FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 22, 2013

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EX-99.2 - EX 99.2 SUPPLEMENT - FIRSTMERIT CORP /OH/a4q12epsslidedeckjan21dr.htm


Exhibit 99.1

FOR IMMEDIATE 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 Reports Fourth Quarter 2012 EPS of $0.35 Per Share
Quarterly Highlights include:

•
Sustained profitability: 55th consecutive quarter of profitability.
•
Continued organic growth: Average commercial noncovered loan growth of $156.8 million, or 2.88%, from prior quarter; average core deposit growth of $109.1 million, or 1.08%, from prior quarter.
•
Superior credit quality: Nonperforming assets as a percent of noncovered period end loans plus other real estate declined to 0.57% from 0.77% in the prior quarter; net charge-offs to noncovered average loans decreased to 0.34% from 0.72% in the prior quarter.
•
Strong balance sheet: Strong tangible common equity ratio at 8.16%.

Akron, Ohio (January 22, 2013) - FirstMerit Corporation (Nasdaq: FMER) reported fourth quarter 2012 net income of $38.2 million, or $0.35 per diluted share. This compares with $35.0 million, or $0.32 per diluted share, for the third quarter 2012 and $30.5 million, or $0.28 per diluted share, for the fourth quarter 2011. For the full year 2012, the Corporation reported net income of $134.1 million, or $1.22 per diluted share, compared with $119.6 million, or $1.10 per diluted share in 2011.

Returns on average common equity (“ROE”) and average assets (“ROA”) for the fourth quarter 2012 were 9.30% and 1.03%, respectively, compared with 8.60% and 0.94%, respectively, for the third quarter 2012 and 7.70% and 0.83% for the fourth quarter 2011.

    “Our ongoing commitment to sound banking fundamentals is reflected in our strong fourth quarter results. While the low-interest rate environment and slow economic recovery continue to challenge the banking industry, I am pleased to report that FirstMerit again performed well and grew our business. Reflecting this organic growth, total commercial loan production for the fourth quarter was up 65% over the year-ago quarter. Our strong asset quality continued to improve, with net charge-offs decreasing to 0.34% of average noncovered loans,” said Paul G. Greig, chairman, president and CEO, FirstMerit Corporation.

“We continued to make progress on our efficiency initiative. In the fourth quarter, excluding costs related to the Citizens transaction and our investment portfolio repositioning, expenses came in below our target of $110 million. Our performance in the quarter demonstrates the financial strength and stability we look to bring to Michigan and Wisconsin once we receive regulatory and shareholder approval of our announced acquisition of Flint-based Citizens Republic Bancorp,” Greig said.

FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results

Net interest margin was 3.58% for the fourth quarter 2012 compared with 3.66% for the third quarter 2012 and 3.85% for the fourth quarter 2011. Despite the Corporation's continued success in reducing deposit costs in the quarter through an improved mix of core deposits, downward pressure on earning asset yields were responsible for a compression in the net interest margin of 8 basis points compared with the third quarter of 2012.

Average noncovered loans during the fourth quarter 2012 increased $258.7 million, or 3.16%, compared with the third quarter 2012 and also increased $770.3 million, or 10.04%, compared with the fourth quarter 2011. Average noncovered commercial loans increased $156.8 million, or 2.88%, compared with the prior quarter, and increased $551.0 million, or 10.91%, compared with the year ago quarter.

Average deposits were $11.6 billion during the fourth quarter 2012, an increase of $3.2 million, or 0.03%, compared with the third quarter 2012, and an increase of $178.5 million, or 1.56%, compared with the fourth quarter 2011. During the fourth quarter 2012, average core deposits, which exclude time deposits, increased $109.1 million, or 1.08%, compared with the third quarter 2012 and $598.6 million, or 6.25%, compared with the fourth quarter 2011. Average time deposits decreased $105.9 million, or 6.93%, and decreased $420.1 million, or 22.80%, respectively, over prior and year-ago quarters. The Corporation continues to emphasize growth in lower cost deposit products and decrease its reliance on certificates of deposit accounts to support balance sheet growth. For the fourth quarter 2012, average core deposits accounted for 87.73% of total average deposits, compared with 86.82% for the third quarter 2012 and 83.86% for the fourth quarter 2011.

Average investments decreased $6.8 million, or 0.18%, compared with the third quarter 2012 and increased $206.3 million, or 5.93% compared with the fourth quarter 2011.

Net interest income on a fully tax-equivalent (“FTE”) basis was $119.1 million in the fourth quarter 2012 compared with $120.7 million in the third quarter 2012 and $123.6 million in the fourth quarter 2011.

Noninterest income, excluding gains on securities transactions of $2.4 million, for the fourth quarter 2012 was $59.2 million, an increase of $4.9 million, or 8.93%, from the third quarter 2012 and an increase of $5.3 million, or 9.79%, from the fourth quarter 2011. The increase in noninterest income in the fourth quarter of 2012 was mainly attributable to a $5.0 million gain on covered loans paid in full.

Other income, net of $2.4 million in securities gains, as a percentage of net revenue for the fourth quarter 2012 was 33.21% compared with 31.05% for third quarter 2012 and 30.38% for the fourth quarter 2011. Net revenue is defined as net interest income, on an FTE basis, plus other income, less gains from securities sales.

Noninterest expense for the fourth quarter 2012 was $112.2 million, an increase of $3.6 million, or 3.31%, from the third quarter 2012 and a decrease of $11.7 million, or 9.44%, from the fourth quarter 2011. Included in noninterest expense in the fourth quarter of 2012 were professional and legal fees of $1.0 million associated with the proposed acquisition of Citizens as well as $2.3 million of fees related to the early termination of Federal Home Loan Bank advances. FDIC expense decreased $3.4 million from the prior year ago quarter. Included in noninterest expense in the fourth quarter of 2011 was $4.9 million of fees related to the early termination of repurchase agreements and Federal Home Loan Bank advances as part of the Corporation's investment portfolio repositioning strategy and $1.3 million of expense related to an increase in the liability associated with the sale of the Corporation's Visa Class B shares in 2008.

During the fourth quarter 2012, the Corporation reported an efficiency ratio of 62.65%, compared with 61.75% for the third quarter 2012 and 69.46% for the fourth quarter 2011.

