AKRON, Ohio, April 22 /PRNewswire-FirstCall/ -- FirstMerit Corporation
(Nasdaq: FMER) today announced first quarter 2008 net income of $31.4
million, or $0.39 per diluted share. This compares with $31.5 million, or
$0.39 per diluted share, for the fourth quarter 2007 and $31.4 million, or
$0.39 per diluted share, for the first quarter 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070920/CLTU138LOGO )
Returns on average common equity ("ROE") and average assets ("ROA") for
the first quarter 2008 were 13.56% and 1.22%, respectively, compared with
13.87% and 1.21% for the fourth quarter 2007 and 14.91% and 1.24% for the
first quarter 2007.
"Revenue growth, expense control and credit quality performance in line
with our expectations highlight our financial results. FirstMerit is
positioned to profitably grow its balance sheet by winning new business and
deepening existing customer relationships. We will execute our super
community banking model with an aggressive sales approach tempered by our
enhanced credit discipline," said Paul G. Greig, Chairman and Chief
Executive Officer of FirstMerit Corporation.
"Commercial lending activity supported asset growth this quarter while
increases in both our capital levels and allowances for loan and credit
losses further solidified the strength of our balance sheet." Mr. Greig
continued, "Our capital and reserve coverage provide our Company with a
strong base for continued growth."
Net interest margin was 3.60% for the first quarter of 2008 compared
with 3.66% for the fourth quarter of 2007 and 3.58% for the first quarter
of 2007. The Company reduced its funding costs compared with the fourth
quarter of 2007 and the first quarter of 2007 due to declining average
daily balances on higher cost deposits along with lower liability pricing
from a falling interest rate environment. The lower liability costs did not
fully mitigate corresponding lower loan yields compared with the fourth
quarter of 2007 based on the timing and magnitude of Federal Reserve
interest rate activity. During the first quarter of 2008 the Company
increased its average core deposits, which excludes time deposits, by $70.0
million, or 1.59%, compared with the fourth quarter of 2007, and $37.2
million, or 0.84%, compared with the first quarter of 2007.
The mix shift in the Company's deposit composition to a higher
concentration of core deposits contributed to lower funding costs and
provided a partial offset to decreased average earning asset yields in the
first quarter of 2008. The Company's investment portfolio yield decreased
in the first quarter of 2008, to 4.91%, compared with 4.99% in the fourth
quarter of 2007, and increased from 4.68% in the first quarter of 2007. The
increased investment portfolio yields compared with the first quarter of
2007 positively impacted the year-over-year increase in the net interest
margin.
Net interest income on a fully tax-equivalent ("FTE") basis was $85.7
million in the first quarter 2008 compared with $87.6 million in the fourth
quarter of 2007 and $83.2 million in the first quarter of 2007. The
decrease in FTE net interest income compared with the fourth quarter 2007
resulted from contraction in the net interest margin, due to declining
spreads on earning assets from the impact of three Federal Reserve Open
Market Committee interest rate cuts totaling 200 basis points and one less
day in the quarter. Net interest margin expansion and average earning asset
growth led to increased FTE net interest income compared with the first
quarter of 2007. Compared with the first quarter of 2007, average earning
assets increased $143.7 million, or 1.52%.
Noninterest income net of securities transactions for the first quarter
of 2008 was $52.3 million, an increase of $3.5 million, or 7.08%, from the
fourth quarter of 2007 and an increase of $3.5 million, or 7.07%, from the
first quarter of 2007. Included in noninterest income in the first quarter
2008 is a $7.9 million gain from the partial redemption of Visa, Inc.
shares.
The primary changes in other income for the 2008 first quarter as
compared to the first quarter of 2007, were as follows: trust department
income was $5.5 million, down 2.61% primarily due to declines in the equity
markets; service charges on deposits was $14.7 million, down 9.31%
primarily attributable to fewer overdraft items and customer preferences to
hold larger balances; credit card fees were $11.2 million, an increase of
3.80%; loan sales and servicing income was $1.4 million, a decrease of $0.3
million, primarily attributable to the current mortgage market environment;
and bank owned life insurance income was $3.2 million, up 1.04% due to a
tax free exchange of policies resulting in higher yields.
Other income, net of securities gains, as a percentage of net revenue
for the first quarter of 2008 was 37.91% compared with 35.80% for fourth
quarter of 2007 and 37.00% for the first quarter of 2007. Net revenue is
defined as net interest income, on a FTE basis, plus other income, less
gains from securities sales.
Noninterest expense for the first quarter of 2008 was $81.2 million, a
decrease of $2.1 million, or 2.47%, from the fourth quarter of 2007 and a
decrease of $0.2 million, or 0.36%, from the first quarter of 2007. For the
three months ended March 31, 2008, decreases in operating costs compared to
the first quarter 2007 occurred as follows: professional services fell $2.9
million, down 60.92% due in part to the consulting services necessary to
remediate Bank Secrecy Act issues incurred in 2007 which were completed
during the first quarter of 2008; other operating expense increased $2.4
million, up 16.90% primarily attributable to a litigation accrual and a
loss on a joint equity investment.
