AKRON, Ohio, Jan. 27 /PRNewswire-FirstCall/ -- FirstMerit Corporation
(Nasdaq: FMER) today announced fourth quarter 2008 net income of $29.1
million, or $0.36 per diluted share. This compares with $29.8 million, or
$0.37 per diluted share, for the third quarter 2008 and $31.5 million, or
$0.39 per diluted share, for the fourth quarter 2007. For the full year 2008,
the Company reported net income of $119.5 million, or $1.48 per diluted share,
compared with $123.0 million, or $1.53 per diluted share in 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070920/CLTU138LOGO )
Returns on average common equity ("ROE") and average assets ("ROA") for
the fourth quarter 2008 were 12.47% and 1.08%, respectively, compared with
12.73% and 1.12%, respectively, for the third quarter 2008 and 13.87% and
1.21% for the fourth quarter 2007.
"The fourth quarter and full year 2008 financial results reflect the
measured steps we have taken to profitably grow our franchise and maintain the
strengths of our balance sheet and integrity of our risk management
processes," said Paul G. Greig, Chairman and Chief Executive Officer of
FirstMerit Corporation. "FirstMerit employees are incented to pursue organic
growth opportunities and develop business relationships aligned with our
highest standards of credit quality. We have also managed our business to
ensure our future growth is supported with ample liquidity and capital levels
in the face of uncertain challenges in today's economy."
Mr. Greig said, "Our bankers took advantage of growth opportunities in
2008 stemming from severe market disruption in Northeast Ohio and generated
robust commercial loan growth. The 11.3% increase in average commercial loans
at the end of the fourth quarter of 2008 compared with the prior year quarter
was matched with 9.2% growth in our average core deposits for the same time
period, highlighting our ability to execute on the super community banking
model and to develop deep and profitable banking relationships with new and
existing customers."
Average loans during the fourth quarter of 2008 increased $83.9 million,
or 1.15%, compared with the third quarter of 2008 and increased $414.7
million, or 5.97%, compared with the fourth quarter of 2007. Increases in the
respective periods were due to average commercial loan growth of $104.2
million, or 2.50%, and $433.9 million, or 11.30%.
Average deposits were $7.7 billion during the fourth quarter of 2008, up
$346.2 million, or 4.73%, compared with the third quarter of 2008, and an
increase of $332.7 million, or 4.53%, compared with the fourth quarter of
2007. For the fourth quarter 2008, average core deposits (which are defined
as checking accounts, savings accounts and money market savings products)
increased $202.6 million, or 4.41%, compared with the third quarter 2008 and
$403.0 million, or 9.16%, compared with the fourth quarter 2007. Core
deposits represented 62.57% of total average deposits, compared with 62.76%
for the third quarter 2008 and 59.92% for the fourth quarter 2007. The
increase in both periods reflects success stemming from strategic retail and
business marketing campaigns for core deposits within the Company's regional
banking areas.
The Company's investment portfolio yield increased in the fourth quarter
of 2008, to 5.01%, compared with 4.97% in the third quarter of 2008, and
increased from 4.99% in the fourth quarter of 2007. The increased investment
portfolio yields contributed to net interest margin expansion in both periods.
Net interest margin was 3.82% for the fourth quarter of 2008 compared with
3.78% for the third quarter of 2008 and 3.66% for the fourth quarter of 2007.
Lower funding costs supported margin expansion over both periods.
Net interest income on a fully tax-equivalent ("FTE") basis was $94.9
million in the fourth quarter 2008 compared with $92.7 million in the third
quarter of 2008 and $87.6 million in the fourth quarter of 2007. The
increases in FTE net interest income compared with those two periods resulted
from expansion in the net interest margin due to decreased liability costs.
Noninterest income net of securities transactions for the fourth quarter
of 2008 was $51.2 million, an increase of $4.2 million, or 8.95%, from the
third quarter of 2008 and an increase of $2.4 million, or 4.85%, from the
fourth quarter of 2007. In the fourth quarter of 2008 the Company recorded
$5.8 million of other income from the sale of Class B Visa Inc. stock.
Noninterest income, net of securities gains, as a percentage of net revenue
for the fourth quarter of 2008 was 35.07% compared with 33.67% for third
quarter of 2008 and 35.80% for the fourth quarter of 2007. 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 of 2008 was $88.2 million, an
increase of $7.6 million, or 9.47%, from the third quarter of 2008 and an
increase of $4.9 million, or 5.94%, from the fourth quarter of 2007. In the
fourth quarter of 2008 the Company recorded $4.0 million of other expense
related to an accrual for litigation, $0.4 million in severance cost from a
reduction in force during the quarter and $1.1 million related to foreclosed
property. For 2008, operating expenses increased $0.4 million, or 0.12%,
compared with 2007, reflecting the success of the Company's strategy to fully
rationalize costs throughout the organization. For the fourth quarter of
2008, the efficiency ratio was 60.34%, compared with 57.64% for the third
quarter of 2008 and 60.85% for the fourth quarter of 2007.
Net charge-offs totaled $15.2 million, or 0.82% of average loans, in the
fourth quarter of 2008 compared with $11.8 million, or 0.64% of average loans,
in the third quarter 2008 and $8.9 million, or 0.51% of average loans, in the
fourth quarter of 2007.
Nonperforming assets totaled $57.5 million at December 31, 2008, an
increase of $14.0 million, or 32.27%, compared with September 30, 2008.
