AKRON, Ohio, April 24 /PRNewswire-FirstCall/ -- FirstMerit Corporation
(Nasdaq: FMER) today announced first quarter 2007 net income of $31.4
million, or $0.39 per diluted share. This compares with $30.0 million, or
$0.37 per diluted share, for the prior-year quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001220/FIRSTMERITLOGO )
Returns on average common equity ("ROE") and average assets ("ROA") for
the first quarter 2007 were 14.91% and 1.24%, respectively, compared with
13.67% and 1.20% for the prior-year quarter.
"Our immediate priority is to accelerate the pace of credit improvement
at FirstMerit. We sold $81 million of problem assets this quarter resulting
in meaningful improvement in our credit metrics, a stronger balance sheet
and higher quality earnings," said Paul G. Greig, Chairman and Chief
Executive Officer of FirstMerit. "This quarter we are reporting
significantly lower net charge-offs, nonperforming assets and provision for
loan losses. A stronger credit position along with enhancements to our
overall credit and portfolio management processes moves FirstMerit toward
our objective of reaching peer levels of credit quality. Improving credit
quality yields improved profitability for the Company, as shown by our
returns on average assets and average equity this quarter. I also am
encouraged with our robust commercial loan growth which increased 2.87%
from the prior quarter, and the stability of our net interest margin over
the same time period."
Net interest margin was 3.58% for the first quarter of 2007 compared
with 3.58% for the fourth quarter of 2006 and 3.80% for the first quarter
of 2006. The Company maintained a stable net interest margin during the
first quarter of 2007, compared with the fourth quarter of 2006, by
reinvesting maturing investment portfolio securities at higher yields and
managing the costs of core deposits. The decrease in net interest margin
compared with the first quarter of 2006 reflects both a shift in consumer
preference for higher- yielding deposit products as well as increased
deposit costs from a higher interest rate environment.
Net interest income on a fully tax-equivalent ("FTE") basis was $83.2
million in the first quarter of 2007 compared with $84.5 million in the
fourth quarter of 2006 and $86.6 million in the first quarter of 2006. The
decrease in FTE net interest income compared with the fourth quarter 2006
resulted from fewer days in the quarter while average earning assets grew
$63.2 million, or 0.67%, along with a stable net interest margin. The
decrease in FTE net interest income compared with the first quarter of 2006
resulted from lower net interest margin, partly offset by an increase in
average earning assets. Compared with the first quarter of 2006, average
loans increased 3.30% and average investments decreased 2.82%.
Noninterest income net of securities transactions for the first quarter
of 2007 was $48.9 million, an increase of $0.5 million or 1.13% from the
fourth quarter of 2006 and an increase of $3.5 million or 7.70% from the
first quarter of 2006. In the first quarter of 2007, the Company completed
a previously announced asset sale that contributed $4.1 to loan sales and
servicing income offset by the $0.5 million loss on the sale of other real
estate which is recorded in other operating expense, for the quarter. Other
income, net of securities gains, as a percentage of net revenue for the
first quarter of 2007 was 37.00% compared with 36.39% for fourth quarter of
2006 and 34.39% for the first quarter of 2006. 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 2007 was $81.5 million, a
decrease of $2.5 million, or 2.93%, from the fourth quarter of 2006 and a
decrease of $0.4 million, or 0.46%, from the first quarter of 2006.
Net charge-offs totaled $3.5 million, or 0.21% of average portfolio
loans in the first quarter of 2007 compared with $9.2 million, or 0.56% of
average portfolio loans in the first quarter of 2006.
Nonperforming assets totaled $32.7 million at March 31, 2007, a
decrease of $31.5 million, or 49.1%, compared with December 31, 2006 and a
decrease of $40.2 million, or 55.22%, compared with March 31, 2006. The
asset sale completed during the first quarter of 2007 included $31.0
million of nonperforming assets. Nonperforming assets at March 31, 2007
represented 0.47% of period-end loans plus other real estate compared with
0.93% at December 31, 2006 and 1.09% at March 31, 2006.