2
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


Net noncovered charge-offs totaled $7.1 million, or 0.34% of average noncovered loans in the fourth quarter 2012, compared with $14.9 million, or 0.72% of average noncovered loans, in the third quarter 2012 and $13.8 million, or 0.71% of average noncovered loans, in the fourth quarter 2011. As a result of guidance from the Office of the Comptroller of the Currency ("OCC"), during the third quarter of 2012, $10.6 million of consumer loans were identified as troubled debt restructurings whereby the borrower's obligation to the Corporation has been discharged in bankruptcy and the borrower had not reaffirmed the debt. These loans were reclassified from performing loans to nonaccrual status and consisted of $6.7 million of first mortgages, $1.0 million of junior liens and $2.9 million of automobile loans, and net loan charge-offs of $2.8 million were recognized in the third quarter of 2012.

Nonperforming assets totaled $50.2 million at December 31, 2012, a decrease of $13.8 million, or 21.59%, compared with September 30, 2012 and a decrease of $30.9 million, or 38.07%, compared with December 31, 2011. Nonperforming assets at December 31, 2012 represented 0.57% of period-end noncovered loans plus other real estate compared with 0.77% at September 30, 2012 and 1.04% at December 31, 2011.

The allowance for noncovered loan losses totaled $98.9 million at December 31, 2012. At December 31, 2012, the allowance for noncovered loan losses was 1.13% of period-end noncovered loans compared with 1.19% at September 30, 2012 and 1.39% at December 31, 2011. The allowance for credit losses is the sum of the allowance for noncovered loan losses and the reserve for unfunded lending commitments. For comparative purposes, the allowance for credit losses was 1.20% of period end noncovered loans at December 31, 2012, compared with 1.26% at September 30, 2012 and 1.47% at December 31, 2011. The allowance for credit losses to nonperforming loans was 284.50% at December 31, 2012, compared with 208.11% at September 30, 2012 and 176.50% at December 31, 2011.

The Corporation’s total assets at December 31, 2012 were $14.9 billion, an increase of $284.2 million, or 1.94%, compared with September 30, 2012 and an increase of $471.3 million, or 3.26%, compared with December 31, 2011.

Total deposits were $11.8 billion at December 31, 2012, an increase of $227.0 million, or 1.97%, from September 30, 2012 and an increase of $327.8 million, or 2.87%, from December 31, 2011. Core deposits totaled $10.4 billion at December 31, 2012, an increase of $328.7 million, or 3.27%, from September 30, 2012 and an increase of $695.6 million, or 7.18%, from December 31, 2011.

Shareholders’ equity was $1.6 billion at December 31, 2012, September 30, 2012, and December 31, 2011. The Corporation maintained a strong capital position as tangible common equity to assets was 8.16% at December 31, 2012, compared with 8.18% at September 30, 2012 and 7.86% at December 31, 2011. The common cash dividend per share paid in the fourth quarter 2012 was $0.16.

Fourth Quarter 2012 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: 87347317. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on January 22, 2013 through February 5, 2013 by dialing (855) 859-2056, and entering the PIN: 87347317. 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.


3
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results

About FirstMerit Corporation
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $14.9 billion as of December 31, 2012 and 196 banking offices and 203 ATM locations in Ohio, Western Pennsylvania, and Chicago areas. 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.

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 year ended December 31, 2012 on Form 10-K. 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, 2012 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 successfully complete the proposed acquisition of Citizens, and those risk factors detailed in the Corporation’s periodic reports and registration statements 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.

Additional Information and Where to Find It
This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between FirstMerit and Citizens, FirstMerit has filed with the U.S. Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that includes a preliminary joint proxy statement of FirstMerit and Citizens that also constitutes a prospectus of FirstMerit. FirstMerit and Citizens will deliver the definitive joint proxy statement/prospectus to their respective shareholders. FirstMerit and Citizens urge investors and shareholders to read the preliminary joint proxy statement/prospectus regarding the proposed merger and the definitive joint proxy statement/prospectus when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (www.sec.gov). You may also obtain these documents, free of charge, from FirstMerit's website (www.firstmerit.com) under the heading “Investors” and then under the heading “Publications and Filings.” You may also obtain these documents, free of charge, from Citizens' website (www.citizensbanking.com) under the tab “Investors” and then under the heading “Financial Documents” and then under the heading “SEC Filings.”
 

4
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results

Participants in the Merger Solicitation
FirstMerit, Citizens, and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from FirstMerit and Citizens shareholders in favor of the merger and related matters. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of FirstMerit and Citizens shareholders in connection with the proposed merger are set forth in the preliminary joint proxy statement/prospectus. You can find information about FirstMerit's executive officers and directors in its definitive proxy statement filed with the SEC on March 8, 2012. You can find information about Citizens' executive officers and directors in its definitive proxy statement filed with the SEC on March 12, 2012. Additional information about FirstMerit's executive officers and directors and Citizens' executive officers and directors can be found in the above-referenced Registration Statement on Form S-4. You can obtain free copies of these documents from FirstMerit and Citizens using the contact information above.



5
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
Consolidated Financial Highlights
 
 
 
 
 
(Unaudited)
 
 
Quarters
 
 
(Dollars in thousands, except per share amounts)
2012
2012
2012
2012
2011
 
4th qtr
3rd qtr
2nd qtr
1st qtr
4th qtr
EARNINGS
 
 
 
 
 
Net interest income FTE (a)
$
119,130

$
120,741

$
121,689

$
121,428

$
123,598

Provision for noncovered loan losses
7,116

9,965

8,766

8,129

12,275

Provision for covered loan losses
5,146

6,214

3,430

5,932

2,773

Other income
61,652

54,925

55,301

51,726

59,737

Other expenses
112,181

108,587

119,077

113,768

123,874

FTE adjustment (a)
2,900

2,851

2,766

2,641

2,632

Net income
38,224

34,953

30,585

30,344

30,496

Diluted EPS
0.35

0.32

0.28

0.28

0.28

PERFORMANCE RATIOS
 
 
 
 
 
