AKRON, Ohio, April 28 /PRNewswire-FirstCall/ -- FirstMerit Corporation (Nasdaq: FMER) reported first quarter 2009 net income of $29.4 million, or $0.34 per diluted share. This compares with $29.1 million, or $0.36 per diluted share, for the fourth quarter 2008 and $31.4 million, or $0.39 per diluted share, for the first quarter 2008.
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Returns on average common equity ("ROE") and average assets ("ROA") for the first quarter 2009 were 11.12% and 1.07%, respectively, compared with 12.47% and 1.08% for the fourth quarter 2008 and 13.56% and 1.22% for the first quarter 2008.
"FirstMerit is positioned to take advantage of the many opportunities within our footprint while facing the challenges of today's economy," said Paul G. Greig, chairman, president and CEO of FirstMerit Corporation. "Execution on our super community bank model continues to generate profitable organic growth in our core markets. Our first quarter performance delivered strong results for our shareholders."
Net interest margin was 3.53% for the first quarter of 2009 compared with 3.82% for the fourth quarter of 2008 and 3.60% for the first quarter of 2008, reflecting a rapid decline in market interest rates late in the fourth quarter of 2008 and the impact on rates earned on loans repricing more quickly than the rates paid on interest-bearing deposits.
Average loans during the first quarter of 2009 increased $14.8 million, or 0.20%, compared to the fourth quarter of 2008 and $357.1 million, or 5.08%, compared with the first quarter of 2008. Increases in the respective periods were due to average commercial loan growth of $64.0 million, or 1.50%, and $395.5 million, or 10.03%.
Average deposits during the first quarter of 2009 decreased $28.4 million, or 0.37%, compared with the fourth quarter of 2008 and increased $314.0 million, or 4.28%, compared with the first quarter of 2008. During the first quarter of 2009 the Company increased its average core deposits, which excludes time deposits, by $260.5 million, or 5.43%, compared with the fourth quarter of 2008, and $593.4 million, or 13.28%, compared with the first quarter of 2008.
Average investments increased $283.6 million, or 11.34%, compared with the fourth quarter of 2008 and increased $276.8 million, or 11.04%, over the first quarter of 2008.
Net interest income on a fully tax-equivalent ("FTE") basis was $88.6 million in the first quarter 2009 compared with $94.9 million in the fourth quarter of 2008 and $85.7 million in the first quarter of 2008. Compared with the fourth quarter of 2008, average earning assets increased $312.7 million, or 3.17% and $608.1 million or 6.35% compared to the first quarter of 2008.
Noninterest income net of securities transactions for the first quarter of 2009 was $55.2 million, an increase of $3.9 million, or 7.70%, from the fourth quarter of 2008 and an increase of $2.9 million, or 5.46%, from the first quarter of 2008. Included in noninterest income in the first quarter 2008 was a $7.9 million gain from the partial redemption of Visa, Inc. shares.
The primary changes in other income for the 2009 first quarter as compared to the first quarter of 2008 were as follows: trust income was $4.8 million, down 12.11% primarily due to declines in the equity markets; service charges on deposits was $14.2 million, down 3.89% primarily attributable to fewer overdraft items and customer preferences to hold larger balances; credit card fees were $11.1 million, down 0.65%; loan sales and servicing income was $2.3 million, an increase of $0.9 million, primarily attributable to refinancing in the current low rate mortgage market environment; bank owned life insurance income was $3.0 million, down 5.81%; and other operating income was $14.3 million, an increase of $11.4 million. Included in other operating income was $9.5 million, due to curtailment of the postretirement medical benefit plan for active employees.
Other income, net of securities gains, as a percentage of net revenue for the first quarter of 2009 was 38.39% compared with 35.07% for fourth quarter of 2008 and 37.91% for the first quarter of 2008. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.
Noninterest expense for the first quarter of 2009 was $83.2 million, a decrease of $5.0 million, or 5.71%, from the fourth quarter of 2008 and an increase of $2.0 million, or 2.42%, from the first quarter of 2008. For the three months ended March 31, 2009, increases in operating expenses compared to the first quarter 2008 were primarily attributable to an increase in professional services. Professional services were $3.5 million, up $1.6 million as compared to first quarter 2008.
During the first quarter of 2009, the Company improved its efficiency ratio to 57.81%, compared with 60.34% for the fourth quarter of 2008 and 58.69% for the first quarter of 2008.
"Expense management combined with a focus on revenue growth enhances our operating efficiencies," commented Mr. Grieg. "For seven consecutive quarters we have increased total revenue over the prior year results."
Net charge-offs totaled $15.6 million, or 0.86% of average loans, in the first quarter of 2009 compared with $15.2 million, or 0.82% of average loans, in the fourth quarter 2008 and $11.3 million, or 0.65% of average loans, in the first quarter of 2008.