The provision for loan losses decreased to $4.2 million in the first
quarter of 2007 compared with $44.2 million in the fourth quarter of 2006
and $6.1 million in the first quarter of 2006. In the fourth quarter of
2006, the Company's higher provision for loan losses were impacted by its
decision to sell $73.7 million of commercial loans included in the asset
sales completed during the first quarter of 2007.
The allowance for loan losses totaled $92.0 million at March 31, 2007,
an increase of $0.7 million and $4.5 million from December 31, 2006 and
March 31, 2006, respectively. At March 31, 2007, the allowance for loan
losses was 1.32% of period-end loans compared with 1.33% at December 31,
2006 and 1.31% at March 31, 2006. 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 as a
percentage of period end loans was 1.42% at March 31, 2007 compared with
1.42% at December 31, 2006 and 1.40% at March 31, 2006. The allowance for
credit losses to nonperforming loans increased to 356.26% at March 31, 2007
compared with 179.60% on December 31, 2006 and 145.32% on March 31, 2006.
FirstMerit's total assets at March 31, 2007 were $10.3 billion, an
increase of $94.5 million, or 0.92%, compared with December 31, 2006 and an
increase of $246.4 million, or 2.44%, compared with March 31, 2006. The
increase from December 31, 2006, was due to continued growth in the
commercial loan portfolio, which increased $106.0 million, or 2.87%, and
offset decreases in the consumer portfolio. Commercial loan growth of
$237.1 million, or 6.66%, drove a majority of the asset growth from March
31, 2006.
Total deposits were $7.7 billion at March 31, 2007, an increase of
$202.3 million, or 2.70% from December 31, 2006, and an increase of $190.6
million, or 2.54%, from March 31, 2006. Core deposits, which exclude all
time deposits, totaled $4.6 billion at March 31, 2007, an increase of $54.4
million or 1.20% from December 31, 2006 and a decrease of $132.3 million,
or 2.81% from March 31, 2006.
Shareholders' equity was $863.6 million at March 31, 2007 and the
Company's capital position remains strong as tangible equity to assets was
7.07%. The common dividend per share paid in the first quarter 2007 was
$0.29.
First Quarter 2007 Conference Call
FirstMerit will host an earnings conference call on April 24, 2007, at
2:00 p.m. Eastern time to provide an overview of first quarter results and
highlights. To participate in the conference call, please dial (888)
694-4728 ten minutes before start time and provide the reservation number:
8685718. A replay of the conference call will be available at approximately
4:30 p.m., on April 24, 2007 through May 1, 2007, by dialing (877)
519-4471, and entering the PIN: 8685718.
The first quarter earnings release will be available on the Internet at
http://www.firstmerit.com under the Investor Relations portion of the Web
site. Any material non-public information that might be disclosed during
the conference call will be posted on the Web site immediately after the
conference call ends.
About FirstMerit
FirstMerit Corporation is a diversified financial services company
headquartered in Akron, Ohio, with assets of $10.3 billion as of March 31,
2007 and 161 banking offices and 176 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 AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited) Quarters
(Dollars in thousands)
2007 2006 2006 2006 2006
EARNINGS 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Net interest income
FTE (a) $83,218 84,502 85,850 86,377 86,563
Provision for loan
losses 4,210 44,235 12,612 13,159 6,106
Other income 48,876 48,332 49,341 52,078 45,397
Other expenses 81,526 83,987 76,983 85,218 81,899
FTE adjustment (a) 1,212 919 763 647 590
Net income 31,421 6,117 31,204 27,661 29,964
Diluted EPS 0.39 0.07 0.39 0.35 0.37