Net charge-offs totaled $11.3 million, or 0.65% of average loans, in
the first quarter of 2008 compared with $8.9 million, or 0.51% of average
loans, in the fourth quarter 2007 and $3.5 million, or 0.21% of average
loans, in the first quarter of 2007.
Nonperforming assets totaled $35.3 million at March 31, 2008, a
decrease of $2.0 million, or 5.26%, compared with December 31, 2007.
Nonperforming assets at March 31, 2008 represented 0.50% of period-end
loans plus other real estate compared with 0.53% at December 31, 2007.
The allowance for loan losses totaled $94.4 million at March 31, 2008,
an increase of $0.2 million from December 31, 2007. At March 31, 2008, the
allowance for loan losses was 1.33% of period-end loans compared with 1.35%
at December 31, 2007. The allowance for credit losses is the sum of the
allowance for loan losses and the reserve for unfunded lending commitments.
For comparative purposes the allowance for credit losses was 1.45% at March
31, 2008 compared with 1.45% at December 31, 2007. The allowance for credit
losses to nonperforming loans was 345.59% at March 31, 2008, compared with
323.22% at December 31, 2007.
FirstMerit's total assets at March 31, 2008 were $10.5 billion, an
increase of $116.2 million, or 1.12%, compared with December 31, 2007 and
an increase of $169.7 million, or 1.64%, compared with March 31, 2007.
Commercial loan growth of $113.7 million, or 2.91%, compared with December
31, 2007, and $220.0 million, or 5.79%, compared with March 31, 2007,
provided the overall asset growth over both periods.
Total deposits were $7.4 billion at March 31, 2008, an increase of
$90.9 million, or 1.24%, from December 31, 2007 and a decrease of $278.5
million, or 3.62%, from March 31, 2007. The decrease compared with March
31, 2007 was driven by lower large brokered and consumer CDs. Core deposits
totaled $4.6 billion at March 31, 2008, an increase of $62.3 million, or
1.38%, from December 31, 2007 and a decrease of $8.8 million, or 0.19%,
from March 31, 2007.
Shareholders' equity was $937 million at March 31, 2008, compared with
$917 million at December 31, 2007 and $864 million at March 31, 2007. The
Company increased its strong capital position as tangible equity to assets
was 7.68% at March 31, 2008, compared with 7.56% and 7.07% at December 31,
2007 and March 31, 2007, respectively. The common dividend per share paid
in the first quarter 2008 was $0.29.
First Quarter 2008 Conference Call
FirstMerit will host an earnings conference call on April 22, 2008, at
2:00 p.m. EDT to provide an overview of first quarter results and
highlights. To participate in the conference call, please dial (888)
693-3477 ten minutes before start time and provide the reservation number:
42926138. A replay of the conference call will be available at
approximately 5:00 p.m., on April 22, 2008 through April, 29, 2008, by
dialing (800) 642-1687, and entering the PIN: 42926138.
FirstMerit Corporation is a diversified financial services company
headquartered in Akron, Ohio, with assets of $10.5 billion as of March 31,
2008 and 159 banking offices and 175 ATMs in 25 Ohio and Western
Pennsylvania counties. FirstMerit provides a complete range of banking and
other financial services to consumers and businesses through its core
operations. Principal wholly-owned subsidiaries include: FirstMerit Bank,
N.A., FirstMerit Mortgage Corporation, FirstMerit Title Agency, Ltd., and
FirstMerit Community Development Corporation.
Forward-Looking Statement
This release contains forward-looking statements relating to present or
future trends or factors affecting the banking industry, and specifically
the financial condition and results of operations, including without
limitation, statements relating to the earnings outlook of the Company, as
well as its operations, markets and products. Actual results could differ
materially from those indicated. Among the important factors that could
cause results to differ materially are interest rate changes, continued
softening in the economy, which could materially impact credit quality
trends and the ability to generate loans, changes in the mix of the
Company's business, competitive pressures, changes in accounting, tax or
regulatory practices or requirements and those risk factors detailed in the
Company's periodic reports and registration statements filed with the
Securities and Exchange Commission. The Company undertakes no obligation to
release revisions to these forward-looking statements or reflect events or
circumstances after the date of this release.