Return on average assets (ROA)
1.03
%
0.94
%
0.84
%
0.84
%
0.83
%
Return on average common equity (ROE)
9.30
%
8.60
%
7.69
%
7.72
%
7.70
%
Net interest margin FTE (a)
3.58
%
3.66
%
3.77
%
3.78
%
3.85
%
Efficiency ratio
62.65
%
61.75
%
67.21
%
65.52
%
69.46
%
Number of full-time equivalent employees
2,724

2,733

2,789

2,997

3,018

MARKET DATA
 
 
 
 
 
Book value per common share
$
15.00

$
14.82

$
14.60

$
14.51

$
14.33

Period-end common share market value
14.19

14.71

16.51

16.86

15.13

Market as a % of book
95
%
99
%
113
%
116
%
106
%
Cash dividends per common share
$
0.16

$
0.16

$
0.16

$
0.16

$
0.16

Common stock dividend payout ratio
45.71
%
50.00
%
57.14
%
57.14
%
57.14
%
Average basic common shares
109,652

109,645

109,562

109,211

109,249

Average diluted common shares
109,652

109,645

109,562

109,211

109,249

Period end common shares
109,649

109,653

109,641

109,187

109,251

Common shares repurchased
12

6

111

69

7

Common stock market capitalization
$
1,555,919

$
1,612,996

$
1,810,173

$
1,840,893

$
1,652,968

ASSET QUALITY (excluding covered loans)
 
 
 
 
 
Gross charge-offs
$
12,475

$
20,999

$
15,014

$
17,417

$
18,984

Net charge-offs
7,116

14,872

8,766

11,979

13,763

Allowance for noncovered loan losses
98,942

98,942

103,849

103,849

107,699

Reserve for unfunded lending commitments
5,433

5,760

5,666

5,410

6,373

Nonperforming assets (NPAs) (b)
50,224

64,055

61,080

67,933

81,094

Net charge-offs to average loans ratio (b)
0.34
%
0.72
%
0.44
%
0.62
%
0.71
%
Allowance for noncovered loan losses to period-end loans (b)
1.13
%
1.19
%
1.28
%
1.32
%
1.39
%
Allowance for credit losses to period-end loans (b)
1.20
%
1.26
%
1.35
%
1.39
%
1.47
%
NPAs to loans and other real estate (b)
0.57
%
0.77
%
0.75
%
0.86
%
1.04
%
Allowance for noncovered loan losses to nonperforming loans
269.69
%
196.66
%
222.44
%
194.97
%
166.64
%
Allowance for credit losses to nonperforming loans
284.50
%
208.11
%
234.57
%
205.13
%
176.50
%
CAPITAL & LIQUIDITY
 
 
 
 
 
Period-end tangible common equity to assets
8.16
%
8.18
%
8.01
%
7.86
%
7.86
%
Average equity to assets
11.12
%
10.97
%
10.98
%
10.91
%
10.75
%
Average equity to total loans (c)
17.37
%
17.46
%
17.57
%
17.50
%
17.40
%
Average total loans to deposits (c)
81.21
%
79.89
%
78.78
%
78.74
%
79.12
%
AVERAGE BALANCES
 
 
 
 
 
Assets
$
14,702,215

$
14,734,016

$
14,558,514

$
14,496,937

$
14,623,441

Deposits
11,595,085

11,591,931

11,555,283

11,472,021

11,416,546

Loans, excluding acquired loans (c)
8,389,223

8,121,083

7,857,840

7,677,963

7,520,400

Acquired loans, including covered loans (c)
1,026,574

1,139,568

1,245,246

1,355,086

1,512,123

Earning assets
13,246,693

13,119,473

12,986,988

12,935,184

12,747,868

Shareholders' equity
1,635,275

1,616,569

1,599,187

1,581,009

1,572,061

ENDING BALANCES
 
 
 
 
 
Assets
$
14,913,012

$
14,628,843

$
14,621,344

$
14,670,818

$
14,441,702

Deposits
11,759,425

11,532,426

11,615,841

11,648,165

11,431,609

Loans, excluding acquired loans (c)
8,677,501

8,260,426

8,031,998

7,764,058

7,635,776

Acquired loans, including covered loans (c)
959,549

1,099,052

1,187,203

1,306,165

1,404,644

Goodwill
460,044

460,044

460,044

460,044

460,044

Intangible assets
6,373

6,817

7,274

7,756

8,239

Earning assets
13,472,067

13,219,301

13,212,071

13,318,202

13,011,267

Total shareholders' equity
1,645,202

1,624,704

1,600,815

1,584,105

1,565,953

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.
(b) - Covered loans and other real estate from George Washington Savings Bank and Midwest Bank & Trust Company are excluded from the ratio of our allowance for loan and credit losses and NPAs. Nonperforming assets at December 31, 2012 and September 30, 2012 include $7.7 million and $10.6 million, respectively, of loans resulting from consumer loans classified as troubled debt restructurings where the borrower's obligation to the Corporation has been restructured in bankruptcy.
(c) - Excludes loss share receivable of $113.7 million, $131.9 million, $152.6 million, $171.1 million and $205.7 million as of December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively.


6
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
December 31,
(Unaudited, except December 31, 2011, which is derived from the audited financial statements)
2012
 
2011
ASSETS
 
 
 
 
Cash and due from banks
$
244,223

 
$
219,256

 
Interest-bearing deposits in banks
13,791

 
158,063

 
 
Total cash and cash equivalents
258,014

 
377,319

 
Investment securities:
 
 
 
 
 
Held-to-maturity
622,121

 
82,764

 
 
Available-for-sale
2,920,971

 
3,353,553

 
 
Other investments
140,717

 
140,726

 
Loans held for sale
23,683

 
30,077

 
Noncovered loans:
 
 
 
 
 
Commercial
5,866,489

 
5,107,747

 
 
Mortgage
445,211

 
413,664

 
 
Installment
1,328,258

 
1,263,665

 
 
Home equity
806,078

 
743,982

 
 
Credit card
146,387

 
146,356

 
 
Leases
139,236

 
73,530

 
 
 
Total noncovered loans
8,731,659

 
7,748,944

 
 
 
   Allowance for noncovered loan losses
(98,942
)
 
(107,699
)
 
 
 
Net noncovered loans
8,632,717

 
7,641,245

 
Covered loans (includes loss share receivable of $113.7 million and $205.7 million at December 31, 2012 and 2011, respectively)
1,019,125