PERFORMANCE RATIOS
Return on average
assets (ROA) 1.24% 0.24% 1.22% 1.10% 1.20%
Return on average common
equity (ROE) 14.91% 2.66% 13.93% 12.75% 13.67%
Net interest margin
FTE (a) 3.58% 3.58% 3.68% 3.78% 3.80%
Efficiency ratio 61.55% 63.06% 56.78% 61.39% 61.90%
Number of full-time
equivalent employees 2,751 2,755 2,769 2,986 3,104
MARKET DATA
Book value/common share $10.78 10.56 11.28 10.88 10.91
Period-end common share
mkt value 21.11 24.14 23.17 20.94 24.66
Market as a % of book 196% 229% 205% 193% 226%
Cash dividends/common
share $0.29 0.29 0.29 0.28 0.28
Common stock dividend
payout ratio 74.36% 414.29% 74.36% 80.00% 75.68%
Average basic common
shares 80,113 80,091 80,066 79,983 80,374
Average diluted common
shares 80,298 80,316 80,262 80,203 80,648
Period end common
shares 80,112 80,101 80,072 80,058 79,766
Common shares
repurchased 2,000 15,876 0 1,329 2,618,588
Common stock market
capitalization $1,691,164 1,933,638 1,855,268 1,676,415 1,967,030
ASSET QUALITY
Gross charge-offs $9,424 22,323 15,453 18,038 14,914
Net charge-offs 3,507 18,559 11,584 13,021 9,178
Allowance for loan
losses 92,045 91,342 88,755 87,727 87,589
Reserve for unfunded
lending commitments 6,746 6,294 6,307 5,716 5,853
Nonperforming assets
(NPAs) 32,664 64,177 72,464 58,786 72,941
Net charge-offs/average
loans ratio 0.21% 1.06% 0.67% 0.78% 0.56%
Net charge-offs and
allowance related to loans
held for sale/average
loans ratio 0.21% 1.40% 0.67% 0.78% 0.56%
Allowance for loan
losses/period-end loans 1.32% 1.33% 1.28% 1.29% 1.31%
Allowance for credit
losses/period-end loans 1.42% 1.42% 1.37% 1.37% 1.40%
NPAs/loans and other
real estate 0.47% 0.93% 1.05% 0.86% 1.09%
Allowance for loan
losses/nonperforming
loans 331.93% 168.03% 143.73% 174.80% 136.22%
Allowance for credit
losses/nonperforming
loans 356.26% 179.60% 153.94% 186.19% 145.32%
CAPITAL & LIQUIDITY
Period-end tangible
equity to assets 7.07% 6.96% 7.55% 7.20% 7.31%
Average equity to assets 8.32% 8.91% 8.77% 8.66% 8.79%
Average equity to loans 12.35% 13.17% 12.99% 12.93% 13.27%
Average loans to
deposits 92.47% 92.97% 93.05% 90.63% 91.58%
AVERAGE BALANCES
Assets $10,276,241 10,227,154 10,138,856 10,051,623 10,111,553
Deposits 7,481,969 7,440,331 7,355,877 7,426,029 7,313,509
Loans 6,918,636 6,917,572 6,844,593 6,730,531 6,697,732
Earning assets 9,437,418 9,374,223 9,249,769 9,174,008 9,245,882
Shareholders' equity 854,713 911,348 888,841 870,234 888,818
ENDING BALANCES
Assets $10,347,121 10,252,572 10,217,968 10,254,773 10,100,717
Deposits 7,701,202 7,498,921 7,389,633 7,402,239 7,510,562
Loans 6,951,631 6,878,873 6,917,347 6,804,769 6,672,102
Goodwill 139,245 139,245 139,245 139,245 139,245
Intangible assets 2,644 2,865 3,088 3,311 3,533
Earning assets 9,447,346 9,382,033 9,344,841 9,315,062 9,193,741
Total shareholders'
equity 863,641 846,111 903,383 870,698 870,552
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, 2006,
which is derived from the March 31, December 31, March 31,
audited financial statements) 2007 2006 2006
ASSETS
Cash and due from banks $242,470 200,204 206,912
Investment securities (at fair
value) and federal funds sold 2,447,426 2,407,888 2,460,321
Loans held for sale 48,289 95,272 61,318
Loans:
Commercial loans 3,800,125 3,694,121 3,562,968
Mortgage loans 598,390 608,008 625,514
Installment loans 1,628,531 1,619,747 1,509,714
Home equity loans 709,964 731,473 772,308
Credit card loans 138,183 147,553 135,916
Leases 76,438 77,971 65,682
Total loans 6,951,631 6,878,873 6,672,102
Less allowance for loan losses (92,045) (91,342) (87,589)
Net loans 6,859,586 6,787,531 6,584,513
Premises and equipment, net 120,556 122,954 119,571
Goodwill 139,245 139,245 139,245
Intangible assets 2,644 2,865 3,533
Accrued interest receivable and
other assets 486,905 496,613 525,304
