FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.2 - EXHIBIT 99.2 - FIRSTMERIT CORP /OH/	a20140127supplementex992q420.pdf
8-K - 8-K - FIRSTMERIT CORP /OH/	a8k_q4x2013xdoc.htm

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results

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 2013 EPS of $0.33 Per Share

Quarterly Highlights include:


•	Profitability Sustained: 59th consecutive quarter of profitability.


•	Organic growth continued : Average loan growth of $175.0 million, or 1.24% from the prior quarter; average core deposit growth of $230.5 million or 1.38% from the prior quarter.


•	Credit quality remained superior: Net charge-offs to average originated loans of 0.13%; nonperforming assets as a percent of period end originated loans plus other real estate at 0.60%.


•	Balance sheet remained strong: Strong tangible common equity ratio at 7.71%.


•	Integration successfully completed: Conversion to unified operating systems in October, operating consistently across five Midwestern states.

Akron, Ohio (January 28, 2014) - FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported fourth quarter 2013 net income of $57.2 million, or $0.33 per diluted share. This compares with $40.7 million, or $0.23 per diluted share, for the third quarter 2013 and $38.2 million, or $0.35 per diluted share, for the fourth quarter 2012. Included in noninterest expense for the fourth quarter 2013 were $6.0 million of pre-tax merger related costs compared to $33.4 million for the third quarter 2013. Pre-tax costs associated with anticipated branch closures of $1.0 million were recognized in the fourth quarter of 2013 and are included within noninterest income.

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results

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

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

Net Interest Income

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

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

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

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

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

Noninterest Income

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results

Noninterest Expense

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

Asset Quality (excluding acquired loans and covered assets)

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

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

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

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

Balance Sheet

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results

$17.1 billion at December 31, 2013, an increase of $220.3 million, or 1.31%, from September 30, 2013 and an increase of $6.7 billion, or 64.41%, from December 31, 2012.

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

Acquisition and Integration Update

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

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

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

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

Fourth Quarter 2013 Conference Call

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

Non-GAAP Measures: This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation's management uses these non-GAAP measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes that these non-

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results

GAAP measures provide a greater understanding of ongoing operations of the Corporation and enhance comparability of results with prior periods, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. The Corporation believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. The Corporation's management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the Corporation's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

About FirstMerit Corporation

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

Subsequent Events

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

Forward-Looking Statements

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights (a)
(Unaudited)							Quarters
(Dollars in thousands, except per share amounts)	2013			2013			2013			2013			2012
	4th qtr			3rd qtr			2nd qtr			1st qtr			4th qtr
EARNINGS
Net interest income FTE (b)	$	202,145		$	207,079		$	201,605		$	114,376		$	119,130
FTE adjustment (b)	4,077			3,739			3,574			3,027			2,900
Provision for originated loan losses	1,552			2,523			3,151			5,808			7,116
Provision for acquired loan losses	5,515			2,033			—			—			—
Provision for covered loan losses	2,983			1,823			4,158			4,138			5,146
Other income	72,420			71,090			69,439			57,392			61,652
Other expenses	179,391			211,378			189,640			106,925			112,181
Net income	57,174			40,715			48,450			37,346			38,224
Diluted EPS (d)	0.33			0.23			0.29			0.33			0.35
PERFORMANCE RATIOS
Return on average assets (ROA)	0.94		%	0.67		%	0.85		%	1.01		%	1.03		%
Return on average equity (ROE)	8.48		%	6.07		%	7.56		%	8.83		%	9.30		%
Return on average tangible common equity (e)	12.96		%	9.29		%	11.49		%	12.76		%	13.01		%
Net interest margin FTE (b)	3.89		%	4.05		%	4.12		%	3.46		%	3.58		%
Efficiency ratio (f)	64.36		%	74.92		%	68.37		%	62.06		%	62.65		%
Number of full-time equivalent employees	4,570			4,666			4,619			2,767			2,738
MARKET DATA
Book value per common share	$	16.38		$	16.08		$	16.06		$	15.99		$	15.00
Tangible book value per common share (e)	$	10.79		10.48			10.44			10.83			10.75
Period-end common share market value	22.23			21.72			20.03			16.54			14.19
Market as a % of book	136		%	135		%	125		%	103		%	95		%
Cash dividends per common share	$	0.16		$	0.16		$	0.16		$	0.16		$	0.16
Common stock dividend payout ratio	48.48		%	69.57		%	55.17		%	48.48		%	45.71		%
Average basic common shares	165,054			165,044			157,863			109,689			109,652
Average diluted common shares	166,097			165,874			158,390			110,238			109,652
Period end common shares	165,056			165,045			165,045			109,746			109,649
Common shares repurchased	17			7			168			26			12
Common stock market capitalization	$	3,669,195		$	3,584,777		$	3,305,851		$	1,815,199		$	1,555,919
ASSET QUALITY (excluding acquired and covered loans) (c)
Gross charge-offs	$	9,913		$	8,515		$	10,969		$	10,776		$	12,475
Net charge-offs	3,359			2,877			3,349			5,907			7,116
Allowance for originated loan losses	96,484			98,291			98,645			98,843			98,942
Reserve for unfunded lending commitments	7,907			8,493			8,114			4,941			5,433
Nonperforming assets (NPAs)	60,883			55,426			66,177			52,231			50,224
Net charge-offs to average loans ratio	0.13		%	0.12		%	0.15		%	0.27		%	0.34		%
Allowance for originated loan losses to period-end loans	0.94		%	1.00		%	1.08		%	1.13		%	1.13		%
Allowance for credit losses to period-end loans	1.02		%	1.09		%	1.17		%	1.18		%	1.20		%
NPAs to loans and other real estate	0.60		%	0.57		%	0.72		%	0.59		%	0.57		%
Allowance for originated loan losses to nonperforming loans	228.62		%	276.19		%	216.97		%	242.21		%	269.69		%
Allowance for credit losses to nonperforming loans	247.35		%	300.06		%	234.82		%	254.32		%	284.50		%
CAPITAL & LIQUIDITY
Period-end tangible common equity to assets (e)	7.71		%	7.42		%	7.59		%	8.03		%	8.16		%
Average equity to assets	11.12		%	11.08		%	11.28		%	11.45		%	11.12		%
Average equity to total loans	18.81		%	18.97		%	18.95		%	17.88		%	17.37		%
Average total loans to deposits	72.84		%	72.11		%	74.04		%	81.36		%	81.21		%
AVERAGE BALANCES
Assets	$	24,034,846		$	24,013,594		$	22,810,702		$	14,983,543		$	14,702,215
Deposits	19,517,476			19,456,231			18,334,244			11,789,784			11,595,085
Originated loans	9,988,587			9,377,826			8,877,754			8,735,307			8,444,208
Acquired loans, including covered loans, less loss share receivable	4,227,693			4,652,101			4,696,740			856,875			971,589
Earning assets	20,593,750			20,276,825			19,609,974			13,408,789			13,246,693
Shareholders' equity	2,673,635			2,661,546			2,571,964			1,715,005			1,635,275
ENDING BALANCES
Assets	$	23,909,027		$	24,134,729		$	23,531,872		$	15,272,484		$	14,913,012
Deposits	19,533,601			19,489,533			19,119,722			11,925,767			11,759,425
Originated loans	10,213,387			9,789,139			9,132,625			8,779,970			8,731,659
Acquired loans, including covered loans,less loss share receivable	4,025,758			4,401,711			4,926,888			801,239			905,391
Goodwill	739,819			739,819			739,819			460,044			460,044
Intangible assets	82,755			85,447			88,419			6,055			6,373
Earning assets	21,048,910			21,297,250			20,772,749			13,905,342			13,472,067
Total shareholders' equity	2,702,894			2,654,645			2,650,909			1,754,850			1,645,202
NOTES:

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

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

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)				December 31,			December 31,
(Unaudited, except December 31, 2012, which is derived from the audited financial statements)				2013			2012
ASSETS
	Cash and due from banks			$	571,171		$	244,223
	Interest-bearing deposits in banks			346,651			13,791
		Total cash and cash equivalents		917,822			258,014
	Investment securities:
		Held-to-maturity		2,935,688			622,121
		Available-for-sale		3,273,174			2,920,971
		Other investments		180,803			140,717
	Loans held for sale			11,622			23,683
	Loans			14,300,972			9,750,784
	Allowance for loan losses			(141,252		)	(142,197		)
	Net loans			14,159,720			9,608,587
	Premises and equipment, net			327,054			181,149
	Goodwill			739,819			460,044
	Intangible assets			82,755			6,373
	Covered other real estate			65,234			59,855
	Accrued interest receivable and other assets			1,215,336			631,498
			Total assets	$	23,909,027		$	14,913,012
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
		Noninterest-bearing		$	5,459,029		$	3,338,371
		Interest-bearing		3,026,735			1,287,674
		Savings and money market accounts		8,587,167			5,758,123
		Certificates and other time deposits		2,460,670			1,375,257
			Total deposits	19,533,601			11,759,425
		Federal funds purchased and securities sold under agreements to repurchase		851,535			1,104,525
		Wholesale borrowings		200,600			136,883
		Long-term debt		324,428			—
		Accrued taxes, expenses, and other liabilities		295,969			266,977
			Total liabilities	21,206,133			13,267,810
		Shareholders' equity:
			5.875% Non-Cumulative Perpetual Preferred stock, Series A, without par value: authorized 115,000 shares; 100,000 issued	100,000			—
			Common stock warrant	3,000			—
			Common Stock, without par value; authorized 300,000,000 shares; issued: December 31, 2013 - 170,183,540 shares; December 31, 2012 - 115,121,731 shares	127,937			127,937
			Capital surplus	1,390,643			475,979
			Accumulated other comprehensive loss	(66,876		)	(16,205		)
			Retained earnings	1,277,975			1,195,850
			Treasury stock, at cost: December 31, 2013 - 5,127,332 shares; December 31, 2012 - 5,472,915 shares	(129,785		)	(138,359		)
			Total shareholders' equity	2,702,894			1,645,202
			Total liabilities and shareholders' equity	$	23,909,027		$	14,913,012

