FirstMerit, Inc. 1998
First Quarter Reports
To Our Shareholders
We are pleased to report that first quarter basic earnings per share were $0.36, an increase of 12.0 percent above first quarter 1997. On a fully-diluted basis, earnings per share were $0.35, an increase of 11.4 percent. Net income for the first quarter was $22.0 million, up 8.6 percent above last year.
We are on target for another strong year. Our profitability ratios, namely return on average equity (ROE) and return on average assets (ROA), were 16.75 percent and 1.68 percent, respectively. This compares favorably to an ROE and ROA of 15.61 percent and 1.59 percent, respectively, reported for the prior year quarter.
Net interest income on a fully tax-equivalent basis was $64.8 million, up 2.3 percent above last year. Compared to last year, net interest margin declined two basis points, from 5.30 percent to 5.28 percent this year, as a result of increased funding costs.
Excluding securities gains/losses, non-interest income was $22.1 million, a gain of 15.7 percent. Much of this improvement came from credit card fees, loan sales and servicing, and other fee income. As a percent of net revenue, non-interest income was 25.4 percent compared to 23.2 percent in the first quarter of 1997.
Non-interest expenses totaled $50.8 million, up 6.4 percent. The first quarter 1998 efficiency ratio was 57.75 percent compared to 57.32 percent the prior year.
The provision for loan losses grew 31 percent above last year, $5.5 million versus $4.2 million, reflecting the continuing shift in FirstMerit's loan portfolio to consumer and commercial loans. Non-performing assets were 0.45 percent of total loans and other real estate compared to 0.30 percent a year ago. The loan loss reserve rose to 1.45 percent of total loans at quarter end, compared to 1.32 percent for the prior year quarter.
Period-end loan growth was 2.9 percent above 1997 levels, derived mainly from growth in commercial loans. Keeping pace with loan growth, deposits increased 3.0 percent in the same period.
Total shareholder equity at March 31, 1998 was $515.4 million, a 1.1 percent decline from $521.2 at 1997 first quarter end. Earnings of $88 million over the preceding twelve-month period were offset by cash dividends of $40 million and the continuation of FirstMerit's stock buyback program, which increased treasury shares by $65 million, or 2.5 million shares.
Our Northeast Ohio market continues to sustain FirstMerit's healthy performance. To our strong base, we will soon add the combined benefits of CoBancorp and Security First Corp. We signed a definitive agreement on April 5 to acquire Security First, a thrift holding company with 14 branches located in Northeast Ohio. The transaction will be structured as a tax-free exchange of stock valued, as of April 3, at $256 million. In connection with this acquisition, we are suspending our stock repurchase program.
These two acquisitions will further enhance FirstMerit's market share in Northeast Ohio, and with Security First, add its strong franchise and expertise in retail construction, acquisition and development lending. We anticipate completion of the CoBancorp and Security First mergers in the second and third quarters, respectively.
In March, we completed the conversion to a single charter. All former bank affiliates are now merged into FirstMerit Bank, N.A., a supercommunity banking organization with 129 branches and over 150 ATMs available to all customers throughout Northeast Ohio.
We take this opportunity to welcome two newly-elected Directors to the Corporate Board, Richard Colella and Richard Seaman. We will miss Del Spitzer, who retired as a Director of the Corporation after 12 years of exemplary service. Richard G. Norton was named President and CEO of FirstMerit Bank, N.A./Akron and Brad L. Tolstedt was named President and CEO/Cleveland.
For many reasons, we are excited about the prospects for 1998. Thank you for your continued confidence in FirstMerit as we move ahead to meet the challenges and opportunities of the new year.
JOHN R. COCHRAN
Chairman and Chief Executive Officer
Stock Performance and Dividends
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Number of shareholders at March 31, 1998 - 6,958. This table sets forth the high and low closing bid quotations, dividend rates and book values per share for the calendar periods indicated. All previous statistics are adjusted to reflect previous stock splits. These quotations, furnished by the National Quotations Bureau Incorporated, represent prices between dealers, do not include retail markup, markdowns, or commissions, and may not represent actual transactions. |
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This chart illustrates the changes in book and market values of the Common Stock over the past four years (adjusted for stock splits). The point at which the closing price line leaves the range block on the chart indicates the closing price on the last day of each quarter. On March 31, 1998, the stock closed at $33.56 per share or 399% of book value. |
| Directors
Karen S. Belden R. Cary Blair John C. Blickle Sid A. Bostic Robert W. Briggs John R. Cochran Richard Colella Elizabeth A. Dalton Terry L. Haines Clifford J. Isroff Philip A. Lloyd, II Robert G. Merzweiler Stephen E. Myers Roger T. Read Justin T. Rogers, Jr. Richard N. Seaman
Stock Listings
Corporate Address
Dividend Reinvestment
Subsidiaries |
Executive Officers
John R. Cochran Chairman &
Sid A.Bostic President &
John R. Macso Executive Vice President/
Robert P. Brecht Executive Vice President/
Jack R. Gravo Executive Vice President/
Bruce M. Kephart Executive Vice President
George P. Paidas Executive Vice President
Carrie L. Tolstedt Executive Vice President
Gregory R. Bean Senior Vice President
Gary J. Elek Senior Vice President
George D. Griffin Senior Vice President & Auditor
H. Joseph Haren Senior Vice President & CIO
Felice L. Larmer Senior Vice President/
Daniel K. McGill Senior Vice President
Christopher J. Maurer Senior Vice President/
Richard G. Norton Senior Vice President
Terry E. Patton Senior Vice President &
William R. Reed Senior Vice President &
William E. Stansifer Senior Vice President &
Brad L. Tolstedt Senior Vice President |