Nonperforming assets totaled $76.2 million at March 31, 2009, an increase of $18.7 million, or 32.54%, compared with December 31, 2008 and $40.9 million, or 115.98%, compared with March 31, 2008. Nonperforming assets at March 31, 2009 represented 1.04% of period-end loans plus other real estate compared with 0.77% at December 31, 2008 and 0.50% at March 31, 2009.
The allowance for loan losses totaled $106.2 million at March 31, 2009, an increase of $2.5 million from December 31, 2008. At March 31, 2009, the allowance for loan losses was 1.45% of period-end loans compared with 1.40% at December 31, 2008 and 1.33% at March 31, 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 1.53% at March 31, 2009, compared with 1.49% at December 31, 2008 and 1.45% at March 31, 2008. The allowance for credit losses to nonperforming loans was 159.22% at March 31, 2009, compared with 211.38% at December 31, 2008 and 345.59% at March 31, 2008.
The Company's total assets at March 31, 2009 were $11.0 billion, a decrease of $127.9 million, or 1.15%, compared with December 31, 2008 and an increase of $455.3 million, or 4.33%, compared with March 31, 2008. Commercial loan growth of $324.8 million, or 8.08%, compared with March, 31, 2008, provided the majority of the overall asset growth. Total loans decreased $74.9 million compared with December 31, 2008 and increased $278.0 million over March 31, 2008.
Total deposits were $7.7 billion at March 31, 2009, an increase of $80.5 million, or 1.06%, from December 31, 2008 and an increase of $255.5 million, or 3.44%, from March 31, 2008. The increase compared with March 31, 2008 was driven by an overall increase in savings and demand deposits. Core deposits totaled $5.3 billion at March 31, 2009, an increase of $464.6 million, or 9.65%, from December 31, 2008 and an increase of $713.2 million, or 15.61%, from March 31, 2008.
Shareholders' equity was $1,084.3 million at March 31, 2009, compared with $937.8 million at December 31, 2008 and $937.4 million at March 31, 2008. The Company increased its strong capital position as tangible common equity to assets was 7.56% at March 31, 2009, compared with 7.27% and 7.68% at December 31, 2008 and March 31, 2008, respectively. The common dividend per share paid in the first quarter 2009 was $0.29.
On January 9, 2009, the Company completed the sale to 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. FirstMerit issued and sold to the Treasury for an aggregate purchase price of $125.0 million in cash 125,000 shares of FirstMerit's Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share along with a warrant to purchase 952,260 shares of the Company's common stock.
On April 22, 2009, the Company completed the repurchase of all 125,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A from the United States Department of the Treasury. The preferred shares were repurchased at a price of approximately $126.2 million, which includes accrued and unpaid dividends of approximately $1.2 million. The repurchase of the preferred stock will result in a charge to the Company's retained earnings of approximately 4.7 million, representing the unaccreted difference between the carrying value of the preferred stock and the repurchase price. The Company is currently evaluating the repurchase of the warrant and does not anticipate that the repurchase of the warrant will have an impact on the Company's net income or net income available to common shareholders.
The Company also announced today that its Board of Directors has declared a quarterly dividend of $0.16 per share on the Company's common stock payable June 15, 2009 to shareholders of record on June 1, 2009. Shareholders of record on June 1, 2009, will also receive a $0.13 per share dividend of common stock. The change in the composition of the current dividend payment from all-cash will allow FirstMerit to retain as additional equity approximately $10.5 million per quarter, near term, which will serve to enhance the Company's Tier I and tangible common equity ratios.
Mr. Greig said, "FirstMerit has a strong capital position, with a tangible common equity to asset ratio of 7.56% at the end of the first quarter. Given the current climate of economic uncertainty, the Board of Directors determined that it would be prudent and in the best interests of FirstMerit's shareholders to further strengthen its capital position. Changing the composition of the dividend to part cash and part stock will enable us to increase our level of retained earnings in order to add to our already high levels of capital."
First Quarter 2009 Conference Call
FirstMerit will host an earnings conference call on April 28, 2009, at 2:00 p.m. EDT to provide an overview of first 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: 94237772. A replay of the conference call will be available at approximately 5:00 p.m., on April 28, 2009 through May 6, 2009, by dialing (800) 642-1687, and entering the PIN: 94237772.
