (1,767) 491
FHLB stock dividends.......................................... 844 771 (265)
Severance costs............................................... 1,315 (1,315) --
Valuation reserves............................................ 675 (526) (929)
Other......................................................... (1,381) (2,523) 3,057
------- ------ ------
Total deferred income tax..................................... $15,549 2,305 11,172
======= ====== ======

36
38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Principal components of the Corporation's net deferred tax (liability) are
summarized as follows:

DECEMBER 31,
---------------------
1996 1995
-------- --------

Excess of book loan provision over tax loan provision.................. $ 5,254 11,577
Excess of tax depreciation over book depreciation...................... (3,858) (4,090)
Leasing book basis income over tax basis............................... (28,014) (21,306)
Deferred loan fees tax basis income over book basis.................... 930 1,561
Postretirement book basis expense over tax basis....................... 3,684 2,672
Pension book basis expense over tax basis.............................. 121 1,799
FHLB stock book basis over tax basis................................... (3,930) (3,086)
Security portfolio tax basis over book basis........................... 1,192 695
Severance costs book basis over tax basis.............................. -- 1,315
Valuation reserves book basis over tax basis........................... 780 1,455
Other.................................................................. 3,075 1,694
-------- --------
Total net deferred tax (liability)..................................... ($20,766) (5,714)
======== ========

12. BENEFIT PLANS

The Corporation has a defined benefit pension plan covering substantially
all of its employees. In general, benefits are based on years of service and the
employee's compensation. The Corporation's funding policy is to contribute
annually the maximum amount that can be deducted for federal income tax
reporting purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned in the
future.

A supplemental non-qualified, non-funded pension plan for certain officers
is also maintained and is being provided for by charges to earnings sufficient
to meet the projected benefit obligation. The pension cost for this plan is
based on substantially the same actuarial methods and economic assumptions as
those used for the defined benefit pension plan.

The following table sets forth the plans' funded status and amounts
recognized in the Corporation's consolidated financial statements:

DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------

Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $49,703, $48,567 and $44,114, respectively......... $(55,222) (54,780) (46,845)
======== ======= =======
Projected benefit obligation............................... (70,119) (73,926) (64,788)
Plan assets at fair value, primarily U.S. government
obligations, corporate bonds and investments in equity
funds................................................. 71,929 67,035 67,042
-------- ------- -------
Plan assets in excess of projected benefit obligation...... 1,810 (6,891) 2,254
Unrecognized net gains (losses)............................ (3,215) 675 (3,223)
Unrecognized prior service cost............................ 3,311 3,340 4,103
Remaining unrecognized net asset being amortized over
employees' average remaining service life................ (999) (1,206) (832)
-------- ------- -------
Prepaid (accrued) pension cost............................. $ 907 (4,082) 2,302
======== ======= =======
Expected long-term rate of return on assets................ 9.00% 9.00% 9.00%
Weighted-average discount rate............................. 7.50% 7.25% 8.25%
Rate of increase in future compensation levels............. 4.75% 4.75% 5.00%
======== ======= =======

37
39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Net pension cost consists of the following components:

YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
------- ------- -------

Service cost.................................................. $ 3,728 3,290 3,729
Interest cost on projected benefit obligation................. 4,978 5,175 4,902
Actual return on plan assets.................................. (3,827) (8,563) (963)
Net total of other components................................. (2,197) 2,976 (4,347)
------- ------ ------
Net periodic pension cost..................................... $ 2,682 2,878 3,321
======= ====== ======

The Corporation maintains a savings plan under Section 401(k) of the
Internal Revenue Code, covering substantially all full-time and part-time
employees after six months of continuous employment. Under the plan, employee
contributions are partially matched by the Corporation. Such matching becomes
vested when the employee reaches five years of credited service. Total savings
plan expense was $2,108, $2,294 and $1,874 for 1996, 1995 and 1994,
respectively.

13. POSTRETIREMENT MEDICAL AND LIFE INSURANCE PLAN

The Corporation has a benefit plan which presently provides postretirement
medical and life insurance for retired employees. Effective January 1, 1993, the
plan was changed to limit the Corporation's medical contribution to 200% of the
1993 level for employees who retire after January 1, 1993. The Corporation
reserves the right to terminate or amend the plan at any time.

The cost of postretirement benefits expected to be provided to current and
future retirees is accrued over those employees' service periods. Prior to 1993,
postretirement benefits were accounted for on a cash basis. In addition to
recognizing the cost of benefits for the current period, recognition is being
provided for the cost of benefits earned in prior service periods (the
transition obligation). The Corporation has elected to amortize the transition
obligation by charges to income over a twenty year period on a straight line
basis.

The following table sets forth the plan's status and amounts recognized in
the Corporation's consolidated financial statements.