FirstMerit Corporation
Analysts/Media Contact: Thomas O'Malley
Director Corporate Communications/Investor Relations Officer
Phone: 330.384.7109
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited) Quarters
(Dollars in thousands)
2008 2007 2007
EARNINGS 1st Qtr 4th Qtr 3rd Qtr
Net interest income FTE (a) $85,695 $87,647 $86,582
Provision for loan losses 11,521 9,334 7,324
Other income 52,854 49,993 49,124
Other expenses 81,234 83,295 84,030
FTE adjustment (a) 1,396 1,486 1,428
Net income 31,443 31,459 30,262
Diluted EPS 0.39 0.39 0.38
PERFORMANCE RATIOS
Return on average assets (ROA) 1.22% 1.21% 1.16%
Return on average common equity
(ROE) 13.56% 13.87% 13.71%
Net interest margin FTE (a) 3.60% 3.66% 3.61%
Efficiency ratio 58.69% 60.85% 61.76%
Number of full-time equivalent
employees 2,676 2,688 2,704
MARKET DATA
Book value/common share $11.59 $11.39 $11.00
Period-end common share mkt value 20.66 20.01 19.76
Market as a % of book 178% 176% 180%
Cash dividends/common share $0.29 $0.29 $0.29
Common stock dividend payout ratio 74.36% 74.36% 76.32%
Average basic common shares 80,655 80,477 80,467
Average diluted common shares 80,722 80,595 80,561
Period end common shares 80,879 80,482 80,467
Common shares repurchased 5,426 6,066 22,473
Common stock market capitalization $1,670,960 $1,610,445 $1,590,028
ASSET QUALITY
Gross charge-offs $14,669 $11,768 $12,347
Net charge-offs 11,315 8,940 7,945
Allowance for loan losses 94,411 94,205 93,811
Reserve for unfunded lending
commitments 7,903 7,394 7,409
Nonperforming assets (NPAs) 35,301 37,262 34,199
Net charge-offs/average loans ratio 0.65% 0.51% 0.45%
Allowance for loan losses/period-
end loans 1.33% 1.35% 1.34%
Allowance for credit losses/period-
end loans 1.45% 1.45% 1.44%
NPAs/loans and other real estate 0.50% 0.53% 0.49%
Allowance for loan
losses/nonperforming loans 318.89% 299.70% 314.22%
Allowance for credit
losses/nonperforming loans 345.59% 323.22% 339.04%
CAPITAL & LIQUIDITY
Period-end tangible equity to
assets 7.68% 7.56% 7.24%
Average equity to assets 8.98% 8.72% 8.45%
Average equity to loans 13.27% 12.94% 12.49%
Average loans to deposits 95.82% 94.71% 93.74%
AVERAGE BALANCES
Assets $10,388,359 $10,313,707 $10,360,739
Deposits 7,330,097 7,339,827 7,479,960
Loans 7,023,928 6,951,544 7,011,776
Earning assets 9,581,121 9,493,271 9,513,230
Shareholders' equity 932,405 899,624 875,720
ENDING BALANCES
Assets $10,516,828 $10,400,666 $10,407,765
Deposits 7,422,678 7,331,739 7,408,296
Loans 7,072,797 7,001,886 7,014,389
Goodwill 139,245 139,245 139,245
Intangible assets 1,754 1,977 2,200
Earning assets 9,688,270 9,509,680 9,563,541
Total shareholders' equity 937,439 916,977 884,877
NOTES:
(a) - Net interest income on a fully tax-equivalent ("FTE") basis restates
interest on tax-exempt securities and loans as if such interest were
subject to federal income tax at the statutory rate. Net interest
income on an FTE basis is not an accounting principle generally
accepted in the United States of America.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited) Quarters
(Dollars in thousands)
2007 2007
EARNINGS 2nd Qtr 1st Qtr
Net interest income FTE (a) $85,593 $83,218
Provision for loan losses 9,967 4,210
Other income 48,930 48,876
Other expenses 81,375 81,526
FTE adjustment (a) 1,368 1,212
Net income 29,885 31,421
Diluted EPS 0.37 0.39
PERFORMANCE RATIOS
Return on average assets (ROA) 1.16% 1.24%
Return on average common equity (ROE) 13.75% 14.91%
Net interest margin FTE (a) 3.62% 3.58%
Efficiency ratio 60.33% 61.55%
Number of full-time equivalent
employees 2,725 2,751
MARKET DATA
Book value/common share $10.71 $10.78
Period-end common share mkt value 20.93 21.11
Market as a % of book 195% 196%
Cash dividends/common share $0.29 $0.29
Common stock dividend payout ratio 78.38% 74.36%
Average basic common shares 80,426 80,113
Average diluted common shares 80,570 80,298
Period end common shares 80,477 80,112
Common shares repurchased 36,159 27,011
Common stock market capitalization $1,684,384 $1,691,164
ASSET QUALITY
Gross charge-offs $10,609 $9,424
Net charge-offs 7,580 3,507
Allowance for loan losses 94,432 92,045
Reserve for unfunded lending
commitments 6,553 6,746
Nonperforming assets (NPAs) 37,038 32,664
Net charge-offs/average loans ratio 0.43% 0.21%
Allowance for loan losses/period-end
loans 1.34% 1.32%
Allowance for credit losses/period-
end loans 1.43% 1.42%
NPAs/loans and other real estate 0.52% 0.47%
Allowance for loan
losses/nonperforming loans 295.08% 331.93%
Allowance for credit
losses/nonperforming loans 315.56% 356.26%
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 7.00% 7.07%