Total assets $10,347,121 10,252,572 10,100,717
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-non-interest bearing $1,463,039 1,455,097 1,465,168
Demand-interest bearing 779,790 799,571 923,491
Savings and money market accounts 2,333,907 2,267,686 2,320,360
Certificates and other time
deposits 3,124,466 2,976,567 2,801,543
Total deposits 7,701,202 7,498,921 7,510,562
Securities sold under agreements to
repurchase 1,380,591 1,261,821 1,272,362
Wholesale borrowings 208,744 464,227 285,143
Accrued taxes, expenses, and other
liabilities 192,943 181,492 162,098
Total liabilities 9,483,480 9,406,461 9,230,165
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,
2007, December 31, 2006 and
March 31, 2006 127,937 127,937 127,937
Capital surplus 108,073 106,916 108,958
Accumulated other comprehensive
loss (71,328) (79,508) (53,395)
Retained earnings 1,006,207 998,079 1,002,035
Treasury stock, at cost,
11,914,435, 11,925,803 and
12,257,585 shares at March 31,
2007, December 31, 2006 and
March 31, 2006, respectively (307,248) (307,313) (314,983)
Total shareholders' equity 863,641 846,111 870,552
Total liabilities and shareholders'
equity $10,347,121 10,252,572 10,100,717
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Quarterly Periods
(Unaudited)
(Dollars in
thousands) March 31, Dec. 31, Sept. 30, June 30, March 31,
2007 2006 2006 2006 2006
ASSETS
Cash and due
from banks $179,566 175,735 185,628 188,915 194,042
Investment
securities/
fed funds
sold 2,429,539 2,410,879 2,360,494 2,392,208 2,500,021
Loans held for
sale 89,243 45,772 44,682 51,269 48,129
Loans:
Commercial
loans 3,749,067 3,730,110 3,674,988 3,603,083 3,567,263
Mortgage
loans 607,602 614,204 619,542 626,476 630,702
Installment
loans 1,622,324 1,625,962 1,592,917 1,526,094 1,513,938
Home equity
loans 717,806 738,630 755,044 772,196 775,728
Credit card
loans 143,853 144,351 139,117 137,545 141,821
Leases 77,984 64,315 62,985 65,137 68,280
Total loans 6,918,636 6,917,572 6,844,593 6,730,531 6,697,732
Less allowance
for loan
losses 91,256 88,175 87,127 86,583 90,229
Net loans 6,827,380 6,829,397 6,757,466 6,643,948 6,607,503
Total earning
assets 9,437,418 9,374,223 9,249,769 9,174,008 9,245,882
Premises and
equipment,
net 121,988 121,956 120,088 119,666 120,155
Accrued
interest
receivable
and other
assets 628,525 643,415 670,498 655,617 641,703
TOTAL
ASSETS $10,276,241 10,227,154 10,138,856 10,051,623 10,111,553
LIABILITIES
Deposits:
Demand-non-
interest
bearing $1,389,455 1,413,682 1,407,653 1,455,229 1,462,671
Demand-
interest
bearing 756,678 767,430 794,886 865,563 848,209
Savings and
money market
accounts 2,284,549 2,267,268 2,246,386 2,280,657 2,292,865
Certificates
and other
time
deposits 3,051,287 2,991,951 2,906,952 2,824,580 2,709,764
Total
deposits 7,481,969 7,440,331 7,355,877 7,426,029 7,313,509
Securities
sold under
agreements
to repurchase 1,352,961 1,269,873 1,357,746 1,212,470 1,295,178
Wholesale
borrowings 399,638 446,950 367,640 371,309 433,257
Total funds 9,234,568 9,157,154 9,081,263 9,009,808 9,041,944
Accrued taxes,
expenses and
other
liabilities 186,960 158,652 168,752 171,581 180,791
Total
liabilities 9,421,528 9,315,806 9,250,015 9,181,389 9,222,735
SHAREHOLDERS'
EQUITY
Preferred stock - - - - -
Common stock 127,937 127,937 127,937 127,937 127,937
Capital
surplus 107,178 106,339 105,587 104,477 108,330
Accumulated
other
comprehensive
(loss) income (76,926) (36,045) (52,601) (54,132) (44,150)
Retained
earnings 1,003,605 1,020,518 1,015,749 1,001,647 998,173
Treasury
stock (307,081) (307,401) (307,831) (309,695) (301,472)
Total
shareholders'
equity 854,713 911,348 888,841 870,234 888,818
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $10,276,241 10,227,154 10,138,856 10,051,623 10,111,553
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.