DECEMBER 31,
-------------------------
1996 1995
---------- ----------

Accumulated postretirement benefit obligation:
Retirees................................................. $(20,259) (15,691)
Fully eligible actives................................... (2,882) (5,628)
Other actives............................................ (7,747) (8,166)
-------- -------
Total accumulated postretirement benefit obligation........ (30,888) (29,485)
Unrecognized prior net loss................................ 6,394 5,622
Unrecognized prior service costs........................... -- 647
Unrecognized transition obligation......................... 13,129 16,156
-------- -------
Accrued postretirement benefit cost........................ $(11,365) (7,060)
======== =======

38
40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Net postretirement benefit cost includes:

YEAR ENDED DECEMBER 31,
-------------------------
1996 1995
---------- ----------

Service cost............................................... $ 945 811
Interest cost.............................................. 2,133 2,107
Actual return on plan assets............................... -- --
Amortization of transition obligation...................... 821 950
Net of other amortization and deferrals.................... 323 --
------ -----
Net periodic postretirement cost........................... $4,222 3,868
====== =====

The following actuarial assumptions effect the determination of these
amounts:

PLAN YEAR JANUARY 1,
---------------------------
1996 1995
----------- -----------

Expected long-term rate of return on assets........... N/A N/A
Weighted-average discount rate........................ 7.25% 7.25%
Medical trend rates:
Pre-65.............................................. 12.4%-6.0% 13.3%-6.0%
Post-65............................................. 11.8%-6.1% 12.5%-6.1%

Shown below is the impact of a 1% increase in the medical trend rates
(i.e., pre-65, 13.9% for 1996 grading down to 7.0% in 2002; post-65, 13.2%
grading down to 7.1% in 2027). This information is required disclosure under
SFAS No. 106.

CURRENT
TREND TREND +1% % CHANGE
---------- ---------- ----------

Aggregate of the service and interest
components of net periodic postretirement
health care benefit cost................... $ 3,029 3,139 3.6%
Accumulated postretirement benefit obligation
for health care benefits................... $ 28,152 29,560 5.0%

14. STOCK OPTIONS

The 1992 Stock Option Program provides incentive and non-qualified stock
options to certain key employees for up to 1,000,000 common shares of the
Corporation. In addition, the 1992 Directors Stock Option Program provides for
the granting of non-qualified stock options to certain non-employee directors of
the Corporation for which 100,000 common shares of the Corporation have been
reserved. Options under these 1992 Programs are not exercisable for at least six
months from date of grant.

Options continue to be outstanding under the 1982 Incentive Stock Option
Plan and these options are fully exercisable.

Options under these plans are granted at 100% of the fair market value.
Options granted as incentive stock options must be exercised within ten years
and options granted as non-qualified stock options have terms established by the
Compensation Committee of the Board and approved by the non-employee directors
of the Board. Options are cancelable within defined periods based upon the
reason for termination of employment.

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." This statement defines a fair value based method of accounting
for an employee stock option or similar equity instrument. The statement does,
however, allow an entity to continue to measure compensation cost for those
plans using the intrinsic value based

39
41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

method of accounting prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees."

In 1996 the Corporation adopted provisions of SFAS No. 123 by providing
disclosures of the pro forma effect on net income and earnings per share that
would result if the fair value compensation element were to be recognized as
expense. The following table shows the pro forma earnings and earnings per share
for 1996 and 1995 along with significant assumptions used in determining the
fair value of the compensation amounts.

1996 1995
----------- -----------

Pro forma amounts:
Net income.......................................... $ 67,825 30,377
Earnings per share.................................. 2.08 0.91
Assumptions:
Dividend yield...................................... 4.4% 4.4%
Expected volatility................................. 23.3% 23.7%
Risk free interest rate............................. 5.2%-6.7% 6.3%-7.3%
Expected lives...................................... 5-6 yrs. 5 yrs.

A summary of stock option activity for the last three years follows:

SHARES
------------------------- RANGE OF
AVAILABLE OPTION PRICE
FOR GRANT OUTSTANDING PER SHARE
---------- ---------- --------------

Balance
December 31, 1993.............................. 1,505,560 839,745 $ 4.32 - 24.19
Exercised................................... -- (57,544) 4.32 - 24.13
Granted..................................... (73,590) 73,590 23.25 - 23.50
--------- -------- --------------
Balance
December 31, 1994.............................. 1,431,970 855,791 4.32 - 24.19
Canceled.................................... (495,190) --
Exercised................................... -- (420,883) 4.32 - 24.13
Granted..................................... (119,450) 119,450 22.50 - 26.25
--------- -------- --------------
Balance
December 31, 1995.............................. 817,330 554,358 4.32 - 24.19
Canceled.................................... -- (13,290)
Exercised................................... -- (172,520) 4.32 - 24.19
Granted..................................... (578,990) 578,990 29.50 - 33.94
--------- -------- --------------
Balance
December 31, 1996.............................. 238,340 947,538 $ 4.61 - 33.94
--------- -------- --------------

The Employee Stock Purchase Plan provides full-time and part-time employees
of the Corporation the opportunity to acquire common shares on a payroll
deduction basis. Of the 200,000 shares available under the Plan, there were
12,512 and 12,752 shares issued in 1996 and 1995, respectively.

