FIRSTMERIT CORP 
By In the news release, FirstMerit Reports Fourth Quarter 2009 EPS of
The complete, corrected release follows:
FirstMerit Reports Fourth Quarter 2009 EPS of $0.17 Per Share
Corporation announces:
- Increase in net interest margin to 3.64%
- 6.24% increase in average core deposits over prior quarter
- 21.98% increase in average core deposits over year ago quarter
- Increase in tangible common equity to 8.99%
- Increase in allowance for credit losses to 1.77% of period-end loans
AKRON, Ohio, Jan. 26 /PRNewswire-FirstCall/ -- FirstMerit Corporation (Nasdaq: FMER) reported fourth quarter 2009 net income of $14.5 million, or $0.17 per diluted share. This compares with $22.8 million, or $0.27 per diluted share, for the third quarter 2009 and $29.1 million, or $0.35 per diluted share, for the fourth quarter 2008. For the full year 2009, the Corporation reported net income of $82.2 million, or $0.90 per diluted share, compared with $119.5 million, or $1.46 per diluted share in 2008.
Returns on average common equity ("ROE") and average assets ("ROA") for the fourth quarter 2009 were 5.38% and 0.54%, respectively, compared with 8.69% and 0.85%, respectively, for the third quarter 2009 and 12.47% and 1.08% for the fourth quarter 2008. ROE and ROA for the year ended December 31, 2009 were 8.09% and 0.76%, respectively, compared with 12.76% and 1.13%, respectively, for the year ended December 31, 2008.
"We produced solid results in the fourth quarter and throughout all of 2009 despite persistent challenges in the economy. Our financial performance is due to our commitment to sound banking fundamentals and appropriate risk management," said Paul G. Greig, chairman, president and CEO of FirstMerit Corporation.
"In the fourth quarter we grew our core deposits, further strengthened our tangible common equity and expanded our net interest margin. At year-end, FirstMerit maintained robust levels of liquidity, capital and reserves, setting us apart from our industry peers. FirstMerit is well-positioned for the future, both in our existing Ohio and Pennsylvania footprint and in our new Chicago market with our upcoming purchase of 24 First Bank branches. We remain on track to close this acquisition which includes $1.2 billion in deposits and a minimum of $315 million of performing loans in mid-February," Greig said.
On December 16, 2009, the FirstMerit Bank acquired $102.0 million of asset based lending loans ("ABL loans") from First Bank Business Capital, Inc., a wholly owned subsidiary of First Bank pursuant to separate Purchase and Assumption agreement with First Bank Business Capital, Inc. also dated November 11, 2009.
Average loans during the fourth quarter of 2009 decreased $108.0 million, or 1.53%, compared with the third quarter of 2009 and also decreased $417.3 million, or 5.66%, compared with the fourth quarter of 2008. Decreases against the respective periods were due to a reduction in both consumer and commercial demand for borrowing. In the fourth quarter of 2009, average commercial loans decreased $46.9 million, or 1.14%, and $214.3 million, or 5.01%, compared with the third quarter of 2009 and fourth quarter of 2008, respectively. Average consumer loans decreased $62.3 million, or 2.15%, and $194.8 million, or 6.78%, over the same periods.
Average deposits were $7.4 billion during the fourth quarter of 2009, up $13.1 million, or 0.18%, compared with the third quarter of 2009, and a decrease of $275.0 million, or 3.58%, compared with the fourth quarter of 2008. For the fourth quarter 2009, average core deposits (which are defined as checking accounts, savings accounts and money market savings products) increased $344.1 million, or 6.24%, compared with the third quarter 2009 and $1.1 billion, or 21.98%, compared with the fourth quarter 2008. Core deposits represented 79.16% of total average deposits, compared with 74.64% for the third quarter 2009 and 62.57% for the fourth quarter 2008. The Corporation increased average core deposits for the ninth consecutive quarter. Strategic retail and business marketing campaigns, primarily focused on new Reality Checking and Savings deposit products, drove the continued growth which began in the fourth quarter of 2007.