Nonperforming assets at December 31, 2008 represented 0.77% of period-end
loans plus other real estate compared with 0.59% at September 30, 2008.
The allowance for loan losses totaled $103.8 million at December 31, 2008,
an increase of $1.8 million from September 30, 2008. At December 31, 2008,
the allowance for loan losses was 1.40% of period-end loans compared with
1.38% at September 30, 2008. The allowance for credit losses is the sum of
the allowance for loan losses and the reserve for unfunded lending
commitments. For comparative purposes the allowance for credit losses was
1.49% at December 31, 2008 compared with 1.47% at September 30, 2008. The
allowance for credit losses to nonperforming loans was 211.38% at December 31,
2008, compared with 281.28% at September 30, 2008.
FirstMerit's total assets at December 31, 2008 were $11.1 billion, an
increase of $415.2 million, or 3.89%, compared with September 30, 2008 and an
increase of $699.4 million, or 6.72%, compared with December 31, 2007.
Investment securities increased $322.6 million, or 13.17%, and commercial
loans increased $79.7 million, or 1.86%, compared with September 30, 2008.
Commercial loans increased $446.3 million, or 11.42%, compared with December
31, 2007, contributing to the majority of asset growth over the prior year
period.
Total deposits were $7.6 billion at December 31, 2008, an increase of
$167.1 million, or 2.25%, from September 30, 2008 and an increase of $265.9
million, or 3.63%, from December 31, 2007. Core deposits totaled $4.8 billion
at December 31, 2008, an increase of $225.6 million, or 4.91%, from September
30, 2008 and an increase of $310.9 million, or 6.90%, from December 31, 2007.
Shareholders' equity was $937.8 million at December 31, 2008, compared
with $926.1 million at September 30, 2008, and $917.0 million at December 31,
2007. The Company maintained a strong capital position as tangible common
equity to assets was 7.27% at December 31, 2008, compared with 7.45% at
September 30, 2008 and 7.56% at December 31, 2007. The common dividend per
share paid in the fourth quarter 2008 was $0.29.
On January 9, 2009, FirstMerit completed the sale to the United States
Department of the Treasury (the "Treasury") of $125.0 million of newly issued
FirstMerit non-voting preferred shares as part of the Treasury's Troubled
Assets Relief Program Capital Purchase Program ("CPP"). All of the proceeds
from this sale of the Series A Preferred Shares and the Warrant by FirstMerit
to the Treasury will qualify as Tier I capital for regulatory purposes. The
additional capital would have increased its Tier 1 capital ratio to 11.49% at
December 31, 2008, and increased its total capital ratio to 13.09% at December
31, 2008.
Fourth quarter 2008 Conference Call
FirstMerit will host an earnings conference call today at 2:00 p.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: 79853842. A
replay of the conference call will be available at approximately 5:00 p.m.
(Eastern Time), on January 27, 2009 through February 4, 2009, by dialing (800)
642-1687, and entering the PIN: 79853842.
About FirstMerit
FirstMerit Corporation is a diversified financial services company
headquartered in Akron, Ohio, with assets of $11.1 billion as of December 31,
2008 and 160 banking offices and 182 ATMs in 25 Ohio and Western Pennsylvania
counties. FirstMerit provides a complete range of banking and other financial
services to consumers and businesses through its core operations. Principal
wholly-owned subsidiaries include: FirstMerit Bank, N.A., FirstMerit Mortgage
Corporation, FirstMerit Title Agency, Ltd., and FirstMerit Community
Development Corporation.
Forward-Looking Statement: This release contains forward-looking
statements relating to present or future trends or factors affecting the
banking industry, and specifically the financial condition and results of
operations, including without limitation, statements relating to the earnings
outlook of the Company, as well as its operations, markets and products.
Actual results could differ materially from those indicated. Among the
important factors that could cause results to differ materially are interest
rate changes, continued softening in the economy, which could materially
impact credit quality trends and the ability to generate loans, changes in the
mix of the Company's business, competitive pressures, changes in accounting,
tax or regulatory practices or requirements and those risk factors detailed in
the Company's periodic reports and registration statements filed with the
Securities and Exchange Commission. The Company undertakes no obligation to
release revisions to these forward-looking statements or reflect events or
circumstances after the date of this release.