15. PARENT COMPANY

Condensed financial information of FirstMerit Corporation (Parent Company
only) is as follows:

40
42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

DECEMBER 31,
-------------------------
CONDENSED BALANCE SHEETS 1996 1995
---------- ----------

ASSETS
Cash and due from banks.................................... $ 21,897 4,866
Investment securities...................................... 1,161 1,036
Loans to subsidiaries...................................... 40,789 104,017
Investment in subsidiaries, at equity in underlying value
of their net assets...................................... 430,708 433,571
Net loans.................................................. 30,179 --
Goodwill................................................... 267 400
Other assets............................................... 10,386 10,363
-------- -------
$535,387 554,253
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued and other liabilities.............................. $ 11,680 11,372
Shareholders' equity....................................... 523,707 542,881
-------- -------
$535,387 554,253
======== =======

YEARS ENDED DECEMBER 31,
----------------------------------------
CONDENSED STATEMENTS OF INCOME 1996 1995 1994
---------- ---------- ----------

Income:
Cash dividends from subsidiaries........................... $ 73,800 87,400 44,916
Other income............................................... 60,348 37,069 23,423
-------- ------- ------
134,148 124,469 68,339
Interest and other expenses................................ 59,970 59,652 29,988
-------- ------- ------
Income before federal income tax benefit and equity in
undistributed income of subsidiaries..................... 74,178 64,817 38,351
Federal income tax (benefit)............................... (1,189) 5,215 (4,103)
-------- ------- ------
75,367 59,602 42,454
Equity in undistributed income (loss) of subsidiaries,
including extraordinary gain in 1995 of $5,599........... (4,427) (28,284) 28,895
-------- ------- ------
$ 70,940 31,318 71,349
======== ======= ======

41
43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31,
----------------------------------------
CONDENSED STATEMENTS OF INCOME 1996 1995 1994
---------- ---------- ----------

Operating activities:
Net income................................................. $ 70,940 31,318 71,349
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in undistributed income of subsidiaries............. 4,427 28,284 (28,895)
Gain on sale of assets -- FMER Bank, N.A................... (490) -- --
Cash received on FMER Bank, N.A. sale...................... 13,060 -- --
Addition to Provision for loan losses...................... -- 1,100 --
Other...................................................... 3,396 12,190 (11,467)
--------- ------- -------
Net cash provided by operating activities.................. 91,333 72,892 30,987
--------- ------- -------
Investing activities:
Proceeds from maturities of investment securities.......... -- 10,262 3,544
Loans to subsidiaries...................................... 63,228 (47,954) (5,497)
Payments for investments in and advances to subsidiaries... -- -- (11,000)
Repayments for investments in/advances to subsidiaries..... -- -- 1,171
Net increase in loans...................................... (31,208) -- --
Purchases of investment securities......................... (133) (196) (993)
--------- ------- -------
Net cash (used) provided by investing activities........... 31,887 (37,888) (12,775)
--------- ------- -------
Financing activities:
Cash dividends............................................. (36,376) (35,299) (28,836)
Proceeds from exercise of stock options.................... 3,482 3,285 3,890
Purchase of treasury shares................................ (56,295) (2,269) (93)
Loans made to First National Bank of Ohio.................. (17,000) -- --
--------- ------- -------
Net cash used by financing activities...................... (106,189) (34,283) (25,039)
--------- ------- -------
Net increase (decrease) in cash and cash equivalents....... 17,031 721 (6,734)
Cash and cash equivalents at beginning of year............. 4,866 4,145 10,879
--------- ------- -------
Cash and cash equivalents at end of year................... $ 21,897 4,866 4,145
========= ======= =======

16. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

Disclosures of fair value information about certain financial instruments,
whether or not recognized in the consolidated balance sheets are provided as
follows. Instruments for which quoted market prices are not available are valued
based on estimates using present value or other valuation techniques whose
results are significantly affected by the assumptions used, including discount
rates and future cash flows. Accordingly, the values so derived, in many cases,
may not be indicative of amounts that could be realized in immediate settlement
of the instrument. Also, certain financial instruments and all non-financial
instruments are excluded from these disclosure requirements. For these and other
reasons, the aggregate fair value amounts presented below are not intended to
represent the underlying value of the Corporation.

The following methods and assumptions were used to estimate the fair values
of each class of financial instrument presented:

Investment securities -- Fair values are based on quoted prices, or for
certain fixed maturity securities not actively traded estimated values are
obtained from independent pricing services.

Federal funds sold -- The carrying amount is considered a reasonable
estimate of fair value.

42
44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Net loans -- Fair value for loans with interest rates that fluctuate as
current rates change are generally valued at carrying amounts with an
appropriate discount for any credit risk. Fair values of other types of loans
are estimated by discounting the future cash flows using the current rates for
which similar loans would be made to borrowers with similar credit ratings and
for the same remaining maturities.

Cash and due from banks -- The carrying amount is considered a
reasonable estimate of fair value.

Accrued interest receivable -- The carrying amount is considered a
reasonable estimate of fair value.