Average investments increased $20.8 million, or 0.76%, compared with the third quarter of 2009 and $248.3 million, or 9.93% compared with the fourth quarter of 2008. The Corporation's investment portfolio yield decreased in the fourth quarter of 2009, to 4.35%, compared with 4.51% in the third quarter of 2009, and decreased from 5.01% in the fourth quarter of 2008, reflective of the declining interest rate environment.
Net interest margin was 3.64% for the fourth quarter of 2009 compared with 3.61% for the third quarter of 2009 and 3.82% for the fourth quarter of 2008, marking a third consecutive quarter of net interest margin expansion. The Corporation's success both migrating existing and attracting new depository accounts into its Reality Checking and Savings products continued to reduce funding costs and positively impact the net interest margin.
Net interest income on a fully tax-equivalent ("FTE") basis was $89.2 million in the fourth quarter 2009 compared with $89.1 million in the third quarter of 2009 and $94.9 million in the fourth quarter of 2008. Declining average loan balances in the fourth quarter of 2009 compared with the third quarter of 2009 offset net interest margin expansion during the quarter.
Noninterest income net of securities transactions for the fourth quarter of 2009 was $50.8 million, an increase of $2.1 million, or 4.37%, from the third quarter of 2009 and a decrease of $0.5 million, or 0.09%, from the fourth quarter of 2008. In the fourth quarter of 2008 the Corporation recorded $5.8 million of other income from the sale of Class B Visa Inc. stock. Noninterest income net of securities transactions as a percentage of net revenue for the fourth quarter of 2009 was 36.28% compared with 35.32% for third quarter of 2009 and 35.07% for the fourth quarter of 2008. 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 2009 was $94.9 million, an increase of $10.7 million, or 12.74%, from the third quarter of 2009 and an increase of $6.6 million, or 7.53%, from the fourth quarter of 2008. The fourth quarter of 2009 noninterest expenses included $2.5 million of professional services related to due diligence and acquisition expense, $1.3 million provision for unfunded lending commitments and $3.9 million related to the discontinuation of hedge accounting for a portfolio of interest rate swaps associated with fixed-rate commercial loans. For the fourth quarter of 2009, the efficiency ratio was 67.74%, compared with 61.05% for the third quarter of 2009 and 60.34% for the fourth quarter of 2008.
Net charge-offs totaled $31.2 million, or 1.79% of average loans, in the fourth quarter of 2009 compared with $18.8 million, or 1.05% of average loans, in the third quarter 2009 and $15.2 million, or 0.82% of average loans, in the fourth quarter of 2008.
Nonperforming assets totaled $101.0 million at December 31, 2009, an increase of $12.1 million, or 13.64%, compared with September 30, 2009. Nonperforming assets at December 31, 2009 represented 1.48% of period-end loans plus other real estate compared with 1.26% at September 30, 2009 and 0.77% million at December 31, 2008.
The allowance for loan losses totaled $115.1 million at December 31, 2009. At December 31, 2009, the allowance for loan losses was 1.68% of period-end loans compared with 1.66% at September 30, 2009 and 1.40% at December 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 1.77% at December 31, 2009 compared with 1.72% at September 30, 2009 and 1.49% at December 31, 2008. The allowance for credit losses to nonperforming loans was 131.82% at December 31, 2009, compared with 153.27% at September 30, 2009 and 211.38% at December 31, 2008.
The Corporation's total assets at December 31, 2009 were $10.5 billion, a decrease of $222.9 million, or 2.07%, compared with September 30, 2009 and a decrease of $561.5 million, or 5.06%, compared with December 31, 2008. Commercial loans decreased $286.2 million, or 6.58% and installment loans decreased $149.2 million or 9.48%, compared with December 31, 2008, contributing to the majority of asset declines over the prior year period.
Total deposits were $7.5 billion at December 31, 2009, an increase of $244.5 million, or 3.36%, from September 30, 2009 and an increase of $81.9 million, or 1.08%, from December 31, 2008. Core deposits totaled $6.2 billion at December 31, 2009, an increase of $576.5 million, or 10.33%, from September 30, 2009 and an increase of $1.34 billion, or 27.80%, from December 31, 2008.