 
1,497,140

 
 
 
   Allowance for covered loan losses
(43,255
)
 
(36,417
)
 
 
 
Net covered loans
975,870

 
1,460,723

 
 
 
Net loans
9,608,587

 
9,101,968

 
Premises and equipment, net
181,149

 
192,949

 
Goodwill
460,044

 
460,044

 
Intangible assets
6,373

 
8,239

 
Covered other real estate (includes loss share receivable of $.05 million and $1.3 million at December 31, 2012 and December 31, 2011, respectively)
59,855

 
54,505

 
Accrued interest receivable and other assets
631,498

 
639,558

 
 
 
    Total assets
$
14,913,012

 
$
14,441,702

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing
$
3,338,371

 
$
3,030,225

 
 
Interest-bearing
1,287,674

 
1,062,896

 
 
Savings and money market accounts
5,758,123

 
5,595,409

 
 
Certificates and other time deposits
1,375,257

 
1,743,079

 
 
 
Total deposits
11,759,425

 
11,431,609

 
 
Federal funds purchased and securities sold under agreements to repurchase
1,104,525

 
866,265

 
 
Wholesale borrowings
136,883

 
203,462

 
 
Accrued taxes, expenses, and other liabilities
266,977

 
374,413

 
 
 
Total liabilities
13,267,810

 
12,875,749

 
 
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: 2012 and 2011 - 115,121,731 shares
127,937

 
127,937

 
 
 
Capital surplus
475,979

 
479,882

 
 
 
Accumulated other comprehensive loss
(16,205
)
 
(23,887
)
 
 
 
Retained earnings
1,195,850

 
1,131,203

 
 
 
Treasury stock, at cost: 2012 - 5,472,915 shares; 2011 - 5,870,923 shares
(138,359
)
 
(149,182
)
 
 
 
Total shareholders' equity
1,645,202

 
1,565,953

 
 
 
    Total liabilities and shareholders' equity
$
14,913,012

 
$
14,441,702

 
 
 
 
 
 
 

7
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
AVERAGE CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
Quarterly Periods
(Unaudited)
December 31,
September 30,
June 30,
March 31,
December 31,
(Dollars in thousands)
2012
2012
2012
2012
2011
ASSETS
 
 
 
 
 
Cash and due from banks
$
238,366

$
440,231

$
410,533

$
378,736

$
621,899

Investment securities:
 
 
 
 
 
Held-to-maturity
620,154

337,685

127,769

90,664

89,166

Available-for-sale
2,925,938

3,215,203

3,429,411

3,459,439

3,231,195

Other investments
140,723

140,736

140,744

140,719

160,147

Loans held for sale
20,485

23,631

22,731

26,483

24,215

Noncovered loans:
 
 
 
 
 
Commercial
5,600,522

5,443,712

5,274,352

5,143,087

5,049,479

Residential Mortgage
443,542

437,123

431,752

421,648

405,329

Installment
1,331,131

1,293,054

1,263,013

1,261,122

1,267,952

Home equity
798,663

779,087

750,859

738,154

744,326

Credit card
145,050

143,948

142,311

143,794

145,560

Leases
125,300

88,583

78,862

73,644

61,267

Total noncovered loans
8,444,208

8,185,507

7,941,149

7,781,449

7,673,913

Covered loans and loss share receivable
1,095,185

1,216,711

1,325,184

1,436,430

1,569,232

Total loans
9,539,393

9,402,218

9,266,333

9,217,879

9,243,145

Less: allowance for loan losses
141,270

145,061

143,565

142,628

141,360

Net loans
9,398,123

9,257,157

9,122,768

9,075,251

9,101,785

Total earning assets
13,246,693

13,119,473

12,986,988

12,935,184

12,747,868

Premises and equipment, net
181,738

184,544

187,181

190,669

193,219

Accrued interest receivable and other assets
1,176,688

1,134,829

1,117,377

1,134,976

1,201,815

TOTAL ASSETS
$
14,702,215

$
14,734,016

$
14,558,514

$
14,496,937

$
14,623,441

LIABILITIES
 
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing
$
3,306,444

$
3,236,703

$
3,144,183

$
3,036,590

$
3,013,543

Interest-bearing
1,122,796

1,080,841

1,060,771

1,066,132

991,456

Savings and money market accounts
5,743,599

5,746,210

5,732,007

5,675,052

5,569,213

Certificates and other time deposits
1,422,246

1,528,177

1,618,322

1,694,247

1,842,334

Total deposits
11,595,085

11,591,931

11,555,283

11,472,021

11,416,546

Federal funds purchased and securities sold under
 
 
 
 
 
agreements to repurchase
957,564

1,032,401

920,352

887,715

999,639

Wholesale borrowings
163,405

178,022

177,987

184,659

225,116

Total funds
12,716,054

12,802,354

12,653,622

12,544,395

12,641,301

Accrued taxes, expenses and other liabilities
350,886

315,093

305,705

371,533

410,079

Total liabilities
13,066,940

13,117,447

12,959,327

12,915,928

13,051,380

SHAREHOLDERS' EQUITY
 
 
 
 
 
Common stock
127,937

127,937

127,937

127,937

127,937

Capital surplus
474,532

472,820

473,650

481,856

479,257

Accumulated other comprehensive income (loss)
(17,666
)
(14,627
)
(18,363
)
(19,862
)
(15,198
)
Retained earnings
1,188,641

1,168,649

1,156,324

1,140,953

1,129,392

Treasury stock
(138,169
)
(138,210
)
(140,361
)
(149,875
)
(149,327
)
Total shareholders' equity
1,635,275

1,616,569

1,599,187

1,581,009

1,572,061

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
14,702,215

$
14,734,016

$
14,558,514

$
14,496,937

$
14,623,441

 
 
 
 
 
 

8
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBIDARIES
 
 
 
 
 
 
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
 
 
 
 
 
Three months ended
 
Three months ended
 
December 31, 2012
 
December 31, 2011
(Unaudited)
Average
 
 
 
Average
 
Average
 
 
 
Average
(Dollars in thousands)
Balance
 
Interest
 
Rate
 
Balance
 
Interest
 
Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
238,366

 
 
 
 
 
$
621,899

 
 
 
 