Deposits -- The carrying amount is considered a reasonable estimate of
fair value for demand and savings deposits and other variable rate deposit
accounts. The fair values for fixed maturity certificates of deposit and other
time deposits are estimated using the rates currently offered for deposits of
similar remaining maturities.

Securities sold under agreements to repurchase and other borrowings
- - -- Fair values are estimated using rates currently available to the Corporation
for similar types of borrowing transactions.

Accrued interest payable -- The carrying amount is considered a
reasonable estimate of fair value.

Commitments to extend credit -- The fair value of commitments to extend
credit is estimated using the fees currently charged to enter into similar
arrangements, taking into account the remaining terms of the agreements, the
creditworthiness of the counterparties, and the difference, if any, between
current interest rates and the committed rates.

Standby letters of credit and financial guarantees written -- Fair
values are based on fees currently charged for similar agreements or on the
estimated cost to terminate or otherwise settle the obligations.

Loans sold with recourse -- Fair value is estimated based on the present
value of the estimated future liability in the event of default.

The estimated fair values of the Corporation's financial instruments based
on the assumptions described above are as follows:

DECEMBER 31,
----------------------------------------------------
1996 1995
------------------------ -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- --------- --------- ---------

Financial assets:
Investment securities...................... $1,187,524 1,187,524 1,403,059 1,403,059
Federal funds sold......................... 15,550 15,550 12,575 12,575
Net loans.................................. 3,606,662 3,585,534 3,723,526 3,704,374
Cash and due from banks.................... 222,164 222,164 287,671 287,671
Accrued interest receivable................ 23,489 23,489 35,584 35,584
Financial liabilities:
Deposits................................... 4,204,875 4,209,789 4,501,925 4,514,823
Securities sold under agreements to
repurchase and other borrowings......... 423,701 423,852 486,958 486,809
Accrued interest payable................... 16,433 16,433 16,252 16,252
Unrecognized financial instruments:
Commitments to extend credit............... -- -- -- --
Standby letters of credit and financial
guarantees written...................... -- -- -- --
Loans sold with recourse................... -- -- -- --

43
45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Corporation is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit,
standby letters of credit, financial guarantees, and loans sold with recourse.

These instruments involve, to varying degrees, elements recognized in the
consolidated balance sheets. The contract or notional amount of these
instruments reflect the extent of involvement the Corporation has in particular
classes of financial instruments.

The Corporation's exposure to credit loss in the event of non-performance
by the other party to the financial instrument for commitments to extend credit
and standby letters of credit and financial guarantees written is represented by
the contractual notional amount of those instruments. The Corporation uses the
obligations as it does for on-balance-sheet instruments.

Unless noted otherwise, the Corporation does not require collateral or
other security to support financial instruments with credit risk. The following
table sets forth financial instruments whose contract amounts represent credit
risk.

DECEMBER 31,
------------------------
1996 1995
---------- ---------

Commitments to extend credit................................. $1,295,118 1,015,723
========== =========
Standby letters of credit and financial guarantees written... $ 89,404 75,898
========== =========
Loans sold with recourse..................................... $ 1,361 1,702
========== =========

Commitments to extend credit are agreements to lend to a customer provided
there is no violation of any condition established in the contract. Commitments
generally are extended at the then prevailing interest rates, have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. The Corporation evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained if deemed necessary by the
Corporation upon extension of credit is based on Management's credit evaluation
of the counter party. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment, and income-producing
commercial properties. Standby letters of credit and financial guarantees
written are conditional commitments issued by the Corporation to guarantee the
performance of a customer to a third party. Those guarantees are primarily
issued to support public and private borrowing arrangements, including
commercial paper, bond financing and similar transactions. Except for short-term
guarantees of $30,965 and $35,427 at December 31, 1996 and 1995, respectively,
the remaining guarantees extend in varying amounts through 2020. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. Collateral held varies, but may
include marketable securities, equipment and real estate. In recourse
arrangements, the Corporation accepts 100% recourse. By accepting 100% recourse,
the Corporation is assuming the entire risk of loss due to borrower default. The
Corporation's exposure to credit loss, if the borrower completely failed to
perform and if the collateral or other forms of credit enhancement all prove to
be of no value, is represented by the notional amount less any allowance for
possible loan losses. The Corporation uses the same credit policies originating
loans which will be sold with recourse as it does for any other type of loan.

18. EXTRAORDINARY GAIN AND UNUSUAL CHARGES

During the third quarter, the corporation recorded a one-time Savings
Association Insurance Fund ("SAIF") recapitalization charge that totaled $10.2
million. The charge was mandated by legislation passed by Congress and signed
into law September 30, 1996.

44
46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

During 1995, the Corporation recognized an extraordinary gain of $5,599,
net of taxes of $3,015, from the sale of several apartment complexes formerly
owned by a CIVISTA subsidiary.