FirstMerit Corporation
Analysts: Thomas O'Malley/Investor Relations Officer
Phone: 330.384.7109
Media Contact: Robert Townsend/Media Relations Officer
Phone: 330.384.7075
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited) Quarters
(Dollars in thousands)
2008 2008 2008
EARNINGS 4th Qtr 3rd Qtr 2nd Qtr
Net interest income FTE (a) $94,855 $92,659 $88,956
Provision for loan losses 16,986 15,531 14,565
Other income 52,795 47,029 48,758
Other expenses 88,240 80,609 80,550
FTE adjustment (a) 1,617 1,538 1,425
Net income 29,136 29,753 29,153
Diluted EPS 0.36 0.37 0.36
PERFORMANCE RATIOS
Return on average assets (ROA) 1.08% 1.12% 1.11%
Return on average common equity (ROE) 12.47% 12.73% 12.31%
Net interest margin FTE (a) 3.82% 3.78% 3.69%
Efficiency ratio 60.34% 57.64% 58.38%
Number of full-time equivalent employees 2,575 2,614 2,679
MARKET DATA
Book value/common share $11.58 $11.44 $11.43
Period-end common share mkt value 20.59 21.00 16.31
Market as a % of book 178% 184% 143%
Cash dividends/common share $0.29 $0.29 $0.29
Common stock dividend payout ratio 80.56% 78.38% 80.56%
Average basic common shares 80,972 80,869 80,855
Average diluted common shares 80,981 80,896 80,898
Period end common shares 80,960 80,974 80,846
Common shares repurchased 61,329 42,429 34,380
Common stock market capitalization $1,666,966 $1,700,454 $1,318,598
ASSET QUALITY
Gross charge-offs $17,932 $14,957 $14,830
Net charge-offs 15,236 11,763 10,737
Allowance for loan losses 103,757 102,007 98,239
Reserve for unfunded
lending commitments 6,588 6,493 7,310
Nonperforming assets (NPAs) 57,526 43,491 41,639
Net charge-offs/average loans ratio 0.82% 0.64% 0.60%
Allowance for loan losses/
period-end loans 1.40% 1.38% 1.36%
Allowance for credit losses/
period-end loans 1.49% 1.47% 1.46%
NPAs/loans and other real estate 0.77% 0.59% 0.57%
Allowance for loan losses/
nonperforming loans 198.76% 264.45% 268.52%
Allowance for credit losses/
nonperforming loans 211.38% 281.28% 288.50%
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 7.27% 7.45% 7.52%
Average equity to assets 8.66% 8.79% 9.06%
Average equity to loans 12.62% 12.76% 13.34%
Average loans to deposits 96.01% 99.40% 97.29%
AVERAGE BALANCES
Assets $10,731,029 $10,569,496 $10,520,469
Deposits 7,672,560 7,326,364 7,339,506
Loans 7,366,246 7,282,333 7,140,627
Earning assets 9,876,488 9,755,812 9,704,252
Shareholders' equity 929,788 929,495 952,769
ENDING BALANCES
Assets $11,100,026 $10,684,845 $10,564,752
Deposits 7,597,679 7,430,556 7,277,184
Loans 7,425,613 7,381,592 7,240,882
Goodwill 139,245 139,245 139,245
Intangible assets 1,403 1,490 1,577
Earning assets 10,209,602 9,840,951 9,724,859
Total shareholders' equity 937,843 926,078 924,429
2008 2007
EARNINGS 1st Qtr 4th Qtr
Net interest income FTE (a) $85,695 $87,647
Provision for loan losses 11,521 9,334
Other income 52,854 49,993
Other expenses 81,234 83,295
FTE adjustment (a) 1,396 1,486
Net income 31,443 31,459
Diluted EPS 0.39 0.39
PERFORMANCE RATIOS
Return on average assets (ROA) 1.22% 1.21%
Return on average common equity (ROE) 13.56% 13.87%
Net interest margin FTE (a) 3.60% 3.66%
Efficiency ratio 58.69% 60.85%
Number of full-time equivalent employees 2,676 2,688
MARKET DATA
Book value/common share $11.59 $11.39
Period-end common share mkt value 20.66 20.01
Market as a % of book 178% 176%
Cash dividends/common share $0.29 $0.29
Common stock dividend payout ratio 74.36% 74.36%
Average basic common shares 80,655 80,477
Average diluted common shares 80,722 80,595
Period end common shares 80,879 80,482
Common shares repurchased 5,426 6,066
Common stock market capitalization $1,670,960 $1,610,445
ASSET QUALITY
Gross charge-offs $14,669 $11,768
Net charge-offs 11,315 8,940
Allowance for loan losses 94,411 94,205
Reserve for unfunded lending commitments 7,903 7,394
Nonperforming assets (NPAs) 35,301 37,262
Net charge-offs/average loans ratio 0.65% 0.51%
Allowance for loan losses/period-end loans 1.33% 1.35%
Allowance for credit losses/period-end loans 1.45% 1.45%
NPAs/loans and other real estate 0.50% 0.53%
Allowance for loan losses/nonperforming loans 318.89% 299.70%
Allowance for credit losses/nonperforming loans 345.59% 323.22%
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 7.68% 7.56%
Average equity to assets 8.98% 8.72%
Average equity to loans 13.27% 12.94%
Average loans to deposits 95.82% 94.71%
AVERAGE BALANCES
Assets $10,388,359 $10,313,707
Deposits 7,330,097 7,339,827
Loans 7,023,928 6,951,544
Earning assets 9,581,121 9,493,271
Shareholders' equity 932,405 899,624
ENDING BALANCES
Assets $10,516,828 $10,400,666
Deposits 7,422,678 7,331,739
Loans 7,072,797 7,001,886
Goodwill 139,245 139,245
Intangible assets 1,754 1,977
Earning assets 9,688,270 9,509,680
Total shareholders' equity 937,439 916,977
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.
CONSOLIDATED BALANCE SHEETS
FIRSTMERIT CORPORATION AND SUBSIDIARIES
December 31,
ASSETS 2008 2007
(In thousands)
Cash and due from banks $178,406 $207,335
Investment securities (at market
value) and federal funds sold 2,772,848 2,460,453
Loans held for sale 11,141 47,341
Loans:
Commercial loans 4,352,730 3,906,448
Mortgage loans 547,125 577,219
Installment loans 1,574,587 1,598,832
Home equity loans 733,832 691,922
Credit card loans 149,745 153,732
Leases 67,594 73,733
Total loans 7,425,613 7,001,886
Allowance for loan losses (103,757) (94,205)
Net loans 7,321,856 6,907,681
Premises and equipment, net 133,184 130,469
Goodwill 139,245 139,245
Other intangible assets 1,403 1,977
Accrued interest receivable and
other assets 541,943 506,165
Total assets $11,100,026 $10,400,666
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-non-interest bearing $1,637,534 $1,482,480
Demand-interest bearing 666,615 727,966
Savings and money market accounts 2,512,331 2,295,147
Certificates and other time deposits 2,781,199 2,826,146
Total deposits 7,597,679 7,331,739
Securities sold under agreements to
repurchase 921,390 1,256,080
Wholesale borrowings 1,344,195 705,121
Accrued taxes, expenses, and other
liabilities 298,919 190,749
Total liabilities 10,162,183 9,483,689
Commitments and contingencies
Shareholders' equity:
Preferred stock, without par value:
authorized and unissued
7,000,000 shares --- ---
Preferred stock, Series A,
without par value:
designated 800,000 shares; none
outstanding --- ---
Convertible preferred stock,
Series B, without par value:
designated 220,000 shares; none
outstanding --- ---
Common stock, without par value:
authorized 300,000,000 shares;
issued 92,026,350 at December 31,
2008 and 2007 127,937 127,937
Capital surplus 94,802 100,028
Accumulated other comprehensive loss (54,080) (43,085)
Retained earnings 1,053,435 1,027,775
Treasury stock, at cost, 11,066,108
and 11,543,882 shares, at December
31, 2008 and 2007, respectively (284,251) (295,678)
Total shareholders' equity 937,843 916,977
Total liabilities and shareholders'
equity $11,100,026 $10,400,666
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Quarterly Periods
(Unaudited)
(Dollars in thousands) December 31, September 30, June 30,
2008 2008 2008
ASSETS
Cash and due from banks $192,804 $171,370 $173,044
Investment securities/fed
funds sold 2,501,346 2,461,431 2,515,546
Loans held for sale 8,896 12,048 48,079
Loans:
Commercial loans 4,273,123 4,168,951 4,069,305
Mortgage loans 555,713 569,293 577,178
Installment loans 1,596,053 1,617,265 1,584,825
Home equity loans 722,466 709,365 692,567
Credit card loans 150,133 147,924 147,242
Leases 68,758 69,535 69,510
Total loans 7,366,246 7,282,333 7,140,627
Less allowance for loan losses 100,898 98,091 94,002
Net loans 7,265,348 7,184,242 7,046,625
Total earning assets 9,876,488 9,755,812 9,704,252
Premises and equipment, net 130,511 127,267 126,488
Accrued interest receivable and
other assets 632,124 613,138 610,687
TOTAL ASSETS $10,731,029 $10,569,496 $10,520,469
LIABILITIES
Deposits:
Demand-non-interest bearing $1,607,901 $1,545,427 $1,518,841
Demand-interest bearing 658,208 678,803 709,922
Savings and money market accounts 2,534,702 2,373,995 2,366,296
Certificates and other time
deposits 2,871,749 2,728,139 2,744,447
Total deposits 7,672,560 7,326,364 7,339,506
Securities sold under agreements to
repurchase 1,168,438 1,504,011 1,312,436
Wholesale borrowings 766,358 634,226 711,132
Total funds 9,607,356 9,464,601 9,363,074
Accrued taxes, expenses and other
liabilities 193,885 175,400 204,626
Total liabilities 9,801,241 9,640,001 9,567,700
SHAREHOLDERS' EQUITY
Preferred stock - - -
Common stock 127,937 127,937 127,937
Capital surplus 93,761 93,381 92,313
Accumulated other comprehensive
(loss) income (62,018) (54,000) (40,757)
Retained earnings 1,053,992 1,048,452 1,059,840
Treasury stock (283,884) (286,275) (286,564)
Total shareholders' equity 929,788 929,495 952,769
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $10,731,029 $10,569,496 $10,520,469
March 31, December 31,
2008 2007
ASSETS
Cash and due from banks $171,028 $175,164
Investment securities/fed funds sold 2,508,125 2,494,975
Loans held for sale 49,068 46,752
Loans:
Commercial loans 3,941,573 3,839,242
Mortgage loans 584,000 581,370
Installment loans 1,587,267 1,615,035
Home equity loans 686,603 696,259
Credit card loans 150,575 149,466
Leases 73,910 70,172
Total loans 7,023,928 6,951,544
Less allowance for loan losses 93,804 92,667
Net loans 6,930,124 6,858,877
Total earning assets 9,581,121 9,493,271
Premises and equipment, net 128,185 132,129
Accrued interest receivable and
other assets 601,829 605,810
TOTAL ASSETS $10,388,359 $10,313,707
LIABILITIES
Deposits:
Demand-non-interest bearing $1,446,889 $1,435,358
Demand-interest bearing 702,115 699,675
Savings and money market accounts 2,318,899 2,262,818
Certificates and other time deposits 2,862,194 2,941,976
Total deposits 7,330,097 7,339,827
Securities sold under agreements to
repurchase 1,310,364 1,517,241
Wholesale borrowings 618,572 369,685
Total funds 9,259,033 9,226,753
Accrued taxes, expenses and other
liabilities 196,921 187,330
Total liabilities 9,455,954 9,414,083
SHAREHOLDERS' EQUITY
Preferred stock - -
Common stock 127,937 127,937
Capital surplus 96,048 99,749
Accumulated other comprehensive
(loss) income (32,170) (60,430)
Retained earnings 1,032,036 1,028,170
Treasury stock (291,446) (295,802)