Shareholders' equity was $1.08 billion at December 31, 2009, compared with $1.06 billion at September 30, 2009, and $937.8 million at December 31, 2008. The Corporation maintained a strong capital position as tangible common equity to assets was 8.99% at December 31, 2009, compared with 8.65% at September 30, 2009 and 7.27% at December 31, 2008. The common cash dividend per share paid in the fourth quarter 2009 was $0.16.
Fourth Quarter 2009 Conference Call
FirstMerit (Nasdaq: FMER) senior management will host an earnings conference call on January 26, 2010 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: 49626728. A replay of the conference call will be available at approximately 5:00 p.m. (Eastern Time) on January 26, 2010 through February 2, 2010 by dialing (800) 642-1687, and entering the PIN: 49626728.
About FirstMerit
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $10.5 billion as of December 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.
Subsequent Events The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing of the December 31, 2009 consolidated financial statements on Form 10-K. As a result, the Corporation will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2009 and will adjust amounts preliminarily reported, if necessary.
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)
2009 2009 2009
4th Qtr 3rd Qtr 2nd Qtr
------- ------- -------
EARNINGS
--------
Net interest income FTE (a) $89,171 $89,079 $88,806
Provision for loan losses 29,960 23,887 26,521
Other income 52,701 51,567 50,845
Other expenses 94,885 84,165 90,564
FTE adjustment (a) 1,793 1,702 1,691
Net income 14,478 22,763 15,495
Diluted EPS (b) 0.17 0.27 0.13
PERFORMANCE RATIOS
------------------
Return on average assets (ROA) 0.54% 0.85% 0.57%
Return on average common
equity (ROE) 5.38% 8.69% 6.27%
Net interest margin FTE (a) 3.64% 3.61% 3.56%
Efficiency ratio 67.74% 61.05% 65.34%
Number of full-time
equivalent employees 2,495 2,522 2,540
MARKET DATA
-----------
Book value/common share $12.36 $12.34 $11.99
Period-end common share mkt
value 20.14 19.03 17.00
Market as a % of book 163% 154% 142%
Cash dividends/common share $0.16 $0.16 $0.16
Common stock dividend payout
ratio 94.12% 59.26% 84.21%
Average basic common shares
(b) 86,149 85,872 84,123
Average diluted common shares
(b) 86,157 85,880 84,131
Period end common shares 87,004 85,869 85,266
Common shares repurchased 35 13 61
Common stock market
capitalization $1,752,261 $1,634,087 $1,449,522
ASSET QUALITY
-------------
Gross charge-offs $34,232 $21,819 $24,726
Net charge-offs 31,220 18,757 21,556
Allowance for loan losses 115,092 116,352 111,222
Reserve for unfunded lending
commitments 5,751 4,470 6,054
Nonperforming assets (NPAs) 101,001 88,881 73,351
Net charge-offs/average
loans ratio * 1.79% 1.05% 1.19%
Allowance for loan losses/
period-end loans * 1.68% 1.66% 1.56%
Allowance for credit losses/
period-end loans * 1.77% 1.72% 1.64%
NPAs/loans and other real
estate * 1.48% 1.26% 1.03%
Allowance for loan losses/
nonperforming loans 125.55% 147.60% 175.17%
Allowance for credit losses/
nonperforming loans 131.82% 153.27% 184.71%
CAPITAL & LIQUIDITY
-------------------
Period-end tangible common
equity to assets 8.99% 8.65% 8.36%
Average equity to assets 10.11% 9.77% 9.37%
Average equity to loans 15.37% 14.72% 14.07%
Average loans to deposits 93.94% 95.57% 95.17%
AVERAGE BALANCES
----------------
Assets $10,559,231 $10,629,359 $10,884,228
Deposits 7,397,592 7,384,507 7,614,826