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND
SUBSIDIARIES Year ended
(Dollars in thousands) December 31, 2006
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks 186,029
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 2,050,736 81,207 3.96%
Obligations of states and political
subdivisions (tax exempt) 114,548 7,390 6.45%
Other securities and federal funds
sold 250,221 15,264 6.10%
Total investment securities and
federal funds sold 2,415,505 103,861 4.30%
Loans held for sale 47,449 3,153 6.65%
Loans 6,798,338 499,746 7.35%
Total earning assets 9,261,292 606,760 6.55%
Allowance for loan losses (88,020)
Other assets 770,714
Total assets 10,130,015
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing 1,434,539 -- --
Demand - interest bearing 818,735 9,217 1.13%
Savings and money market accounts 2,271,654 50,083 2.20%
Certificates and other time deposits 2,859,218 123,877 4.33%
Total deposits 7,384,146 183,177 2.48%
Securities sold under agreements to
repurchase 1,283,951 56,151 4.37%
Wholesale borrowings 404,723 24,140 5.96%
Total interest bearing liabilities 7,638,281 263,468 3.45%
Other liabilities 167,266
Shareholders' equity 889,929
Total liabilities and shareholders'
equity 10,130,015
Net yield on earning assets 9,261,292 343,292 3.71%
Interest rate spread 3.10%
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, 2006
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks 194,042
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 2,161,306 20,850 3.91%
Obligations of states and political
subdivisions (tax exempt) 90,622 1,527 6.83%
Other securities and federal funds
sold 248,093 3,526 5.76%
Total investment securities and
federal funds sold 2,500,021 25,903 4.20%
Loans held for sale 48,129 762 6.42%
Loans 6,697,732 116,997 7.08%
Total earning assets 9,245,882 143,662 6.30%
Allowance for loan losses (90,229)
Other assets 761,858
Total assets 10,111,553
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing 1,462,671 -- --
Demand - interest bearing 848,209 2,362 1.13%
Savings and money market accounts 2,292,865 10,748 1.90%
Certificates and other time deposits 2,709,764 26,101 3.91%
Total deposits 7,313,509 39,211 2.17%
Securities sold under agreements to
repurchase 1,295,178 11,923 3.73%
Wholesale borrowings 433,257 5,965 5.58%
Total interest bearing liabilities 7,579,273 57,099 3.06%
Other liabilities 180,791
Shareholders' equity 888,818
Total liabilities and shareholders'
equity 10,111,553
Net yield on earning assets 9,245,882 86,563 3.80%
Interest rate spread 3.25%
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,
2007 2006
Interest income:
Interest and fees on loans,
including held for sale $130,089 117,740
Interest and dividends on
investment securities and federal
funds sold 26,846 25,332
Total interest income 156,935 143,072
Interest expense:
Interest on deposits:
Demand-interest bearing 1,919 2,362
Savings and money market accounts 14,006 10,748
Certificates and other time
deposits 36,080 26,101
Interest on securities sold under
agreements to repurchase 16,785 11,923
Interest on wholesale borrowings 6,139 5,965
Total interest expense 74,929 57,099
Net interest income 82,006 85,973
Provision for loan losses 4,210 6,106
Net interest income after
provision for loan losses 77,796 79,867
Other income:
Trust department income 5,596 5,394
Service charges on deposits 16,249 16,066
Credit card fees 11,099 10,671
ATM and other service fees 3,071 3,108
Bank owned life insurance income 3,168 2,986
Investment services and insurance 2,453 2,597
Investment securities gains, net - 16
Loan sales and servicing income 5,438 1,445
Other operating income 1,802 3,114
Total other income 48,876 45,397