Total shareholders' equity 932,405 899,624
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $10,388,359 $10,313,707
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND SUBSIDIARIES Three months ended
(Dollars in thousands) December 31, 2008
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $192,804
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,971,257 23,984 4.84%
Obligations of states and political
subdivisions (tax exempt) 316,220 4,804 6.04%
Other securities and federal funds
sold 213,869 2,720 5.06%
Total investment securities and
federal funds sold 2,501,346 31,508 5.01%
Loans held for sale 8,896 100 4.47%
Loans 7,366,246 105,390 5.69%
Total earning assets 9,876,488 136,998 5.52%
Allowance for loan losses (100,898)
Other assets 762,635
Total assets $10,731,029
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,607,901 -- --
Demand - interest bearing 658,208 370 0.22%
Savings and money market accounts 2,534,702 6,764 1.06%
Certificates and other time deposits 2,871,749 23,816 3.30%
Total deposits 7,672,560 30,950 1.60%
Securities sold under agreements to
repurchase 1,168,438 3,752 1.28%
Wholesale borrowings 766,358 7,441 3.86%
Total interest bearing liabilities 7,999,455 42,143 2.10%
Other liabilities 193,885
Shareholders' equity 929,788
Total liabilities and
shareholders' equity $10,731,029
Net yield on earning assets $9,876,488 94,855 3.82%
Interest rate spread 3.42%
Year ended
December 31, 2007
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $178,164
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,955,049 85,544 4.38%
Obligations of states and political
subdivisions (tax exempt) 255,461 15,595 6.10%
Other securities and federal funds
sold 244,749 17,127 7.00%
Total investment securities and
federal funds sold 2,455,259 118,266 4.82%
Loans held for sale 56,036 3,050 5.44%
Loans 6,971,464 521,172 7.48%
Total earning assets 9,482,759 642,488 6.78%
Allowance for loan losses (92,662)
Other assets 750,527
Total assets $10,318,788
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,408,726 -- --
Demand - interest bearing 733,410 6,824 0.93%
Savings and money market accounts 2,266,070 54,166 2.39%
Certificates and other time deposits 3,045,715 146,559 4.81%
Total deposits 7,453,921 207,549 2.78%
Securities sold under agreements to
repurchase 1,471,785 71,298 4.84%
Wholesale borrowings 326,460 20,601 6.31%
Total interest bearing liabilities 7,843,440 299,448 3.82%
Other liabilities 191,096
Shareholders' equity 875,526
Total liabilities and
shareholders' equity $10,318,788
Net yield on earning assets $9,482,759 343,040 3.62%
Interest rate spread 2.96%
Three months ended
December 31, 2007
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $175,164
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,977,627 22,949 4.60%
Obligations of states and political
subdivisions (tax exempt) 276,989 4,249 6.09%
Other securities and federal funds
sold 240,359 4,154 6.86%
Total investment securities and
federal funds sold 2,494,975 31,352 4.99%
Loans held for sale 46,752 760 6.45%
Loans 6,951,544 127,343 7.27%
Total earning assets 9,493,271 159,455 6.66%
Allowance for loan losses (92,667)
Other assets 737,939
Total assets $10,313,707
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,435,358 -- --
Demand - interest bearing 699,675 1,352 0.77%
Savings and money market accounts 2,262,818 12,667 2.22%
Certificates and other time deposits 2,941,976 35,290 4.76%
Total deposits 7,339,827 49,309 2.67%
Securities sold under agreements to
repurchase 1,517,241 16,994 4.44%
Wholesale borrowings 369,685 5,505 5.91%
Total interest bearing liabilities 7,791,395 71,808 3.66%
Other liabilities 187,330
Shareholders' equity 899,624
Total liabilities and
shareholders' equity $10,313,707
Net yield on earning assets $9,493,271 87,647 3.66%
Interest rate spread 3.00%
Note: Interest income on tax-exempt securities and loans has been
adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
FIRSTMERIT CORPORATION AND SUBSIDIARIES Twelve months ended
(Dollars in thousands) December 31, 2008
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks $177,089
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,985,026 94,260 4.75%
Obligations of states and political
subdivisions (tax exempt) 294,724 17,910 6.08%
Other securities and federal funds
sold 216,794 11,326 5.22%
Total investment securities and
federal funds sold 2,496,544 123,496 4.95%
Loans held for sale 29,419 1,602 5.45%
Loans 7,203,946 434,704 6.03%
Total earning assets 9,729,909 559,802 5.75%
Allowance for loan losses (96,714)
Other assets 739,158
Total assets $10,549,442
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,530,021 -- --
Demand - interest bearing 687,160 2,514 0.37%
Savings and money market accounts 2,398,778 29,839 1.24%
Certificates and other time deposits 2,801,623 105,853 3.78%
Total deposits 7,417,582 138,206 1.86%
Securities sold under agreements to
repurchase 1,343,441 31,857 2.37%
Wholesale borrowings 663,109 27,574 4.16%
Total interest bearing liabilities 7,894,111 197,637 2.50%
Other liabilities 189,222
Shareholders' equity 936,088
Total liabilities and
shareholders' equity $10,549,442
Net yield on earning assets $9,729,909 362,165 3.72%
Interest rate spread 3.25%
Twelve months ended
December 31, 2007
Average Average
Balance Interest Rate
ASSETS
Cash and due from banks 178,164
Investment securities and federal
funds sold:
U.S. Treasury securities and U.S.
Government agency obligations
(taxable) 1,955,049 85,544 4.38%
Obligations of states and political
subdivisions (tax exempt) 255,461 15,595 6.10%
Other securities and federal funds
sold 244,749 17,127 7.00%
Total investment securities and
federal funds sold 2,455,259 118,266 4.82%
Loans held for sale 56,036 3,050 5.44%
Loans 6,971,464 521,172 7.48%
Total earning assets 9,482,759 642,488 6.78%
Allowance for loan losses (92,662)
Other assets 750,527
Total assets 10,318,788
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing 1,408,726 -- --
Demand - interest bearing 733,410 6,824 0.93%
Savings and money market accounts 2,266,070 54,166 2.39%
Certificates and other time deposits 3,045,715 146,559 4.81%
Total deposits 7,453,921 207,549 2.78%
Securities sold under agreements to
repurchase 1,471,785 71,298 4.84%
Wholesale borrowings 326,460 20,601 6.31%
Total interest bearing liabilities 7,843,440 299,448 3.82%
Other liabilities 191,096
Shareholders' equity 875,526
Total liabilities and
shareholders' equity 10,318,788
Net yield on earning assets 9,482,759 343,040 3.62%
Interest rate spread 2.96%
Note: Interest income on tax-exempt securities and loans has been
adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) Quarters ended Twelve months ended
(In thousands except per
share data) December 31, December 31,
2008 2007 2008 2007
Interest income:
Interest and fees on loans,
including held for sale $105,463 $128,078 $436,194 $524,103
Interest and dividends on
investment securities and
federal funds sold 29,918 29,891 117,632 112,891
Total interest income 135,381 157,969 553,826 636,994
Interest expense:
Interest on deposits:
Demand-interest bearing 370 1,352 2,514 6,824
Savings and money market
accounts 6,764 12,667 29,839 54,166
Certificates and other time
deposits 23,816 35,290 105,853 146,559
Interest on securities sold
under agreements to
repurchase 3,752 16,994 31,857 71,298
Interest on wholesale
borrowings 7,441 5,505 27,574 20,601
Total interest expense 42,143 71,808 197,637 299,448
Net interest income 93,238 86,161 356,189 337,546
Provision for loan losses 16,986 9,334 58,603 30,835
Net interest income after
provision for loan losses 76,252 76,827 297,586 306,711
Other income:
Trust department income 5,291 5,896 22,127 23,245
Service charges on deposits 15,450 17,067 62,862 67,374
Credit card fees 11,667 12,012 47,054 46,502
ATM and other service fees 2,613 3,055 10,894 12,621
Bank owned life insurance
income 2,451 3,283 12,008 13,476
Investment services and
insurance 1,949 3,121 10,503 11,241
Investment securities gains,
net 1,555 1,122 2,126 1,123
Loan sales and servicing
income 2,294 1,551 6,940 10,311
Gain on Visa Inc. 5,768 - 13,666 -
Other operating income 3,757 2,886 13,256 11,030
Total other income 52,795 49,993 201,436 196,923
Other expenses:
Salaries, wages, pension and
employee benefits 46,991 43,087 179,463 170,457
Net occupancy expense 5,950 6,284 24,649 25,679
Equipment expense 6,139 6,239 24,137 25,401
Stationery, supplies and
postage 2,458 2,388 9,372 9,436
Bankcard, loan processing and
other costs 7,359 7,482 29,456 29,781
Professional services 3,261 3,588 11,695 15,865
Amortization of intangibles 87 222 573 889
Other operating expense 15,995 14,005 51,288 52,718
Total other expenses 88,240 83,295 330,633 330,226
Income before federal
income tax expense 40,807 43,525 168,389 173,408
Federal income tax expense 11,671 12,066 48,904 50,381
Net income $29,136 $31,459 $119,485 $123,027
Other comprehensive income, net
of taxes
Unrealized securities'
holding gain, net of taxes $30,296 $11,271 $10,808 $22,716
Unrealized hedging gain
(loss), net of taxes 209 (340) 1,342 (1,249)
Minimum pension liability
adjustment, net of taxes (24,384) 13,065 (21,763) 15,686
Less: reclassification
adjustment for securities'
gain realized in net
income, net of taxes 1,011 729 1,382 730
Total other comprehensive
income (loss), net of taxes 5,110 23,267 (10,995) 36,423
Comprehensive income $34,246 $54,726 $108,490 $159,450
Net income applicable to
common shares $29,136 $31,459 $119,485 $123,027
Net income used in diluted EPS
calculation $29,136 $31,463 $119,490 $123,043
Weighted average number of
common shares outstanding -
basic 80,972 80,477 80,839 80,372
Weighted average number of
common shares outstanding -
diluted 80,981 80,595 80,876 80,510
Basic earnings per share $0.36 $0.39 $1.48 $1.53
Diluted earnings per share $0.36 $0.39 $1.48 $1.53
Dividend per share $0.29 $0.29 $1.16 $1.16
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME---LINKED
QUARTERS
(Unaudited) Quarterly Results
(Dollars in thousands, 2008 2008 2008 2008 2007