Investment securities and federal funds sold:
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury securities and U.S. government
 
 
 
 
 
 
 
 
 
 
 
agency obligations (taxable)
2,794,524

 
$
16,767

 
2.39
%
 
2,761,042

 
$
19,028

 
2.73
%
Obligations of states and political
 
 
 
 
 
 
 
 
 
 
 
subdivisions (tax exempt)
510,722

 
6,583

 
5.13
%
 
403,405

 
5,568

 
5.48
%
Other securities and federal funds sold
381,569

 
3,429

 
3.58
%
 
316,061

 
2,406

 
3.02
%
Total investment securities and federal
 
 
 
 
 
 
 
 
 
 
 
funds sold
3,686,815

 
26,779

 
2.89
%
 
3,480,508

 
27,002

 
3.08
%
Loans held for sale
20,485

 
199

 
3.86
%
 
24,215

 
266

 
4.36
%
Noncovered loans, covered loans and loss share
 
 
 
 
 
 
 
 
 
 
 
receivable
9,539,393

 
101,288

 
4.22
%
 
9,243,145

 
107,612

 
4.62
%
Total earning assets
13,246,693

 
128,266

 
3.85
%
 
12,747,868

 
134,880

 
4.20
%
Allowance for loan losses
(141,270
)
 
 
 
 
 
(141,360
)
 
 
 
 
Other assets
1,358,426

 
 
 
 
 
1,395,034

 
 
 
 
Total assets
$
14,702,215

 
 
 
 
 
$
14,623,441

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
3,306,444

 
—

 
—

 
$
3,013,543

 
—

 
—

Interest-bearing
1,122,796

 
261

 
0.09
%
 
991,456

 
237

 
0.09
%
Savings and money market accounts
5,743,599

 
5,261

 
0.36
%
 
5,569,213

 
5,998

 
0.43
%
Certificates and other time deposits
1,422,246

 
2,287

 
0.64
%
 
1,842,334

 
3,201

 
0.69
%
Total deposits
11,595,085

 
7,809

 
0.27
%
 
11,416,546

 
9,436

 
0.33
%
Securities sold under agreements to repurchase
957,564

 
303

 
0.13
%
 
999,639

 
512

 
0.20
%
Wholesale borrowings
163,405

 
1,024

 
2.49
%
 
225,116

 
1,334

 
2.35
%
Total interest bearing liabilities
9,409,610

 
9,136

 
0.39
%
 
9,627,758

 
11,282

 
0.46
%
Other liabilities
350,886

 
 
 
 
 
410,079

 
 
 
 
Shareholders' equity
1,635,275

 
 
 
 
 
1,572,061

 
 
 
 
Total liabilities and shareholders' equity
$
14,702,215

 
 
 
 
 
$
14,623,441

 
 
 
 
Net yield on earning assets
$
13,246,693

 
$
119,130

 
3.58
%
 
$
12,747,868

 
$
123,598

 
3.85
%
Interest rate spread
 
 
 
 
3.47
%
 
 
 
 
 
3.73
%
 
 
 
 
 
 
 
 
 
 
 
 
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.

9
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRST MERIT CORPORATION AND SUBSIDARIES
 
 
 
 
 
 
 
 
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
 
 
 
 
 
Twelve months ended
 
Twelve months ended
 
December 31, 2012
 
December 31, 2011
(Unaudited)
Average
 
 
 
Average
 
Average
 
 
 
Average
(Dollars in thousands)
Balance
 
Interest
 
Rate
 
Balance
 
Interest
 
Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
366,815

 
 
 
 
 
$
562,133

 
 
 
 
Investment securities and federal funds sold:
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury securities and U.S. government
 
 
 
 
 
 
 
 
 
 
 
agency obligations (taxable)
2,825,283

 
$
73,455

 
2.60
%
 
2,869,664

 
$
78,202

 
2.73
%
Obligations of states and political
 
 
 
 
 
 
 
 
 
 
 
subdivisions (tax exempt)
483,582

 
25,034

 
5.18
%
 
378,834

 
21,277

 
5.62
%
Other securities and federal funds sold
383,420

 
11,575

 
3.02
%
 
301,786

 
8,842

 
2.93
%
Total investment securities and federal
 
 
 
 
 
 
 
 
 
 
 
funds sold
3,692,285

 
110,064

 
2.98
%
 
3,550,284

 
108,321

 
3.05
%
Loans held for sale
23,326

 
960

 
4.12
%
 
22,467

 
1,045

 
4.65
%
Noncovered loans, covered loans and loss share
 
 
 
 
 
 
 
 
 
 
 
receivable
9,357,080

 
410,818

 
4.39
%
 
9,155,973

 
438,579

 
4.79
%
Total earning assets
13,072,691

 
521,842

 
3.99
%
 
12,728,724

 
547,945

 
4.30
%
Allowance for loan losses
(143,131
)
 
 
 
 
 
(139,414
)
 
 
 
 
Other assets
1,324,252

 
 
 
 
 
1,343,887

 
 
 
 
Total assets
$
14,620,627

 
 
 
 
 
$
14,495,330

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing
$
3,181,475

 
—

 
—

 
$
2,969,137

 
—

 
—

Interest bearing
1,082,740

 
987

 
0.09
%
 
893,062

 
816

 
0.09
%
Savings and money market accounts
5,724,330

 
20,563

 
0.36
%
 
5,320,392

 
28,171

 
0.53
%
Certificates and other time deposits
1,565,253

 
11,723

 
0.75
%
 
2,229,910

 
20,003

 
0.90
%
Total deposits
11,553,798

 
33,273

 
0.29
%
 
11,412,501

 
48,990

 
0.43
%
Securities sold under agreements to repurchase
949,756

 
1,157

 
0.12
%
 
925,803

 
3,344

 
0.36
%
Wholesale borrowings
175,989

 
4,423

 
2.51
%
 
298,835

 
6,295

 
2.11
%
Total interest bearing liabilities
9,498,068

 
38,853

 
0.41
%
 
9,668,002

 
58,629

 
0.61
%
Other liabilities
332,976

 
 
 
 
 
309,838

 
 
 
 
Shareholders' equity
1,608,108

 
 
 
 
 
1,548,353

 
 
 
 
Total liabilities and shareholders' equity
$
14,620,627

 
 
 
 
 
$
14,495,330

 
 
 
 
Net yield on earning assets
$
13,072,691

 
$
482,989

 
3.69
%
 
$
12,728,724

 
$
489,316

 
3.84
%
Interest rate spread
 
 
 
 
3.58
%
 
 
 
 
 
3.70
%
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.