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES Period End Loans by Product Type (Unaudited) (Dollars in thousands)
	As of December 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,648,279	$	1,725,970	$	375,860	$	8,750,109
Mortgage	529,253		470,652		50,679		1,050,584
Installment	1,727,925		1,004,569		6,162		2,738,656
Home equity	920,066		294,424		97,442		1,311,932
Credit card	148,313		—		—		148,313
Leases	239,551		—		—		239,551
Subtotal	10,213,387		3,495,615		530,143		14,239,145
Loss share receivable	—		—		61,827		61,827
Total loans	10,213,387		3,495,615		591,970		14,300,972
Less allowance for loan losses	96,484		741		44,027		141,252
Net loans	$	10,116,903	$	3,494,874	$	547,943	$	14,159,720


	As of September 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,420,369	$	1,963,746	$	422,225	$	8,806,340
Mortgage	487,283		466,594		52,796		1,006,673
Installment	1,647,095		1,080,298		6,361		2,733,754
Home equity	889,372		306,783		102,908		1,299,063
Credit card	145,113		—		—		145,113
Leases	199,907		—		—		199,907
Subtotal	9,789,139		3,817,421		584,290		14,190,850
Loss share receivable	—		—		69,986		69,986
Total loans	9,789,139		3,817,421		654,276		14,260,836
Less allowance for loan losses	98,291		—		45,544		143,835
Net loans	$	9,690,848	$	3,817,421	$	608,732	$	14,117,001


	As of June 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,997,812	$	2,267,811	$	505,706	$	8,771,329
Mortgage	462,427		439,380		56,056		957,863
Installment	1,496,663		1,221,060		7,794		2,725,517
Home equity	845,051		322,111		106,970		1,274,132
Credit card	142,319		—		—		142,319
Leases	188,353		—		—		188,353
Subtotal	9,132,625		4,250,362		676,526		14,059,513
Loss share receivable	—		—		83,910		83,910
Total loans	9,132,625		4,250,362		760,436		14,143,423
Less allowance for loan losses	98,645		—		49,069		147,714
Net loans	$	9,033,980	$	4,250,362	$	711,367	$	13,995,709


	As of March 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	5,888,337		$	—	$	621,188	$	6,509,525
Mortgage	451,522		—		58,627		510,149
Installment	1,322,795		—		8,081		1,330,876
Home equity	812,458		—		113,343		925,801
Credit card	140,721		—		—		140,721
Leases	164,137		—		—		164,137
Subtotal	8,779,970		—		801,239		9,581,209
Loss share receivable	—		—		95,593		95,593
Total loans	8,779,970		—		896,832		9,676,802
Less allowance for loan losses	98,843		—		47,945		146,788
Net loans	$	8,681,127	$	—	$	848,887	$	9,530,014

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



	As of December 31, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,866,489	$	—	$	718,437	$	6,584,926
Mortgage	445,211		—		61,540		506,751
Installment	1,328,258		—		8,189		1,336,447
Home equity	806,078		—		117,225		923,303
Credit card	146,387		—		—		146,387
Leases	139,236		—		—		139,236
Subtotal	8,731,659		—		905,391		9,637,050
Loss share receivable	—		—		113,734		113,734
Total loans	8,731,659		—		1,019,125		9,750,784
Less allowance for loan losses	98,942		—		43,255		142,197
Net loans	$	8,632,717	$	—	$	975,870	$	9,608,587

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.
(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

FirstMerit Corporation Reports Fourth Quarter 2013 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)	2013			2013			2013			2013			2012
ASSETS
Cash and cash equivalents	$	1,135,601		$	1,415,430		$	806,129		$	394,896		$	238,366
Investment securities:
Held-to-maturity	2,763,517			2,640,807			1,953,094			637,614			620,154
Available-for-sale	3,284,635			3,243,173			3,723,002			2,919,636			2,925,938
Other investments	253,490			267,743			253,649			140,729			140,723
Loans held for sale	10,248			18,265			17,394			14,884			20,485
Loans	14,281,860			14,106,837			13,662,835			9,695,926			9,539,393
Less: allowance for loan losses	177,628			146,509			146,705			141,735			141,270
Net loans	14,104,232			13,960,328			13,516,130			9,554,191			9,398,123
Total earning assets	20,593,750			20,276,825			19,609,974			13,408,789			13,246,693
Premises and equipment, net	326,632			322,236			299,979			179,381			181,738
Accrued interest receivable and other assets	2,156,491			2,145,612			2,241,325			1,142,212			1,176,688
TOTAL ASSETS	$	24,034,846		$	24,013,594		$	22,810,702		$	14,983,543		$	14,702,215
LIABILITIES
Deposits:
Noninterest-bearing	$	5,546,316		$	5,443,800		$	5,095,977		$	3,321,660		$	3,306,444
Interest-bearing	2,875,375			2,720,592			2,347,155			1,300,816			1,122,796
Savings and money market accounts	8,544,097			8,570,910			8,210,780			5,835,750			5,743,599
Certificates and other time deposits	2,551,688			2,720,929			2,680,332			1,331,558			1,422,246
Total deposits	19,517,476			19,456,231			18,334,244			11,789,784			11,595,085
Federal funds purchased and securities sold under
agreements to repurchase	948,959			1,011,991			927,451			906,717			957,564
Wholesale borrowings	200,622			201,012			237,887			136,298			163,405
Long-term debt	324,426			324,424			314,597			155,506			—
Total funds	20,991,483			20,993,658			19,814,179			12,988,305			12,716,054
Accrued taxes, expenses and other liabilities	369,728			358,390			424,559			280,233			350,886
Total liabilities	21,361,211			21,352,048			20,238,738			13,268,538			13,066,940
SHAREHOLDERS' EQUITY
Preferred stock	100,000			100,000			100,000			62,222			—
Common stock warrant	3,000			3,000			2,637			—			—
Common stock	127,937			127,937			127,937			127,937			127,937
Capital surplus	1,389,222			1,386,931			1,274,758			473,943			474,532
Accumulated other comprehensive loss	(79,431		)	(82,598		)	(29,033		)	(21,247		)	(17,666		)
Retained earnings	1,262,705			1,256,052			1,225,380			1,209,837			1,188,641
Treasury stock	(129,798		)	(129,776		)	(129,715		)	(137,687		)	(138,169		)
Total shareholders' equity	2,673,635			2,661,546			2,571,964			1,715,005			1,635,275
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	24,034,846		$	24,013,594		$	22,810,702		$	14,983,543		$	14,702,215