except share data) 4th Q 3rd Q 2nd Q 1st Q 4th Q
Interest and fees on
loans, including held
for sale $105,463 $107,927 $106,516 $116,288 $128,078
Interest and dividends
- securities and
federal funds sold 29,918 29,223 29,255 29,236 29,891
Total interest
income 135,381 137,150 135,771 145,524 157,969
Interest on deposits:
Demand-interest
bearing 370 589 591 964 1,352
Savings and money
market accounts 6,764 6,932 6,500 9,643 12,667
Certificates and
other time deposits 23,816 23,463 26,587 31,987 35,290
Securities sold
under agreements
to repurchase 3,752 8,244 8,319 11,542 16,994
Wholesale borrowings 7,441 6,801 6,243 7,089 5,505
Total interest
expense 42,143 46,029 48,240 61,225 71,808
Net interest income 93,238 91,121 87,531 84,299 86,161
Provision for loan
losses 16,986 15,531 14,565 11,521 9,334
Net interest income
after provision
for loan losses 76,252 75,590 72,966 72,778 76,827
Other income:
Trust department
income 5,291 5,562 5,824 5,450 5,896
Service charges on
deposits 15,450 16,648 16,028 14,736 17,067
Credit card fees 11,667 12,084 12,146 11,157 12,012
ATM and other service
fees 2,613 2,717 2,770 2,794 3,055
Bank owned life
insurance income 2,451 3,139 3,217 3,201 3,283
Investment services
and insurance 1,949 2,899 2,790 2,865 3,121
Investment securities
gains (losses), net 1,555 - 47 524 1,122
Loan sales and
servicing income 2,294 1,370 1,885 1,391 1,551
Gain on Visa Inc. 5,768 - - 7,898 -
Other operating income 3,757 2,610 4,051 2,838 2,886
Total other income 52,795 47,029 48,758 52,854 49,993
Other expenses:
Salaries, wages,
pension and employee
benefits 46,991 45,043 44,364 43,065 43,087
Net occupancy expense 5,950 5,741 6,204 6,754 6,284
Equipment expense 6,139 5,962 5,842 6,194 6,239
Stationery, supplies
and postage 2,458 2,347 2,242 2,325 2,388
Bankcard, loan
processing and other
costs 7,359 7,497 7,356 7,244 7,482
Professional services 3,261 3,966 2,581 1,887 3,588
Amortization of
intangibles 87 86 177 223 222
Other operating
expense 15,995 9,967 11,784 13,542 14,005
Total other
expenses 88,240 80,609 80,550 81,234 83,295
Income before income tax
expense 40,807 42,010 41,174 44,398 43,525
Federal income taxes 11,671 12,257 12,021 12,955 12,066
Net income $29,136 $29,753 $29,153 $31,443 $31,459
Other comprehensive
income (loss), net of
taxes 5,110 (7,756) (19,858) 11,509 23,267
Comprehensive income $34,246 $21,997 $9,295 $42,952 $54,726
Net income applicable to
common shares $29,136 $29,753 $29,153 $31,443 $31,459
Adjusted net income used
in diluted EPS
calculation $29,136 $29,753 $29,154 $31,447 $31,463
Weighted-average common
shares - basic 80,972 80,869 80,855 80,655 80,477
Weighted-average common
shares - diluted 80,981 80,896 80,898 80,722 80,595
Basic net income per
share $0.36 $0.37 $0.36 $0.39 $0.39
Diluted net income per
share $0.36 $0.37 $0.36 $0.39 $0.39
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited, except December 31, 2007 annual period which
is derived from the audited financial statements)
(Dollars in thousands, except ratios)
Quarterly Periods
Dec 31 Sept 30 Jun 30
Allowance for Credit Losses 2008 2008 2008
Allowance for loan losses, beginning
of period $102,007 $98,239 $94,411
Provision for loan losses 16,986 15,531 14,565
Charge-offs 17,932 14,957 14,830
Recoveries 2,696 3,194 4,093
Net charge-offs 15,236 11,763 10,737
Allowance for loan losses, end of
period $103,757 $102,007 $98,239
Reserve for unfunded lending
commitments, beginning of period $6,493 $7,310 $7,903
Provision for credit losses 95 (817) (593)
Reserve for unfunded lending
commitments, end of period $6,588 $6,493 $7,310
Allowance for Credit Losses $110,345 $108,500 $105,549
Ratios
Provision for loan losses as a % of
average loans 0.92% 0.85% 0.82%
Provision for credit losses as a % of
average loans 0.01% -0.04% -0.03%
Net charge-offs as a % of average
loans 0.82% 0.64% 0.60%
Allowance for loan losses as a % of
period-end loans 1.40% 1.38% 1.36%
Allowance for credit losses as a % of
period-end loans 1.49% 1.47% 1.46%
Allowance for loan losses as a % of
nonperforming loans 198.76% 264.45% 268.52%
Allowance for credit losses as a % of
nonperforming loans 211.38% 281.28% 288.50%
Asset Quality
Impaired loans:
Nonaccrual $40,195 $29,245 $26,702
Other nonperforming loans:
Nonaccrual 12,007 9,328 9,884
Total nonperforming loans 52,202 38,573 36,586
Other real estate ("ORE") 5,324 4,918 5,053
Total nonperforming assets ("NPAs") $57,526 $43,491 $41,639
NPAs as % of period-end loans + ORE 0.77% 0.59% 0.57%
Past due 90 days or more & accruing
interest $23,928 $16,241 $10,654
Annual
Quarterly Periods Period
Mar 31 Dec 31 Dec 31
Allowance for Credit Losses 2008 2007 2007
