SYS-CON MEDIA Authors: Mat Mathews, PR.com Newswire, David Smith, Tim Crawford, Kevin Benedict

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FirstMerit Reports Fourth Quarter 2013 EPS of $0.33 Per Share

AKRON, Ohio, Jan. 28, 2014 /PRNewswire/ -- 

Quarterly Highlights include:

  • Profitability Sustained: 59th consecutive quarter of profitability.
  • Organic growth continued: Average loan growth of $175.0 million, or 1.24% from the prior quarter; average core deposit growth of $230.5 million or 1.38% from the prior quarter.
  • Credit quality remained superior:  Net charge-offs to average originated loans of 0.13%; nonperforming assets as a percent of period end originated loans plus other real estate at 0.60%.
  • Balance sheet remained strong:  Strong tangible common equity ratio at 7.71%.
  • Integration successfully completed: Conversion to unified operating systems in October, operating consistently across five Midwestern states.

FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported fourth quarter 2013 net income of $57.2 million, or $0.33 per diluted share.  This compares with $40.7 million, or $0.23 per diluted share, for the third quarter 2013 and $38.2 million, or $0.35 per diluted share, for the fourth quarter 2012. Included in noninterest expense for the fourth quarter 2013 were $6.0 million of pre-tax merger related costs compared to $33.4 million for the third quarter 2013.  Pre-tax costs associated with anticipated branch closures of $1.0 million were recognized in the fourth quarter of 2013 and are included within noninterest income.

(Logo: http://photos.prnewswire.com/prnh/20070920/CLTU138LOGO )

Returns on average common equity ("ROE") and average assets ("ROA") for the fourth quarter 2013 were 8.48% and 0.94%, respectively, compared with 6.07% and 0.67%, respectively, for the third quarter 2013 and 9.30% and 1.03%, respectively, for the fourth quarter 2012. 

"FirstMerit's strong performance in the fourth quarter of 2013 was representative of our entire year's accomplishments. Through our strategic acquisition of Citizens Republic Bancorp as well as our continued success in our legacy markets, we expanded our balance sheet with robust loan and core deposit growth while maintaining pristine credit metrics. We substantially completed the integration of Citizens Republic Bancorp  with a seamless conversion of all operating systems in October, and we now offer the same wide array of competitive products and industry leading services across our entire five-state Midwest footprint. We are aggressively competing in our new markets, backed with a comprehensive marketing and sponsorship program to build awareness, while maintaining a focused approach on further penetrating our legacy markets. We continue to work to take market share and enhance shareholder value," said Paul Greig, chairman, president and CEO, FirstMerit Corporation.

Except as noted, the Citizens Republic Bancorp ("Citizens") acquisition is primarily contributing to the increases over the prior year period in the income statement and balance sheets.  Citizens' results of operations are included in the reported current year to date period results since the date of acquisition, April 12, 2013.

"Acquired loans", as used herein, are those assumed in the Citizens acquisition. (As used herein, "originated loans" refer to loans that have been originated in the normal course of business and "covered loans" refer to loans covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.)

Net Interest Income

Net interest income on a fully tax-equivalent ("FTE") basis was $202.1 million in the fourth quarter 2013 compared with $207.1 million in the third quarter 2013 and $119.1 million in the fourth quarter 2012.

Net interest margin was 3.89% for the fourth quarter 2013 compared with 4.05% for the third quarter 2013 and 3.58% for the fourth quarter 2012.  Fourth quarter 2013 net interest margin compression compared with the third quarter 2013 was primarily driven by both lower yields and decline in the acquired loan portfolio.  Notably present this quarter was stability in the yields of both the Corporation's investment portfolio and originated loans, compared with the prior quarter. 

Average originated loans were $10.0 billion during the fourth quarter 2013, an increase of $610.8 million, or 6.51%, compared with the third quarter 2013, and an increase of $1.5 billion, or 18.29%, compared with the fourth quarter 2012.  Average originated commercial loans increased $394.8 million, or 6.44%, compared with the prior quarter, and increased $925.7 million, or 16.53%, compared with the year ago quarter.

Average deposits were $19.5 billion during the fourth quarter 2013, an increase of $0.1 billion, or 0.31%, compared with the third quarter 2013, and an increase of $7.9 billion, or 68.33%, compared with the fourth quarter 2012.  During the fourth quarter 2013, average core deposits, which exclude time deposits, increased $0.2 billion, or 1.38%, compared with the third quarter 2013 and increased $6.8 billion, or 66.78%, compared with the fourth quarter 2012.  Average time deposits decreased $169.2 million, or 6.22%, and increased $1.1 billion, or 79.41%, respectively, over the prior and year-ago quarters.  For the fourth quarter 2013, average core deposits accounted for 86.93% of total average deposits, compared with 86.02% for the third quarter 2013 and 87.73% for the fourth quarter 2012.

Average investments increased $149.9 million, or 2.44%, compared with the third quarter 2013 and increased $2.6 billion, or 70.92% compared with the fourth quarter 2012.

Noninterest Income

Noninterest income, excluding gains and losses on securities transactions, for the fourth quarter 2013 was $72.4 million, an increase of $1.3 million, or 1.87%, from the third quarter 2013 and an increase of $13.2 million, or 22.28%, from the fourth quarter 2012.  Included in noninterest income in the fourth quarter 2013 was $0.8 million of gains on covered loans paid in full, compared to $1.8 million and $5.0 million in the third quarter 2013 and fourth quarter 2012, respectively.

Other income, excluding net securities gains and losses, as a percentage of net revenue for the fourth quarter 2013 was 26.38% compared with 25.56% for third quarter 2013 and 33.21% for the fourth quarter 2012.  Net revenue is defined as net interest income, on an FTE basis, plus other income, excluding gains and losses from securities sales.

Noninterest Expense

Noninterest expense for the fourth quarter 2013 was $179.4 million, a decrease of $32.0 million, or 15.13%, from the third quarter 2013 and an increase of $67.2 million, or 59.91%, from the fourth quarter 2012.  Included in noninterest expense in the fourth quarter 2013 and third quarter 2013 were merger related costs associated with the Citizens acquisition of $6.0 million and $33.4 million, respectively.  The majority of the merger related costs incurred in the fourth quarter of 2013 were associated with professional and legal services rendered in connection with the merger. The majority of the merger related costs incurred in the third quarter 2013 were from fees for early termination of existing agreements assumed from the merger and are included within Bankcard, loan processing and other costs in the accompanying year to date consolidated statements of comprehensive income.  The Corporation's efficiency ratio was 64.36% for the fourth quarter 2013, compared with 74.92% for the third quarter 2013 and 62.65% for the fourth quarter 2012.