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES Average Loans by Product Type (Unaudited) (Dollars in thousands)
	Quarter ended December 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾			Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,526,243	$	1,866,064		$	400,105	$	8,792,412
Mortgage	509,685		472,771			51,304		1,033,760
Installment	1,697,651		1,032,245			6,279		2,736,175
Home equity	905,172		298,212			100,712		1,304,096
Credit card	146,805		—			—		146,805
Leases	203,031		—			—		203,031
Subtotal	9,988,587		3,669,292			558,401		14,216,280
Loss share receivable	—		—			65,580		65,580
Total loans	9,988,587		3,669,292			623,981		14,281,860
Less allowance for loan losses	134,890		(2,091		)	44,829		177,628
Net loans	$	9,853,697	$	3,671,383		$	579,152	$	14,104,232


	Quarter ended September 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾			Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,131,423	$	2,118,803		$	460,242	$	8,710,468
Mortgage	472,281		448,206			54,403		974,890
Installment	1,570,124		1,145,824			7,180		2,723,128
Home equity	866,001		312,681			104,762		1,283,444
Credit card	143,637		—			—		143,637
Leases	194,360		—			—		194,360
Subtotal	9,377,826		4,025,514			626,587		14,029,927
Loss share receivable	—		—			76,910		76,910
Total loans	9,377,826		4,025,514			703,497		14,106,837
Less allowance for loan losses	97,693		68			48,748		146,509
Net loans	$	9,280,133	$	4,025,446		$	654,749	$	13,960,328


	Quarter Ended June 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾			Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,888,935	$	2,141,015		$	575,859	$	8,605,809
Mortgage	453,813		408,723			56,825		919,361
Installment	1,388,765		1,107,076			7,912		2,503,753
Home equity	831,243		288,254			111,076		1,230,573
Credit card	141,785		—			—		141,785
Leases	173,213		—			—		173,213
Subtotal	8,877,754		3,945,068			751,672		13,574,494
Loss share receivable	—		—			88,341		88,341
Total loans	8,877,754		3,945,068			840,013		13,662,835
Less allowance for loan losses	99,411		—			47,294		146,705
Net loans	$	8,778,343	$	3,945,068		$	792,719	$	13,516,130


	Quarter Ended March 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾			Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,859,818	$	—		$	673,815	$	6,533,633
Mortgage	448,589		—			60,391		508,980
Installment	1,325,016		—			8,118		1,333,134
Home equity	806,936		—			114,551		921,487
Credit card	144,159		—			—		144,159
Leases	150,789		—			—		150,789
Subtotal	8,735,307		—			856,875		9,592,182
Loss share receivable	—		—			103,744		103,744
Total loans	8,735,307		—			960,619		9,695,926
Less allowance for loan losses	98,660		—			43,075		141,735
Net loans	$	8,636,647	$	—		$	917,544	$	9,554,191

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



	Quarter ended December 31, 2012
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,600,522	$	—	$	780,904	$	6,381,426
Mortgage	443,542		—		62,382		505,924
Installment	1,331,131		—		8,251		1,339,382
Home equity	798,663		—		120,052		918,715
Credit card	145,050		—		—		145,050
Leases	125,300		—		—		125,300
Subtotal	8,444,208		—		971,589		9,415,797
Loss share receivable	—		—		123,596		123,596
Total loans	8,444,208		—		1,095,185		9,539,393
Less allowance for loan losses	99,461		—		41,809		141,270
Net loans	$	8,344,747	$	—	$	1,053,376	$	9,398,123

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.
(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBIDARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential

	Three months ended							Three months ended							Three months ended
	December 31, 2013							September 30, 2013							December 31, 2012
(Unaudited)	Average					Average		Average					Average		Average					Average
(Dollars in thousands)	Balance			Interest ⁽¹⁾		Rate		Balance			Interest ⁽¹⁾		Rate		Balance			Interest ⁽¹⁾		Rate
ASSETS
Cash and cash equivalents	$	1,135,601						$	1,415,430						$	238,366
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	4,895,147			$	24,236	1.96	%	4,849,135			$	23,551	1.93	%	2,794,524			$	16,767	2.39	%
Obligations of states and political subdivisions (tax exempt)	728,408			8,609		4.69	%	712,296			8,890		4.95	%	510,722			6,583		5.13	%
Other securities and federal funds sold	678,087			6,445		3.77	%	590,292			6,215		4.18	%	381,569			3,429		3.58	%
Total investment securities and federal funds sold	6,301,642			39,290		2.47	%	6,151,723			38,656		2.49	%	3,686,815			26,779		2.89	%
Loans held for sale	10,248			92		3.56	%	18,265			174		3.78	%	20,485			199		3.86	%
Loans, including loss share receivable ⁽²⁾	14,281,860			177,275		4.92	%	14,106,837			182,406		5.13	%	9,539,393			101,288		4.22	%
Total earning assets	20,593,750			216,657		4.17	%	20,276,825			221,236		4.33	%	13,246,693			128,266		3.85	%
Allowance for loan losses	(177,628		)					(146,509		)					(141,270		)
Other assets	2,483,123							2,467,848							1,358,426
Total assets	$	24,034,846						$	24,013,594						$	14,702,215
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,546,316		—		—	%	$	5,443,800		—		—	%	$	3,306,444		—		—	%
Interest-bearing	2,875,375			759		0.10	%	2,720,592			809		0.12	%	1,122,796			261		0.09	%
Savings and money market accounts	8,544,097			6,127		0.28	%	8,570,910			6,495		0.30	%	5,743,599			5,261		0.36	%
Certificates and other time deposits	2,551,688			2,500		0.39	%	2,720,929			1,712		0.25	%	1,422,246			2,287		0.64	%
Total deposits	19,517,476			9,386		0.19	%	19,456,231			9,016		0.18	%	11,595,085			7,809		0.27	%
Securities sold under agreements to repurchase	948,959			291		0.12	%	1,011,991			306		0.12	%	957,564			303		0.13	%
Wholesale borrowings	200,622			938		1.85	%	201,012			936		1.85	%	163,405			1,024		2.49	%
Long-term debt	324,426			3,897		4.77	%	324,424			3,899		4.77	%	—			—		—	%
Total interest bearing liabilities	15,445,167			14,512		0.37	%	15,549,858			14,157		0.36	%	9,409,610			9,136		0.39	%
Other liabilities	369,728							358,390							350,886
Shareholders' equity	2,673,635							2,661,546							1,635,275
Total liabilities and shareholders' equity	$	24,034,846						$	24,013,594						$	14,702,215
Net yield on earning assets	$	20,593,750		$	202,145	3.89	%	$	20,276,825		$	207,079	4.05	%	$	13,246,693		$	119,130	3.58	%
Interest rate spread						3.80	%						3.97	%						3.47	%

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBIDARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential

	Twelve Months Ended							Twelve Months Ended
	December 31, 2013							December 31, 2012
(Unaudited)	Average					Average		Average					Average
(Dollars in thousands)	Balance			Interest ⁽¹⁾		Rate		Balance			Interest ⁽¹⁾		Rate
ASSETS
Cash and cash equivalents	$	941,356						$	366,815
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	4,319,524			$	88,761	2.05	%	2,825,283			$	73,455	2.60	%
Obligations of states and political subdivisions (tax exempt)	673,695			33,311		4.94	%	483,582			25,034		5.18	%
Other securities and federal funds sold	535,916			20,063		3.74	%	383,420			11,575		3.02	%
Total investment securities and federal funds sold	5,529,135			142,135		2.57	%	3,692,285			110,064		2.98	%
Loans held for sale	15,194			553		3.64	%	23,326			960		4.12	%
Loans,including loss share receivable ⁽²⁾	12,948,666			637,532		4.92	%	9,357,080			410,818		4.39	%
Total earning assets	18,492,995			780,220		4.22	%	13,072,691			521,842		3.99	%
Allowance for loan losses	(153,190		)					(143,131		)
Other assets	2,208,614							1,324,252
Total assets	$	21,489,775						$	14,620,627
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	4,859,659		—		—	%	$	3,181,475		—		—	%
Interest-bearing	2,316,421			2,543		0.11	%	1,082,740			987		0.09	%
Savings and money market accounts	7,799,943			24,406		0.31	%	5,724,330			20,563		0.36	%
Certificates and other time deposits	2,325,565			9,649		0.41	%	1,565,253			11,723		0.75	%
Total deposits	17,301,588			36,598		0.21	%	11,553,798			33,273		0.29	%
Securities sold under agreements to repurchase	949,068			1,240		0.13	%	949,756			1,157		0.12	%
Wholesale borrowings	194,150			3,893		2.01	%	175,989			4,423		2.51	%
Long-term debt	280,323			13,287		4.74	%	—			—		—	%
Total interest bearing liabilities	13,865,470			55,018		0.40	%	9,498,068			38,853		0.41	%
Other liabilities	355,781							332,976
Shareholders' equity	2,408,865							1,608,108
Total liabilities and shareholders' equity	$	21,489,775						$	14,620,627
Net yield on earning assets ⁽¹⁾	$	18,492,995		$	725,202	3.92	%	$	13,072,691		$	482,989	3.69	%
Interest rate spread						3.82	%						3.58	%