Loans 6,948,985 7,057,021 7,246,752
Earning assets 9,714,193 9,802,810 10,001,266
Shareholders' equity 1,068,013 1,038,824 1,019,628
ENDING BALANCES
---------------
Assets $10,538,487 $10,761,355 $10,696,962
Deposits 7,515,796 7,271,274 7,451,220
Loans 6,923,489 7,029,648 7,145,146
Goodwill 139,598 139,245 139,245
Intangible assets 1,158 1,143 1,229
Earning assets 9,685,155 9,793,244 9,869,183
Total shareholders' equity 1,075,050 1,059,209 1,022,647
(Unaudited) Quarters
--------
(Dollars in thousands)
2009 2008
1st Qtr 4th Qtr
------- -------
EARNINGS
--------
Net interest income FTE (a) $88,577 $94,855
Provision for loan losses 18,065 16,986
Other income 55,188 52,795
Other expenses 83,203 88,240
FTE adjustment (a) 1,683 1,617
Net income 29,434 29,136
Diluted EPS (b) 0.33 0.35
PERFORMANCE RATIOS
------------------
Return on average assets (ROA) 1.07% 1.08%
Return on average common
equity (ROE) 12.39% 12.47%
Net interest margin FTE (a) 3.53% 3.82%
Efficiency ratio 57.81% 60.34%
Number of full-time
equivalent employees 2,562 2,575
MARKET DATA
-----------
Book value/common share $11.84 $11.58
Period-end common share mkt
value 18.20 20.59
Market as a % of book 154% 178%
Cash dividends/common share $0.29 $0.29
Common stock dividend payout
ratio 80.56% 82.86%
Average basic common shares
(b) 82,514 82,193
Average diluted common shares
(b) 82,523 82,202
Period end common shares 81,417 80,960
Common shares repurchased 45 19
Common stock market
capitalization $1,481,789 $1,666,966
ASSET QUALITY
-------------
Gross charge-offs $18,936 $17,932
Net charge-offs 15,565 15,236
Allowance for loan losses 106,257 103,757
Reserve for unfunded lending
commitments 6,019 6,588
Nonperforming assets (NPAs) 76,243 57,526
Net charge-offs/average
loans ratio * 0.86% 0.82%
Allowance for loan losses/
period-end loans * 1.45% 1.40%
Allowance for credit losses/
period-end loans * 1.53% 1.49%
NPAs/loans and other real
estate * 1.04% 0.77%
Allowance for loan losses/
nonperforming loans 151.35% 198.76%
Allowance for credit losses/
nonperforming loans 159.93% 211.38%
CAPITAL & LIQUIDITY
-------------------
Period-end tangible common
equity to assets 7.60% 7.27%
Average equity to assets 9.66% 8.66%
Average equity to loans 14.54% 12.62%
Average loans to deposits 96.56% 96.01%
AVERAGE BALANCES
----------------
Assets $11,115,042 $10,731,029
Deposits 7,644,118 7,672,560
Loans 7,381,019 7,366,246
Earning assets 10,189,233 9,876,488
Shareholders' equity 1,073,276 929,788
ENDING BALANCES
---------------
Assets $10,972,176 $11,100,026
Deposits 7,678,213 7,597,679
Loans 7,350,763 7,425,613
Goodwill 139,245 139,245
Intangible assets 1,316 1,403
Earning assets 10,108,403 10,209,602
Total shareholders' equity 1,084,269 937,843
NOTES:
(a) - Net interest income on a fully tax-equivalent ("FTE") basis
restates interest on tax-exempt securities and loans as if such
interest were subject to federal income tax at the statutory rate.
Net interest income on an FTE basis is not an accounting principle
generally accepted in the United States of America.
(b) -Average outstanding shares and per share data restated to
reflect the effect of stock dividends declared April 28, 2009 and
August 20, 2009.
* As required by current accounting guidance, the acquired ABL loans
from First Bank Business Capital, Inc. were recorded at fair value
with no carryover of the related allowances. The ratios of our
allowance for loan and credit losses do not include these loans.