About FirstMerit
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $11.0 billion as of March 31, 2009 and 158 banking offices and 172 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)
(Dollars in thousands)
Quarters
------------------------------------------------------
2009 2008 2008 2008 2008
EARNINGS 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
-------- ------- ------- ------- ------- -------
Net interest
income FTE (a) $88,577 $94,855 $92,659 $88,956 $85,695
Provision for
loan losses 18,065 16,986 15,531 14,565 11,521
Other income 55,188 52,795 47,029 48,758 52,854
Other expenses 83,203 88,240 80,609 80,550 81,234
FTE adjustment (a) 1,683 1,617 1,538 1,425 1,396
Net income 29,434 29,136 29,753 29,153 31,443
Diluted EPS 0.34 0.36 0.37 0.36 0.39
PERFORMANCE RATIOS
------------------
Return on average
assets (ROA) 1.07% 1.08% 1.12% 1.11% 1.22%
Return on average
common equity
(ROE) 11.12% 12.47% 12.73% 12.31% 13.56%
Net interest
margin FTE (a) 3.53% 3.82% 3.78% 3.69% 3.60%
Efficiency ratio 57.81% 60.34% 57.64% 58.38% 58.69%
Number of full-
time equivalent
employees 2,562 2,575 2,614 2,679 2,676
MARKET DATA
-----------
Book value/common
share $11.78 $11.58 $11.44 $11.43 $11.59
Period-end common
share mkt value 18.20 20.59 21.00 16.31 20.66
Market as a %
of book 155% 178% 184% 143% 178%
Cash dividends/
common share $0.29 $0.29 $0.29 $0.29 $0.29
Common stock
dividend
payout ratio 85.29% 80.56% 78.38% 80.56% 74.36%
Average basic
common shares 81,293 80,972 80,869 80,855 80,655
Average diluted
common shares 81,302 80,981 80,896 80,898 80,722
Period end common
shares 81,417 80,960 80,974 80,846 80,879
Common shares
repurchased 44,584 18,900 2,623 34,380 5,426
Common stock
market
capitalization $1,481,789 $1,666,966 $1,700,454 $1,318,598 $1,670,960
ASSET QUALITY
-------------
Gross charge-
offs $18,936 $17,932 $14,957 $14,830 $14,669
Net charge-offs 15,565 15,236 11,763 10,737 11,315
Allowance for
loan losses 106,257 103,757 102,007 98,239 94,411
Reserve for
unfunded
lending
commitments 6,019 6,588 6,493 7,310 7,903
Nonperforming
assets
(NPAs) 76,243 57,526 43,491 41,639 35,301
Net charge-offs/
average loans
ratio 0.86% 0.82% 0.64% 0.60% 0.65%
Allowance for
loan losses/
period-end
loans 1.45% 1.40% 1.38% 1.36% 1.33%
Allowance for
credit losses/
period-end loans 1.53% 1.49% 1.47% 1.46% 1.45%
NPAs/loans and
other real estate 1.04% 0.77% 0.59% 0.57% 0.50%
Allowance for
loan losses/
nonperforming
loans 151.35% 198.76% 264.45% 268.52% 318.89%
Allowance for
credit
losses/
nonperforming
loans 159.93% 211.38% 281.28% 288.50% 345.59%
CAPITAL &
LIQUIDITY
----------
Period-end
tangible common
equity to assets 7.56% 7.27% 7.45% 7.52% 7.68%
Average equity to
assets 9.66% 8.66% 8.79% 9.06% 8.98%
Average equity to
loans 14.54% 12.62% 12.76% 13.34% 13.27%
Average loans to
deposits 96.56% 96.01% 99.40% 97.29% 95.82%
AVERAGE BALANCES
----------------
Assets $11,115,042 $10,731,029 $10,569,496 $10,520,469 $10,388,359
Deposits 7,644,118 7,672,560 7,326,364 7,339,506 7,330,097
Loans 7,381,019 7,366,246 7,282,333 7,140,627 7,023,928
Earning
assets 10,189,233 9,876,488 9,755,812 9,704,252 9,581,121
Shareholders'
equity 1,073,276 929,788 929,495 952,769 932,405
ENDING BALANCES
---------------
Assets $10,972,176 $11,100,026 $10,684,845 $10,564,752 $10,516,828
Deposits 7,678,213 7,597,679 7,430,556 7,277,184 7,422,678
Loans 7,350,763 7,425,613 7,381,592 7,240,882 7,072,797
Goodwill 139,245 139,245 139,245 139,245 139,245
Intangible
assets 1,316 1,403 1,490 1,577 1,754
Earning
assets 10,108,403 10,209,602 9,840,951 9,724,859 9,688,270
Total
shareholders'
equity 1,084,269 937,843 926,078 924,429 937,439
NOTES:
(a) - Net interest income on a fully tax-equivalent ("FTE") basis restates
interest on tax-exempt securities and loans as if such interest were
subject to federal income tax at the statutory rate. Net interest
income on an FTE basis is not an accounting principle generally
accepted in the United States of America.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited, except December 31, 2008,
which is derived from the
audited financial statements)
March 31, Dec. 31, March 31,
2009 2008 2008
---- ---- ----
ASSETS
Cash and due from banks $179,397 $178,406 $200,852
Investment securities (at fair
value) 2,735,232 2,772,848 2,559,729
Loans held for sale 22,408 11,141 55,744
Loans:
Commercial loans 4,344,915 4,352,730 4,020,155