Asset Quality (excluding acquired loans and covered assets)

Due to the impact of business combination accounting and protection against credit risk from FDIC loss sharing agreements, acquired loans and covered assets are excluded from the asset quality discussion to provide for improved comparability to prior periods and better perspective into asset quality trends.  Acquired loans are recorded at fair value at the date of acquisition with no allowance brought forward in accordance with business combination accounting.  Impaired acquired and covered loans are considered to be performing due to the application of the accretion method under the applicable accounting guidance. 

Net charge-offs on originated loans totaled $3.4 million, or 0.13% of average originated loans in the fourth quarter 2013, compared with $2.9 million, or 0.12% of average originated loans, in the third quarter 2013 and $7.1 million, or 0.34% of average originated loans, in the fourth quarter 2012. 

Nonperforming assets totaled $60.9 million at December 31, 2013, an increase of $5.5 million, or 9.85%, compared with September 30, 2013 and an increase of $10.7 million, or 21.22%, compared with December 31, 2012. Nonperforming assets at December 31, 2013 represented 0.60% of period-end originated loans plus other real estate compared with 0.57% at September 30, 2013 and 0.57% at December 31, 2012.

The allowance for originated loan losses totaled $96.5 million at December 31, 2013.   At December 31, 2013, the allowance for originated loan losses was 0.94% of period-end originated loans compared with 1.00% at September 30, 2013 and 1.13% at December 31, 2012.  The allowance for credit losses is the sum of the allowance for originated loan losses and the reserve for unfunded lending commitments.  For comparative purposes, the allowance for credit losses was 1.02% of period end originated loans at December 31, 2013, compared with 1.09% at September 30, 2013 and 1.20% at December 31, 2012.  The allowance for credit losses to nonperforming loans was 247.35% at December 31, 2013, compared with 300.06% at September 30, 2013 and 284.50% at December 31, 2012.

Balance Sheet

The Corporation's total assets at December 31, 2013 were $23.9 billion, a decrease of $225.7 million, or 0.94%, compared with September 30, 2013 and an increase of $9.0 billion, or 60.32%, compared with December 31, 2012. 

Total deposits were $19.5 billion at December 31, 2013, an increase of $44.1 million, or 0.23%, from September 30, 2013 and an increase of $7.8 billion, or 66.11%, from December 31, 2012.  Core deposits totaled $17.1 billion at December 31, 2013, an increase of $220.3 million, or 1.31%, from September 30, 2013 and an increase of $6.7 billion, or 64.41%, from December 31, 2012. 

Shareholders' equity was $2.7 billion as of December 31, 2013 and September 30, 2013 and $1.6 billion as of December 31, 2012.  The increases mainly reflect the addition of $928.3 million in equity from the Citizen acquisition.  The Corporation maintained a strong capital position as tangible common equity to assets was 7.71% at December 31, 2013, compared with 7.42% at September 30, 2013 and 8.16% at December 31, 2012.  The common cash dividend per share paid in the fourth quarter 2013 was $0.16.

Acquisition and Integration Update

Professional consulting groups have been assisting the Corporation with the integration and accounting matters related to the Citizens' transaction.  Core operating systems were converted as of October 20, 2013.

Merger related costs incurred through December 31, 2013 totaled approximately $78.1 million

The Citizens' acquisition was considered a business combination and accounted for under FASB Accounting Standard Codification 805, Business Combinations (ASC 805). All acquired assets and liabilities were recorded at their estimated fair values as of the date of acquisition and identifiable intangible assets were recorded at their estimated fair value. Estimated fair values are considered preliminary and, in accordance with ASC 805, are subject to change up to one year after the acquisition date. This allows for adjustments to the initial purchase entries if additional information relative to closing date fair values becomes available, and we continue to analyze our estimates of the fair values of the assets acquired and the liabilities assumed. Material adjustments to acquisition date estimated fair values are recorded in the period in which the acquisition occurred and, as a result, previously reported results are subject to change. Certain reclassifications of prior periods' amounts may also be made to conform to the current period's presentation and would have no effect on previously reported net income amounts.

During the quarter ended December 31, 2013, we obtained additional information that resulted in changes to certain acquisition-data fair value estimates relating to the Citizens' acquisition. These purchase accounting adjustments have resulted in an increase to goodwill of approximately $5.4 million which was recognized for the Citizens' acquisition in the quarter ended June 30, 2013. Prior period amounts appropriately reflect these adjustments.

Fourth Quarter 2013 Conference Call

FirstMerit (Nasdaq: FMER) senior management will host an earnings conference call today at 11:00 a.m. (Eastern Time) to provide an overview of fourth quarter results and highlights.  To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 35161818.  A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on January 28, 2014 through February 10, 2014 by dialing (855) 859-2056, and entering the PIN: 35161818.  The Corporation will provide a slide presentation, which management will speak to during the conference call.  A copy of the presentation will be available at https://www.firstmerit.com/personal/investors.aspx; click on the Presentations link to access the slide presentation.

Non-GAAP Measures:  This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation's management uses these non-GAAP measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations of the Corporation and enhance comparability of results with prior periods, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. The Corporation believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. The Corporation's management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the Corporation's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

About FirstMerit Corporation

FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $23.9 billion as of December 31, 2013, and 404 banking offices and 431 ATM locations in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal affiliates include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation and FirstMerit Title Agency, Ltd.

Subsequent Events

The Corporation is required under generally accepted accounting principles to evaluate subsequent events through the filing of the its consolidated financial statements for the quarter ended December 31, 2013 on Form 10-Q.  As a result, the Corporation will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2013 and will adjust amounts preliminarily reported, if necessary.

Forward-Looking Statements

This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Corporation, as well as its operations, markets and products.  Actual results could differ materially from those indicated.  Among the important factors that could cause results to differ materially are interest rate changes, continued softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Corporation's business, competitive pressures, changes in accounting, tax or regulatory practices or requirements, the Corporation's ability to realize the synergies and benefits contemplated by the acquisition of Citizens, such as it being accretive to earnings and expanding the Corporation's geographic presence, in the time frame anticipated or at all, and those risk factors detailed in the Corporation's periodic reports filed with the Securities and Exchange Commission.  The Corporation undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

FirstMerit Corporation
Analysts: Thomas O'Malley/Investor Relations Officer
Phone: 330.384.7109
Media Contact: Robert Townsend/Media Relations Officer
Phone: 330.384.7075

 

 


FIRSTMERIT CORPORATION AND SUBSIDIARIES






Consolidated Financial Highlights (a)






(Unaudited)



Quarters



(Dollars in thousands, except per share amounts)

2013

2013

2013

2013

2012


4th qtr

3rd qtr

2nd qtr

1st qtr

4th qtr

EARNINGS






Net interest income FTE (b)

$

202,145


$

207,079


$

201,605


$

114,376


$

119,130


FTE adjustment (b)

4,077


3,739


3,574


3,027


2,900


Provision for originated loan losses

1,552


2,523


3,151


5,808


7,116


Provision for acquired loan losses

5,515


2,033





Provision for covered loan losses

2,983


1,823


4,158


4,138


5,146


Other income

72,420


71,090


69,439


57,392


61,652


Other expenses

179,391


211,378


189,640


106,925


112,181


Net income

57,174


40,715


48,450


37,346


38,224


Diluted EPS (d)