The ABL loans were acquired on December 16, 2009.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited, except December 31,
2008, which is derived from the December 31,
------------
audited financial statements) 2009 2008
---- ----
ASSETS
Cash and due from banks $161,033 $178,406
Investment securities
Held-to-maturity 178,895 158,273
Available-for-sale 2,565,943 2,614,575
Loans held for sale 16,828 11,141
Loans:
Commercial loans 4,066,522 4,352,730
Mortgage loans 463,416 547,125
Installment loans 1,425,373 1,574,587
Home equity loans 753,112 733,832
Credit card loans 153,525 149,745
Leases 61,541 67,594
------ ------
Total loans 6,923,489 7,425,613
Less allowance for loan losses (115,092) (103,757)
-------- --------
Net loans 6,808,397 7,321,856
Premises and equipment, net 125,205 133,184
Goodwill 139,598 139,245
Intangible assets 1,158 1,403
Accrued interest receivable and
other assets 541,430 541,943
------- -------
Total assets $10,538,487 $11,100,026
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand-non-interest bearing $2,069,921 $1,637,534
Demand-interest bearing 677,448 666,615
Savings and money market accounts 3,408,109 2,512,331
Certificates and other time
deposits 1,360,318 2,781,199
--------- ---------
Total deposits 7,515,796 7,597,679
--------- ---------
Securities sold under agreements
to repurchase 996,345 921,390
Wholesale borrowings 740,105 1,344,195
Accrued taxes, expenses, and
other liabilities 211,191 298,919
------- -------
Total liabilities 9,463,437 10,162,183
--------- ----------
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 --- ---
Common stock, without par value: 127,937 127,937
authorized 300,000,000 shares;
issued 93,633,871 and 92,026,350
at December 31, 2009 and 2008,
respectively
Capital surplus 88,573 94,802
Accumulated other comprehensive
loss (16,036) (54,080)
Retained earnings 1,043,625 1,053,435
Treasury stock, at cost,
6,629,995 and 11,066,108 shares
at December 31, 2009 and 2008,
respectively (169,049) (284,251)
-------- --------
Total shareholders' equity 1,075,050 937,843
--------- -------
Total liabilities and
shareholders' equity $10,538,487 $11,100,026
=========== ===========
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Quarterly Periods
(Unaudited)
December September
(Dollars in thousands) 31, 30, June 30,
2009 2009 2009
---- ---- ----
ASSETS
Cash and due from banks $167,608 $159,985 $194,381
Investment securities
Held-to-maturity 171,437 160,084 156,877
Available-for-sale 2,577,759 2,568,348 2,576,994
Fed funds sold 5 - -
Loans held for sale 16,007 17,357 20,643
Loans:
Commercial loans 4,058,851 4,105,778 4,263,114
Mortgage loans 472,829 492,089 513,982
Installment loans 1,449,091 1,492,019 1,512,929
Home equity loans 756,478 758,353 749,097
Credit card loans 151,233 149,460 146,589
Leases 60,503 59,322 61,041
------ ------ ------
Total loans 6,948,985 7,057,021 7,246,752
Less allowance for loan
losses 113,438 111,073 104,864
------- ------- -------
Net loans 6,835,547 6,945,948 7,141,888
Total earning assets 9,714,193 9,802,810 10,001,266
Premises and equipment,
net 126,073 127,096 129,433
Accrued interest
receivable and other
assets 664,795 650,541 664,012
------- ------- -------
TOTAL ASSETS $10,559,231 $10,629,359 $10,884,228
=========== =========== ===========
LIABILITIES
Deposits:
Demand-non-interest
bearing $2,028,977 $1,947,359 $1,891,792
Demand-interest bearing 651,381 647,712 671,235
Savings and money market
accounts 3,175,825 2,916,980 2,810,155
Certificates and other
time deposits 1,541,409 1,872,456 2,241,644
--------- --------- ---------
Total deposits 7,397,592 7,384,507 7,614,826
Securities sold under
agreements to repurchase 1,076,199 1,087,875 945,178
Wholesale borrowings 762,023 883,377 1,019,786
------- ------- ---------
Total funds 9,235,814 9,355,759 9,579,790
Accrued taxes, expenses
and other liabilities 255,404 234,776 284,810
------- ------- -------
Total liabilities 9,491,218 9,590,535 9,864,600
SHAREHOLDERS' EQUITY
Preferred stock - - 27,850
Common stock 127,937 127,937 127,937