Other 1995 unusual charges included the following items: a) fees, expenses,
and lost tax benefits of $16,214 related to the acquisitions of CIVISTA; b) an
expense of $2,199 related to an early retirement program; and c) a reengineering
plan that was implemented to improve the overall operating effectiveness of the
Corporation, improve productivity within the branch network and centralize
operational functions previously handled by affiliate banks. The charges
associated with this plan totaled $17,838 on a pre-tax basis, the components of
which were as follows: $6,584 in adjustments to the value of buildings,
equipment and other assets; $2,875 increase to reserves; $4,688 in severance
costs; and $3,691 in consulting, sales training, and merchandising expenses
consistent with the launch of FirstMerit's new retail emphasis. The severance
charge relates to a management and employee staff reduction of approximately 400
people. As of December 31, 1996, implementation of the reengineering plan that
began in 1995 was completed.

19. CONTINGENCIES

The nature of the Corporation's business results in a certain amount of
litigation. Accordingly, FirstMerit Corporation and its subsidiaries are subject
to various pending and threatened lawsuits in which claims for monetary damages
are asserted. Management, after consultation with legal counsel, is of the
opinion that the ultimate liability of such pending matters would not have a
material effect on the Corporation's financial condition or results of
operations.

45
47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial and per share data for the years ended December 31,
1996 and 1995 are summarized as follows:

QUARTERS
--------------------------------------------
FIRST SECOND THIRD FOURTH
-------- ------- ------- -------
IN THOUSANDS (EXCEPT PER SHARE DATA)

Total interest income.............. 1996 $101,627 103,385 104,362 102,371
==== ======== ======= ======= =======
1995 $102,866 104,793 104,801 104,167
==== ======== ======= ======= =======
Net interest income................ 1996 $ 60,390 63,505 63,928 63,149
==== ======== ======= ======= =======
1995 $ 58,507 57,709 59,285 60,193
==== ======== ======= ======= =======
Provision for possible loan
losses........................... 1996 $ 2,957 3,170 3,485 8,139
==== ======== ======= ======= =======
1995 $ 2,712 2,586 2,820 11,645
==== ======== ======= ======= =======
Income (loss) before federal income
taxes............................ 1996 $ 28,817 28,679 19,835 28,684
==== ======== ======= ======= =======
1995 $ 18,100 19,026 24,916 (5,373)
==== ======== ======= ======= =======
Extraordinary item, net of tax
effect........................... 1996 -- -- -- --
==== ======== ======= ======= =======
1995 -- -- -- 5,599
==== ======== ======= ======= =======
Net income......................... 1996 $ 19,253 19,221 13,447 19,019
==== ======== ======= ======= =======
1995 $ (1,184) 12,664 16,649 3,189
==== ======== ======= ======= =======
Income (loss) per share before
extraordinary item............... 1996 $ 0.58 0.59 0.42 0.59
==== ======== ======= ======= =======
1995 $ (0.04) 0.38 0.50 (0.07)
==== ======== ======= ======= =======
Extraordinary item, net of tax
effect, per share................ 1996 -- -- -- --
==== ======== ======= ======= =======
1995 -- -- -- 0.17
==== ======== ======= ======= =======
Net income per share............... 1996 $ 0.58 0.59 0.42 0.59
==== ======== ======= ======= =======
1995 $ (0.04) 0.38 0.50 0.10
==== ======== ======= ======= =======

21. SHAREHOLDER RIGHTS PLAN

The Corporation has in effect a shareholder rights plan ("Plan"). The Plan
provides that each share of Common Stock has one right attached. Under the Plan,
subject to certain conditions, the Rights would be distributed after either of
the following events: (1) a person acquires 10% or more of the Common Stock of
the Corporation, or (2) the commencement of a tender offer that would result in
a change in the ownership of 10% or more of the Common Stock. After such an
event, each Right would entitle the holder to purchase shares of Series A
Preferred Stock of the Corporation. Subject to certain conditions, the
Corporation may redeem the Rights for $0.01 per Right.

46
48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FIRSTMERIT CORPORATION AND SUBSIDIARIES

22. REGULATORY MATTERS

The Corporation is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a
material effect on the Corporation's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Corporation must meet specific capital guidelines that involve quantitative
measures of the Corporation's assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Corporation's
capital amounts and classification are also subject to quantitative judgments by
regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Corporation to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted assets and of Tier I
capital to average assets. Management believes, as of December 31, 1996, that
the Corporation meets all capital adequacy requirements to which it is subject.
The capital terms used in this note to the consolidated financial statements are
defined in the regulations as well as in the "Capital Resources" section of
Management's Discussion and Analysis of financial condition and results of
operations.

As of December 31, 1996, the most recent notification from the Office of
the Comptroller of the Currency ("OCC") categorized the Corporation as well
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized the Corporation must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the
table. In Management's opinion there are no conditions or events since the OCC's
notification that have changed the Corporation's categorization as well
capitalized.