0.33


0.23


0.29


0.33


0.35


PERFORMANCE RATIOS






Return on average assets (ROA)

0.94

%

0.67

%

0.85

%

1.01

%

1.03

%

Return on average equity (ROE)

8.48

%

6.07

%

7.56

%

8.83

%

9.30

%

Return on average tangible common equity (e)

12.96

%

9.29

%

11.49

%

12.76

%

13.01

%

Net interest margin FTE (b)

3.89

%

4.05

%

4.12

%

3.46

%

3.58

%

Efficiency ratio (f)

64.36

%

74.92

%

68.37

%

62.06

%

62.65

%

Number of full-time equivalent employees

4,570


4,666


4,619


2,767


2,738


MARKET DATA






Book value per common share

$

16.38


$

16.08


$

16.06


$

15.99


$

15.00


Tangible book value per common share (e)

$

10.79


10.48


10.44


10.83


10.75


Period-end common share market value

22.23


21.72


20.03


16.54


14.19


Market as a % of book

136

%

135

%

125

%

103

%

95

%

Cash dividends per common share

$

0.16


$

0.16


$

0.16


$

0.16


$

0.16


Common stock dividend payout ratio

48.48

%

69.57

%

55.17

%

48.48

%

45.71

%

Average basic common shares

165,054


165,044


157,863


109,689


109,652


Average diluted common shares

166,097


165,874


158,390


110,238


109,652


Period end common shares

165,056


165,045


165,045


109,746


109,649


Common shares repurchased

17


7


168


26


12


Common stock market capitalization

$

3,669,195


$

3,584,777


$

3,305,851


$

1,815,199


$

1,555,919


ASSET QUALITY (excluding acquired and covered loans) (c)






Gross charge-offs

$

9,913


$

8,515


$

10,969


$

10,776


$

12,475


Net charge-offs

3,359


2,877


3,349


5,907


7,116


Allowance for originated loan losses

96,484


98,291


98,645


98,843


98,942


Reserve for unfunded lending commitments

7,907


8,493


8,114


4,941


5,433


Nonperforming assets (NPAs)

60,883


55,426


66,177


52,231


50,224


Net charge-offs to average loans ratio

0.13

%

0.12

%

0.15

%

0.27

%

0.34

%

Allowance for originated loan losses to period-end loans

0.94

%

1.00

%

1.08

%

1.13

%

1.13

%

Allowance for credit losses to period-end loans

1.02

%

1.09

%

1.17

%

1.18

%

1.20

%

NPAs to loans and other real estate

0.60

%

0.57

%

0.72

%

0.59

%

0.57

%

Allowance for originated loan losses to nonperforming loans

228.62

%

276.19

%

216.97

%

242.21

%

269.69

%

Allowance for credit losses to nonperforming loans

247.35

%

300.06

%

234.82

%

254.32

%

284.50

%

CAPITAL & LIQUIDITY






Period-end tangible common equity to assets (e)

7.71

%

7.42

%

7.59

%

8.03

%

8.16

%

Average equity to assets

11.12

%

11.08

%

11.28

%

11.45

%

11.12

%

Average equity to total loans

18.81

%

18.97

%

18.95

%

17.88

%

17.37

%

Average total loans to deposits

72.84

%

72.11

%

74.04

%

81.36

%

81.21

%

AVERAGE BALANCES






Assets

$

24,034,846


$

24,013,594


$

22,810,702


$

14,983,543


$

14,702,215


Deposits

19,517,476


19,456,231


18,334,244


11,789,784


11,595,085


Originated loans

9,988,587


9,377,826


8,877,754


8,735,307


8,444,208


Acquired loans, including covered loans, less loss share receivable

4,227,693


4,652,101


4,696,740


856,875


971,589


Earning assets

20,593,750


20,276,825


19,609,974


13,408,789


13,246,693


Shareholders' equity

2,673,635


2,661,546


2,571,964


1,715,005


1,635,275


ENDING BALANCES






Assets

$

23,909,027


$

24,134,729


$

23,531,872


$

15,272,484


$

14,913,012


Deposits

19,533,601


19,489,533


19,119,722


11,925,767


11,759,425


Originated loans

10,213,387


9,789,139


9,132,625


8,779,970


8,731,659


Acquired loans, including covered loans, less loss share receivable

4,025,758


4,401,711


4,926,888


801,239


905,391


Goodwill

739,819


739,819


739,819


460,044


460,044


Intangible assets

82,755


85,447


88,419


6,055


6,373


Earning assets

21,048,910


21,297,250


20,772,749


13,905,342


13,472,067


Total shareholders' equity

2,702,894


2,654,645


2,650,909


1,754,850


1,645,202


NOTES:






(a) - Effective April 12, 2013, the Corporation acquired Citizens.  Citizens' assets and liabilities were included in the consolidated balance sheet on the date of acquisition at fair value.  Citizens' results of operations were included in the consolidated statements of comprehensive income beginning on the date of acquisition. 

(b) - The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes.  As such, these tax-exempt securities typically yield lower returns than taxable securities.  To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments.  This adjustment is not permitted under generally accepted accounting principles in the Consolidated Statements of Comprehensive Income.  

(c) - Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired loans and covered assets are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. 

(d) - Net income used to determine diluted EPS was reduced by the cash dividends payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A of approximately $1.5 million in each of the quarters ended December 31, 2013, September 30, 2013 and June 30, 2013, and approximately $0.9 million in the quarter ended March 31, 2013.

(e) -  Tangible book value per common share is a non-GAAP financial measure and is calculated based on tangible common equity divided by period end common shares outstanding.  Tangible common equity excludes goodwill, intangible assets, and preferred stock.  Management believes this non-GAAP measure serves as a useful tool to help evaluate the strength and discipline of a company's capital management strategies and as an additional, conservative measure of total company value.

(f) - The efficiency ratio is calculated as noninterest expense divided by total revenue, excluding net losses on the sale of securities of $2.8 million and $9.0 thousand in the quarters ended June 30, 2013 and March 31, 2013, respectively, and net gains of $2.4 million in the quarter ended December 31, 2012.