Average equity to assets 8.45% 8.32%
Average equity to loans 12.45% 12.35%
Average loans to deposits 93.18% 92.47%
AVERAGE BALANCES
Assets $10,319,454 $10,276,241
Deposits 7,515,205 7,481,969
Loans 7,002,750 6,918,636
Earning assets 9,485,819 9,437,418
Shareholders' equity 871,554 854,713
ENDING BALANCES
Assets $10,429,099 $10,347,121
Deposits 7,474,466 7,701,202
Loans 7,052,390 6,951,631
Goodwill 139,245 139,245
Intangible assets 2,422 2,644
Earning assets 9,545,752 9,447,346
Total shareholders' equity 862,265 863,641
NOTES:
(a) - Net interest income on a fully tax-equivalent ("FTE") basis restates
interest on tax-exempt securities and loans as if such interest were
subject to federal income tax at the statutory rate. Net interest
income on an FTE basis is not an accounting principle generally
accepted in the United States of America.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited, except December 31,
2007, which is derived from the March 31, December 31, March 31,
audited financial statements) 2008 2007 2007
ASSETS
Cash and due from banks $200,852 $207,335 $242,470
Investment securities (at fair
value) and federal funds sold 2,559,729 2,460,453 2,447,426
Loans held for sale 55,744 47,341 48,289
Loans:
Commercial loans 4,020,155 3,906,448 3,800,125
Mortgage loans 575,479 577,219 598,390
Installment loans 1,576,517 1,598,832 1,628,531
Home equity loans 684,064 691,922 709,964
Credit card loans 145,747 153,732 138,183
Leases 70,835 73,733 76,438
Total loans 7,072,797 7,001,886 6,951,631
Less allowance for loan losses (94,411) (94,205) (92,045)
Net loans 6,978,386 6,907,681 6,859,586
Premises and equipment, net 126,273 130,469 135,999
Goodwill 139,245 139,245 139,245
Intangible assets 1,754 1,977 2,644
Accrued interest receivable and
other assets 454,845 506,165 471,462
Total assets $10,516,828 $10,400,666 $10,347,121
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand-non-interest bearing $1,498,107 $1,482,480 $1,463,039
Demand-interest bearing 703,319 727,966 779,790
Savings and money market
accounts 2,366,466 2,295,147 2,333,907
Certificates and other time
deposits 2,854,786 2,826,146 3,124,466
Total deposits 7,422,678 7,331,739 7,701,202
Securities sold under agreements
to repurchase 1,298,145 1,256,080 1,380,591
Wholesale borrowings 653,618 705,121 208,744
Accrued taxes, expenses, and
other liabilities 204,948 190,749 192,943
Total liabilities 9,579,389 9,483,689 9,483,480
Commitments and contingencies
Shareholders' equity:
Preferred stock, without par
value: authorized and unissued
7,000,000 shares -- -- --
Preferred stock, Series A,
without par value: designated
800,000 shares; none outstanding -- -- --
Convertible preferred stock,
Series B, without par value:
designated 220,000 shares;
none outstanding -- -- --
Common stock, without par
value: authorized 300,000,000
shares; issued 92,026,350 at
March 31, 2008, December 31,
2007 and March 31, 2007 127,937 127,937 127,937
Capital surplus 91,387 100,028 108,073
Accumulated other comprehensive
loss (31,576) (43,085) (71,328)
Retained earnings 1,035,766 1,027,775 1,006,207
Treasury stock, at cost,
11,147,360, 11,543,882 and
11,914,435 shares at March 31,
2008, December 31, 2007 and
March 31, 2007, respectively (286,075) (295,678) (307,248)
Total shareholders' equity 937,439 916,977 863,641
Total liabilities and shareholders'
equity $10,516,828 $10,400,666 $10,347,121
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Quarterly Periods
(Unaudited)
(Dollars in thousands) March December September
31, 2008 31, 2007 30, 2007
ASSETS
Cash and due from banks $171,028 $175,164 $180,426
Investment securities/fed funds
sold 2,508,125 2,494,975 2,455,777
Loans held for sale 49,068 46,752 45,677
Loans:
Commercial loans 3,941,573 3,839,242 3,868,235
Mortgage loans 584,000 581,370 586,911
Installment loans 1,587,267 1,615,035 1,640,380
Home equity loans 686,603 696,259 704,499
Credit card loans 150,575 149,466 143,312
Leases 73,910 70,172 68,439
Total loans 7,023,928 6,951,544 7,011,776
Less allowance for loan losses 93,804 92,667 94,393
Net loans 6,930,124 6,858,877 6,917,383
Total earning assets 9,581,121 9,493,271 9,513,230
Premises and equipment, net 128,185 132,129 133,303
Accrued interest receivable and
other assets 601,829 605,810 628,173
TOTAL ASSETS $10,388,359 $10,313,707 $10,360,739
LIABILITIES
Deposits:
Demand-non-interest bearing $1,446,889 $1,435,358 $1,400,848
Demand-interest bearing 702,115 699,675 714,216
Savings and money market accounts 2,318,899 2,262,818 2,224,048
Certificates and other time
deposits 2,862,194 2,941,976 3,140,848