Other expenses:
Salaries, wages, pension and
employee benefits 42,500 43,031
Net occupancy expense 6,686 6,549
Equipment expense 3,084 2,958
Stationery, supplies and postage 2,333 2,453
Bankcard, loan processing and other
costs 7,470 5,827
Professional services 4,829 2,763
Amortization of intangibles 223 223
Other operating expense 14,401 18,095
Total other expenses 81,526 81,899
Income before federal income
tax expense 45,146 43,365
Federal income tax expense 13,725 13,401
Net income $31,421 29,964
Other comprehensive income (loss),
net of taxes
Unrealized securities' holding gain
(loss), net of taxes 8,113 (9,748)
Unrealized hedging gain (loss), net
of taxes 67 (787)
Minimum pension liability
adjustment, net of taxes - -
Less: reclassification adjustment
for securities' gains losses
realized in net income, net of taxes - 10
Total other comprehensive income
(loss), net of taxes 8,180 (10,545)
Comprehensive income $39,601 19,419
Net income applicable to common
shares $31,421 29,964
Net income used in diluted EPS
calculation $31,425 29,969
Weighted average number of common
shares outstanding - basic 80,113 80,374
Weighted average number of common
shares outstanding - diluted 80,298 80,648
Basic earnings per share $0.39 0.37
Diluted earnings per share $0.39 0.37
Dividend per share $0.29 0.28
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME---LINKED
QUARTERS
(Unaudited) Quarterly Results
(Dollars in thousands, except
share data) 2007 2006 2006 2006 2006
1st Q 4th Q 3rd Q 2nd Q 1st Q
Interest and fees on loans,
including held for sale 130,089 131,683 129,890 123,450 117,740
Interest and dividends -
securities and federal
funds sold 26,846 25,795 25,131 24,820 25,332
Total interest income 156,935 157,478 155,021 148,270 143,072
Interest on deposits:
Demand-interest bearing 1,919 2,031 2,241 2,583 2,362
Savings and money market
accounts 14,006 14,068 13,188 12,079 10,748
Certificates and other
time deposits 36,080 35,569 32,881 29,326 26,101
Securities sold under
agreements to
repurchase 16,785 15,393 15,878 12,957 11,923
Wholesale borrowings 6,139 6,834 5,746 5,595 5,965
Total interest expense 74,929 73,895 69,934 62,540 57,099
Net interest income 82,006 83,583 85,087 85,730 85,973
Provision for loan losses 4,210 44,235 12,612 13,159 6,106
Net interest income
after provision for
loan losses 77,796 39,348 72,475 72,571 79,867
Other income:
Trust department income 5,596 5,794 5,721 5,744 5,394
Service charges on deposits 16,249 18,198 19,250 18,010 16,066
Credit card fees 11,099 11,325 11,251 11,478 10,671
ATM and other service fees 3,071 3,135 3,301 3,273 3,108
Bank owned life insurance
income 3,168 3,001 3,042 5,310 2,986
Investment services and
insurance 2,453 2,011 2,631 2,581 2,597
Investment securities gains
(losses), net - - 2 4 16
Loan sales and servicing
income 5,438 1,504 1,731 2,833 1,445
Other operating income 1,802 3,364 2,412 2,845 3,114
Total other income 48,876 48,332 49,341 52,078 45,397
Other expenses:
Salaries, wages, pension
and employee benefits 42,500 43,700 43,248 46,721 43,031
Net occupancy expense 6,686 6,143 6,002 6,120 6,549
Equipment expense 3,084 3,030 3,097 2,914 2,958
Stationery, supplies and
postage 2,333 2,633 2,423 2,403 2,453
Bankcard, loan processing
and other costs 7,470 7,508 7,459 7,417 5,827
Professional services 4,829 5,000 5,470 3,738 2,763
Amortization of intangibles 223 222 222 222 223
Other operating expense 14,401 15,751 9,062 15,683 18,095
Total other expenses 81,526 83,987 76,983 85,218 81,899
Income before income tax
expense 45,146 3,693 44,833 39,431 43,365
Federal income taxes 13,725 (2,424) 13,629 11,770 13,401
Net income 31,421 6,117 31,204 27,661 29,964
Other comprehensive income