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

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

FirstMerit Corporation Reports Fourth Quarter 2013 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,
				2013			2012			2013			2012
Interest income:
	Loans and loans held for sale			$	176,559		$	101,086		$	635,872		$	410,299
	Investment securities:
		Taxable		30,681			20,196			108,824			85,030
		Tax-exempt		5,340			4,084			21,107			15,354
		Total investment securities interest		36,021			24,280			129,931			100,384
			Total interest income	212,580			125,366			765,803			510,683
Interest expense:
	Deposits:
		Interest-bearing		759			261			2,543			987
		Savings and money market accounts		6,127			5,261			24,406			20,563
		Certificates and other time deposits		2,500			2,287			9,649			11,723
	Securities sold under agreements to repurchase			291			303			1,240			1,157
	Wholesale borrowings			938			1,024			3,893			4,423
	Long-term debt			3,897			—			13,287			—
		Total interest expense		14,512			9,136			55,018			38,853
		Net interest income		198,068			116,230			710,785			471,830
	Provision for loan losses			10,050			12,262			33,684			54,698
		Net interest income after provision for loan losses		188,018			103,968			677,101			417,132
Other income:
	Trust department income			10,255			5,662			34,770			23,143
	Service charges on deposits			19,084			14,247			74,399			57,737
	Credit card fees			12,414			11,167			50,542			43,569
	ATM and other service fees			5,659			3,432			19,155			14,792
	Bank owned life insurance income			4,037			3,067			16,926			12,140
	Investment services and insurance			3,530			2,147			12,777			8,990
	Investment securities gains/(losses), net			—			2,425			(2,803		)	3,786
	Loan sales and servicing income			3,577			7,946			23,069			27,031
	Other operating income			13,864			11,559			41,508			32,416
		Total other income		72,420			61,652			270,343			223,604
Other expenses:
	Salaries, wages, pension and employee benefits			93,621			61,560			354,016			245,192
	Net occupancy expense			14,066			7,114			49,510			31,754
	Equipment expense			13,177			7,398			41,875			29,243
	Stationery, supplies and postage			4,895			2,162			14,199			8,800
	Bankcard, loan processing and other costs			10,886			9,260			71,929			34,195
	Professional services			8,358			6,119			40,680			23,480
	Amortization of intangibles			2,692			444			8,392			1,866
	FDIC insurance expense			5,106			1,738			17,707			10,753
	Other operating expense			26,590			16,386			89,026			68,330
		Total other expenses		179,391			112,181			687,334			453,613
Income before income tax expense				81,047			53,439			260,110			187,123
Income tax expense				23,873			15,215			76,426			53,017
			Net income	$	57,174		$	38,224		$	183,684		$	134,106
Other comprehensive income, net of taxes
	Changes in unrealized securities' holding gains and (losses), net of taxes of $9.3 million, $5.3 million, $46.6 million and $2.2 million, respectively			$	(17,308	)	$	(6,718	)	$	(86,537	)	$	4,154
	Reclassification for realized securities' (gains) and losses, net of taxes of $-0- million, $1.0 million, $1.0 million and $1.0 million, respectively			—			(1,576		)	1,822			(2,461		)
	Pension and postretirement benefit costs, net of taxes of $18.3 million, $3.2 million, $18.3 million and $3.2 million, respectively			34,044			5,989			34,044			5,989
Total other comprehensive gain (loss), net of taxes				16,736			(2,305		)	(50,671		)	7,682
		Comprehensive income		$	73,910		$	35,919		$	133,013		$	141,788
Net income attributable to common shareholders				$	55,264		$	38,224		$	176,802		$	134,106
Net income used in diluted EPS calculation				$	55,264		$	38,224		$	176,802		$	134,106
Weighted average number of common shares outstanding - basic				165,054			109,652			149,607			109,518
Weighted average number of common shares outstanding - diluted				166,097			109,652			150,421			109,518
Basic earnings per common share				$	0.33		$	0.35		$	1.18		$	1.22
Diluted earnings per common share				$	0.33		$	0.35		$	1.18		$	1.22
Dividend per common share				$	0.16		$	0.16		$	0.64		$	0.64