 


 

FIRSTMERIT CORPORATION AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS











(Dollars in thousands)

December 31,


December 31,

(Unaudited, except December 31, 2012, which is derived from the audited financial statements)

2013


2012

ASSETS





Cash and due from banks

$

571,171



$

244,223



Interest-bearing deposits in banks

346,651



13,791




Total cash and cash equivalents

917,822



258,014



Investment securities:






Held-to-maturity

2,935,688



622,121




Available-for-sale

3,273,174



2,920,971




Other investments

180,803



140,717



Loans held for sale

11,622



23,683



Loans

14,300,972



9,750,784



Allowance for loan losses

(141,252)



(142,197)



Net loans

14,159,720



9,608,587



Premises and equipment, net

327,054



181,149



Goodwill

739,819



460,044



Intangible assets

82,755



6,373



Covered other real estate

65,234



59,855



Accrued interest receivable and other assets

1,215,336



631,498





Total assets

$

23,909,027



$

14,913,012


LIABILITIES AND SHAREHOLDERS' EQUITY





Deposits:






Noninterest-bearing

$

5,459,029



$

3,338,371




Interest-bearing

3,026,735



1,287,674




Savings and money market accounts

8,587,167



5,758,123




Certificates and other time deposits

2,460,670



1,375,257





Total deposits

19,533,601



11,759,425




Federal funds purchased and securities sold under agreements to repurchase

851,535



1,104,525




Wholesale borrowings

200,600



136,883




Long-term debt

324,428






Accrued taxes, expenses, and other liabilities

295,969



266,977





Total liabilities

21,206,133



13,267,810




Shareholders' equity:







5.875% Non-Cumulative Perpetual Preferred stock, Series A, without par value: authorized 115,000 shares; 100,000 issued

100,000







Common stock warrant

3,000







Common Stock, without par value;  authorized 300,000,000 shares; issued: December 31, 2013 - 170,183,540 shares;

December 31, 2012 - 115,121,731 shares

127,937



127,937





Capital surplus

1,390,643



475,979





Accumulated other comprehensive loss

(66,876)



(16,205)





Retained earnings

1,277,975



1,195,850





Treasury stock, at cost: December 31, 2013 - 5,127,332 shares; December 31, 2012 - 5,472,915 shares

(129,785)



(138,359)





Total shareholders' equity

2,702,894



1,645,202





Total liabilities and shareholders' equity

$

23,909,027



$

14,913,012


 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Period End Loans by Product Type (Unaudited)

(Dollars in thousands)









As of December 31, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

6,648,279



$

1,725,970



$

375,860



$

8,750,109


Mortgage

529,253



470,652



50,679



1,050,584


Installment

1,727,925



1,004,569



6,162



2,738,656


Home equity

920,066



294,424



97,442



1,311,932


Credit card

148,313







148,313


Leases

239,551







239,551


Subtotal

10,213,387



3,495,615



530,143



14,239,145


Loss share receivable





61,827



61,827


Total loans

10,213,387



3,495,615



591,970



14,300,972


Less allowance for loan losses

96,484



741



44,027



141,252


Net loans

$

10,116,903



$

3,494,874



$

547,943



$

14,159,720



















As of September 30, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

6,420,369



$

1,963,746



$

422,225



$

8,806,340


Mortgage

487,283



466,594



52,796



1,006,673


Installment

1,647,095



1,080,298



6,361



2,733,754


Home equity

889,372



306,783



102,908



1,299,063


Credit card

145,113







145,113


Leases

199,907







199,907


Subtotal

9,789,139



3,817,421



584,290



14,190,850


Loss share receivable





69,986



69,986


Total loans

9,789,139



3,817,421



654,276



14,260,836


Less allowance for loan losses

98,291





45,544



143,835


Net loans

$

9,690,848



$

3,817,421



$

608,732



$

14,117,001



















As of June 30, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

5,997,812



$

2,267,811



$

505,706



$

8,771,329


Mortgage

462,427



439,380



56,056



957,863


Installment

1,496,663



1,221,060



7,794



2,725,517


Home equity

845,051



322,111



106,970



1,274,132


Credit card

142,319







142,319


Leases

188,353







188,353


Subtotal

9,132,625



4,250,362



676,526



14,059,513


Loss share receivable





83,910



83,910


Total loans

9,132,625



4,250,362



760,436



14,143,423


Less allowance for loan losses

98,645





49,069



147,714


Net loans

$

9,033,980



$

4,250,362



$

711,367



$

13,995,709



















As of March 31, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

5,888,337



$



$

621,188



$

6,509,525


Mortgage

451,522





58,627



510,149


Installment

1,322,795





8,081



1,330,876


Home equity

812,458





113,343



925,801


Credit card

140,721







140,721


Leases

164,137







164,137


Subtotal

8,779,970





801,239



9,581,209


Loss share receivable





95,593



95,593


Total loans

8,779,970





896,832



9,676,802


Less allowance for loan losses

98,843





47,945



146,788


Net loans

$

8,681,127



$



$

848,887



$

9,530,014



















As of December 31, 2012


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

5,866,489



$



$

718,437



$

6,584,926


Mortgage

445,211





61,540



506,751


Installment

1,328,258





8,189



1,336,447


Home equity

806,078





117,225



923,303


Credit card

146,387







146,387


Leases

139,236







139,236


Subtotal

8,731,659





905,391



9,637,050


Loss share receivable





113,734



113,734


Total loans

8,731,659





1,019,125



9,750,784


Less allowance for loan losses

98,942





43,255



142,197


Net loans

$

8,632,717



$



$

975,870



$

9,608,587










(1) Loans assumed from Citizens.  No allowance was brought forward on the date of acquisition in accordance with business combination accounting.

(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

 

 


FIRSTMERIT CORPORATION AND SUBSIDIARIES










AVERAGE CONSOLIDATED BALANCE SHEETS











Quarterly Periods

(Unaudited)

December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)

2013


2013


2013


2013


2012

ASSETS










Cash and cash equivalents

$

1,135,601



$

1,415,430



$

806,129



$

394,896



$

238,366


Investment securities:










Held-to-maturity

2,763,517



2,640,807



1,953,094



637,614



620,154


Available-for-sale

3,284,635



3,243,173



3,723,002



2,919,636



2,925,938


Other investments

253,490



267,743



253,649



140,729



140,723


Loans held for sale

10,248



18,265



17,394



14,884



20,485


Loans

14,281,860



14,106,837



13,662,835



9,695,926



9,539,393


Less: allowance for loan losses

177,628



146,509



146,705



141,735



141,270


Net loans

14,104,232



13,960,328



13,516,130



9,554,191



9,398,123


Total earning assets

20,593,750



20,276,825



19,609,974



13,408,789



13,246,693


Premises and equipment, net

326,632



322,236



299,979



179,381



181,738


Accrued interest receivable and other assets

2,156,491



2,145,612



2,241,325



1,142,212



1,176,688


TOTAL ASSETS

$

24,034,846



$

24,013,594



$

22,810,702



$

14,983,543



$

14,702,215


LIABILITIES










Deposits:










Noninterest-bearing

$

5,546,316



$

5,443,800



$

5,095,977



$

3,321,660



$

3,306,444


Interest-bearing

2,875,375



2,720,592



2,347,155



1,300,816



1,122,796


Savings and money market accounts

8,544,097



8,570,910



8,210,780



5,835,750



5,743,599


Certificates and other time deposits

2,551,688



2,720,929



2,680,332



1,331,558



1,422,246


Total deposits

19,517,476



19,456,231



18,334,244



11,789,784



11,595,085


Federal funds purchased and securities sold under










agreements to repurchase

948,959



1,011,991



927,451



906,717



957,564


Wholesale borrowings

200,622



201,012



237,887



136,298



163,405


Long-term debt

324,426



324,424



314,597



155,506




Total funds

20,991,483



20,993,658



19,814,179



12,988,305



12,716,054


Accrued taxes, expenses and other liabilities

369,728



358,390



424,559



280,233



350,886


Total liabilities

21,361,211



21,352,048



20,238,738



13,268,538



13,066,940


SHAREHOLDERS' EQUITY










Preferred stock

100,000



100,000



100,000



62,222




Common stock warrant

3,000



3,000



2,637






Common stock

127,937



127,937



127,937



127,937



127,937


Capital surplus

1,389,222



1,386,931



1,274,758



473,943



474,532


Accumulated other comprehensive loss

(79,431)



(82,598)



(29,033)



(21,247)



(17,666)


Retained earnings

1,262,705



1,256,052



1,225,380



1,209,837



1,188,641


Treasury stock

(129,798)



(129,776)



(129,715)



(137,687)



(138,169)


Total shareholders' equity

2,673,635



2,661,546



2,571,964



1,715,005



1,635,275


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

24,034,846



$

24,013,594



$

22,810,702



$

14,983,543



$

14,702,215












 

 


FIRSTMERIT CORPORATION AND SUBSIDIARIES

Average Loans by Product Type (Unaudited)

(Dollars in thousands)









Quarter ended December 31, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

6,526,243



$

1,866,064



$

400,105



$

8,792,412


Mortgage

509,685



472,771



51,304



1,033,760


Installment

1,697,651



1,032,245



6,279



2,736,175


Home equity

905,172



298,212



100,712



1,304,096


Credit card

146,805







146,805


Leases

203,031







203,031


Subtotal

9,988,587



3,669,292



558,401



14,216,280


Loss share receivable





65,580



65,580


Total loans

9,988,587



3,669,292



623,981



14,281,860


Less allowance for loan losses

134,890



(2,091)



44,829



177,628


Net loans

$

9,853,697



$

3,671,383



$

579,152



$

14,104,232



















Quarter ended September 30, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

6,131,423



$

2,118,803



$

460,242



$

8,710,468


Mortgage

472,281



448,206



54,403



974,890


Installment

1,570,124



1,145,824



7,180



2,723,128


Home equity

866,001



312,681



104,762



1,283,444


Credit card

143,637







143,637


Leases

194,360







194,360


Subtotal

9,377,826



4,025,514



626,587



14,029,927


Loss share receivable





76,910



76,910


Total loans

9,377,826



4,025,514



703,497



14,106,837


Less allowance for loan losses

97,693



68



48,748



146,509


Net loans

$

9,280,133



$

4,025,446



$

654,749



$

13,960,328



















Quarter Ended June 30, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

5,888,935



$

2,141,015



$

575,859



$

8,605,809


Mortgage

453,813



408,723



56,825



919,361


Installment

1,388,765



1,107,076



7,912



2,503,753


Home equity

831,243



288,254



111,076



1,230,573


Credit card

141,785







141,785


Leases

173,213







173,213


Subtotal

8,877,754



3,945,068



751,672



13,574,494


Loss share receivable





88,341



88,341


Total loans

8,877,754



3,945,068



840,013



13,662,835


Less allowance for loan losses

99,411





47,294



146,705


Net loans

$

8,778,343



$

3,945,068



$

792,719



$

13,516,130



















Quarter Ended March 31, 2013


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

5,859,818



$



$

673,815



$

6,533,633


Mortgage

448,589





60,391



508,980


Installment

1,325,016





8,118



1,333,134


Home equity

806,936





114,551



921,487


Credit card

144,159







144,159


Leases

150,789







150,789


Subtotal

8,735,307





856,875



9,592,182


Loss share receivable





103,744



103,744


Total loans

8,735,307





960,619



9,695,926


Less allowance for loan losses

98,660





43,075



141,735


Net loans

$

8,636,647



$



$

917,544



$

9,554,191



















Quarter ended December 31, 2012


Originated Loans


Acquired Loans (1)


Covered Loans (2)


Total Loans

Commercial

$

5,600,522



$



$

780,904



$

6,381,426


Mortgage

443,542





62,382



505,924


Installment

1,331,131





8,251



1,339,382


Home equity

798,663





120,052



918,715


Credit card

145,050







145,050


Leases

125,300







125,300


Subtotal

8,444,208





971,589



9,415,797


Loss share receivable





123,596



123,596


Total loans

8,444,208





1,095,185



9,539,393


Less allowance for loan losses

99,461





41,809



141,270


Net loans

$

8,344,747



$



$

1,053,376



$

9,398,123










(1) Loans assumed from Citizens.  No allowance was brought forward on the date of acquisition in accordance with business combination accounting.

(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

 

 


FIRSTMERIT CORPORATION AND SUBIDARIES














AVERAGE CONSOLIDATED BALANCE SHEETS


Fully Tax-equivalent Interest Rates and Interest Differential















Three months ended



Three months ended



Three months ended



December 31, 2013



September 30, 2013



December 31, 2012


(Unaudited)

Average




Average


Average




Average


Average




Average

(Dollars in thousands)

Balance


Interest (1)


Rate


Balance


Interest (1)


Rate


Balance


Interest (1)


Rate

ASSETS


















Cash and cash equivalents

$

1,135,601







$

1,415,430







$

238,366






Investment securities and federal funds sold:


















U.S. treasury securities and U.S. government agency obligations (taxable)

4,895,147



$

24,236



1.96

%


4,849,135



$

23,551



1.93

%


2,794,524



$

16,767



2.39

%

Obligations of states and political subdivisions (tax exempt)

728,408



8,609



4.69

%


712,296



8,890



4.95

%


510,722



6,583



5.13

%

Other securities and federal funds sold

678,087



6,445



3.77

%


590,292



6,215



4.18

%


381,569



3,429



3.58

%

Total investment securities and federal funds sold

6,301,642



39,290



2.47

%


6,151,723



38,656



2.49

%


3,686,815



26,779



2.89

%

Loans held for sale

10,248



92



3.56

%


18,265



174



3.78

%


20,485



199



3.86

%

Loans, including loss share receivable (2)

14,281,860



177,275



4.92

%


14,106,837



182,406



5.13

%


9,539,393



101,288



4.22

%

Total earning assets

20,593,750



216,657



4.17

%


20,276,825



221,236



4.33

%


13,246,693



128,266



3.85

%

Allowance for loan losses

(177,628)







(146,509)







(141,270)






Other assets

2,483,123







2,467,848







1,358,426






Total assets

$

24,034,846







$

24,013,594







$

14,702,215






LIABILITIES AND SHAREHOLDERS' EQUITY















Deposits:


