10
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


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,
 
 
 
 
2012
 
2011
 
2012
 
2011
Interest income:
 
 
 
 
 
 
 
 
Loans and loans held for sale
$
101,086

 
$
107,516

 
$
410,299

 
$
438,393

 
Investment securities:
 
 
 
 
 
 
 
 
 
Taxable
20,196

 
21,434

 
85,030

 
87,044

 
 
Tax-exempt
4,084

 
3,298

 
15,354

 
12,819

 
 
Total investment securities interest
24,280

 
24,732

 
100,384

 
99,863

 
 
 
Total interest income
125,366

 
132,248

 
510,683

 
538,256

Interest expense:
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Interest-bearing
261

 
237
 
987

 
816
 
 
Savings and money market accounts
5,261

 
5,998

 
20,563

 
28,171

 
 
Certificates and other time deposits
2,287

 
3,201

 
11,723

 
20,003

 
Securities sold under agreements to repurchase
303

 
512
 
1,157

 
3,344

 
Wholesale borrowings
1,024

 
1,334

 
4,423

 
6,295

 
 
Total interest expense
9,136

 
11,282

 
38,853

 
58,629

 
 
Net interest income
116,230

 
120,966

 
471,830

 
479,627

Provision for noncovered loan losses
7,116

 
12,275

 
33,976

 
54,035

Provision for covered loan losses
5,146

 
2,773

 
20,722

 
20,353

 
 
Net interest income after provision for loan losses
103,968

 
105,918

 
417,132

 
405,239

Other income:
 
 
 
 
 
 
 
 
Trust department income
5,662

 
5,413

 
23,143

 
22,396

 
Service charges on deposits
14,247

 
15,622

 
57,737

 
64,082

 
Credit card fees
11,167

 
10,182

 
43,569

 
49,539

 
ATM and other service fees
3,432

 
3,920

 
14,792

 
13,701

 
Bank owned life insurance income
3,067

 
3,381

 
12,140

 
14,820

 
Investment services and insurance
2,147

 
1,844

 
8,990

 
8,228

 
Investment securities gains, net
2,425

 
5,790

 
3,786

 
11,081

 
Loan sales and servicing income
7,946

 
5,102

 
27,031

 
14,205

 
Other operating income
11,559

 
8,483

 
32,416

 
26,705

 
 
Total other income
61,652

 
59,737

 
223,604

 
224,757

Other expenses:
 
 
 
 
 
 
 
 
Salaries, wages, pension and employee benefits
61,560

 
62,546

 
245,192

 
240,362

 
Net occupancy expense
7,114

 
7,270

 
31,754

 
32,414

 
Equipment expense
7,398

 
7,234

 
29,243

 
27,959

 
Stationery, supplies and postage
2,162

 
2,719

 
8,800

 
10,691

 
Bankcard, loan processing and other costs
9,260

 
7,948

 
34,195

 
32,226

 
Professional services
6,119

 
5,763

 
23,480

 
23,229

 
Amortization of intangibles
444

 
543

 
1,866

 
2,172

 
FDIC insurance expense
1,738

 
5,119

 
10,753

 
17,306

 
Other operating expense
16,386

 
24,732

 
68,330

 
77,986

 
 
Total other expenses
112,181

 
123,874

 
453,613

 
464,345

 
 
 
Income before income tax expense
53,439

 
41,781

 
187,123

 
165,651

Income tax expense
15,215

 
11,285

 
53,017

 
46,093

 
 
 
Net income
$
38,224

 
$
30,496

 
$
134,106

 
$
119,558

Other comprehensive income, net of taxes
 
 
 
 
 
 
 
 
Changes in unrealized securities' holding gains and losses
$
(6,718
)
 
$
1,317

 
$
4,154

 
$
26,205

 
Reclassification for realized securities' gains
(1,576
)
 
(3,764
)
 
(2,461
)
 
(7,203
)
 
Change in minimum pension liability
5,989

 
(16,786
)
 
5,989

 
(16,786
)
 
Total other comprehensive gain (loss), net of taxes
(2,305
)
 
(19,233
)
 
7,682

 
2,216

 
 
Comprehensive income
$
35,919

 
$
11,263

 
$
141,788

 
$
121,774

 
Net income applicable to common shares
$
38,224

 
$
30,496

 
$
134,106

 
$
119,558

 
Net income used in diluted EPS calculation
$
38,224

 
$
30,496

 
$
134,106

 
$
119,558

Weighted average number of common shares outstanding - basic
109,652

 
109,249

 
109,518

 
109,102

Weighted average number of common shares outstanding - diluted
109,652

 
109,249

 
109,518

 
109,102

Basic earnings per common share
$
0.35

 
$
0.28

 
$
1.22

 
$
1.10

Diluted earnings per common share
$
0.35

 
$
0.28

 
$
1.22

 
$
1.10

Dividend per common share
$
0.16

 
$
0.16

 
$
0.64

 
$
0.64

 
 
 
 
 
 
 
 
 
 
 

11
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME---LINKED QUARTERS
 
 
 
 
 
 
 
 
Quarterly Results
(Unaudited)
2012
2012
2012
2012
2011
(Dollars in thousands, except share data)
4th qtr
3rd qtr
2nd qtr
1st qtr
4th qtr
Loans and loans held for sale
$
101,086

$
103,005

$
103,126

$
103,082

$
107,516

Investment securities
24,280

24,477

25,629

25,998

24,732

Total interest income
125,366

127,482

128,755

129,080

132,248

Interest on deposits:
 
 
 
 
 
Interest-bearing
261

243

236

247

237

Savings and money market accounts
5,261

5,166

5,033

5,103

5,998

Certificates and other time deposits
2,287

2,743

3,169

3,524

3,201

Securities sold under agreements to repurchase
303

310

276

268

512

Wholesale borrowings
1,024

1,130

1,118

1,151

1,334

Total interest expense
9,136

9,592

9,832

10,293

11,282

Net interest income
116,230

117,890

118,923

118,787

120,966

Provision for noncovered loan losses
7,116

9,965

8,766

8,129

12,275

Provision for covered loan losses
5,146

6,214

3,430

5,932

2,773

Net interest income after provision for loan losses
103,968

101,711

106,727

104,726

105,918

Other income:
 
 
 
 
 
Trust department income
5,662

6,124

5,730

5,627

5,413

Service charges on deposits
14,247

14,603

14,478

14,409

15,622

Credit card fees
11,167

11,006

11,216

10,180

10,182

ATM and other service fees
3,432

3,680

3,890

3,790

3,920

Bank owned life insurance income
3,067

3,094

2,923

3,056

3,381

Investment services and insurance
2,147

2,208

2,388

2,247

1,844

Investment securities gains, net
2,425

553

548

260

5,790

Loan sales and servicing income
7,946

7,255

5,139

6,691

5,102

Other operating income
11,559

6,402

8,989

5,466

8,483

Total other income
61,652

54,925

55,301

51,726

59,737

Other expenses:
 
 
 
 
 
Salaries, wages, pension and employee benefits
61,560

58,061

61,598

63,973

62,546

Net occupancy expense
7,114

8,077

7,971

8,592

7,270

Equipment expense
7,398

7,143

7,598

7,104

7,234

Stationery, supplies and postage
2,162

2,210

2,285

2,143

2,719

Bankcard, loan processing and other costs
9,260

8,424

8,858

7,653

7,948

Professional services
6,119

4,702

9,307

3,352

5,763

Amortization of intangibles
444

456

483

483

543

FDIC insurance expense
1,738

1,832

3,463

3,720

5,119

Other operating expense
16,386

17,682

17,514

16,748

24,732

Total other expenses
112,181

108,587

119,077

113,768

123,874

Income before income tax expense
53,439

48,049

42,951

42,684

41,781

Income taxes
15,215

13,096

12,366

12,340

11,285

Net income
38,224

34,953

30,585

30,344

30,496

Other comprehensive income (loss), net of taxes
(2,305
)
4,525

3,747

1,715

(19,233
)
Comprehensive income
$
35,919

$
39,478

$
34,332

$
32,059

$
11,263

Net income applicable to common shares
$
38,224

$
34,953

$
30,585

$
30,344

$
30,496

Net income used in diluted EPS calculation
$
38,224

$
34,953

$
30,585

$
30,344

$
30,496

Weighted-average common shares - basic
109,652

109,645

109,562

109,211

109,249

Weighted-average common shares - diluted
109,652

109,645

109,562

109,211

109,249

Basic earnings per common share
$
0.35

$
0.32

$
0.28

$
0.28

$
0.28

Diluted earnings per common share
$
0.35

$
0.32

$
0.28

$
0.28

$
0.28

 
 
 
 
 
 

12
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
ASSET QUALITY INFORMATION (excluding Covered Assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
2012
2012
2012
2012
2011
 
2011
Allowance for noncovered loan losses, beginning of period
$
98,942

$
103,849

$
103,849

$
107,699

$
109,187

 
$
114,690

Provision for noncovered loan losses
7,116

9,965

8,766

8,129

12,275

 
54,035

Charge-offs
12,475

20,999

15,014

17,417

18,984

 
82,768

Recoveries
5,359

6,127

6,248

5,438

5,221

 
21,742

Net charge-offs
7,116

14,872

8,766

11,979

13,763

 
61,026

Allowance for noncovered loan losses, end of period
$
98,942

$
98,942

$
103,849

$
103,849

$
107,699

 
$
107,699

Reserve for unfunded lending commitments,
 
 
 
 
 
 
 
beginning of period
$
5,760

$
5,666

$
5,410

$
6,373

$
6,360

 
$
8,849

Provision for (relief of) credit losses
(327
)
94

256

(963
)
13

 
(2,476
)
Reserve for unfunded lending commitments,
 
 
 
 
 
 
 
end of period
$
5,433

$
5,760

$
5,666

$
5,410

$
6,373

 
$
6,373

Allowance for Credit Losses
$
104,375

$
104,702

$
109,515

$
109,259

$
114,072

 
$
114,072

Ratios (a)
 
 
 
 
 
 
 
Provision for loan losses to average loans
0.34
%
0.48
%
0.44
%
0.42
%
0.63
%
 
0.73
%
Net charge-offs to average loans
0.34
%
0.72
%
0.44
%
0.62
%
0.71
%
 
0.82
%
Allowance for loan losses to period-end loans
1.13
%
1.19
%
1.28
%
1.32
%
1.39
%
 
1.39
%
Allowance for credit losses to period-end loans
1.20
%
1.26
%
1.35
%
1.39
%
1.47
%
 
1.47
%
Allowance for loan losses to nonperforming loans
269.69
%
196.66
%
222.44
%
194.97
%
166.64
%
 
166.64
%
Allowance for credit losses to nonperforming loans
284.50
%
208.11
%
234.57
%
205.13
%
176.50
%
 
176.50
%
Asset Quality (a)
 
 
 
 
 
 
 
Impaired noncovered loans:
 
 
 
 
 
 
 
Nonaccrual
$
21,766

$
31,492

$
38,381

$
44,546

$
55,815

 
$
55,815

Other nonperforming loans:
 
 
 
 
 
 
 
Nonaccrual (b)
14,921

18,819

8,306

8,717

8,816

 
8,816

Total nonperforming loans
36,687

50,311

46,687

53,263

64,631

 
64,631

Other real estate ("ORE")
13,537

13,744

14,393

14,670

16,463

 
16,463

Total nonperforming assets ("NPAs")
$
50,224

$
64,055

$
61,080

$
67,933

$
81,094

 
$
81,094

NPAs to period-end loans + ORE
0.57
%
0.77
%
0.75
%
0.86
%
1.04
%
 
1.04
%
Accruing noncovered loans past due 90 days or more
$
9,417

$
9,691

$
6,545

$
9,261

$
11,376

 
$
11,376

 
 
 
 
 
 
 
 
(a) Excludes covered loans and related loss share receivable with a period end balance of $1.0 billion, $1.2 billion, $1.3 billion, $1.4 billion and $1.5 billion and covered ORE and related loss share receivable with a period end balance of $59.9 million, $56.8 million, $54.5 million, $56.4 million and $54.5 million at December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively.