Mortgage loans 524,909 547,125 575,479
Installment loans 1,533,885 1,574,587 1,576,517
Home equity loans 741,073 733,832 684,064
Credit card loans 141,597 149,745 145,747
Leases 64,384 67,594 70,835
------ ------ ------
Total loans 7,350,763 7,425,613 7,072,797
Less allowance for loan
losses (106,257) (103,757) (94,411)
-------- -------- -------
Net loans 7,244,506 7,321,856 6,978,386
Premises and equipment, net 130,920 133,184 126,273
Goodwill 139,245 139,245 139,245
Intangible assets 1,316 1,403 1,754
Accrued interest receivable
and other assets 519,152 541,943 454,845
------- ------- -------
Total assets $10,972,176 $11,100,026 $10,516,828
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand-non-interest bearing $1,848,200 $1,637,534 1,498,107
Demand-interest bearing 669,789 666,615 703,319
Savings and money market
accounts 2,763,058 2,512,331 2,366,466
Certificates and other time
deposits 2,397,166 2,781,199 2,854,786
--------- --------- ---------
Total deposits 7,678,213 7,597,679 7,422,678
--------- --------- ---------
Securities sold under
agreements to repurchase 804,525 921,390 1,298,145
Wholesale borrowings 1,134,152 1,344,195 653,618
Accrued taxes, expenses, and
other liabilities 271,017 298,919 204,948
------- ------- -------
Total liabilities 9,887,907 10,162,183 9,579,389
--------- ---------- ---------
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 -- -- --
Fixed-Rate Cumulative
Perpetual Preferred Stock,
Series A, $1,000 liquidation
preference; authorized and
issued 125,000 shares 120,622 -- --
Common stock, without par
value:
authorized 300,000,000
shares; issued 92,026,350 at
March 31, 2009, December
31, 2008 and March 31, 2008 127,937 127,937 127,937
Common stock warrant 4,582 -- --
Capital surplus 84,876 94,802 91,387
Accumulated other
comprehensive loss (38,634) (54,080) (31,576)
Retained earnings 1,057,681 1,053,435 1,035,766
Treasury stock, at cost,
10,609,284, 11,066,108 and
11,147,360 shares at
March 31, 2009,
December 31, 2008 and March
31, 2008, respectively (272,795) (284,251) (286,075)
-------- -------- --------
Total shareholders' equity 1,084,269 937,843 937,439
--------- ------- -------
Total liabilities and
shareholders' equity $10,972,176 $11,100,026 $10,516,828
=========== =========== ===========
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
Quarterly Periods
---------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2009 2008 2008 2008 2008
-------- ------- -------- ------- --------
ASSETS
Cash and due
from banks $209,922 $192,804 $171,370 $173,044 $171,028
Investment
securities/fed
funds sold 2,784,966 2,501,346 2,461,431 2,515,546 2,508,125
Loans held for
sale 23,248 8,896 12,048 48,079 49,068
Loans:
Commercial
loans 4,337,108 4,273,123 4,168,951 4,069,305 3,941,573
Mortgage loans 536,498 555,713 569,293 577,178 584,000
Installment
loans 1,558,374 1,596,053 1,617,265 1,584,825 1,587,267
Home equity
loans 736,956 722,466 709,365 692,567 686,603
Credit card
loans 146,355 150,133 147,924 147,242 150,575
Leases 65,728 68,758 69,535 69,510 73,910
---------- ---------- ---------- ---------- ----------
Total loans 7,381,019 7,366,246 7,282,333 7,140,627 7,023,928
Less allowance
for loan losses 102,533 100,898 98,091 94,002 93,804
---------- ---------- ---------- ---------- ----------
Net loans 7,278,486 7,265,348 7,184,242 7,046,625 6,930,124
Total earning
assets 10,189,233 9,876,488 9,755,812 9,704,252 9,581,121
Premises and
equipment, net 132,156 130,511 127,267 126,488 128,185
Accrued
interest
receivable
and other
assets 686,264 632,124 613,138 610,687 601,829
---------- ---------- ---------- ---------- ----------
TOTAL ASSETS $11,115,042 $10,731,029 $10,569,496 $10,520,469 $10,388,359
========== ========== ========== ========== ==========
LIABILITIES
Deposits:
Demand-non
-interest
bearing $1,767,885 $1,607,901 $1,545,427 $1,518,841 $1,446,889
Demand-
interest
bearing 655,279 658,208 678,803 709,922 702,115
Savings and
money market
accounts 2,638,166 2,534,702 2,373,995 2,366,296 2,318,899
Certificates
and other
time
deposits 2,582,788 2,871,749 2,728,139 2,744,447 2,862,194
---------- ---------- ---------- ---------- ----------
Total
deposits 7,644,118 7,672,560 7,326,364 7,339,506 7,330,097
Securities
sold under
agreements to
repurchase 941,112 1,168,438 1,504,011 1,312,436 1,310,364
Wholesale
borrowings 1,151,777 766,358 634,226 711,132 618,572