TO BE WELL
CAPITALIZED UNDER
PER CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURCHASES ACTION PROVISIONS
------------------ -------------------- ---------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------- ----- ---------- ----- ---------- ------

As of December 31, 1996:
Total Capital
(to Risk Weighted Assets)........ $573,247 13.82% *331,861 *8.0% *414,826 *10.0%
Tier I Capital
(to Risk Weighted Amount)........ $523,911 12.63% *165,931 *4.0% *248,896 *6.0%
Tier I Capital
(to Average Assets).............. $523,911 5.63% *217,575 *4.0% *271,893 *5.0%
<FN>
* greater than or equal to

47
49

MANAGEMENT'S REPORT

The management of FirstMerit Corporation is responsible for the preparation
and accuracy of the financial information presented in this annual report. These
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, based on the best estimates and judgement of
management.

The Corporation maintains a system of internal controls designed to provide
reasonable assurance that assets are safeguarded, that transactions are executed
in accordance with the Corporation's authorization and policies, and that
transactions are properly recorded so as to permit preparation of financial
statements that fairly present the financial position and results of operations
in conformity with generally accepted accounting principles. These systems and
controls are reviewed by our internal auditors and independent auditors.

The Audit Committee of the Board of Directors is composed of only outside
directors and has the responsibility for the recommendation of the independent
auditors for the Corporation. The Audit Committee meets regularly with
management, internal auditors and our independent auditors to review accounting,
auditing and financial matters. The independent auditors and the internal
auditors have free access to the Audit Committee.

/s/ JOHN R. COCHRAN /s/ JACK R. GRAVO
JOHN R. COCHRAN JACK R. GRAVO
President and Chief Executive Vice President
Executive Officer Finance and Administration

48
50

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying consolidated balance sheets of FirstMerit
Corporation and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the years in the three year period ended December 31, 1996.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FirstMerit
Corporation and subsidiaries as of December 31, 1996 and 1995 and the results of
their operations and their cash flows for each of the years in the three year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.

/s/ Coopers & Lybrand

Akron, OH
January 16, 1997

49
51

AVERAGE CONSOLIDATED BALANCE SHEETS, FULLY-TAX EQUIVALENT INTEREST RATES AND
INTEREST DIFFERENTIAL

FIRSTMERIT CORPORATION AND SUBSIDIARIES

YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------- ------------------------------ ------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- -------- ------- --------- -------- ------- --------- -------- -------
(DOLLARS IN THOUSANDS)

ASSETS
Investment securities:
U.S. Treasury securities
and U.S. Government
agency obligations
(taxable)............. $1,110,581 69,010 6.21% 1,218,604 75,759 6.22% 1,289,286 74,960 5.81%
Obligations of states
and political
subdivisions (tax-
exempt)............... 100,630 7,404 7.36 122,244 9,369 7.66 145,199 11,011 7.58%
Other securities........ 99,977 6,489 6.49 106,176 7,077 6.67 190,239 11,981 6.30%
---------- ------- --------- ------- --------- -------
Total investment
securities........ 1,311,188 82,903 6.32 1,447,024 92,205 6.37 1,624,724 97,952 6.03%
Federal funds sold........ 19,233 934 4.86 22,011 1,681 7.64 55,126 2,168 3.93%
Loans..................... 3,812,900 330,951 8.68 3,818,486 326,581 8.55 3,350,162 275,488 8.22%
Less allowance for
possible loan losses.... 47,392 -- -- 37,923 -- -- 36,040 -- --
---------- ------- --------- ------- --------- -------
Net loans........... 3,765,508 330,951 8.79 3,780,563 326,581 8.64 3,314,122 275,488 8.31%
---------- ------- --------- ------- --------- -------
Total earning
assets............ 5,095,929 414,788 8.14 5,249,598 420,467 8.01 4,993,972 375,608 7.52%
------- ------- -------
Cash and due from banks... 207,533 220,787 204,513
Other assets.............. 175,020 184,426 187,273
---------- --------- ---------
Total assets........ $5,478,482 5,654,811 5,385,758
========== ========= =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand -- non-interest
bearing............... $ 745,102 -- -- 725,287 -- -- 666,469 -- --
Demand -- interest
bearing............... 447,524 7,839 1.75 426,608 9,202 2.16 460,994 10,429 2.26%
Savings................. 1,399,011 32,446 2.32 1,514,374 38,438 2.54 1,710,909 43,372 2.54%
Certificates and other
time deposits......... 1,772,150 95,379 5.38 1,782,817 97,518 5.47 1,607,616 68,528 4.26%
---------- ------- --------- ------- --------- -------
Total deposits...... 4,363,787 135,664 3.11 4,449,086 145,158 3.26 4,445,988 122,329 2.75%
Federal funds purchased,
securities sold under
agreements to repurchase
and other borrowings.... 515,556 25,109 4.87 609,247 35,775 5.87 374,351 17,853 4.77%
---------- ------- --------- ------- --------- -------
Total interest
bearing
liabilities....... 4,134,241 160,773 3.89 4,333,046 180,933 4.18 4,153,870 140,182 3.37%
---------- ------- --------- ------- ---------
Other liabilities......... 71,240 68,440 50,559
Shareholders' equity...... 527,899 528,038 514,860
---------- --------- ---------
Total liabilities
and shareholders'
equity............ $5,478,482 5,654,811 5,385,758
========== ========= =========
Net yield on earning
assets.................. 254,015 4.98 239,534 4.56 235,426 4.71
======= ==== ======= ==== ======= ====
Interest rate spread...... 4.25 3.83 4.15
==== ==== ====
Income on tax-exempt
securities and loans.... 6,241 8,034 10,454
======= ======= =======

- - ---------------

Notes: Interest income on tax-exempt securities and loans have been adjusted to
a fully-taxable equivalent basis.