(b) At December 31, 2012 and September 30, 2012, included are $7.7 million and $10.6 million, respectively, of consumer loans classified as troubled debt restructurings where the borrower's obligation to the Corporation has been restructured in bankruptcy.



13
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results


FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
2012
 
2012
 
2012
 
2011
QUARTERLY OTHER INCOME DETAIL
 
4th qtr
 
3rd qtr
 
2nd qtr
 
1st qtr
 
4th qtr
Trust department income
 
$
5,662

 
$
6,124

 
$
5,730

 
$
5,627

 
$
5,413

Service charges on deposits
 
14,247

 
14,603

 
14,478

 
14,409

 
15,622

Credit card fees
 
11,167

 
11,006

 
11,216

 
10,180

 
10,182

ATM and other service fees
 
3,432

 
3,680

 
3,890

 
3,790

 
3,920

Bank owned life insurance income
 
3,067

 
3,094

 
2,923

 
3,056

 
3,381

Investment services and insurance
 
2,147

 
2,208

 
2,388

 
2,247

 
1,844

Investment securities gains, net
 
2,425

 
553

 
548

 
260

 
5,790

Loan sales and servicing income
 
7,946

 
7,255

 
5,139

 
6,691

 
5,102

Other operating income
 
11,559

 
6,402

 
8,989

 
5,466

 
8,483

Total Other Income
 
$
61,652

 
$
54,925

 
$
55,301

 
$
51,726

 
$
59,737

 
 
2012
 
2012
 
2012
 
2012
 
2011
QUARTERLY OTHER EXPENSES DETAIL
 
4th qtr
 
3rd qtr
 
2nd qtr
 
1st qtr
 
4th qtr
Salaries, wages, pension and employee benefits
 
$
61,560

 
$
58,061

 
$
61,598

 
$
63,973

 
$
62,546

Net occupancy expense
 
7,114

 
8,077

 
7,971

 
8,592

 
7,270

Equipment expense
 
7,398

 
7,143

 
7,598

 
7,104

 
7,234

Taxes, other than income taxes
 
1,924

 
2,051

 
2,020

 
1,955

 
1,389

Stationery, supplies and postage
 
2,162

 
2,210

 
2,285

 
2,143

 
2,719

Bankcard, loan processing and other costs
 
9,260

 
8,424

 
8,858

 
7,653

 
7,948

Advertising
 
2,774

 
2,472

 
2,280

 
1,684

 
2,275

Professional services
 
6,119

 
4,702

 
9,307

 
3,352

 
5,763

Telephone
 
1,230

 
1,316

 
1,379

 
1,398

 
1,525

Amortization of intangibles
 
444

 
456

 
483

 
483

 
543

FDIC insurance expense
 
1,738

 
1,832

 
3,463

 
3,720

 
5,119

Other operating expense
 
10,458

 
11,843

 
11,835

 
11,711

 
19,543

Total Other Expenses
 
$
112,181

 
$
108,587

 
$
119,077

 
$
113,768

 
$
123,874


14
FirstMerit Corporation Reports Fourth Quarter 2012 EPS Results

FIRSTMERIT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
ALLOWANCE FOR NONCOVERED LOAN LOSSES - Net Charge-off Detail
 
 
 
 
 
 
 
 
 
 
(Unaudited)
Quarters ended
 
Year ended
(Dollars in thousands)
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
Allowance for noncovered loan losses - beginning of period
$
98,942

 
$
109,187

 
$
107,699

 
$
114,690

Loans charged off:
 
 
 
 
 
 
 
Commercial
5,081

 
7,418

 
28,648

 
31,943

Mortgage
533

 
1,033

 
3,964

 
4,819

Installment
3,588

 
5,635

 
18,029

 
25,839

Home equity
1,141

 
2,491

 
7,249

 
8,691

Credit cards
1,553

 
1,711

 
6,171

 
7,846

Leases
144

 
—

 
144

 
778

Overdrafts
435

 
696

 
1,700

 
2,852

Total
12,475

 
18,984

 
65,905

 
82,768

Recoveries:
 
 
 
 
 
 
 
Commercial
1,317

 
850

 
5,626

 
2,703

Mortgage
44

 
29

 
235

 
221

Installment
2,581

 
2,890

 
11,635

 
13,639

Home equity
725

 
730

 
2,819

 
1,985

Credit cards
555

 
475

 
2,138

 
2,264

Manufactured housing
9

 
56

 
59

 
119

Leases
—

 
2

 
38

 
37

Overdrafts
128

 
189

 
622

 
774

Total
5,359

 
5,221

 
23,172

 
21,742

Net charge-offs
7,116

 
13,763

 
42,733

 
61,026

Provision for noncovered loan losses
7,116

 
12,275

 
33,976

 
54,035

Allowance for noncovered loan losses-end of period
$
98,942

 
$
107,699

 
$
98,942

 
$
107,699

 
 
 
 
 
 
 
 
Average noncovered loans (a)
$
8,444,208

 
$
7,673,913

 
$
8,089,317

 
$
7,409,502

Ratio to average noncovered loans (a):
 
 
 
 
 
 
 
(Annualized) noncovered net charge-offs
0.34
%
 
0.71
%
 
0.53
%
 
0.82
%
Provision for noncovered loan losses
0.34
%
 
0.63
%
 
0.42
%
 
0.73
%
Noncovered Loans, period-end (a)
$
8,731,659

 
$
7,748,944

 
$
8,731,659

 
$
7,748,944

 
 
 
 
 
 
 
 
Allowance for credit losses (a):
$
104,375

 
$
114,072

 
$
104,375

 
$
114,072

To (annualized) net charge-offs
3.69

 
2.09

 
2.44

 
1.87

Allowance for noncovered loan losses (a):
 
 
 
 
 
 
 
To period-end noncovered loans
1.13
%
 
1.39
%
 
1.13
%
 
1.39
%
To (annualized) net noncovered charge-offs
3.50

 
1.97

 
2.32

 
1.76

 
 
 
 
 
 
 
 
(a) Excludes covered loans and loss share receivable.


15