Common stock warrant - - 2,820
Capital surplus 74,213 55,732 63,457
Accumulated other
comprehensive loss (9,266) (26,793) (35,569)
Retained earnings 1,047,097 1,050,359 1,056,739
Treasury stock (171,968) (168,411) (223,606)
-------- -------- --------
Total shareholders' equity 1,068,013 1,038,824 1,019,628
--------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $10,559,231 $10,629,359 $10,884,228
Quarterly Periods
(Unaudited)
December
(Dollars in thousands) March 31, 31,
2009 2008
---- ----
ASSETS
Cash and due from banks $209,922 $192,804
Investment securities
Held-to-maturity 161,217 160,283
Available-for-sale 2,623,732 2,340,639
Fed funds sold 17 424
Loans held for sale 23,248 8,896
Loans:
Commercial loans 4,337,108 4,273,123
Mortgage loans 536,498 555,713
Installment loans 1,558,374 1,596,053
Home equity loans 736,956 722,466
Credit card loans 146,355 150,133
Leases 65,728 68,758
------ ------
Total loans 7,381,019 7,366,246
Less allowance for loan losses 102,533 100,898
------- -------
Net loans 7,278,486 7,265,348
Total earning assets 10,189,233 9,876,488
Premises and equipment, net 132,156 130,511
Accrued interest receivable and
other assets 686,264 632,124
------- -------
TOTAL ASSETS $11,115,042 $10,731,029
=========== ===========
LIABILITIES
Deposits:
Demand-non-interest bearing $1,767,885 $1,607,901
Demand-interest bearing 655,279 658,208
Savings and money market accounts 2,638,166 2,534,702
Certificates and other time
deposits 2,582,788 2,871,749
--------- ---------
Total deposits 7,644,118 7,672,560
Securities sold under agreements to
repurchase 941,112 1,168,438
Wholesale borrowings 1,151,777 766,358
--------- -------
Total funds 9,737,007 9,607,356
Accrued taxes, expenses and other
liabilities 304,759 193,885
------- -------
Total liabilities 10,041,766 9,801,241
SHAREHOLDERS' EQUITY
Preferred stock 109,807 -
Common stock 127,937 127,937
Common stock warrant 4,175 -
Capital surplus 86,872 93,761
Accumulated other comprehensive
loss (49,477) (62,018)
Retained earnings 1,069,948 1,053,992
Treasury stock (275,986) (283,884)
-------- --------
Total shareholders' equity 1,073,276 929,788
--------- -------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $11,115,042 $10,731,029
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, 2009
Average Average
Balance Interest Rate
------- -------- ----
ASSETS
Cash and due from banks $167,608
Investment securities and
federal funds sold:
U.S. Treasury securities and
U.S. Government agency
obligations (taxable) 2,224,704 23,348 4.16%
Obligations of states and
political subdivisions (tax
exempt) 331,098 5,021 6.02%
Other securities and federal
funds sold 193,399 1,799 3.69%
------- -----
Total investment securities
and federal
funds sold 2,749,201 30,168 4.35%
Loans held for sale 16,007 204 5.06%
Loans 6,948,985 81,762 4.67%
--------- ------
Total earning assets 9,714,193 112,134 4.58%
Allowance for loan losses (113,438)
Other assets 790,868
-------
Total assets $10,559,231
===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand - non-interest
bearing $2,028,977 -- --
Demand - interest bearing 651,381 149 0.09%
Savings and money market
accounts 3,175,825 6,880 0.86%
Certificates and other time
deposits 1,541,409 8,413 2.17%
--------- -----
Total deposits 7,397,592 15,442 0.83%
Securities sold under
agreements to repurchase 1,076,199 1,268 0.47%
Wholesale borrowings 762,023 6,253 3.26%
------- -----
Total interest bearing
liabilities 7,206,837 22,963 1.26%
Other liabilities 255,404
Shareholders' equity 1,068,013
---------
Total liabilities and
shareholders' equity $10,559,231
===========
Net interest margin $9,714,193 89,171 3.64%
========== ====== ====
Interest rate spread 3.32%
====
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 interest margin $9,876,488 94,855 3.82%
========== ====== ====
Interest rate spread 3.42%
====
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, 2009
Average Average
Balance Interest Rate
------- -------- ----
ASSETS
Cash and due from banks $183,215