---------- ---------- ---------- ---------- ----------
Total funds 9,737,007 9,607,356 9,464,601 9,363,074 9,259,033
Accrued taxes,
expenses and
other
liabilities 304,759 193,885 175,400 204,626 196,921
Total
liabilities 10,041,766 9,801,241 9,640,001 9,567,700 9,455,954
SHAREHOLDERS'
EQUITY
Preferred stock 109,807 - - - -
Common stock 127,937 127,937 127,937 127,937 127,937
Common stock
warrant 4,175 - - - -
Capital surplus 86,872 93,761 93,381 92,313 96,048
Accumulated
other
comprehensive
(loss) income (49,477) (62,018) (54,000) (40,757) (32,170)
Retained
earnings 1,069,948 1,053,992 1,048,452 1,059,840 1,032,036
Treasury stock (275,986) (283,884) (286,275) (286,564) (291,446)
---------- ---------- ---------- ---------- ----------
Total
shareholders'
equity 1,073,276 929,788 929,495 952,769 932,405
---------- ---------- ---------- ---------- ----------
TOTAL
LIABILITIES
AND
SHAREHOLDERS'
EQUITY $11,115,042 $10,731,029 $10,569,496 $10,520,469 $10,388,359
========== ========== ========== ========== ==========
AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential
-----------------------------------------------------------------
FIRSTMERIT CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------
Three months ended
(Dollars in thousands) March 31, 2009
----------------------------
Average Average
Balance Interest Rate
------- -------- -------
ASSETS
Cash and due from banks $209,922
Investment securities and federal
funds sold:
U.S. Treasury securities and
U.S. Government agency
obligations (taxable) 2,251,028 25,954 4.68%
Obligations of states and
political subdivisions (tax
exempt) 320,943 4,914 6.21%
Other securities and federal
funds sold 212,995 2,341 4.46%
------- -----
Total investment securities
and federal funds sold 2,784,966 33,209 4.84%
Loans held for sale 23,248 322 5.62%
Loans 7,381,019 87,508 4.81%
--------- ------
Total earning assets 10,189,233 121,039 4.82%
Allowance for loan losses (102,533)
Other assets 818,420
-------
Total assets $11,115,042
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,767,885 -- --
Demand - interest bearing 655,279 155 0.10%
Savings and money market
accounts 2,638,166 5,377 0.83%
Certificates and other time
deposits 2,582,788 18,588 2.92%
--------- ------
Total deposits 7,644,118 24,120 1.28%
Securities sold under agreements
to repurchase 941,112 999 0.43%
Wholesale borrowings 1,151,777 7,343 2.59%
--------- -----
Total interest bearing
liabilities 7,969,122 32,462 1.65%
Other liabilities 304,759
Shareholders' equity 1,073,276
---------
Total liabilities and
shareholders' equity $11,115,042
===========
Net yield on earning assets $10,189,233 88,577 3.53%
=========== ====== ====
Interest rate spread 3.17%
====
Year 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%
====
Three months ended
(Dollars in thousands) March 31, 2008
---------------------------
Average Average
Balance Interest Rate
------- -------- -------
ASSETS
Cash and due from banks $171,028
Investment securities and federal
funds sold:
U.S. Treasury securities and
U.S. Government agency
obligations (taxable) 2,004,597 23,295 4.67%
Obligations of states and
political subdivisions (tax
exempt) 280,919 4,263 6.10%
Other securities and federal
funds sold 222,609 3,050 5.51%
------- -----
Total investment securities
and federal funds sold 2,508,125 30,608 4.91%
Loans held for sale 49,068 672 5.51%
Loans 7,023,928 115,640 6.62%
--------- -------
Total earning assets 9,581,121 146,920 6.17%
Allowance for loan losses (93,804)
Other assets 730,014
-------
Total assets $10,388,359
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $1,446,889 -- --
Demand - interest bearing 702,115 964 0.55%
Savings and money market
accounts 2,318,899 9,643 1.67%
Certificates and other time
deposits 2,862,194 31,987 4.49%
--------- ------
Total deposits 7,330,097 42,594 2.34%
Securities sold under agreements
to repurchase 1,310,364 11,542 3.54%
Wholesale borrowings 618,572 7,089 4.61%
------- -----
Total interest bearing
liabilities 7,812,144 61,225 3.15%
Other liabilities 196,921
Shareholders' equity 932,405
-------
Total liabilities and
shareholders' equity $10,388,359
===========
Net yield on earning assets $9,581,121 85,695 3.60%
========== ====== ====
Interest rate spread 3.02%
====
Note: Interest income on tax-exempt securities and loans has been
adjusted to a fully-taxable equivalent basis.