(loss), net of taxes 8,180 (41,365) 23,870 (8,618) (10,545)
Comprehensive income 39,601 (35,248) 55,074 19,043 19,419
Net income applicable to
common shares 31,421 6,117 31,204 27,661 29,964
Adjusted net income used in
diluted EPS calculation 31,425 6,121 31,209 27,666 29,968
Weighted-average common
shares - basic 80,113 80,091 80,066 79,983 80,374
Weighted-average common
shares - diluted 80,298 80,316 80,262 80,203 80,648
Basic net income per share 0.39 0.07 0.39 0.35 0.37
Diluted net income per share 0.39 0.07 0.39 0.35 0.37
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited, except December 31, 2006 annual period which
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
Quarterly Periods
31-Mar 31-Dec Sep 30
Allowance for Credit Losses 2007 2006 2006
Allowance for loan losses, beginning
of period $91,342 88,755 87,727
Allowance related to loans held for
sale - (23,089) -
Provision for loan losses 4,210 44,235 12,612
Charge-offs 9,424 22,323 15,453
Recoveries 5,917 3,764 3,869
Net charge-offs 3,507 18,559 11,584
Allowance for loan losses, end of
period $92,045 91,342 88,755
Reserve for unfunded lending
commitments, beginning of period $6,294 6,307 5,716
Provision for credit losses 452 (13) 591
Reserve for unfunded lending
commitments, end of period $6,746 6,294 6,307
Allowance for Credit Losses $98,791 97,636 95,062
Ratios
Provision for loan losses as a % of
average loans 0.25% 2.54% 0.73%
Provision for credit losses as a % of
average loans 0.03% 0.00% 0.03%
Net charge-offs as a % of average
loans 0.21% 1.06% 0.67%
Net charge-offs and allowance related
to loans held for sale as a % of
average loans 0.21% 1.40% 0.67%
Allowance for loan losses as a % of
period-end loans 1.32% 1.33% 1.28%
Allowance for credit losses as a % of
period-end loans 1.42% 1.42% 1.37%
Allowance for loan losses as a % of
nonperforming loans 331.93% 168.03% 143.73%
Allowance for credit losses as a % of
nonperforming loans 356.26% 179.60% 153.94%
Asset Quality
Impaired loans:
Nonaccrual $17,049 45,045 52,621
Other nonperforming loans:
Nonaccrual 10,681 9,317 9,132
Total nonperforming loans 27,730 54,362 61,753
Other real estate ("ORE") 4,934 9,815 10,711
Total nonperforming assets ("NPAs") $32,664 64,177 72,464
NPAs as % of period-end loans + ORE 0.47% 0.93% 1.05%
Past due 90 days or more & accruing
interest $15,209 16,860 15,311
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited, except December 31, 2006 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 2006 2006 2006
Allowance for loan losses, beginning
of period 87,589 90,661 90,661
Allowance related to loans held for
sale - - (23,089)
Provision for loan losses 13,159 6,106 76,112
Charge-offs 18,038 14,914 70,728
Recoveries 5,017 5,736 18,386
Net charge-offs 13,021 9,178 52,342
Allowance for loan losses, end of
period 87,727 87,589 91,342
Reserve for unfunded lending
commitments, beginning of period 5,853 6,072 6,072
Provision for credit losses (137) (219) 222
Reserve for unfunded lending
commitments, end of period 5,716 5,853 6,294
Allowance for Credit Losses 93,443 93,442 97,636
Ratios
Provision for loan losses as a % of
average loans 0.78% 0.37% 1.12%
Provision for credit losses as a % of
average loans -0.01% -0.01% 0.00%
Net charge-offs as a % of average
loans 0.78% 0.56% 0.77%
Net charge-offs and allowance related
to loans held for sale as a % of
average loans 0.78% 0.56% 1.11%
Allowance for loan losses as a % of
period-end loans 1.29% 1.31% 1.33%
Allowance for credit losses as a % of
period-end loans 1.37% 1.40% 1.42%
Allowance for loan losses as a % of
nonperforming loans 174.80% 136.22% 168.03%
Allowance for credit losses as a % of
nonperforming loans 186.19% 145.32% 179.60%