Total deposits 7,330,097 7,339,827 7,479,960
Securities sold under agreements to
repurchase 1,310,364 1,517,241 1,555,235
Wholesale borrowings 618,572 369,685 256,356
Total funds 9,259,033 9,226,753 9,291,551
Accrued taxes, expenses and other
liabilities 196,921 187,330 193,468
Total liabilities 9,455,954 9,414,083 9,485,019
SHAREHOLDERS' EQUITY
Preferred stock - - -
Common stock 127,937 127,937 127,937
Capital surplus 96,048 99,749 100,511
Accumulated other comprehensive
(loss) income (32,170) (60,430) (77,215)
Retained earnings 1,032,036 1,028,170 1,020,979
Treasury stock (291,446) (295,802) (296,492)
Total shareholders' equity 932,405 899,624 875,720
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $10,388,359 $10,313,707 $10,360,739
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Quarterly Periods
(Unaudited)
(Dollars in thousands) June 30, March 31,
2007 2007
ASSETS
Cash and due from banks $177,524 $179,566
Investment securities/fed funds sold 2,440,015 2,429,539
Loans held for sale 43,054 89,243
Loans:
Commercial loans 3,845,395 3,749,067
Mortgage loans 596,758 607,602
Installment loans 1,636,669 1,622,324
Home equity loans 711,113 717,806
Credit card loans 141,294 143,853
Leases 71,521 77,984
Total loans 7,002,750 6,918,636
Less allowance for loan losses 92,298 91,256
Net loans 6,910,452 6,827,380
Total earning assets 9,485,819 9,437,418
Premises and equipment, net 135,255 137,530
Accrued interest receivable and other
assets 613,154 612,983
TOTAL ASSETS $10,319,454 $10,276,241
LIABILITIES
Deposits:
Demand-non-interest bearing $1,408,827 $1,389,455
Demand-interest bearing 763,907 756,678
Savings and money market accounts 2,293,567 2,284,549
Certificates and other time
deposits 3,048,904 3,051,287
Total deposits 7,515,205 7,481,969
Securities sold under agreements to
repurchase 1,458,982 1,352,961
Wholesale borrowings 280,914 399,638
Total funds 9,255,101 9,234,568
Accrued taxes, expenses and other
liabilities 192,799 186,960
Total liabilities 9,447,900 9,421,528
SHAREHOLDERS' EQUITY
Preferred stock - -
Common stock 127,937 127,937
Capital surplus 102,355 107,178
Accumulated other comprehensive
(loss) income (72,170) (76,926)
Retained earnings 1,012,675 1,003,605
Treasury stock (299,243) (307,081)
Total shareholders' equity 871,554 854,713
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $10,319,454 $10,276,241
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND
SUBSIDIARIES Three months ended
(Dollars in thousands) March 31, 2008
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $171,028
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 2,004,597 23,295 4.67%
Obligations of states and political
subdivisions (tax exempt) 280,919 4,263 6.10%
Other securities and federal funds
sold 222,609 3,050 5.51%
Total investment securities and
federal funds sold 2,508,125 30,608 4.91%
Loans held for sale 49,068 672 5.51%
Loans 7,023,928 115,640 6.62%
Total earning assets 9,581,121 146,920 6.17%
Allowance for loan losses (93,804)
Other assets 730,014
Total assets $10,388,359
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,446,889 -- --
Demand - interest bearing 702,115 964 0.55%
Savings and money market accounts 2,318,899 9,643 1.67%
Certificates and other time deposits 2,862,194 31,987 4.49%
Total deposits 7,330,097 42,594 2.34%
Securities sold under agreements to
repurchase 1,310,364 11,542 3.54%
Wholesale borrowings 618,572 7,089 4.61%
Total interest bearing liabilities 7,812,144 61,225 3.15%
Other liabilities 196,921
Shareholders' equity 932,405
Total liabilities and shareholders'
equity $10,388,359
Net yield on earning assets $9,581,121 85,695 3.60%
Interest rate spread 3.02%
Note: Interest income on tax-exempt securities and loans has been
adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND
SUBSIDIARIES Year ended
(Dollars in thousands) December 31, 2007
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $178,164
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,955,049 85,544 4.38%
Obligations of states and political
subdivisions (tax exempt) 255,461 15,595 6.10%
Other securities and federal funds
sold 244,749 17,127 7.00%
Total investment securities and
federal funds sold 2,455,259 118,266 4.82%
Loans held for sale 56,036 3,050 5.44%
Loans 6,971,464 521,172 7.48%
Total earning assets 9,482,759 642,488 6.78%
Allowance for loan losses (92,662)
Other assets 750,527
Total assets $10,318,788
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,408,726 -- --
Demand - interest bearing 733,410 6,824 0.93%
Savings and money market accounts 2,266,070 54,166 2.39%