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME---LINKED QUARTERS

	Quarterly Results
(Unaudited)	2013		2013			2013			2013			2012
(Dollars in thousands, except share data)	4th qtr		3rd qtr			2nd qtr			1st qtr			4th qtr
Loans and loans held for sale	$	176,559	$	182,107		$	178,535		$	98,672		$	101,086
Investment securities	36,021		35,390			35,236			23,284			24,280
Total interest income	212,580		217,497			213,771			121,956			125,366
Interest on deposits:
Interest-bearing	759		809			656			318			261
Savings and money market accounts	6,127		6,495			6,469			5,315			5,261
Certificates and other time deposits	2,500		1,712			3,374			2,063			2,287
Securities sold under agreements to repurchase	291		306			329			313			303
Wholesale borrowings	938		936			1,169			850			1,024
Long-term debt	3,897		3,899			3,743			1,748			—
Total interest expense	14,512		14,157			15,740			10,607			9,136
Net interest income	198,068		203,340			198,031			111,349			116,230
Provision for loan losses	10,050		6,379			7,309			9,946			12,262
Net interest income after provision for loan losses	188,018		196,961			190,722			101,403			103,968
Other income:
Trust department income	10,255		9,608			9,167			5,741			5,662
Service charges on deposits	19,084		22,146			20,582			12,585			14,247
Credit card fees	12,414		13,588			14,317			10,222			11,167
ATM and other service fees	5,659		5,216			4,945			3,335			3,432
Bank owned life insurance income	4,037		4,351			3,641			4,897			3,067
Investment services and insurance	3,530		3,403			3,429			2,415			2,147
Investment securities (losses)/gains, net	—		—			(2,794		)	(9		)	2,425
Loan sales and servicing income	3,577		3,644			7,985			7,863			7,946
Other operating income	13,864		9,134			8,167			10,343			11,559
Total other income	72,420		71,090			69,439			57,392			61,652
Other expenses:
Salaries, wages, pension and employee benefits	93,621		97,390			105,099			57,906			61,560
Net occupancy expense	14,066		13,816			13,346			8,282			7,114
Equipment expense	13,177		11,040			10,309			7,349			7,398
Stationery, supplies and postage	4,895		3,801			3,407			2,096			2,162
Bankcard, loan processing and other costs	10,886		40,786			12,417			7,840			9,260
Professional services	8,358		9,768			17,144			5,410			6,119
Amortization of intangibles	2,692		2,972			2,411			317			444
FDIC insurance expense	5,106		4,925			4,149			3,526			1,738
Other operating expense	26,590		26,880			21,358			14,199			16,386
Total other expenses	179,391		211,378			189,640			106,925			112,181
Income before income tax expense	81,047		56,673			70,521			51,870			53,439
Income tax expense	23,873		15,958			22,071			14,524			15,215
Net income	57,174		40,715			48,450			37,346			38,224
Total other comprehensive income (loss), net of taxes	16,736		(11,716		)	(47,777		)	(7,914		)	(2,305		)
Comprehensive income	$	73,910	$	28,999		$	673		$	29,432		$	35,919
Net income attributable to common shareholders	$	55,264	$	38,936		$	46,598		$	36,036		$	38,224
Net income used in diluted EPS calculation	$	55,264	$	38,936		$	46,598		$	36,036		$	38,224
Weighted-average number of common shares - basic	165,054		165,044			157,863			109,689			109,652
Weighted-average number of common shares - diluted	166,097		165,874			158,390			110,238			109,652
Basic earnings per common share	$	0.33	$	0.24		$	0.30		$	0.33		$	0.35
Diluted earnings per common share	$	0.33	$	0.23		$	0.29		$	0.33		$	0.35

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION (excluding acquired loans and covered assets) (a)


	(Unaudited)															(Audited)
(Dollars in thousands, except ratios)	Quarterly Periods															Annual Period
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
Allowance for Credit Losses	2013			2013			2013			2013			2012			2012
Allowance for originated loan losses, beginning of period	$	98,291		$	98,645		$	98,843		$	98,942		$	98,942		$	107,699
Provision for originated loan losses	1,552			2,523			3,151			5,808			7,116			33,976
Charge-offs	9,913			8,515			10,969			10,776			12,475			65,905
Recoveries	6,554			5,638			7,620			4,869			5,359			23,172
Net charge-offs	3,359			2,877			3,349			5,907			7,116			42,733
Allowance for originated loan losses, end of period	$	96,484		$	98,291		$	98,645		$	98,843		$	98,942		$	98,942
Reserve for unfunded lending commitments,
beginning of period	$	8,493		$	8,114		$	4,941		$	5,433		$	5,760		$	6,373
Provision for (relief of) credit losses	(586		)	379			3,173			(492		)	(327		)	(940		)
Reserve for unfunded lending commitments,
end of period	$	7,907		$	8,493		$	8,114		$	4,941		$	5,433		$	5,433
Allowance for Credit Losses	$	104,391		$	106,784		$	106,759		$	103,784		$	104,375		$	104,375
Ratios
Provision for loan losses to average loans	0.06		%	0.11		%	0.14		%	0.27		%	0.34		%	0.42		%
Net charge-offs to average loans	0.13		%	0.12		%	0.15		%	0.27		%	0.34		%	0.53		%
Allowance for loan losses to period-end loans	0.94		%	1.00		%	1.08		%	1.13		%	1.13		%	1.13		%
Allowance for credit losses to period-end loans	1.02		%	1.09		%	1.17		%	1.18		%	1.20		%	1.20		%
Allowance for loan losses to nonperforming loans	228.62		%	276.19		%	216.97		%	242.21		%	269.69		%	269.69		%
Allowance for credit losses to nonperforming loans	247.35		%	300.06		%	234.82		%	254.32		%	284.50		%	284.50		%
Asset Quality
Impaired originated loans:
Nonaccrual	$	25,674		$	19,140		$	28,935		$	23,843		$	21,766		$	21,766
Other nonperforming loans:
Nonaccrual	16,529			16,448			16,529			16,966			14,921			14,921
Total nonperforming loans	42,203			35,588			45,464			40,809			36,687			36,687
Other real estate ("ORE")	18,680			19,838			20,713			11,422			13,537			13,537
Total nonperforming assets ("NPAs")	$	60,883		$	55,426		$	66,177		$	52,231		$	50,224		$	50,224
NPAs to period-end loans + ORE	0.60		%	0.57		%	0.72		%	0.59		%	0.57		%	0.57		%
Accruing originated loans past due 90 days or more	$	11,176		$	12,452		$	11,760		$	12,393		$	9,417		$	9,417
(a) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and covered loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL

(Unaudited)
(Dollars in thousands)
	2013		2013		2013			2013			2012
QUARTERLY OTHER INCOME DETAIL	4th qtr		3rd qtr		2nd qtr			1st qtr			4th qtr
Trust department income	$	10,255	$	9,608	$	9,167		$	5,741		$	5,662
Service charges on deposits	19,084		22,146		20,582			12,585			14,247
Credit card fees	12,414		13,588		14,317			10,222			11,167
ATM and other service fees	5,659		5,216		4,945			3,335			3,432
Bank owned life insurance income	4,037		4,351		3,641			4,897			3,067
Investment services and insurance	3,530		3,403		3,429			2,415			2,147
Investment securities gains/(losses), net	—		—		(2,794		)	(9		)	2,425
Loan sales and servicing income	3,577		3,644		7,985			7,863			7,946
Other operating income	13,864		9,134		8,167			10,343			11,559
Total Other Income	$	72,420	$	71,090	$	69,439		$	57,392		$	61,652
	2013		2013		2013			2013			2012
QUARTERLY OTHER EXPENSES DETAIL	4th qtr		3rd qtr		2nd qtr			1st qtr			4th qtr
Salaries and wages	$	76,685	$	79,369	$	85,680		$	46,391		$	45,988
Pension and employee benefits	16,936		18,021		19,419			11,515			15,572
Net occupancy expense	14,066		13,816		13,346			8,282			7,114
Equipment expense	13,177		11,040		10,309			7,349			7,398
Taxes, other than income taxes	2,618		2,785		2,891			1,922			1,924
Stationery, supplies and postage	4,895		3,801		3,407			2,096			2,162
Bankcard, loan processing and other costs	10,886		40,786		12,417			7,840			9,260
Advertising	4,855		4,432		3,745			2,070			2,774
Professional services	8,358		9,768		17,144			5,410			6,119
Telephone	3,427		3,326		2,728			1,177			1,230
Amortization of intangibles	2,692		2,972		2,411			317			444
FDIC insurance expense	5,106		4,925		4,149			3,526			1,738
Other operating expense	15,690		16,337		11,994			9,030			10,458
Total Other Expenses	$	179,391	$	211,378	$	189,640		$	106,925		$	112,181

FirstMerit Corporation Reports Fourth Quarter 2013 EPS Results



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

(Unaudited)	Quarters Ended						Year Ended
(Dollars in thousands)	December 31,						December 31,
	2013			2012			2013			2012
Allowance for originated loan losses - beginning of period	$	98,291		$	98,942		$	98,942		$	107,699
Loans charged off:
Commercial	993			5,081			7,637			28,648
Mortgage	718			533			1,903			3,964
Installment	4,895			3,588			16,683			18,029
Home equity	1,201			1,141			5,036			7,249
Credit cards	1,312			1,553			5,541			6,171
Leases	—			144			1,237			144
Overdrafts	794			435			2,136			1,700
Total	9,913			12,475			40,173			65,905
Recoveries:
Commercial	2,281			1,317			9,012			5,626
Mortgage	97			44			230			235
Installment	2,649			2,581			10,459			11,635
Home equity	955			725			2,492			2,819
Credit cards	421			555			1,841			2,138
Manufactured housing	11			9			60			59
Leases	—			—			100			38
Overdrafts	140			128			487			622
Total	6,554			5,359			24,681			23,172
Net charge-offs	3,359			7,116			15,492			42,733
Provision for originated loan losses	1,552			7,116			13,034			33,976
Allowance for originated loan losses-end of period	$	96,484		$	98,942		$	96,484		$	98,942

Average originated loans	$	9,988,587		$	8,444,208		$	9,252,555		$	8,089,317
Ratio to average originated loans:
(Annualized) originated net charge-offs	0.13		%	0.34		%	0.17		%	0.53		%
Provision for originated loan losses	0.06		%	0.34		%	0.14		%	0.42		%
Originated Loans, period-end	$	10,213,387		$	8,731,659		$	10,213,387		$	8,731,659

Allowance for credit losses:	$	104,391		$	104,375		$	104,391		$	104,375
To (annualized) net charge-offs	7.83			3.69			6.74			2.44
Allowance for originated loan losses:
To period-end originated loans	0.94		%	1.13		%	0.94		%	1.13		%
To (annualized) net originated charge-offs	7.24			3.50			6.23			2.32

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

FIRSTMERIT CORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 28, 2014

Attached files