Noninterest-bearing

$

5,546,316





%


$

5,443,800





%


$

3,306,444



%

Interest-bearing

2,875,375



759



0.10

%


2,720,592



809



0.12

%


1,122,796


261


0.09

%

Savings and money market accounts

8,544,097



6,127



0.28

%


8,570,910



6,495



0.30

%


5,743,599


5,261


0.36

%

Certificates and other time deposits

2,551,688



2,500



0.39

%


2,720,929



1,712



0.25

%


1,422,246


2,287


0.64

%

Total deposits

19,517,476



9,386



0.19

%


19,456,231



9,016



0.18

%


11,595,085


7,809


0.27

%

Securities sold under agreements to repurchase

948,959



291



0.12

%


1,011,991



306



0.12

%


957,564


303


0.13

%

Wholesale borrowings

200,622



938



1.85

%


201,012



936



1.85

%


163,405


1,024


2.49

%

Long-term debt

324,426



3,897



4.77

%


324,424



3,899



4.77

%




%

Total interest bearing liabilities

15,445,167



14,512



0.37

%


15,549,858



14,157



0.36

%


9,409,610


9,136


0.39

%

Other liabilities

369,728







358,390







350,886





Shareholders' equity

2,673,635







2,661,546







1,635,275





Total liabilities and shareholders' equity

$

24,034,846







$

24,013,594







$

14,702,215





Net yield on earning assets

$

20,593,750



$

202,145



3.89

%


$

20,276,825



$

207,079



4.05

%


$

13,246,693


$

119,130


3.58

%

Interest rate spread





3.80

%






3.97

%






3.47

%



















(1) The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets.  The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes.  As such, these tax-exempt securities typically yield lower returns than taxable securities.  To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments.  This adjustment is not permitted under generally accepted accounting principles in the Consolidated Statements of Comprehensive Income.   The taxable-equivalent adjustments to net interest income were $4.1 million, $3.7 million  and $2.9 million for the three months ended December 31, 2013, September 30, 2013 and December 31, 2012, respectively.

(2) Nonaccrual loans have been included in the average balances.

 


 

FIRSTMERIT CORPORATION AND SUBIDARIES








AVERAGE CONSOLIDATED BALANCE SHEETS


Fully Tax-equivalent Interest Rates and Interest Differential









Twelve Months Ended



Twelve Months Ended



December 31, 2013



December 31, 2012


(Unaudited)

Average




Average


Average




Average

(Dollars in thousands)

Balance


Interest (1)


Rate


Balance


Interest (1)


Rate

ASSETS












Cash and cash equivalents

$

941,356







$

366,815






Investment securities and federal funds sold:












U.S. treasury securities and U.S. government agency obligations (taxable)

4,319,524



$

88,761



2.05

%


2,825,283



$

73,455



2.60

%

Obligations of states and political subdivisions (tax exempt)

673,695



33,311



4.94

%


483,582



25,034



5.18

%

Other securities and federal funds sold

535,916



20,063



3.74

%


383,420



11,575



3.02

%

Total investment securities and federal funds sold

5,529,135



142,135



2.57

%


3,692,285



110,064



2.98

%

Loans held for sale

15,194



553



3.64

%


23,326



960



4.12

%

Loans, including loss share receivable (2)

12,948,666



637,532



4.92

%


9,357,080



410,818



4.39

%

Total earning assets

18,492,995



780,220



4.22

%


13,072,691



521,842



3.99

%

Allowance for loan losses

(153,190)







(143,131)






Other assets

2,208,614







1,324,252






Total assets

$

21,489,775







$

14,620,627






LIABILITIES AND SHAREHOLDERS' EQUITY












Deposits:












Noninterest-bearing

$

4,859,659





%


$

3,181,475



%

Interest-bearing

2,316,421



2,543



0.11

%


1,082,740


987


0.09

%

Savings and money market accounts

7,799,943



24,406



0.31

%


5,724,330


20,563


0.36

%

Certificates and other time deposits

2,325,565



9,649



0.41

%


1,565,253


11,723


0.75

%

Total deposits

17,301,588



36,598



0.21

%


11,553,798


33,273


0.29

%

Securities sold under agreements to repurchase

949,068



1,240



0.13

%


949,756


1,157


0.12

%

Wholesale borrowings

194,150



3,893



2.01

%


175,989


4,423


2.51

%

Long-term debt

280,323



13,287



4.74

%




%

Total interest bearing liabilities

13,865,470



55,018



0.40

%


9,498,068


38,853


0.41

%

Other liabilities

355,781







332,976





Shareholders' equity

2,408,865







1,608,108





Total liabilities and shareholders' equity

$

21,489,775







$

14,620,627





Net yield on earning assets (1)

$

18,492,995



$

725,202



3.92

%


$

13,072,691


$

482,989


3.69

%

Interest rate spread





3.82

%






3.58

%













(1)  The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets.  The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes.  As such, these tax-exempt securities typically yield lower returns than taxable securities.  To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments.  This adjustment is not permitted under generally accepted accounting principles in the Consolidated Statements of Comprehensive Income.   The taxable-equivalent adjustments to net interest income were $14.4 million and $11.2 million for the twelve months ended December 31, 2013 and 2012, respectively.

(2) Nonaccrual loans have been included in the average balances.

 

 


FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Quarters Ended


Twelve Months Ended

(Dollars in thousands except per share data)

December 31,


December 31,





2013


2012


2013


2012

Interest income:









Loans and loans held for sale

$

176,559



$

101,086



$

635,872



$

410,299



Investment securities:










Taxable

30,681



20,196



108,824



85,030




Tax-exempt

5,340



4,084



21,107



15,354




Total investment securities interest

36,021



24,280



129,931



100,384





Total interest income

212,580



125,366



765,803



510,683


Interest expense:









Deposits:










Interest-bearing

759



261



2,543



987




Savings and money market accounts

6,127



5,261



24,406



20,563




Certificates and other time deposits

2,500



2,287



9,649



11,723



Securities sold under agreements to repurchase

291



303



1,240



1,157



Wholesale borrowings

938



1,024



3,893



4,423



Long-term debt

3,897





13,287






Total interest expense

14,512



9,136



55,018



38,853




Net interest income

198,068



116,230



710,785



471,830



Provision for loan losses

10,050



12,262



33,684



54,698




Net interest income after provision for loan losses

188,018



103,968



677,101



417,132


Other income:









Trust department income

10,255



5,662



34,770



23,143



Service charges on deposits

19,084



14,247



74,399



57,737



Credit card fees

12,414



11,167



50,542



43,569



ATM and other service fees

5,659



3,432



19,155



14,792



Bank owned life insurance income

4,037



3,067



16,926



12,140



Investment services and insurance

3,530



2,147



12,777



8,990



Investment securities gains/(losses), net



2,425



(2,803)



3,786



Loan sales and servicing income

3,577



7,946



23,069



27,031



Other operating income

13,864



11,559



41,508



32,416




Total other income

72,420



61,652



270,343



223,604


Other expenses:









Salaries, wages, pension and employee benefits

93,621



61,560



354,016



245,192



Net occupancy expense

14,066



7,114



49,510



31,754



Equipment expense

13,177



7,398



41,875



29,243



Stationery, supplies and postage

4,895



2,162



14,199



8,800



Bankcard, loan processing and other costs

10,886



9,260



71,929



34,195



Professional services

8,358



6,119



40,680



23,480



Amortization of intangibles

2,692



444



8,392



1,866



FDIC insurance expense

5,106



1,738



17,707



10,753



Other operating expense

26,590



16,386



89,026



68,330




Total other expenses

179,391



112,181



687,334



453,613


Income before income tax expense

81,047



53,439



260,110



187,123


Income tax expense

23,873



15,215



76,426



53,017





Net income

$

57,174



$

38,224



$

183,684



$

134,106


Other comprehensive income, net of taxes









Changes in unrealized securities' holding gains and (losses), net of taxes of  $9.3 million, $5.3 million, $46.6 million and $2.2 million, respectively

$

(17,308)



$

(6,718)



$

(86,537)



$

4,154



Reclassification for realized securities' (gains) and losses, net of taxes of $-0-

million, $1.0 million, $1.0 million and $1.0 million, respectively



(1,576)



1,822



(2,461)



Pension and postretirement benefit costs, net of taxes of $18.3 million, $3.2 million, $18.3 million and $3.2 million, respectively

34,044



5,989



34,044



5,989


Total other comprehensive gain (loss), net of taxes

16,736



(2,305)



(50,671)



7,682




Comprehensive income

$

73,910



$

35,919



$

133,013



$

141,788


Net income attributable to common shareholders

$

55,264



$

38,224



$

176,802



$

134,106


Net income used in diluted EPS calculation

$

55,264



$

38,224



$

176,802



$

134,106


Weighted average number of common shares outstanding - basic

165,054



109,652



149,607



109,518


Weighted average number of common shares outstanding - diluted

166,097



109,652



150,421



109,518


Basic earnings per common share

$

0.33



$

0.35



$

1.18



$

1.22


Diluted earnings per common share

$

0.33



$

0.35



$

1.18



$

1.22


Dividend per common share

$

0.16



$

0.16



$

0.64



$

0.64


 


 

FIRSTMERIT CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME---LINKED QUARTERS














Quarterly Results

(Unaudited)

2013


2013


2013


2013


2012

(Dollars in thousands, except share data)

4th qtr


3rd qtr


2nd qtr


1st qtr


4th qtr

Loans and loans held for sale

$

176,559



$

182,107



$

178,535



$

98,672



$

101,086


Investment securities

36,021



35,390



35,236



23,284



24,280


Total interest income

212,580



217,497



213,771



121,956



125,366


Interest on deposits:










Interest-bearing

759



809



656



318



261


Savings and money market accounts

6,127



6,495



6,469



5,315



5,261


Certificates and other time deposits

2,500



1,712



3,374



2,063



2,287


Securities sold under agreements to repurchase

291



306



329



313



303


Wholesale borrowings

938



936



1,169



850



1,024


Long-term debt

3,897



3,899



3,743



1,748




Total interest expense

14,512



14,157



15,740



10,607



9,136


Net interest income

198,068



203,340



198,031



111,349



116,230


Provision for loan losses

10,050



6,379



7,309



9,946



12,262


Net interest income after provision for loan losses

188,018



196,961



190,722



101,403



103,968


Other income:










Trust department income

10,255



9,608



9,167



5,741



5,662


Service charges on deposits

19,084



22,146



20,582



12,585



14,247


Credit card fees

12,414



13,588



14,317



10,222



11,167


ATM and other service fees

5,659



5,216



4,945



3,335



3,432


Bank owned life insurance income

4,037



4,351



3,641



4,897



3,067


Investment services and insurance

3,530



3,403



3,429



2,415



2,147


Investment securities (losses)/gains, net





(2,794)



(9)



2,425


Loan sales and servicing income

3,577



3,644



7,985



7,863



7,946


Other operating income

13,864



9,134



8,167



10,343



11,559


Total other income

72,420



71,090



69,439



57,392



61,652


Other expenses:










Salaries, wages, pension and employee benefits

93,621



97,390



105,099



57,906



61,560


Net occupancy expense

14,066



13,816



13,346



8,282



7,114


Equipment expense

13,177



11,040



10,309



7,349



7,398


Stationery, supplies and postage

4,895



3,801



3,407



2,096



2,162


Bankcard, loan processing and other costs

10,886



40,786



12,417



7,840



9,260


Professional services

8,358



9,768



17,144



5,410



6,119


Amortization of intangibles

2,692



2,972



2,411



317



444


FDIC  insurance expense

5,106



4,925



4,149



3,526



1,738


Other operating expense

26,590



26,880



21,358



14,199



16,386


Total other expenses

179,391



211,378



189,640



106,925



112,181


Income before income tax expense

81,047



56,673



70,521



51,870



53,439


Income tax expense

23,873



15,958



22,071



14,524



15,215


Net income

57,174



40,715



48,450



37,346



38,224


Total other comprehensive income (loss), net of taxes

16,736



(11,716)



(47,777)



(7,914)



(2,305)


Comprehensive income

$

73,910



$

28,999



$

673



$

29,432



$

35,919


Net income attributable to common shareholders

$

55,264



$

38,936



$

46,598



$

36,036



$

38,224


Net income used in diluted EPS calculation

$

55,264



$

38,936



$

46,598



$

36,036



$

38,224


Weighted-average number of common shares - basic

165,054



165,044



157,863



109,689



109,652


Weighted-average number of common shares - diluted

166,097



165,874



158,390



110,238



109,652


Basic earnings per common share

$

0.33



$

0.24



$

0.30



$

0.33



$

0.35


Diluted earnings per common share

$

0.33



$

0.23



$

0.29



$

0.33



$

0.35












 


 

FIRSTMERIT CORPORATION AND SUBSIDIARIES







ASSET QUALITY INFORMATION (excluding acquired loans and covered assets) (a)


































(Unaudited)


(Audited)

(Dollars in thousands, except ratios)

Quarterly Periods


Annual Period


December 31,


September 30,


June 30,


March 31,


December 31,


December 31,

Allowance for Credit Losses

2013


2013


2013


2013


2012


2012

Allowance for originated loan losses, beginning of period

$

98,291



$

98,645



$

98,843



$

98,942



$

98,942



$

107,699


Provision for originated loan losses

1,552



2,523



3,151



5,808



7,116



33,976


Charge-offs

9,913



8,515



10,969



10,776



12,475



65,905


Recoveries

6,554



5,638



7,620



4,869



5,359



23,172


Net charge-offs

3,359



2,877



3,349



5,907



7,116



42,733


Allowance for originated loan losses, end of period

$

96,484



$

98,291



$

98,645



$

98,843



$

98,942



$

98,942


Reserve for unfunded lending commitments,












beginning of period

$

8,493



$

8,114



$

4,941



$

5,433



$

5,760



$

6,373


Provision for (relief of) credit losses

(586)