Asset Quality
Impaired loans:
Nonaccrual 41,927 56,258 45,045
Other nonperforming loans:
Nonaccrual 8,261 8,044 9,317
Total nonperforming loans 50,188 64,302 54,362
Other real estate ("ORE") 8,598 8,639 9,815
Total nonperforming assets ("NPAs") 58,786 72,941 64,177
NPAs as % of period-end loans + ORE 0.86% 1.09% 0.93%
Past due 90 days or more & accruing
interest 16,483 18,640 16,860
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
(Unaudited)
(Dollars in thousands)
2007 2006 2006 2006 2006
QUARTERLY OTHER INCOME DETAIL 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Trust department income $5,596 5,794 5,721 5,744 5,394
Service charges on deposits 16,249 18,198 19,250 18,010 16,066
Credit card fees 11,099 11,325 11,251 11,478 10,671
ATM and other service fees 3,071 3,135 3,301 3,273 3,108
Bank owned life insurance income 3,168 3,001 3,042 5,310 2,986
Investment services and insurance 2,453 2,011 2,631 2,581 2,597
Investment securities gains
(losses), net - - 2 4 16
Loan sales and servicing income 5,438 1,504 1,731 2,833 1,445
Other operating income 1,802 3,364 2,412 2,845 3,114
Total Other Income $48,876 48,332 49,341 52,078 45,397
2007 2006 2006 2006 2006
QUARTERLY OTHER EXPENSES DETAIL 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Salaries, wages, pension and
employee benefits $42,500 43,700 43,248 46,721 43,031
Net occupancy expense 6,686 6,143 6,002 6,120 6,549
Equipment expense 3,084 3,030 3,097 2,914 2,958
Taxes, other than federal income
taxes 1,662 1,753 (7,703) 1,802 1,819
Stationery, supplies and postage 2,333 2,633 2,423 2,403 2,453
Bankcard, loan processing and
other costs 7,470 7,508 7,459 7,417 5,827
Advertising 1,420 798 1,152 2,369 2,766
Professional services 4,829 5,000 5,470 3,738 2,763
Telephone 1,120 1,362 1,138 1,094 1,128
Amortization of intangibles 223 222 222 222 223
Other operating expense 10,199 11,838 14,475 10,418 12,382
Total Other Expenses $81,526 83,987 76,983 85,218 81,899
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES - Net Charge-off Detail
(Unaudited)
(Dollars in thousands) Quarters ended Year ended
March 31, Dec. 31,
2007 2006 2006
Allowance for loan losses - beginning
of period $91,342 90,661 90,661
Loans charged off:
Commercial 448 6,066 32,628
Mortgage 990 373 1,670
Installment 4,746 6,030 20,682
Home equity 820 620 3,847
Credit cards 2,399 1,774 8,294
Leases 21 51 3,607
Total 9,424 14,914 70,728
Recoveries:
Commercial 2,878 1,437 3,734
Mortgage 8 56 142
Installment 2,114 3,146 10,340
Home equity 257 378 1,293
Credit cards 474 449 2,123
Manufactured housing 112 169 451
Leases 74 101 303
Total 5,917 5,736 18,386
Net charge-offs 3,507 9,178 52,342
Provision for loan losses 4,210 6,106 76,112
Allowance related to loans held for
sale - - (23,089)
Allowance for loan losses - end of
period $92,045 87,589 91,342
Average loans outstanding $6,918,636 6,697,732 6,798,338
Ratio to average loans:
(Annualized) net charge-offs 0.21% 0.56% 0.77%
(Annualized) net charge-offs and
allowance related to loans held
for sale 0.21% 0.56% 1.11%
Provision for loan losses 0.25% 0.37% 1.12%
Loans outstanding - period-end $6,951,631 6,672,102 6,878,873
Allowance for credit losses: 98,791 93,442 97,636
As a multiple of (annualized) net
charge-offs 6.95 2.51 1.87
As a multiple of (annualized) net
charge-offs and allowance related
to loans held for sale 6.95 2.51 1.29
Allowance for loan losses:
As a percent of period-end loans
outstanding 1.32% 1.31% 1.33%
As a multiple of (annualized) net
charge-offs 6.47 2.35 1.75
As a multiple of (annualized) net
charge-offs and allowance related
to loans held for sale 6.47 2.35 1.21
SOURCE FirstMerit Corporation
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