Nonaccrual loans have been included in the average balances.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) Quarters ended
(In thousands except per share data) March 31,
--------------
2009 2008
---- ----
Interest income:
Interest and fees on loans, including held for
sale $87,799 $116,288
Interest and dividends on investment securities
and federal funds sold 31,557 29,236
------ ------
Total interest income 119,356 145,524
------- -------
Interest expense:
Interest on deposits:
Demand-interest bearing 155 964
Savings and money market accounts 5,377 9,643
Certificates and other time deposits 18,588 31,987
Interest on securities sold under agreements to
repurchase 999 11,542
Interest on wholesale borrowings 7,343 7,089
----- -----
Total interest expense 32,462 61,225
------ ------
Net interest income 86,894 84,299
Provision for loan losses 18,065 11,521
------ ------
Net interest income after provision for loan
losses 68,829 72,778
------ ------
Other income:
Trust department income 4,790 5,450
Service charges on deposits 14,163 14,736
Credit card fees 11,084 11,157
ATM and other service fees 2,606 2,794
Bank owned life insurance income 3,015 3,201
Investment services and insurance 2,918 2,865
Investment securities gains, net - 524
Loan sales and servicing income 2,335 1,391
Gain on Visa Inc. redemption - 7,898
Gain on post medical retirement curtailment 9,543 -
Other operating income 4,734 2,838
----- -----
Total other income 55,188 52,854
------ ------
Other expenses:
Salaries, wages, pension and employee benefits 42,682 43,065
Net occupancy expense 6,871 6,754
Equipment expense 5,797 6,194
Stationery, supplies and postage 2,275 2,325
Bankcard, loan processing and other costs 7,842 7,244
Professional services 3,480 1,887
Amortization of intangibles 87 223
Other operating expense 14,169 13,542
------ ------
Total other expenses 83,203 81,234
------ ------
Income before federal income tax
expense 40,814 44,398
Federal income tax expense 11,380 12,955
------ ------
Net income $29,434 $31,443
======= =======
Other comprehensive income, net of taxes
Unrealized securities' holding (loss) gain,
net of taxes $15,817 $11,610
Unrealized hedging gain (loss), net of taxes (94) (633)
Minimum pension liability adjustment, net of
taxes (277) 873
Less: reclassification adjustment for
securities' gain realized in
net income, net of taxes - 341
--- ---
Total other comprehensive (loss) gain, net of
taxes 15,446 11,509
------ ------
Comprehensive income $44,880 $42,952
======= =======
Net income applicable to common shares $27,563 $31,443
======= =======
Net income used in diluted EPS calculation $27,563 $31,447
======= =======
Weighted average number of common shares
outstanding - basic 81,293 80,655
====== ======
Weighted average number of common shares
outstanding - diluted 81,302 80,722
====== ======
Basic earnings per share $0.34 $0.39
===== =====
Diluted earnings per share $0.34 $0.39
===== =====
Dividend per share $0.29 $0.29
===== =====
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME---LINKED
QUARTERS
(Unaudited) Quarterly Results
(Dollars in thousands, --------------------------------------------
except share data) 2009 2008 2008 2008 2008
1st Q 4th Q 3rd Q 2nd Q 1st Q
------ ------ ------ ------ ------
Interest and fees on
loans, including held
for sale $87,799 $105,463 $107,927 $106,516 $116,288
Interest and dividends -
securities and federal
funds sold 31,557 29,918 29,223 29,255 29,236
------ ------ ------ ------ ------
Total interest
income 119,356 135,381 137,150 135,771 145,524
------- ------- ------- ------- -------
Interest on deposits:
Demand-interest
bearing 155 370 589 591 964
Savings and money
market accounts 5,377 6,764 6,932 6,500 9,643
Certificates and other
time deposits 18,588 23,816 23,463 26,587 31,987
Securities sold
under agreements to
repurchase 999 3,752 8,244 8,319 11,542
Wholesale borrowings 7,343 7,441 6,801 6,243 7,089
------ ------ ------ ------ ------
Total interest
expense 32,462 42,143 46,029 48,240 61,225
------ ------ ------ ------ ------
Net interest income 86,894 93,238 91,121 87,531 84,299
Provision for loan
losses 18,065 16,986 15,531 14,565 11,521
------ ------ ------ ------ ------
Net interest income
after provision for
loan losses 68,829 76,252 75,590 72,966 72,778
------ ------ ------ ------ ------
Other income:
Trust department income 4,790 5,291 5,562 5,824 5,450
Service charges on
deposits 14,163 15,450 16,648 16,028 14,736
Credit card fees 11,084 11,667 12,084 12,146 11,157
ATM and other service
fees 2,606 2,613 2,717 2,770 2,794
Bank owned life
insurance income 3,015 2,451 3,139 3,217 3,201
Investment services and
insurance 2,918 1,949 2,899 2,790 2,865
Investment securities
gains, net - 1,555 - 47 524
Loan sales and servicing
income 2,335 2,294 1,370 1,885 1,391
Gain on Visa Inc. - 5,768 - - 7,898
Other operating income 14,277 3,757 2,610 4,051 2,838
------ ------ ------ ------ ------
Total other income 55,188 52,795 47,029 48,758 52,854
------ ------ ------ ------ ------
Other expenses:
Salaries, wages, pension
and employee benefits 42,682 46,991 45,043 44,364 43,065
Net occupancy expense 6,871 5,950 5,741 6,204 6,754
Equipment expense 5,797 6,139 5,962 5,842 6,194
Stationery, supplies and
postage 2,275 2,458 2,347 2,242 2,325
Bankcard, loan
processing and
other costs 7,842 7,359 7,497 7,356 7,244
Professional services 3,480 3,261 3,966 2,581 1,887
Amortization of
intangibles 87 87 86 177 223
Other operating expense 14,169 15,995 9,967 11,784 13,542
------ ------ ------ ------ ------
Total other expenses 83,203 88,240 80,609 80,550 81,234
------ ------ ------ ------ ------
Income before income tax
expense 40,814 40,807 42,010 41,174 44,398
Federal income taxes 11,380 11,671 12,257 12,021 12,955
------ ------ ------ ------ ------
Net income $29,434 $29,136 $29,753 $29,153 $31,443
------ ------ ------ ------ ------
Other comprehensive
income (loss),
net of taxes 15,446 5,110 (7,756) (19,858) 11,509
------ ----- ------ ------- ------
Comprehensive income $44,880 $34,246 $21,997 $9,295 $42,952
======= ======= ======= ====== =======
Net income applicable to
common shares $27,563 $29,136 $29,753 $29,153 $31,443
======= ======= ======= ======= =======
Adjusted net income used
in diluted
EPS calculation $27,563 $29,136 $29,753 $29,154 $31,447
======= ======= ======= ======= =======
Weighted-average common
shares - basic 81,293 80,972 80,869 80,855 80,655
------ ------ ------ ------ ------
Weighted-average common
shares - diluted 81,302 80,981 80,896 80,898 80,722
------ ------ ------ ------ ------
Basic net income per
share $0.34 $0.36 $0.37 $0.36 $0.39
======= ======= ======= ======= =======
Diluted net income per
share $0.34 $0.36 $0.37 $0.36 $0.39
======= ======= ======= ======= =======
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited, except December 31, 2008 annual period which is derived
from the audited financial statements)
(Dollars in thousands, except ratios)
Annual
Quarterly Periods Period
------------------------------------------------ ------
Allowance for Mar 31 Dec 31 Sept 30 Jun 30 Mar 31 Dec 31
Credit Losses 2009 2008 2008 2008 2008 2008
---- ---- ---- ---- ---- ----
Allowance for
loan losses,
beginning of
period $103,757 $102,007 $98,239 $94,411 $94,205 $94,205
Provision
for
loan
losses 18,065 16,986 15,531 14,565 11,521 58,603
Charge-offs 18,936 17,932 14,957 14,830 14,669 62,388
Recoveries 3,371 2,696 3,194 4,093 3,354 13,337
------ ------ ------ ------ ------ ------
Net charge-
offs 15,565 15,236 11,763 10,737 11,315 49,051
------ ------ ------ ------ ------ ------
Allowance
for loan
losses, end
of period $106,257 $103,757 $102,007 $98,239 $94,411 $103,757
======== ======== ======== ======= ======= ========
Reserve for
unfunded
lending
commitments,
beginning
of period $6,588 $6,493 $7,310 $7,903 $7,394 $7,394
Provision
for credit
losses (569) 95 (817) (593) 509 (806)
------ ------ ------ ------ ------ ------
Reserve for
unfunded
lending
commitments,
end of
period $6,019 $6,588 $6,493 $7,310 $7,903 $6,588
====== ====== ====== ====== ====== ======
Allowance
for Credit
Losses $112,276 $110,345 $108,500 $105,549 $102,314 $110,345
======== ======== ======== ======== ======== ========
Ratios
Provision
for loan
losses as a
% of
average loans 0.99% 0.92% 0.85% 0.82% 0.66% 0.81%
Provision for
credit
losses as
a % of
average loans (0.03)% 0.01% (0.04)% (0.03)% 0.03% (0.01)%
Net charge-
offs as a %
of average
loans 0.86% 0.82% 0.64% 0.60% 0.65% 0.68%
Allowance for
loan losses
as a % of
period-end
loans 1.45% 1.40% 1.38% 1.36% 1.33% 1.40%
Allowance for
credit
losses as
a % of
period-end
loans 1.53% 1.49% 1.47% 1.46% 1.45% 1.49%
Allowance for
loan
losses as a
% of
nonperforming
loans 151.35% 198.76% 264.45% 268.52% 318.89% 198.76%
Allowance for
credit
losses as a
% of
nonperforming
loans 159.93% 211.38% 281.28% 288.50% 345.59% 211.38%