Allowance for loan losses, beginning
of period $94,205 $93,811 $91,342
Provision for loan losses 11,521 9,334 30,835
Charge-offs 14,669 11,768 44,148
Recoveries 3,354 2,828 16,176
Net charge-offs 11,315 8,940 27,972
Allowance for loan losses, end of
period $94,411 $94,205 $94,205
Reserve for unfunded lending
commitments, beginning of period $7,394 $7,409 $6,294
Provision for credit losses 509 (15) 1,100
Reserve for unfunded lending
commitments, end of period $7,903 $7,394 $7,394
Allowance for Credit Losses $102,314 $101,599 $101,599
Ratios
Provision for loan losses as a % of
average loans 0.66% 0.53% 0.44%
Provision for credit losses as a % of
average loans 0.03% 0.00% 0.02%
Net charge-offs as a % of average
loans 0.65% 0.51% 0.40%
Allowance for loan losses as a % of
period-end loans 1.33% 1.35% 1.35%
Allowance for credit losses as a % of
period-end loans 1.45% 1.45% 1.45%
Allowance for loan losses as a % of
nonperforming loans 318.89% 299.70% 299.70%
Allowance for credit losses as a % of
nonperforming loans 345.59% 323.22% 323.22%
Asset Quality
Impaired loans:
Nonaccrual $19,777 $21,513 $21,513
Other nonperforming loans:
Nonaccrual 9,829 9,920 9,920
Total nonperforming loans 29,606 31,433 31,433
Other real estate ("ORE") 5,695 5,829 5,829
Total nonperforming assets ("NPAs") $35,301 $37,262 $37,262
NPAs as % of period-end loans + ORE 0.50% 0.53% 0.53%
Past due 90 days or more & accruing
interest $10,931 $11,702 $11,702
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
(Unaudited)
(Dollars in thousands)
2008 2008 2008 2008 2007
QUARTERLY OTHER INCOME DETAIL 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
Trust department income $5,291 $5,562 $5,824 $5,450 $5,896
Service charges on deposits 15,450 16,648 16,028 14,736 17,067
Credit card fees 11,667 12,084 12,146 11,157 12,012
ATM and other service fees 2,613 2,717 2,770 2,794 3,055
Bank owned life insurance
income 2,451 3,139 3,217 3,201 3,283
Investment services and
insurance 1,949 2,899 2,790 2,865 3,121
Investment securities gains
(losses), net 1,555 - 47 524 1,122
Loan sales and servicing
income 2,294 1,370 1,885 1,391 1,551
Gain on Visa Inc. 5,768 - - 7,898 -
Other operating income 3,757 2,610 4,051 2,838 2,886
Total Other Income $52,795 $47,029 $48,758 $52,854 $49,993
QUARTERLY OTHER EXPENSES 2008 2008 2008 2008 2007
DETAIL 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
Salaries, wages, pension and
employee benefits $46,991 $45,043 $44,364 $43,065 $43,087
Net occupancy expense 5,950 5,741 6,204 6,754 6,284
Equipment expense 6,139 5,962 5,842 6,194 6,239
Taxes, other than federal
income taxes 1,463 1,714 1,701 1,702 1,274
Stationery, supplies and
postage 2,458 2,347 2,242 2,325 2,388
Bankcard, loan processing and
other costs 7,359 7,497 7,356 7,244 7,482
Advertising 1,863 2,476 2,489 2,666 2,989
Professional services 3,261 3,966 2,581 1,887 3,588
Telephone 978 956 994 1,019 1,006
Amortization of intangibles 87 86 177 223 222
Other operating expense 11,691 4,821 6,600 8,155 8,736
Total Other Expenses $88,240 $80,609 $80,550 $81,234 $83,295
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES - Net Charge-off Detail
(Unaudited)
(Dollars in thousands) Quarters ended Year ended
December 31, December 31,
2008 2007 2008 2007
Allowance for loan
losses - beginning of
period $102,007 $93,811 $94,205 $91,342
Loans charged off:
Commercial 5,591 2,969 16,318 7,856
Mortgage 1,025 958 4,696 5,026
Installment 7,276 4,745 24,740 18,343
Home equity 707 758 4,153 4,151
Credit cards 2,506 2,104 9,821 8,497
Leases 6 - 26 41
Overdrafts 821 234 2,634 234
Total 17,932 11,768 62,388 44,148
Recoveries:
Commercial 402 357 2,388 4,351
Mortgage 35 36 76 44
Installment 1,473 1,705 7,071 8,021
Home equity 125 182 851 1,265
Credit cards 376 390 1,831 1,842
Manufactured housing 77 71 247 323
Leases 7 43 104 286
Overdrafts 201 44 769 44
Total 2,696 2,828 13,337 16,176
Net charge-offs 15,236 8,940 49,051 27,972
Provision for loan
losses 16,986 9,334 58,603 30,835
Allowance for loan
losses - end of period $103,757 $94,205 $103,757 $94,205
Average loans
outstanding $7,366,246 $6,951,544 $7,203,946 $6,971,464
Ratio to average loans:
(Annualized) net
charge-offs 0.82% 0.51% 0.68% 0.40%
Provision for loan
losses 0.92% 0.53% 0.81% 0.44%
Loans outstanding -
period-end $7,425,613 $7,001,886 $7,425,613 $7,001,886
Allowance for credit
losses: $110,345 $101,599 $110,345 $101,599
As a multiple of
(annualized) net
charge-offs 1.82 2.86 2.25 3.63
Allowance for loan
losses:
As a percent of
period-end loans
outstanding 1.40% 1.35% 1.40% 1.35%
As a multiple of
(annualized) net
charge-offs 1.71 2.66 2.12 3.37