Certificates and other time deposits 3,045,715 146,559 4.81%
Total deposits 7,453,921 207,549 2.78%
Securities sold under agreements to
repurchase 1,471,785 71,298 4.84%
Wholesale borrowings 326,460 20,601 6.31%
Total interest bearing liabilities 7,843,440 299,448 3.82%
Other liabilities 191,096
Shareholders' equity 875,526
Total liabilities and shareholders'
equity $10,318,788
Net yield on earning assets $9,482,759 343,040 3.62%
Interest rate spread 2.96%
Note: Interest income on tax-exempt securities and loans has been
adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND
SUBSIDIARIES Three months ended
(Dollars in thousands) March 31, 2007
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $179,566
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,955,704 20,222 4.19%
Obligations of states and political
subdivisions (tax exempt) 222,381 3,382 6.17%
Other securities and federal funds
sold 251,454 4,421 7.13%
Total investment securities and
federal funds sold 2,429,539 28,025 4.68%
Loans held for sale 89,243 763 3.47%
Loans 6,918,636 129,359 7.58%
Total earning assets 9,437,418 158,147 6.80%
Allowance for loan losses (91,256)
Other assets 750,513
Total assets $10,276,241
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,389,455 -- --
Demand - interest bearing 756,678 1,919 1.03%
Savings and money market accounts 2,284,549 14,006 2.49%
Certificates and other time deposits 3,051,287 36,080 4.80%
Total deposits 7,481,969 52,005 2.82%
Securities sold under agreements to
repurchase 1,352,961 16,785 5.03%
Wholesale borrowings 399,638 6,139 6.23%
Total interest bearing liabilities 7,845,113 74,929 3.87%
Other liabilities 186,960
Shareholders' equity 854,713
Total liabilities and shareholders'
equity $10,276,241
Net yield on earning assets $9,437,418 83,218 3.58%
Interest rate spread 2.93%
Note: Interest income on tax-exempt securities and loans has been
adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) Quarters ended
(In thousands except per share data) March 31,
2008 2007
Interest income:
Interest and fees on loans,
including held for sale $116,288 $130,089
Interest and dividends on
investment securities and federal
funds sold 29,236 26,846
Total interest income 145,524 156,935
Interest expense:
Interest on deposits:
Demand-interest bearing 964 1,919
Savings and money market accounts 9,643 14,006
Certificates and other time
deposits 31,987 36,080
Interest on securities sold under
agreements to repurchase 11,542 16,785
Interest on wholesale borrowings 7,089 6,139
Total interest expense 61,225 74,929
Net interest income 84,299 82,006
Provision for loan losses 11,521 4,210
Net interest income after
provision for loan losses 72,778 77,796
Other income:
Trust department income 5,450 5,596
Service charges on deposits 14,736 16,249
Credit card fees 11,157 11,099
ATM and other service fees 2,794 3,071
Bank owned life insurance income 3,201 3,168
Investment services and insurance 2,865 2,453
Investment securities gains, net 524 -
Loan sales and servicing income 1,391 5,438
Other operating income 10,736 1,802
Total other income 52,854 48,876
Other expenses:
Salaries, wages, pension and
employee benefits 43,065 42,500
Net occupancy expense 6,754 6,686
Equipment expense 2,901 3,084
Stationery, supplies and postage 2,325 2,333
Bankcard, loan processing and other
costs 7,244 7,470
Professional services 1,887 4,829
Amortization of intangibles 223 223
Other operating expense 16,835 14,401
Total other expenses 81,234 81,526
Income before federal income
tax expense 44,398 45,146
Federal income tax expense 12,955 13,725
Net income $31,443 31,421
Other comprehensive income (loss),
net of taxes
Unrealized securities' holding gain
(loss), net of taxes $11,610 8,113
Unrealized hedging gain (loss), net
of taxes (633) 67
Minimum pension liability
adjustment, net of taxes 873 -
Less: reclassification adjustment
for securities' gains losses
realized in net income,
net of taxes 341 -
Total other comprehensive income
(loss), net of taxes 11,509 8,180
Comprehensive income $42,952 39,601
Net income applicable to common
shares $31,443 31,421
Net income used in diluted EPS
calculation $31,447 31,425
Weighted average number of common
shares outstanding - basic 80,655 80,113
Weighted average number of common
shares outstanding - diluted 80,722 80,298
Basic earnings per share $0.39 0.39
Diluted earnings per share $0.39 0.39
Dividend per share $0.29 0.29
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME---LINKED
QUARTERS
(Unaudited) Quarterly Results
(Dollars in thousands,
except share data) 2008 2007 2007 2007 2007
1st Q 4th Q 3rd Q 2nd Q 1st Q