Asset Quality
Impaired
loans:
Nonaccrual $54,070 $40,195 $29,245 $26,702 $19,777 $40,195
Other
nonperforming
loans:
Nonaccrual 16,134 12,007 9,328 9,884 9,829 12,007
------ ------ ----- ----- ----- ------
Total
nonperforming
loans 70,204 52,202 38,573 36,586 29,606 52,202
Other real
estate
("ORE") 6,039 5,324 4,918 5,053 5,695 5,324
------ ------ ------ ------ ------ ------
Total
nonperforming
assets
("NPAs") $76,243 $57,526 $43,491 $41,639 $35,301 $57,526
======= ======= ======= ======= ======= =======
NPAs as %
of period-
end loans
+ ORE 1.04% 0.77% 0.59% 0.57% 0.50% 0.77%
======= ======= ======= ======= ======= =======
Past due 90
days or
more &
accruing
interest $18,602 $23,928 $16,241 $10,654 $10,931 $23,928
======= ======= ======= ======= ======= =======
FIRSTMERIT CORPORATION
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
(Unaudited)
(Dollars in thousands)
2009 2008 2008 2008 2008
QUARTERLY OTHER INCOME DETAIL 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
------- ------- ------- ------- -------
Trust department income $4,790 $5,291 $5,562 $5,824 $5,450
Service charges on deposits 14,163 15,450 16,648 16,028 14,736
Credit card fees 11,084 11,667 12,084 12,146 11,157
ATM and other service fees 2,606 2,613 2,717 2,770 2,794
Bank owned life insurance
income 3,015 2,451 3,139 3,217 3,201
Investment services and
insurance 2,918 1,949 2,899 2,790 2,865
Investment securities
gains, net - 1,555 - 47 524
Loan sales and servicing
income 2,335 2,294 1,370 1,885 1,391
Gain on Visa Inc. - 5,768 - - 7,898
Gain on post medical retirement
curtailment 9,543 - - - 0
Other operating income 4,734 3,757 2,610 4,051 2,838
------- ------- ------- ------- -------
Total Other Income $55,188 $52,795 $47,029 $48,758 $52,854
======= ======= ======= ======= =======
2009 2008 2008 2008 2008
QUARTERLY OTHER EXPENSES DETAIL 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
------- ------- ------- ------- -------
Salaries, wages, pension and
employee benefits $42,682 $46,991 $45,043 $44,364 $43,065
Net occupancy expense 6,871 5,950 5,741 6,204 6,754
Equipment expense 5,797 6,139 5,962 5,842 6,194
Taxes, other than federal income
taxes 1,626 1,463 1,714 1,701 1,702
Stationery, supplies and
postage 2,275 2,458 2,347 2,242 2,325
Bankcard, loan processing and
other costs 7,842 7,359 7,497 7,356 7,244
Advertising 1,971 1,863 2,476 2,489 2,666
Professional services 3,480 3,261 3,966 2,581 1,887
Telephone 1,014 978 956 994 1,019
Amortization of intangibles 87 87 86 177 223
Other operating expense 9,558 11,691 4,821 6,600 8,155
------- ------- ------- ------- -------
Total Other Expenses $83,203 $88,240 $80,609 $80,550 $81,234
======= ======= ======= ======= =======
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES - Net Charge-off Detail
(Unaudited)
(Dollars in thousands) Quarters ended Year ended
March 31, December 31,
---------------- ------------
2009 2008 2008
---- ---- ----
Allowance for loan losses -
beginning of
period $103,757 $94,205 $94,205
Loans charged off:
Commercial 4,554 3,453 16,318
Mortgage 923 1,280 4,696
Installment 8,438 6,004 24,740
Home equity 1,535 1,066 4,153
Credit cards 2,967 2,293 9,821
Leases - - 26
Overdrafts 519 573 2,634
--- --- -----
Total 18,936 14,669 62,388
------ ------ ------
Recoveries:
Commercial 224 722 2,388
Mortgage 26 32 76
Installment 2,401 1,742 7,071
Home equity 85 100 851
Credit cards 387 459 1,831
Manufactured housing 53 72 247
Leases 5 38 104
Overdrafts 190 189 769
--- --- ---
Total 3,371 3,354 13,337
----- ----- ------
Net charge-offs 15,565 11,315 49,051
Provision for loan losses 18,065 11,521 58,603
------ ------ ------
Allowance for loan losses -
end of period $106,257 $94,411 $103,757
======== ======= ========
Average loans outstanding $7,381,019 $7,023,928 $7,203,946
========== ========== ==========
Ratio to average loans:
(Annualized) net charge-offs 0.86% 0.65% 0.68%
==== ==== ====
Provision for loan losses 0.99% 0.66% 0.81%
==== ==== ====
Loans outstanding - period-end $7,350,763 $7,072,797 $7,425,613
========== ========== ==========
Allowance for credit losses: $112,276 $102,314 $110,345
======== ======== ========
As a multiple of
(annualized) net charge-offs 1.78 2.25 2.25
==== ==== ====
Allowance for loan losses:
As a percent of period-end
Loans outstanding 1.45% 1.33% 1.40%
==== ==== ====
As a multiple of
(annualized) net charge-offs 1.68 2.07 2.12
==== ==== ====