Investment securities and
federal funds sold:
U.S. Treasury securities and
U.S. Government agency
obligations (taxable) 2,222,771 97,871 4.40%
Obligations of states and
political subdivisions (tax
exempt) 321,919 19,718 6.13%
Other securities and federal
funds sold 204,272 8,394 4.11%
------- -----
Total investment securities
and federal 2,748,962 125,983 4.58%
funds sold
Loans held for sale 19,289 1,032 5.35%
Loans 7,156,983 339,381 4.74%
--------- -------
Total earning assets 9,925,234 466,396 4.70%
Allowance for loan losses (108,017)
Other assets 793,062
-------
Total assets $10,793,494
===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest
bearing $1,910,171 -- --
Demand - interest bearing 656,367 600 0.09%
Savings and money market
accounts 2,886,842 23,472 0.81%
Certificates and other time
deposits 2,056,208 54,610 2.66%
--------- ------
Total deposits 7,509,588 78,682 1.05%
Securities sold under
agreements to repurchase 1,013,167 4,764 0.47%
Wholesale borrowings 952,979 27,317 2.87%
------- ------
Total interest bearing
liabilities 7,565,563 110,763 1.46%
Other liabilities 267,835
Shareholders' equity 1,049,925
---------
Total liabilities and
shareholders' equity $10,793,494
===========
Net interest margin $9,925,234 355,633 3.58%
========== ======= ====
Interest rate spread 3.24%
====
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 2,496,544 123,496 4.95%
funds sold
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 interest margin $9,729,909 362,165 3.72%
========== ======= ====
Interest rate spread 3.25%
====
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) December 31,
2009 2008
---- ----
Interest income:
Interest and fees on loans, including held
for sale $81,907 $105,463
Interest and dividends on investment
securities and federal funds sold 28,434 29,918
------ ------
Total interest income 110,341 135,381
------- -------
Interest expense:
Interest on deposits:
Demand-interest bearing 149 370
Savings and money market accounts 6,880 6,764
Certificates and other time deposits 8,413 23,816
Interest on securities sold under agreements
to repurchase 1,268 3,752
Interest on wholesale borrowings 6,253 7,441
----- -----
Total interest expense 22,963 42,143
------ ------
Net interest income 87,378 93,238
Provision for loan losses 29,960 16,986
------ ------
Net interest income after provision for loan
losses 57,418 76,252
------ ------
Other income:
Trust department income 5,374 5,291
Service charges on deposits 16,568 15,450
Credit card fees 12,049 11,667
ATM and other service fees 2,730 2,613
Bank owned life insurance income 4,524 2,451
Investment services and insurance 2,322 1,949
Investment securities gains, net 1,934 1,555
Loan sales and servicing income 2,947 2,294
Gain on Visa Inc. redemption - 5,768
Gain on post medical retirement curtailment - -
Other operating income 4,253 3,757
----- -----
Total other income 52,701 52,795
------ ------
Other expenses:
Salaries, wages, pension and employee
benefits 45,748 46,991
Net occupancy expense 5,631 5,950
Equipment expense 6,445 6,139
Stationery, supplies and postage 2,414 2,458
Bankcard, loan processing and other costs 8,215 7,359
Professional services 6,098 3,261
Amortization of intangibles 87 87
Other operating expense 20,247 15,995
------ ------
Total other expenses 94,885 88,240
------ ------
Income before federal income tax expense 15,234 40,807
Federal income tax expense 756 11,671
--- ------
Net income $14,478 $29,136
======= =======
Other comprehensive income, net of taxes
Unrealized securities' holding gain (loss),
net of taxes $(9,880) $30,296
Unrealized hedging gain (loss), net of taxes - 209
Minimum pension liability adjustment, net of
taxes 3,899 (24,384)
Less: reclassification adjustment for
securities' gain realized in net
income, net of taxes 2,618 1,011
----- -----
Total other comprehensive gain (loss), net
of taxes (8,599) 5,110
------ -----
Comprehensive income $5,879 $34,246
====== =======
Net income applicable to common shares $14,478 $29,136
======= =======