Non-accrual loans have been included in the average balances.

50
52

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

For information about the Directors of FirstMerit, see "Election of
Directors" on pages 1 through 5 of FirstMerit's Proxy Statement dated February
26, 1997 ("Proxy Statement"), which is incorporated herein by reference.

Information about the Executive Officers of FirstMerit appears in Part I of
this report.

Disclosures by FirstMerit with respect to compliance with Section 16(a)
appear on page 5 of the Proxy Statement, and are incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

See "Executive Compensation and Other Information" on pages 6 through 16 of
the Proxy Statement, which is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See "Principal Shareholders" and "Election of Directors" at page 25, and
pages 1 through 5, respectively, of the Proxy Statement, which are incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Certain Relationships and Related Transactions" at pages 18 and 19 of
the Proxy Statement, which is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) The following Financial Statements appear in Part II of this Report:

Consolidated Balance Sheets

December 31, 1996 and 1995

Consolidated Statements of Income

Years ended December 31, 1996, 1995 and 1994

Consolidated Statements of Changes in Shareholders' Equity

Years ended December 31, 1996, 1995 and 1994

Consolidated Statements of Cash Flows

Years ended December 31, 1996, 1995 and 1994

Notes to Consolidated Financial Statements

Years ended December 31, 1996, 1995 and 1994

Management's Report

Independent Auditors' Report

(a)(2) Financial Statement Schedules

All schedules are omitted as the required information is inapplicable or
the information is presented in the consolidated financial statements or
related notes which appear in Part II of this report.

(a)(3) Management Contracts or Compensatory Plans or Arrangements

See those documents listed on the Exhibit Index which are marked as
such.

51
53

(b) Reports on Form 8-K

No reports on Form 8-K were filed by FirstMerit during the fourth
quarter of 1996.

See the Exhibit Index.

(d) Financial Statements

See subparagraph (a)(1) above.

52
54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Akron,
State of Ohio, on the 26th day of February, 1997.

FirstMerit Corporation

By: /s/ John R. Cochran
----------------------------------
John R. Cochran, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on the 20th day of February, 1997 by the following
persons (including a majority of the Board of Directors of the registrant) in
the capacities indicated.

SIGNATURE TITLE
- - ---------------------------------------- ---------------------------------------------------

/s/ JOHN R. COCHRAN President and Chief Executive Officer (Principal
- - ---------------------------------------- Executive Officer) and Director
John R. Cochran

/s/ JACK R. GRAVO Executive Vice President (Principal Financial
- - ---------------------------------------- Officer and Principal Accounting Officer)
Jack R. Gravo

/s/ KAREN S. BELDEN Director
- - ----------------------------------------
Karen S. Belden

/s/ R. CARY BLAIR Director
- - ----------------------------------------
R. Cary Blair

/s/ JOHN C. BLICKLE Director
- - ----------------------------------------
John C. Blickle

/s/ ROBERT W. BRIGGS Director
- - ----------------------------------------
Robert W. Briggs

/s/ ROBERT M. CARTER Director
- - ----------------------------------------
Robert M. Carter

/s/ ELIZABETH A. DALTON Director
- - ----------------------------------------
Elizabeth A. Dalton

/s/ TERRY L. HAINES Director
- - ----------------------------------------
Terry L. Haines

/s/ CLIFFORD J. ISROFF Director
- - ----------------------------------------
Clifford J. Isroff

/s/ PHILIP A. LLOYD, II Director
- - ----------------------------------------
Philip A. Lloyd, II

/s/ ROBERT G. MERZWEILER Director
- - ----------------------------------------
Robert G. Merzweiler

/s/ STEPHEN E. MYERS Director
- - ----------------------------------------
Stephen E. Myers

/s/ GILBERT H. NEAL Director
- - ----------------------------------------
Gilbert H. Neal

/s/ ROGER T. READ Director
- - ----------------------------------------
Roger T. Read

/s/ JUSTIN T. ROGERS, JR. Director
- - ----------------------------------------
Justin T. Rogers, Jr.