379



3,173



(492)



(327)



(940)


Reserve for unfunded lending commitments,












end of period

$

7,907



$

8,493



$

8,114



$

4,941



$

5,433



$

5,433


Allowance for Credit Losses

$

104,391



$

106,784



$

106,759



$

103,784



$

104,375



$

104,375


 

Ratios












Provision for loan losses to average loans

0.06

%


0.11

%


0.14

%


0.27

%


0.34

%


0.42

%

Net charge-offs to average loans

0.13

%


0.12

%


0.15

%


0.27

%


0.34

%


0.53

%

Allowance for loan losses to period-end loans

0.94

%


1.00

%


1.08

%


1.13

%


1.13

%


1.13

%

Allowance for credit losses to period-end loans

1.02

%


1.09

%


1.17

%


1.18

%


1.20

%


1.20

%

Allowance for loan losses to nonperforming loans

228.62

%


276.19

%


216.97

%


242.21

%


269.69

%


269.69

%

Allowance for credit losses to nonperforming loans

247.35

%


300.06

%


234.82

%


254.32

%


284.50

%


284.50

%

 

Asset Quality












Impaired originated loans:












Nonaccrual

$

25,674



$

19,140



$

28,935



$

23,843



$

21,766



$

21,766


Other nonperforming loans:












Nonaccrual

16,529



16,448



16,529



16,966



14,921



14,921


Total nonperforming loans

42,203



35,588



45,464



40,809



36,687



36,687


Other real estate ("ORE")

18,680



19,838



20,713



11,422



13,537



13,537


Total nonperforming assets ("NPAs")

$

60,883



$

55,426



$

66,177



$

52,231



$

50,224



$

50,224


NPAs to period-end loans + ORE

0.60

%


0.57

%


0.72

%


0.59

%


0.57

%


0.57

%

Accruing originated loans past due 90 days or more

$

11,176



$

12,452



$

11,760



$

12,393



$

9,417



$

9,417


 

(a) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and covered loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.

 

 


FIRSTMERIT CORPORATION AND SUBSIDIARIES








NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL




















(Unaudited)












(Dollars in thousands)















2013


2013


2013


2013


2012

QUARTERLY OTHER INCOME DETAIL



4th qtr


3rd qtr


2nd qtr


1st qtr


4th qtr

Trust department income


$

10,255


$

9,608



$

9,167



$

5,741



$

5,662


Service charges on deposits



19,084


22,146



20,582



12,585



14,247


Credit card fees



12,414


13,588



14,317



10,222



11,167


ATM and other service fees



5,659


5,216



4,945



3,335



3,432


Bank owned life insurance income



4,037


4,351



3,641



4,897



3,067


Investment services and insurance



3,530


3,403



3,429



2,415



2,147


Investment securities gains/(losses), net






(2,794)



(9)



2,425


Loan sales and servicing income



3,577


3,644



7,985



7,863



7,946


Other operating income



13,864


9,134



8,167



10,343



11,559


Total Other Income


$

72,420


$

71,090



$

69,439



$

57,392



$

61,652





 

2013


2013


2013


2013


2012

QUARTERLY OTHER EXPENSES DETAIL



4th qtr


3rd qtr


2nd qtr


1st qtr


4th qtr

Salaries and wages


$

76,685


$

79,369



$

85,680



$

46,391



$

45,988


Pension and employee benefits



16,936


18,021



19,419



11,515



15,572


Net occupancy expense



14,066


13,816



13,346



8,282



7,114


Equipment expense



13,177


11,040



10,309



7,349



7,398


Taxes, other than income taxes



2,618


2,785



2,891



1,922



1,924


Stationery, supplies and postage



4,895


3,801



3,407



2,096



2,162


Bankcard, loan processing and other costs



10,886


40,786



12,417



7,840



9,260


Advertising



4,855


4,432



3,745



2,070



2,774


Professional services



8,358


9,768



17,144



5,410



6,119


Telephone



3,427


3,326



2,728



1,177



1,230


Amortization of intangibles



2,692


2,972



2,411



317



444


FDIC insurance expense



5,106


4,925



4,149



3,526



1,738


Other operating expense



15,690


16,337



11,994



9,030



10,458


Total Other Expenses


$

179,391


$

211,378



$

189,640



$

106,925



$

112,181


 

 


FIRSTMERIT CORPORATION AND SUBSIDIARIES




ALLOWANCE FOR ORIGINATED LOAN LOSSES - Net Charge-off Detail (excluding acquired and covered loans) (a)









(Unaudited)

Quarters Ended


Year Ended

(Dollars in thousands)

December 31,


December 31,


2013


2012


2013


2012

Allowance for originated loan losses - beginning of period

$

98,291



$

98,942



$

98,942



$

107,699


Loans charged off:








Commercial

993



5,081



7,637



28,648


Mortgage

718



533



1,903



3,964


Installment

4,895



3,588



16,683



18,029


Home equity

1,201



1,141



5,036



7,249


Credit cards

1,312



1,553



5,541



6,171


Leases



144



1,237



144


Overdrafts

794



435



2,136



1,700


Total

9,913



12,475



40,173



65,905


Recoveries:








Commercial

2,281



1,317



9,012



5,626


Mortgage

97



44



230



235


Installment

2,649



2,581



10,459



11,635


Home equity

955



725



2,492



2,819


Credit cards

421



555



1,841



2,138


Manufactured housing

11



9



60



59


Leases





100



38


Overdrafts

140



128



487



622


Total

6,554



5,359



24,681



23,172


Net charge-offs

3,359



7,116



15,492



42,733


Provision for originated loan losses

1,552



7,116



13,034



33,976


Allowance for originated loan losses-end of period

$

96,484



$

98,942



$

96,484



$

98,942










Average originated loans

$

9,988,587



$

8,444,208



$

9,252,555



$

8,089,317


Ratio to average originated loans:








(Annualized) originated net charge-offs

0.13

%


0.34

%


0.17

%


0.53

%

Provision for originated loan losses

0.06

%


0.34

%


0.14

%


0.42

%

Originated Loans, period-end

$

10,213,387



$

8,731,659



$

10,213,387



$

8,731,659










Allowance for credit losses:

$

104,391



$

104,375



$

104,391



$

104,375


To (annualized) net charge-offs

7.83



3.69



6.74



2.44


Allowance for originated loan losses:








To period-end originated loans

0.94

%


1.13

%


0.94

%


1.13

%

To (annualized) net originated charge-offs

7.24



3.50



6.23



2.32










(a) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and covered loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.

 

 

SOURCE FirstMerit Corporation

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