Interest and fees on
loans, including held
for sale $116,288 $128,078 $133,860 $132,076 $130,089
Interest and dividends
- securities and
federal funds sold 29,236 29,891 28,771 27,383 26,846
Total interest
income 145,524 157,969 162,631 159,459 156,935
Interest on deposits:
Demand-interest
bearing 964 1,352 1,677 1,876 1,919
Savings and money
market accounts 9,643 12,667 13,501 13,992 14,006
Certificates and
other time deposits 31,987 35,290 38,464 36,725 36,080
Securities sold
under agreements
to repurchase 11,542 16,994 19,514 18,005 16,785
Wholesale borrowings 7,089 5,505 4,321 4,636 6,139
Total interest
expense 61,225 71,808 77,477 75,234 74,929
Net interest income 84,299 86,161 85,154 84,225 82,006
Provision for loan
losses 11,521 9,334 7,324 9,967 4,210
Net interest income
after provision
for loan losses 72,778 76,827 77,830 74,258 77,796
Other income:
Trust department
income 5,450 5,896 5,657 6,096 5,596
Service charges on
deposits 14,736 17,067 17,003 17,055 16,249
Credit card fees 11,157 12,012 11,679 11,712 11,099
ATM and other service
fees 2,794 3,055 3,306 3,189 3,071
Bank owned life
insurance income 3,201 3,283 3,735 3,290 3,168
Investment services
and insurance 2,865 3,121 3,007 2,660 2,453
Investment securities
gains (losses), net 524 1,122 - 1 -
Loan sales and
servicing income 1,391 1,551 1,411 1,911 5,438
Other operating income 10,736 2,886 3,326 3,016 1,802
Total other income 52,854 49,993 49,124 48,930 48,876
Other expenses:
Salaries, wages,
pension and employee
benefits 43,065 43,087 41,332 43,538 42,500
Net occupancy expense 6,754 6,284 6,188 6,521 6,686
Equipment expense 2,901 2,886 2,958 2,851 3,084
Stationery, supplies
and postage 2,325 2,388 2,463 2,252 2,333
Bankcard, loan
processing and other
costs 7,244 7,482 7,222 7,607 7,470
Professional services 1,887 3,588 2,923 4,525 4,829
Amortization of
intangibles 223 222 222 222 223
Other operating
expense 16,835 17,358 20,722 13,859 14,401
Total other
expenses 81,234 83,295 84,030 81,375 81,526
Income before income tax
expense 44,398 43,525 42,924 41,813 45,146
Federal income taxes 12,955 12,066 12,662 11,928 13,725
Net income $31,443 $31,459 $30,262 $29,885 $31,421
Other comprehensive
income (loss), net of
taxes 11,509 23,267 15,721 (10,745) 8,180
Comprehensive income $42,952 $54,726 $45,983 $19,140 $39,601
Net income applicable to
common shares $31,443 $31,459 $30,262 $29,885 $31,421
Adjusted net income used
in diluted EPS
calculation $31,447 $31,463 $30,266 $29,889 $31,425
Weighted-average common
shares - basic 80,655 80,477 80,467 80,426 80,113
Weighted-average common
shares - diluted 80,722 80,595 80,561 80,570 80,298
Basic net income per
share $0.39 $0.39 $0.38 $0.37 $0.39
Diluted net income per
share $0.39 $0.39 $0.38 $0.37 $0.39
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited, except December 31, 2007 annual period which
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
Quarterly Periods
Mar 31 Dec 31 Sept 30
Allowance for Credit Losses 2008 2007 2007
Allowance for loan losses, beginning
of period $94,205 $93,811 $94,432
Provision for loan losses 11,521 9,334 7,324
Charge-offs 14,669 11,768 12,347
Recoveries 3,354 2,828 4,402
Net charge-offs 11,315 8,940 7,945
Allowance for loan losses, end of
period $94,411 $94,205 $93,811
Reserve for unfunded lending
commitments, beginning of period $7,394 $7,409 $6,553
Provision for credit losses 509 (15) 856
Reserve for unfunded lending
commitments, end of period $7,903 $7,394 $7,409
Allowance for Credit Losses $102,314 $101,599 $101,220
Ratios
Provision for loan losses as a % of
average loans 0.66% 0.53% 0.41%
Provision for credit losses as a % of
average loans 0.03% 0.00% 0.05%
Net charge-offs as a % of average
loans 0.65% 0.51% 0.45%
Allowance for loan losses as a % of
period-end loans 1.33% 1.35% 1.34%
Allowance for credit losses as a % of
period-end loans 1.45% 1.45% 1.44%
Allowance for loan losses as a % of
nonperforming loans 318.89% 299.70% 314.22%
Allowance for credit losses as a % of
nonperforming loans 345.59% 323.22% 339.04%
Asset Quality
Impaired loans:
Nonaccrual $19,777 $21,513 $20,165
Other nonperforming loans:
Nonaccrual 9,829 9,920 9,690
Total nonperforming loans 29,606 31,433 29,855
Other real estate ("ORE") 5,695 5,829 4,344
Total nonperforming assets ("NPAs") $35,301 $37,262 $34,199
NPAs as % of period-end loans + ORE 0.50% 0.53% 0.49%
Past due 90 days or more & accruing
interest $10,931 $11,702 $13,107
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited, except December 31, 2007 annual period which
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
Annual
Quarterly Periods Period
June 30 Mar 31 Dec 31
Allowance for Credit Losses 2007 2007 2007
Allowance for loan losses, beginning
of period $92,045 $91,342 $91,342
Provision for loan losses 9,967 4,210 30,835
Charge-offs 10,609 9,424 44,148
Recoveries 3,029 5,917 16,176
Net charge-offs 7,580 3,507 27,972
Allowance for loan losses, end of
period $94,432 $92,045 $94,205
Reserve for unfunded lending
commitments, beginning of period $6,746 $6,294 $6,294
Provision for credit losses (193) 452 1,100
Reserve for unfunded lending
commitments, end of period $6,553 $6,746 $7,394
Allowance for Credit Losses $100,985 $98,791 $101,599
Ratios
Provision for loan losses as a % of
average loans 0.57% 0.25% 0.44%
Provision for credit losses as a % of
average loans -0.01% 0.03% 0.02%
Net charge-offs as a % of average
loans 0.43% 0.21% 0.40%
Allowance for loan losses as a % of
period-end loans 1.34% 1.32% 1.35%
Allowance for credit losses as a % of
period-end loans 1.43% 1.42% 1.45%
Allowance for loan losses as a % of
nonperforming loans 295.08% 331.93% 299.70%
Allowance for credit losses as a % of
nonperforming loans 315.56% 356.26% 323.22%
Asset Quality
Impaired loans:
Nonaccrual $20,877 $17,049 $21,513
Other nonperforming loans:
Nonaccrual 11,125 10,681 9,920
Total nonperforming loans 32,002 27,730 31,433
Other real estate ("ORE") 5,036 4,934 5,829
Total nonperforming assets ("NPAs") $37,038 $32,664 $37,262
NPAs as % of period-end loans + ORE 0.52% 0.47% 0.53%
Past due 90 days or more & accruing
interest $10,536 $15,209 $11,702
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
(Unaudited)
(Dollars in thousands)
2008 2007 2007 2007 2007
QUARTERLY OTHER INCOME DETAIL 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Trust department income $5,450 $5,896 $5,657 $6,096 $5,596
Service charges on deposits 14,736 17,067 17,003 17,055 16,249
Credit card fees 11,157 12,012 11,679 11,712 11,099
ATM and other service fees 2,794 3,055 3,306 3,189 3,071
Bank owned life insurance
income 3,201 3,283 3,735 3,290 3,168
Investment services and
insurance 2,865 3,121 3,007 2,660 2,453
Investment securities gains
(losses), net 524 1,122 - 1 -
Loan sales and servicing
income 1,391 1,551 1,411 1,911 5,438
Visa redemption 7,898 - - - -
Other operating income 2,838 2,886 3,326 3,016 1,802
Total Other Income $52,854 $49,993 $49,124 $48,930 $48,876
QUARTERLY OTHER EXPENSES 2008 2007 2007 2007 2007
DETAIL 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Salaries, wages, pension and
employee benefits $43,065 $43,087 $41,332 $43,538 $42,500
Net occupancy expense 6,754 6,284 6,188 6,521 6,686
Equipment expense 2,901 2,886 2,958 2,851 3,084
Taxes, other than federal
income taxes 1,702 1,274 1,984 1,655 1,662
Stationery, supplies and
postage 2,325 2,388 2,463 2,252 2,333
Bankcard, loan processing and
other costs 7,244 7,482 7,222 7,607 7,470
Advertising 2,666 2,989 3,332 1,260 1,420
Professional services 1,887 3,588 2,923 4,525 4,829
Telephone 1,019 1,006 1,142 1,094 1,120
Amortization of intangibles 223 222 222 222 223
Other operating expense 11,448 12,089 14,264 9,850 10,199
Total Other Expenses $81,234 $83,295 $84,030 $81,375 $81,526
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES - Net Charge-off Detail
(Unaudited)
(Dollars in thousands) Quarters ended Year ended
March 31, December 31,
2008 2007 2007
Allowance for loan losses - beginning
of period $94,205 $91,342 $91,342
Loans charged off:
Commercial 3,453 448 7,856
Mortgage 1,280 990 5,026
Installment 6,004 4,746 18,343
Home equity 1,066 820 4,151
Credit cards 2,293 2,399 8,497
Leases - 21 41
Overdrafts 573 - 234
Total 14,669 9,424 44,148
Recoveries:
Commercial 722 2,878 4,351
Mortgage 32 8 44
Installment 1,742 2,114 8,021
Home equity 100 257 1,265
Credit cards 459 474 1,842
Manufactured housing 72 112 323
Leases 38 74 286
Overdrafts 189 - 44
Total 3,354 5,917 16,176
Net charge-offs 11,315 3,507 27,972
Provision for loan losses 11,521 4,210 30,835
Allowance for loan losses - end of
period $94,411 $92,045 $94,205
Average loans outstanding $7,023,928 6,918,636 6,971,464
Ratio to average loans:
(Annualized) net charge-offs 0.65% 0.21% 0.40%
Provision for loan losses 0.66% 0.25% 0.44%
Loans outstanding - period-end $7,072,797 $6,951,631 $7,001,886
Allowance for credit losses: $102,314 $98,791 $101,599
As a multiple of (annualized) net
charge-offs 2.25 6.95 3.63
Allowance for loan losses:
As a percent of period-end loans
outstanding 1.33% 1.32% 1.35%
As a multiple of (annualized) net
charge-offs 2.07 6.47 3.37
SOURCE FirstMerit Corporation
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