/s/ DEL SPITZER Director
- - ----------------------------------------
Del Spitzer

EXHIBIT INDEX

EXHIBIT
NUMBER
- - ----------

(3)(a)(1) Amended and Restated Articles of Incorporation, as amended, of FirstMerit
Corporation
(3)(b) Code of Regulations, as amended, of FirstMerit Corporation
(3)(c)(2) Amended and Restated Shareholders Rights Agreement
(4) Description of Shares (contained in Exhibit 3(a) above)
(10)(a)(3) 1982 Incentive Stock Option Plan of FirstMerit Corporation*
(10)(b) Amended and Restated 1992 Stock Option Program of FirstMerit Corporation*
(10)(c) 1992 Directors Stock Option Program*
(10)(d)(4) FirstMerit Corporation 1995 Restricted Stock Plan*
(10)(e) 1997 Stock Option Program of FirstMerit Corporation*
(10)(f)(5) 1985 FirstMerit Corporation Stock Plan (CV)*
(10)(g)(6) 1993 FirstMerit Corporation Stock Plan (CV)*
(10)(h) Amended and Restated FirstMerit Corporation Executive Deferred Compensation
Plan*
(10)(i) Amended and Restated FirstMerit Corporation Director Deferred Compensation Plan*
(10)(j)(7) FirstMerit Corporation Executive Supplemental Retirement Plan*
(10)(k)(8) FirstMerit Corporation Unfunded Supplemental Benefit Plan*
(10)(l)(9) First Amendment to the FirstMerit Corporation Unfunded Supplemental Benefit
Plan*
(10)(m)(10) Supplemental Pension Agreement of John R. Macso*
(10)(n)(11) FirstMerit Corporation Executive Committee Life Insurance Program Summary*
<FN>
- - ---------------

1 Incorporated by reference to Exhibit 3(i) of FirstMerit's Forms 8-K filed
with the Commission on April 27, 1995.

2 Incorporated by reference to Exhibit 4 of FirstMerit's Registration Statement
on Form 8-A/A filed with the Commission on July 18, 1996

3 Incorporated by reference to Exhibit 4.2 of FirstMerit's Registration
Statement on Form S-8 (No. 33-7266), filed with the Commission on July 15,
1986.

4 Incorporated by reference to Exhibit (10)(d) of FirstMerit's Form 10-Q for
the fiscal quarter ended March 31, 1995, filed with the Commission on May 15,
1995.

5 Incorporated by reference to Exhibit (10)(a) of FirstMerit's Form S-8 No.
33-57557, filed with the Commission on February 1, 1995.

6 Incorporated by reference to Exhibit (10)(b) of FirstMerit's Form S-8 No.
33-57557, filed with the Commission on February 1, 1995.

7 Incorporated by reference to Exhibit (10)(d) of FirstMerit's Form 10-K for
the fiscal year ended December 31, 1995, filed with the Commission on March
15, 1996.

8 Incorporated by reference to Exhibit (10)(j) of FirstMerit's Form 10-K for
the fiscal year ended December 31, 1991, filed with the Commission on March
16, 1992.

9 Incorporated by reference to Exhibit (10)(v) of FirstMerit's Form 10-K for
the fiscal year ended December 31, 1994, filed with the Commission on March
2, 1995.

10 Incorporated by reference to Exhibit (10)(r) of FirstMerit's Form 10-K for
the fiscal year ended December 31, 1991, filed with the Commission on March
16, 1992.

11 Incorporated by reference to Exhibit (10)(w) of FirstMerit's Form 10-K for
the fiscal year ended December 31, 1994, filed with the Commission on March
2, 1995.

EXHIBIT
NUMBER
- - ----------

(10)(o)(12) Long Term Disability Plan*
(10)(p)(13) Employment Agreement of John R. Cochran*
(10)(q)(14) Restricted Stock Award Agreement of John R. Cochran*
(10)(r) Form of FirstMerit Corporation Termination Agreement*
(10)(s)(15) Form of Director and Officer Indemnification Agreement and Undertaking*
(10)(t)(16) Distribution Agreement, by and among FirstMerit Corporation, First National Bank
of Ohio and the Agents
(10)(u)(17) Form of First National Bank of Ohio Global Bank Note (Fixed Rate)
(10)(v)(18) Form of First National Bank of Ohio Global Bank Note (Floating Rate)
(21) Subsidiaries of FirstMerit Corporation
(23) Consent of Coopers & Lybrand
(27) Financial Data Schedule
<FN>
* Management Contract or Compensatory Plan or Arrangement

- - ---------------

12 Incorporated by reference to Exhibit (10)(x) of FirstMerit's Form 10-K for
the fiscal year ended December 31, 1994, filed with the Commission on March
2, 1995.

13 Incorporated by reference to Exhibit (10)(a) of FirstMerit's Form 10-Q for
the fiscal quarter ended March 31, 1995, filed with the Commission on May 15,
1995.

14 Incorporated by reference to Exhibit (10)(e) of FirstMerit's Form 10-Q for
the fiscal quarter ended March 31, 1995, filed with the Commission on May 15,
1995.

15 Incorporated by reference to Exhibit (10)(i) of FirstMerit's Form 8-K/A filed
with the Commission on April 27, 1995.

16 Incorporated by reference to Exhibit (10)(ii) of FirstMerit's Form 8-K/A
filed with the Commission on April 27, 1995.

17 Incorporated by reference to Exhibit (10)(iii) of FirstMerit's Form 8-K/A
filed with the Commission on April 27, 1995.

18 Incorporated by reference to Exhibit (10)(iv) of FirstMerit's Form 8-K/A
filed with the Commission on April 27, 1995.