Net income used in diluted EPS calculation $14,478 $29,136
======= =======
Weighted average number of common shares
outstanding -basic * 86,149 82,193
====== ======
Weighted average number of common shares
outstanding -diluted * 86,157 82,202
====== ======
Basic earnings per share * $0.17 $0.35
===== =====
Diluted earnings per share * $0.17 $0.35
===== =====
Stock dividend per share - -
=== ===
Dividend per share $0.16 $0.29
(Unaudited) Twelve months ended
(In thousands except per share data) December 31,
2009 2008
---- ----
Interest income:
Interest and fees on loans, including held
for sale $340,236 $436,194
Interest and dividends on investment
securities and federal funds sold 119,291 117,632
------- -------
Total interest income 459,527 553,826
------- -------
Interest expense:
Interest on deposits:
Demand-interest bearing 600 2,514
Savings and money market accounts 23,472 29,839
Certificates and other time deposits 54,610 105,853
Interest on securities sold under agreements
to repurchase 4,764 31,857
Interest on wholesale borrowings 27,317 27,574
------ ------
Total interest expense 110,763 197,637
------- -------
Net interest income 348,764 356,189
Provision for loan losses 98,433 58,603
------ ------
Net interest income after provision for loan
losses 250,331 297,586
------- -------
Other income:
Trust department income 20,683 22,127
Service charges on deposits 63,366 62,862
Credit card fees 46,512 47,054
ATM and other service fees 11,110 10,894
Bank owned life insurance income 13,740 12,008
Investment services and insurance 10,008 10,503
Investment securities gains, net 6,037 2,126
Loan sales and servicing income 12,954 6,940
Gain on Visa Inc. redemption - 13,666
Gain on post medical retirement curtailment 9,543 -
Other operating income 16,348 13,256
------ ------
Total other income 210,301 201,436
------- -------
Other expenses:
Salaries, wages, pension and employee
benefits 175,906 179,463
Net occupancy expense 24,099 24,649
Equipment expense 24,301 24,137
Stationery, supplies and postage 8,907 9,372
Bankcard, loan processing and other costs 31,467 29,456
Professional services 16,414 11,695
Amortization of intangibles 347 573
Other operating expense 71,376 51,288
------ ------
Total other expenses 352,817 330,633
------- -------
Income before federal income tax expense 107,815 168,389
Federal income tax expense 25,645 48,904
------ ------
Net income $82,170 $119,485
======= ========
Other comprehensive income, net of taxes
Unrealized securities' holding gain (loss),
net of taxes $38,994 $10,808
Unrealized hedging gain (loss), net of taxes (94) 1,342
Minimum pension liability adjustment, net of
taxes 3,068 (21,763)
Less: reclassification adjustment for
securities' gain realized in net
income, net of taxes 3,924 1,382
----- -----
Total other comprehensive gain (loss), net
of taxes 38,044 (10,995)
------ -------
Comprehensive income $120,214 $108,490
======== ========
Net income applicable to common shares $75,799 $119,485
======= ========
Net income used in diluted EPS calculation $75,799 $119,490
======= ========
Weighted average number of common shares
outstanding -basic * 84,615 82,060
====== ======
Weighted average number of common shares
outstanding -diluted * 84,623 82,097
====== ======
Basic earnings per share * $0.90 $1.46
===== =====
Diluted earnings per share * $0.90 $1.46
===== =====
Stock dividend per share $0.73% -
===== ===
Dividend per share $0.77 $1.16
* Average outstanding shares and per share data restated to reflect
the effect of stock dividends declared April 28, 2009 and August 20,
2009.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME---
LINKED QUARTERS
(Unaudited) Quarterly Results
-----------------
(Dollars in thousands, except share
data) 2009 2009 2009
4th Q 3rd Q 2nd Q
----- ----- -----
Interest and fees on loans,
including held for sale $81,907 $84,283 $86,247
Interest and dividends -securities
and federal funds sold 28,434 29,388 29,912
------ ------ ------
Total interest income 110,341 113,671 116,159
------- ------- -------
Interest on deposits:
