FIRSTMERIT CORP 
By AKRON, Ohio, Jan. 24, 2012 /PRNewswire/ --
Quarterly Highlights include:
-- 51st consecutive quarter of profitability
-- Solid linked-quarter credit trends supported by a $9.3 million, or
10.27%, decline in non-performing assets and a $0.8 million, or 5.76%,
decline in net charge-offs to 0.73% of average loans
-- Average commercial loan growth of $173.4 million, or 3.56%, from prior
quarter
-- Average core deposit growth of $226.1 million, or 2.42%, from prior
quarter
-- Strong tangible common equity ratio at 7.86%
FirstMerit Corporation (Nasdaq: FMER) reported fourth quarter 2011 net income of $30.5 million, or $0.28 per diluted share. This compares with $31.7 million, or $0.29 per diluted share, for the third quarter 2011 and $27.0 million, or $0.25 per diluted share, for the fourth quarter 2010. For the full year 2011, the Corporation reported net income of $119.6 million, or $1.10 per diluted share, compared with $102.9 million, or $1.02 per diluted share in 2010.
(Logo: http://photos.prnewswire.com/prnh/20070920/CLTU138LOGO )
Returns on average common equity ("ROE") and average assets ("ROA") for the fourth quarter 2011 were 7.70% and 0.83%, respectively, compared with 8.02% and 0.86%, respectively, for the third quarter 2011 and 7.04% and 0.74% for the fourth quarter 2010.
"Our strong performance in the fourth quarter capped a year of solid and profitable results in an environment that continues to challenge the financial industry and its customers," said Paul G. Greig, chairman, president and CEO of FirstMerit Corporation. "Among our accomplishments were continued improvements of our already strong credit quality. We also maintained a strong balance sheet with ample liquidity to support consumer and commercial loan growth in both our legacy markets and Chicago. We are also moving forward on our expense management and revenue generation initiative; we are in the process of evaluating nearly 4,000 ideas submitted by employees at all levels of the Corporation and look to begin implementation on the best of these ideas in the spring of 2012."
Mr. Greig said, "Because we have not wavered from the fundamentals of sound banking practices, we remain one of the strongest banks in the industry, providing outstanding products and service to our customers and positive returns to our shareholders."
Net interest margin was 3.85% for the fourth quarter of 2011 compared with 3.75% for the third quarter of 2011 and 4.14% for the fourth quarter of 2010. Lower deposit costs in the fourth quarter resulting from the Corporation's continued success growing core deposits drove net interest margin expansion from the prior quarter. The increase in core deposits was a significant factor in reducing average deposit costs every quarter in 2011. The decline in net interest margin compared with the fourth quarter of 2010 is attributed to lower earning asset yields in a persistently low interest rate environment.
Average loans, not including covered loans, during the fourth quarter of 2011 increased $190.6 million, or 2.55%, compared with the third quarter of 2011 and also increased $530.6 million, or 7.43%, compared with the fourth quarter of 2010. Average commercial loans increased $173.4 million, or 3.56%, compared with the prior quarter, and increased $603.8 million, or 13.58%, compared with the year ago quarter. Commercial loans remain the primary driver in average loan portfolio growth, however, average consumer loans increased moderately for the second consecutive quarter.
Average deposits were $11.4 billion during the fourth quarter of 2011, decreasing $31.1 million, or 0.27%, compared with the third quarter of 2011, and increasing $28.1 million, or 0.25%, compared with the fourth quarter of 2010. During the fourth quarter 2011, average core deposits, which exclude time deposits, increased $226.1 million, or 2.42%, compared with the third quarter 2011 and $1.2 billion, or 14.18%, compared with the fourth quarter 2010. The Corporation has successfully executed a strategy to increase the concentration of lower cost deposits within the overall deposit mix by focusing on growth in checking, money market and savings account products with less emphasis on renewing maturing certificate of deposit accounts. In addition to efficiently funding balance sheet growth, the increased concentration in core deposit accounts generally deepens and extends the length of customer relationships. Average time deposits decreased $257.2 million, or 12.25%, and decreased $1.2 billion, or 38.65%, respectively, over prior and year-ago quarters.
Average investments decreased $195.6 million, or 5.32%, compared with the third quarter of 2011 and increased $242.5 million, or 7.49% compared with the fourth quarter of 2010. As part of the Corporation's previously announced strategy to reposition the investment portfolio and extend its current duration, approximately $395.3 million of securities were sold during the fourth quarter of 2011 of which $83.5 million was used to terminate higher cost funding in Federal Home Loan Bank ("FHLB") advances and repurchase agreements as part of a deleveraging of the portfolio. Additionally, the Corporation redeemed $20.3 million in FHLB Chicago stock.
Net interest income on a fully tax-equivalent ("FTE") basis was $123.6 million in the fourth quarter 2011 compared with $121.8 million in the third quarter of 2011 and $130.2 million in the fourth quarter of 2010.
Noninterest income excluding securities transactions for the fourth quarter of 2011 was $53.9 million, a decrease of $2.4 million, or 4.30%, from the third quarter of 2011 and a decrease of $0.2 million, or 0.40%, from the fourth quarter of 2010. Other operating income in the fourth quarter of 2011 decreased $1.6 million, or 17.11%, compared with the prior quarter which included $2.7 million from gains on covered loans paid in full and $2.1 million from an increase in the fair value of interest rate lock commitments resulting from an increase in the mortgage pipeline partially offset by $2.7 million of insurance reimbursement of legal costs incurred and previously expensed.
Other income, net of $5.8 million in securities gains, as a percentage of net revenue for the fourth quarter of 2011 was 30.38% compared with 31.64% for third quarter of 2011 and 29.37% for the fourth quarter of 2010. 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 2011 was $123.9 million, an increase of $7.9 million, or 6.83%, from the third quarter of 2011 and an increase of $1.4 million, or 1.16%, from the fourth quarter of 2010. Included in other operating expense in the fourth quarter of 2011 is $4.9 million of fees related to the early termination of repurchase agreements and FHLB advances as part of the Corporation's investment portfolio repositioning strategy and $1.3 million of expense related to an increase in the liability associated with the sale of our Visa® Class B shares in 2008.
During the fourth quarter of 2011, the Corporation reported an efficiency ratio of 69.46%, compared with 64.78% for the third quarter of 2011 and 65.86% for the fourth quarter of 2010.
Net charge-offs, excluding acquired loans, totaled $13.8 million, or 0.73% of average loans, excluding acquired loans, in the fourth quarter of 2011, compared with $14.6 million, or 0.79% of average loans, in the third quarter 2011 and $21.7 million, or 1.25% of average loans, in the fourth quarter of 2010.
Nonperforming assets totaled $81.1 million at December 31, 2011, a decrease of $9.3 million, or 10.27%, compared with September 30, 2011 and a decrease of $42.4 million, or 34.34%, compared with December 31, 2010. Nonperforming assets at December 31, 2011 represented 1.06% of period-end loans plus other real estate compared with 1.21% at September 30, 2011 and 1.78% at December 31, 2010.
The allowance for noncovered loan losses totaled $107.7 million at December 31, 2011. At December 31, 2011, the allowance for noncovered loan losses was 1.41% of period-end loans compared with 1.46% at September 30, 2011 and 1.65% at December 31, 2010. The allowance for credit losses is the sum of the allowance for noncovered loan losses and the reserve for unfunded lending commitments. For comparative purposes the allowance for credit losses was 1.49% of period end loans, excluding acquired loans, at December 31, 2011, compared with 1.55% at September 30, 2011 and 1.78% at December 31, 2010. The allowance for credit losses to nonperforming loans was 176.50% at December 31, 2011, compared with 169.42% at September 30, 2011 and 118.01% at December 31, 2010.
The Corporation's total assets at December 31, 2011 were $14.4 billion, a decrease of $246.6 million, or 1.68%, compared with September 30, 2011 and an increase of $304.8 million, or 2.16%, compared with December 31, 2010.
Total deposits were $11.4 billion at December 31, 2011, an increase of $35.5 million, or 0.31%, from September 30, 2011 and an increase of $163.6 million, or 1.45%, from December 31, 2010. Core deposits totaled $9.7 billion at December 31, 2011, an increase of $235.9 million, or 2.50% from September 30, 2011 and an increase of $1.2 billion, or 14.38%, from December 31, 2010.
Shareholders' equity was $1.6 billion at December 31, 2011, compared with $1.6 billion at September 30, 2011, and $1.5 billion at December 31, 2010. The Corporation maintained a strong capital position as tangible common equity to assets was 7.86% at December 31, 2011, compared with 7.75% at September 30, 2011 and 7.59% at December 31, 2010. The common cash dividend per share paid in the fourth quarter 2011 was $0.16.
Fourth Quarter 2011 Conference Call
FirstMerit (Nasdaq: FMER) senior management will host an earnings conference call today at 11:00 a.m. (Eastern Time) to provide an overview of fourth quarter results and highlights. To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 41325090. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on January 24, 2012 through February 7, 2012 by dialing (855) 859-2056, and entering the PIN: 41325090. The Corporation will provide a slide presentation, which management will speak to during the conference call. A copy of the presentation will be available at https://www.firstmerit.com/personal/investors.aspx; click on the Presentations link to access the slide presentation.
About FirstMerit Corporation
FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of $14.4 billion as of December 31, 2011 and 206 banking offices and 214 ATMs in Ohio, Western Pennsylvania, and Chicago areas. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal wholly-owned subsidiaries include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation, FirstMerit Title Agency, Ltd., and FirstMerit Community Development Corporation.
Subsequent Events
The Corporation is required under generally accepted accounting principles to evaluate subsequent events through the filing of the its consolidated financial statements for the year ended December 31, 2011 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, 2011 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 Corporation, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, continued softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Corporation's business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Corporation's periodic reports and registration statements filed with the Securities and Exchange Commission. The Corporation undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited)
(Dollars in thousands) Quarters
--------
2011 2011 2011 2011 2010
EARNINGS 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
-------- ------- ------- ------- ------- -------
Net interest income FTE (a) $123,598 $121,788 $119,735 $124,191 $130,227
Provision for noncovered loan
losses 12,275 14,604 10,138 17,018 19,816
Provision for covered loan losses 2,773 4,768 7,481 5,331 3,572
Other income 59,737 60,772 51,491 52,756 54,311
Other expenses 123,874 115,957 110,068 114,445 122,452
FTE adjustment (a) 2,632 2,396 2,292 2,367 2,363
Net income 30,496 31,737 29,763 27,560 27,030
Diluted EPS 0.28 0.29 0.27 0.25 0.25
PERFORMANCE RATIOS
------------------
Return on average assets (ROA) 0.83% 0.86% 0.82% 0.78% 0.74%
Return on average common equity
(ROE) 7.70% 8.02% 7.78% 7.37% 7.04%
Net interest margin FTE (a) 3.85% 3.75% 3.77% 4.01% 4.14%
Efficiency ratio 69.46% 64.78% 64.30% 64.37% 65.86%
Number of full-time equivalent
employees 3,018 3,016 3,028 3,056 3,058
MARKET DATA
-----------
Book value/common share $14.33 $14.38 $14.19 $13.98 $13.86
Period-end common share mkt value 15.13 11.36 16.51 17.07 19.79
Market as a % of book 106% 79% 116% 122% 143%
Cash dividends/common share $0.16 $0.16 $0.16 $0.16 $0.16
Common stock dividend payout ratio 57.14% 55.17% 59.26% 64.00% 64.41%
Average basic common shares 109,249 109,245 109,138 108,769 108,807
Average diluted common shares 109,249 109,246 109,139 108,770 108,808
Period end common shares 109,251 109,247 109,241 108,734 108,817
Common shares repurchased 7 10 45 91 9
Common stock market capitalization $1,652,968 $1,241,046 $1,803,569 $1,856,089 $2,153,479
ASSET QUALITY (excluding acquired loans)
---------------------------------------
Gross charge-offs $18,984 $20,014 $20,958 $22,812 $27,553
Net charge-offs 13,763 14,604 15,641 17,018 21,654
Allowance for noncovered loan
losses 107,699 109,187 109,187 114,690 114,690
Reserve for unfunded lending
commitments 6,373 6,360 5,799 7,202 8,849
Nonperforming assets (NPAs) (b) 81,094 90,375 99,846 112,759 123,502
Net charge-offs/average loans
ratio (b) 0.73% 0.79% 0.89% 0.99% 1.25%
Allowance for noncovered loan
losses/period-end loans (b) 1.41% 1.46% 1.51% 1.64% 1.65%
Allowance for credit losses/
period-end loans (b) 1.49% 1.55% 1.59% 1.74% 1.78%
NPAs/loans and other real estate
(b) 1.06% 1.21% 1.38% 1.61% 1.78%
Allowance for noncovered loan
losses/nonperforming loans 166.64% 160.09% 150.31% 138.67% 109.56%
Allowance for credit losses/
nonperforming loans 176.50% 169.42% 158.30% 147.38% 118.01%
CAPITAL & LIQUIDITY
-------------------
Period-end tangible common equity
to assets 7.86% 7.75% 7.79% 7.50% 7.59%
Average equity to assets 10.75% 10.75% 10.59% 10.62% 10.51%
Average equity to total loans (c) 17.40% 17.55% 17.36% 17.14% 17.15%
Average total loans to deposits (c) 79.12% 78.18% 77.05% 78.14% 78.00%
AVERAGE BALANCES
----------------
Assets $14,623,441 $14,610,628 $14,481,208 $14,270,871 $14,493,060
Deposits 11,416,546 11,447,682 11,464,738 11,319,809 11,388,423
Loans, excluding acquired loans (c) 7,520,400 7,298,446 7,080,109 6,963,389 6,868,222
Acquired loans, including covered
loans (c) 1,512,123 1,651,559 1,753,942 1,881,540 2,014,361
Earning assets 12,747,868 12,878,105 12,724,269 12,560,913 12,466,629
Shareholders' equity 1,572,061 1,570,411 1,533,855 1,516,227 1,523,078
ENDING BALANCES
---------------
Assets $14,441,702 $14,688,278 $14,347,557 $14,466,509 $14,134,714
Deposits 11,431,609 11,396,121 11,340,939 11,395,946 11,268,006
Loans, excluding acquired loans (c) 7,635,776 7,453,612 7,216,015 6,989,973 6,937,142
Acquired loans, including covered
loans (c) 1,404,644 1,604,707 1,707,887 1,800,525 1,953,093
Goodwill 460,044 460,044 460,044 460,044 460,044
Intangible assets 8,239 8,782 9,325 9,868 10,411
Earning assets 13,011,267 12,769,183 12,926,211 12,659,414 12,427,936
Total shareholders' equity 1,565,953 1,570,654 1,550,387 1,519,957 1,507,715
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) -As required by current accounting guidance, the acquired loans and other real estate from First Bank, George Washington Savings Bank and Midwest Bank & Trust Company were recorded at fair
value with no carryover of the related allowances. The ratio of our allowance for loan and credit losses and NPAs do not include these loans and other real estate.
(c) -Excludes loss share receivable of $205.7 million, $220.5 million, $239.4 million, $266.0 million, and $288.6 million as of December 31, 2011, September 30, 2011, June 30, 2011, March 31,
2011, and December 31, 2010, respectively.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) December 31,
------------
(Unaudited, except December 31, 2010, which is derived from the audited
financial statements) 2011 2010
---- ----
ASSETS
Cash and due from banks $219,256 $157,415
Interest bearing-
deposits in banks 158,063 365,698
Total cash and
cash equivalents 377,319 523,113
Investment securities
Held-to-maturity 82,764 59,962
Available-for-sale 3,353,553 2,987,040
Other investments 140,726 160,752
Loans held for sale 30,077 41,340
Noncovered loans:
Commercial loans 5,107,747 4,527,497
Mortgage loans 413,664 403,843
Installment loans 1,263,665 1,308,860
Home equity loans 743,982 749,378
Credit card loans 146,356 149,506
Leases 73,530 63,004
------ ------
Total noncovered loans 7,748,944 7,202,088
Allowance for noncovered loan losses (107,699) (114,690)
-------- --------
Net noncovered loans 7,641,245 7,087,398
Covered loans (includes
loss share receivable
of $205.7 million and
$288.6 million at
December 31, 2011 and
2010, respectively) 1,497,140 1,976,754
Allowance for covered loan losses (36,417) (13,733)
------- -------
Net covered loans 1,460,723 1,963,021
Net loans 9,101,968 9,050,419
Premises and equipment,
net 192,949 197,866
Goodwill 460,044 460,044
Intangible assets 8,239 10,411
Other real estate
covered by FDIC loss
share 54,505 54,710
Accrued interest
receivable and other
assets 639,558 589,057
Total assets $14,441,702 $14,134,714
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-non-
interest bearing $3,030,225 $2,790,550
Demand-interest
bearing 1,062,896 868,404
Savings and money
market accounts 5,595,409 4,811,784
Certificates and
other time
deposits 1,743,079 2,797,268
--------- ---------
Total deposits 11,431,609 11,268,006
Federal funds
purchased and
securities sold
under agreements
to repurchase 866,265 777,585
Wholesale
borrowings 203,462 326,007
Accrued taxes,
expenses, and
other liabilities 374,413 255,401
------- -------
Total liabilities 12,875,749 12,626,999
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: 2011 and 2010 -115,121,731
shares 127,937 127,937
Capital surplus 479,882 485,567
Accumulated other comprehensive loss (23,887) (26,103)
Retained earnings 1,131,203 1,080,900
Treasury stock, at cost: 2011 -
5,870,923 shares; 2010 - 6,305,218
shares (149,182) (160,586)
-------- --------
Total shareholders' equity 1,565,953 1,507,715
--------- ---------
Total liabilities and shareholders'
equity $14,441,702 $14,134,714
=========== ===========
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands) Quarterly Periods
-----------------
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
---- ---- ---- ---- ----
ASSETS
Cash and due from banks $621,899 $517,150 $588,487 $520,602 $809,828
Investment securities
Held-to-maturity 89,166 85,664 79,012 64,212 64,287
Available-for-sale 3,231,195 3,429,631 3,382,943 3,194,751 3,012,983
Other investments 160,147 160,799 160,811 160,752 160,756
Loans held for sale 24,215 24,524 18,512 22,574 39,174
Noncovered loans:
Commercial loans 5,049,479 4,876,034 4,665,550 4,553,777 4,445,691
Mortgage loans 405,329 399,228 398,702 403,758 403,334
Installment loans 1,267,952 1,264,868 1,270,589 1,294,156 1,331,130
Home equity loans 744,326 741,497 736,117 741,596 754,270
Credit card loans 145,560 144,796 143,528 146,526 146,744
Leases 61,267 56,909 58,607 61,768 62,115
------ ------ ------ ------ ------
Total noncovered loans 7,673,913 7,483,332 7,273,093 7,201,581 7,143,284
Covered loans and loss
share receivable 1,569,232 1,694,155 1,809,898 1,917,043 2,046,145
--------- --------- --------- --------- ---------
Total loans 9,243,145 9,177,487 9,082,991 9,118,624 9,189,429
Less: total allowance for
loan losses 141,360 138,441 143,721 134,064 119,924
------- ------- ------- ------- -------
Net loans 9,101,785 9,039,046 8,939,270 8,984,560 9,069,505
Total earning assets 12,747,868 12,878,105 12,724,269 12,560,913 12,466,629
Premises and equipment, net 193,219 192,218 192,584 195,296 195,915
Accrued interest receivable
and other assets 1,201,815 1,161,596 1,119,589 1,128,124 1,140,612
--------- --------- --------- --------- ---------
TOTAL ASSETS $14,623,441 $14,610,628 $14,481,208 $14,270,871 $14,493,060
=========== =========== =========== =========== ===========
LIABILITIES
Deposits:
Demand-non-interest
bearing $3,013,543 $2,988,521 $2,998,090 $2,874,884 $2,816,850
Demand-interest bearing 991,456 913,252 824,125 841,545 857,960
Savings and money market
accounts 5,569,213 5,446,351 5,279,353 4,978,773 4,710,682
Certificates and other time
deposits 1,842,334 2,099,558 2,363,170 2,624,607 3,002,931
--------- --------- --------- --------- ---------
Total deposits 11,416,546 11,447,682 11,464,738 11,319,809 11,388,423
Federal funds purchased and
securities sold under
agreements to repurchase 999,639 969,020 884,244 848,169 904,163
Wholesale borrowings 225,116 320,691 325,057 325,296 368,397
------- ------- ------- ------- -------
Total funds 12,641,301 12,737,393 12,674,039 12,493,274 12,660,983
Accrued taxes, expenses and
other liabilities 410,079 302,824 273,314 261,370 308,999
------- ------- ------- ------- -------
Total liabilities 13,051,380 13,040,217 12,947,353 12,754,644 12,969,982
SHAREHOLDERS' EQUITY
Common stock 127,937 127,937 127,937 127,937 127,937
Capital surplus 479,257 477,864 479,078 486,907 485,126
Accumulated other
comprehensive loss (15,198) (2,211) (16,402) (26,703) (9,867)
Retained earnings 1,129,392 1,116,207 1,095,270 1,089,554 1,080,809
Treasury stock (149,327) (149,386) (152,028) (161,468) (160,927)
-------- -------- -------- -------- --------
Total shareholders' equity 1,572,061 1,570,411 1,533,855 1,516,227 1,523,078
--------- --------- --------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $14,623,441 $14,610,628 $14,481,208 $14,270,871 $14,493,060
=========== =========== =========== =========== ===========
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
(Unaudited)
(Dollars in thousands)
Three months ended Three months ended
------------------ ------------------
December 31, 2011 December 31, 2010
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
ASSETS
Cash and due from banks $621,899 $809,828
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government agency obligations (taxable) 2,761,042 19,028 2.73% 2,579,880 19,337 2.97%
Obligations of states and political subdivisions (tax exempt) 403,405 5,568 5.48% 352,330 5,329 6.00%
-----
Other securities and federal funds sold 316,061 2,406 3.02% 305,816 2,158 2.80%
------- ----- ------- -----
Total investment securities and federal funds sold 3,480,508 27,002 3.08% 3,238,026 26,824 3.29%
Loans held for sale 24,215 266 4.36% 39,174 470 4.76%
Noncovered loans, covered loans and loss share receivable 9,243,145 107,612 4.62% 9,189,429 121,434 5.24%
--------- ------- --------- -------
Total earning assets 12,747,868 134,880 4.20% 12,466,629 148,728 4.73%
Allowance for loan losses (141,360) (119,924)
Other assets 1,395,034 1,335,616
--------- ---------
Total assets $14,623,441 $14,492,149
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $3,013,543 - - $2,816,850 - -
Demand - interest bearing 991,456 237 0.09% 857,960 198 0.09%
Savings and money market accounts 5,569,213 5,999 0.43% 4,710,682 8,145 0.69%
Certificates and other time deposits 1,842,334 3,201 0.69% 3,002,931 7,209 0.95%
--------- ----- --------- -----
Total deposits 11,416,546 9,437 0.33% 11,388,423 15,552 0.54%
Securities sold under agreements to repurchase 999,639 512 0.20% 904,163 960 0.42%
Wholesale borrowings 225,116 1,334 2.35% 368,397 1,989 2.14%
------- ----- ------- -----
Total interest bearing liabilities 9,627,758 11,283 0.46% 9,844,133 18,501 0.75%
Other liabilities 410,079 308,088
Shareholders' equity 1,572,061 1,523,078
---------
Total liabilities and shareholders' equity $14,623,441 14,492,149
Net yield on earning assets $12,747,868 123,597 3.85% 12,466,629 130,227 4.14%
Interest rate spread 3.73% 3.99%
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
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
(Unaudited)
(Dollars in thousands)
Twelve months ended Twelve months ended
------------------- -------------------
December 31, 2011 December 31, 2010
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
ASSETS
Cash and due from banks $562,133 $728,723
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government agency obligations (taxable) 2,869,664 78,202 2.73% 2,554,538 87,019 3.41%
Obligations of states and political subdivisions (tax exempt) 378,834 21,277 5.62% 348,832 21,454 6.15%
Other securities and federal funds sold 301,786 8,842 2.93% 300,700 8,508 2.83%
------- ----- ------- -----
Total investment securities and federal funds sold 3,550,284 108,321 3.05% 3,204,070 116,981 3.65%
Loans held for sale 22,467 1,045 4.65% 23,612 1,162 4.92%
Noncovered loans, covered loans and loss share receivable 9,155,973 438,579 4.79% 8,529,303 433,308 5.08%
--------- ------- --------- -------
Total earning assets 12,728,724 547,945 4.30% 11,756,985 551,451 4.69%
Allowance for loan losses (139,414) (116,118)
Other assets 1,343,887 1,154,761
Total assets $14,495,330 $13,524,351
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non-interest bearing $2,969,137 - - $2,550,849 - -
Demand - interest bearing 893,062 816 0.09% 794,497 751 0.09%
Savings and money market accounts 5,320,392 28,171 0.53% 4,303,815 31,912 0.74%
Certificates and other time deposits 2,229,910 20,003 0.90% 2,801,270 32,713 1.17%
--------- ------ --------- ------
Total deposits 11,412,501 48,990 0.43% 10,450,431 65,376 0.63%
Securities sold under agreements to repurchase 925,803 3,344 0.36% 907,015 4,477 0.49%
Wholesale borrowings 298,835 6,295 2.11% 510,799 13,998 2.74%
------- ----- ------- ------
Total interest bearing liabilities 9,668,002 58,629 0.61% 9,317,396 83,851 0.90%
Other liabilities 309,838 340,485
Shareholders' equity 1,548,353 1,315,621
---------
Total liabilities and shareholders' equity $14,495,330 $13,524,351
Net yield on earning assets $12,728,724 489,316 3.84% $11,756,985 467,600 3.98%
Interest rate spread 3.70% 3.79%
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)
(Dollars and shares in thousands, except per share data) Quarters ended Twelve months ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Interest income:
Loans and loans
held for sale $107,516 $121,651 $438,393 $433,763
Investment
securities
Taxable 21,434 21,495 87,044 95,527
Tax-exempt 3,298 3,219 12,819 13,080
----- ----- ------ ------
Total
investment
securities
interest 24,732 24,714 99,863 108,607
Total interest income 132,248 146,365 538,256 542,370
------- -------
Interest expense:
Deposits:
Demand-
interest
bearing 237 198 816 751
Savings and
money
market
accounts 5,998 8,145 28,171 31,912
Certificates
and other
time
deposits 3,201 7,209 20,003 32,713
Securities sold
under
agreements to
repurchase 512 960 3,344 4,477
Wholesale
borrowings 1,334 1,989 6,295 13,998
Total
interest
expense 11,282 18,501 58,629 83,851
------ ------ ------ ------
Net interest
income 120,966 127,864 479,627 458,519
Provision for noncovered loan losses 12,275 19,816 54,035 83,783
Provision for covered loan losses 2,773 3,572 20,353 4,432
----- ----- ------ -----
Net interest
income
after
provision
for loan
losses 105,918 104,476 405,239 370,304
------- ------- ------- -------
Other income:
Trust department
income 5,413 5,627 22,396 21,951
Service charges
on deposits 15,622 15,938 64,082 65,900
Credit card fees 10,182 12,678 49,539 49,010
ATM and other
service fees 3,920 2,910 13,701 11,259
Bank owned life
insurance
income 3,381 3,192 14,820 14,949
Investment
services and
insurance 1,844 2,300 8,228 9,451
Investment
securities
gains, net 5,790 146 11,081 855
Loan sales and
servicing
income 5,875 9,221 14,533 19,440
Gain on George
Washington
acquisition - - - 1,041
Other operating
income 7,710 2,299 26,377 18,700
Total other
income 59,737 54,311 224,757 212,556
------ ------- -------
Other expenses:
Salaries, wages,
pension and
employee
benefits 62,546 62,331 240,362 221,316
Net occupancy
expense 7,270 9,236 32,414 32,665
Equipment
expense 7,234 7,549 27,959 27,664
Stationery,
supplies and
postage 2,719 3,183 10,691 11,438
Bankcard, loan
processing and
other costs 7,948 7,810 32,226 31,572
Professional
services 5,763 7,731 23,229 29,357
Amortization of
intangibles 543 1,006 2,172 2,914
FDIC expense 5,119 4,342 17,306 17,790
Other operating
expense 24,732 19,264 77,986 68,144
Total other
expenses 123,874 122,452 464,345 442,860
------- ------- -------
Income before income tax
expense 41,781 36,335 165,651 140,000
Income tax expense 11,285 9,305 46,093 37,091
------ ----- ------ ------
Net income $30,496 $27,030 $119,558 $102,909
------- -------- --------
Other comprehensive income, net of taxes
Changes in
unrealized
securities'
holding gains
and losses $1,317 $(21,560) $26,205 $(555)
Reclassification
for realized
securities'
gains (3,764) (95) (7,203) (556)
Change in
minimum pension
liability (16,786) 467 (16,786) 467
Total other
comprehensive
gain (loss),
net of taxes (19,233) (21,188) 2,216 (644)
Comprehensive
income $11,263 $5,842 $121,774 $102,265
Net income
applicable to
common shares $30,496 $27,030 $119,558 $102,909
Net income used
in diluted EPS
calculation $30,496 $27,030 $119,558 $102,909
Weighted average number of common shares outstanding -
basic 109,249 108,807 109,102 101,163
======= ======= ======= =======
Weighted average number of common shares outstanding -
diluted 109,249 108,808 109,102 101,165
======= ======= ======= =======
Basic earnings per common share $0.28 $0.25 $1.10 $1.02
Diluted earnings per common share $0.28 $0.25 $1.10 $1.02
Dividend per common share $0.16 $0.16 $0.64 $0.64
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME---LINKED QUARTERS
(Unaudited)
(Dollars and shares in thousands,
except per share data)
Quarterly Results
-----------------
2011 2011 2011 2011 2010
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- -------
Loans and loans held
for sale $107,516 $108,417 $107,904 $114,555 $121,651
Investment securities 24,732 25,138 25,313 24,680 24,714
------ ------ ------ ------ ------
Total interest income 132,248 133,555 133,217 139,235 146,365
Interest on deposits:
Demand-interest bearing 237 218 177 184 198
Savings and money market accounts 5,998 6,929 7,398 7,845 8,145
Certificates and other time
deposits 3,201 4,370 5,606 6,827 7,209
Securities sold under agreements
to repurchase 512 977 940 915 960
Wholesale borrowings 1,334 1,669 1,653 1,640 1,989
----- -----
Total interest expense 11,282 14,163 15,774 17,411 18,501
Net interest income 120,966 119,392 117,443 121,824 127,864
Provision for noncovered loan
losses 12,275 14,604 10,138 17,018 19,816
Provision for covered loan losses 2,773 4,768 7,481 5,331 3,572
----- ----- ----- ----- -----
Net interest income after
provision for loan losses 105,918 100,020 99,824 99,475 104,476
Other income:
Trust department income 5,413 5,607 5,863 5,514 5,627
Service charges on deposits 15,622 17,838 15,712 14,910 15,938
Credit card fees 10,182 13,640 13,510 12,207 12,678
ATM and other service fees 3,920 3,801 3,063 2,917 2,910
Bank owned life insurance income 3,381 3,182 3,015 5,241 3,192
Investment services and insurance 1,844 1,965 1,972 2,447 2,300
Investment securities gains, net 5,790 4,402 889 - 146
Loan sales and servicing income 5,875 1,036 2,609 5,012 9,221
Other operating income 7,710 9,301 4,858 4,508 2,299
-----
Total other income 59,737 60,772 51,491 52,756 54,311
Other expenses:
Salaries, wages, pension and
employee benefits 62,546 61,232 56,713 59,871 62,331
Net occupancy expense 7,270 8,464 8,086 8,594 9,236
Equipment expense 7,234 7,073 6,816 6,836 7,549
Stationery, supplies and postage 2,719 2,517 2,750 2,705 3,183
Bankcard, loan processing and
other costs 7,948 8,449 8,266 7,562 7,810
Professional services 5,763 5,732 5,940 5,793 7,731
Amortization of intangibles 543 543 543 543 1,006
FDIC expense 5,119 3,240 4,581 4,366 4,342
Other operating expense 24,732 18,707 16,373 18,175 19,264
------ ------ ------ ------
Total other expenses 123,874 115,957 110,068 114,445 122,452
Income before income tax expense 41,781 44,835 41,247 37,786 36,335
Income taxes 11,285 13,098 11,484 10,226 9,305
------ ------ ------ ------ -----
Net income $30,496 $31,737 $29,763 $27,560 $27,030
Other comprehensive income
(loss), net of taxes (19,233) 4,491 16,620 338 (21,188)
=======
Comprehensive income $11,263 $36,228 $46,383 $27,898 $5,842
Net income applicable
to common shares $30,496 $31,737 $29,763 $27,560 $27,030
Adjusted net income
used in diluted EPS
calculation $30,496 $31,737 $29,763 $27,560 $27,030
Weighted-average common shares
outstanding - basic 109,249 109,245 109,138 108,769 108,807
======= ======= ======= ======= =======
Weighted-average common shares
outstanding - diluted 109,249 109,246 109,139 108,770 108,808
======= ======= ======= ======= =======
Basic net income per
common share $0.28 $0.29 $0.27 $0.25 $0.25
Diluted net income per
common share $0.28 $0.29 $0.27 $0.25 $0.25
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION (Excluding Acquired Assets)
(Unaudited, except December 31, 2010 annual period
which is derived from the audited financial statements)
(Dollars in thousands, except ratios)
Quarterly Periods Annual Period
----------------- -------------
December 31, September 30, June 30, March 31, December 31, December 31,
Allowance for Credit Losses 2011 2011 2011 2011 2010 2010
---- ---- ---- ---- ---- ----
Allowance for noncovered loan losses, beginning of period $109,187 $109,187 $114,690 $114,690 $116,528 $115,092
Provision for noncovered loan losses 12,275 14,604 10,138 17,018 19,816 83,783
Charge-offs 18,984 20,014 20,958 22,812 27,553 104,532
Recoveries 5,221 5,410 5,317 5,794 5,899 20,347
Net charge-offs 13,763 14,604 15,641 17,018 21,654 84,185
Allowance for noncovered loan losses, end of period $107,699 $109,187 $109,187 $114,690 $114,690 $114,690
Reserve for unfunded lending commitments,
beginning of period $6,360 $5,799 $7,202 $8,849 $7,864 $5,751
Provision for / (relief of) credit losses 13 561 (1,403) (1,647) 985 3,098
--- --- ------ ------ --- -----
Reserve for unfunded lending commitments,
end of period $6,373 $6,360 $5,799 $7,202 $8,849 $8,849
Allowance for Credit Losses $114,072 $115,547 $114,986 $121,892 $123,539 $123,539
Ratios (a)
Provision for loan losses as a % of average loans 0.65% 0.79% 0.57% 0.99% 1.14% 1.23%
Provision for credit losses as a % of average loans 0.00% 0.03% -0.08% -0.10% 0.06% 0.05%
Net charge-offs as a % of average loans 0.73% 0.79% 0.89% 0.99% 1.25% 1.23%
Allowance for loan losses as a % of period-end loans 1.41% 1.46% 1.51% 1.64% 1.65% 1.65%
Allowance for credit losses as a % of period-end loans 1.49% 1.55% 1.59% 1.74% 1.78% 1.78%
Allowance for loan losses as a % of nonperforming loans 166.64% 160.09% 150.31% 138.67% 109.56% 109.56%
Allowance for credit losses as a % of nonperforming loans 176.50% 169.42% 158.30% 147.38% 118.01% 118.01%
Asset Quality (a)
Impaired loans:
Nonaccrual $55,755 $59,928 $63,688 $71,246 $89,828 $89,828
Other nonperforming loans:
Nonaccrual 8,876 8,275 8,951 11,460 14,859 14,859
----- ----- ----- ------ ------ ------
Total nonperforming loans 64,631 68,203 72,639 82,706 104,687 104,687
Other real estate ("ORE") 16,463 22,172 27,207 30,053 18,815 18,815
------ ------ ------ ------ ------ ------
Total nonperforming assets ("NPAs") $81,094 $90,375 $99,846 $112,759 $123,502 $123,502
NPAs as % of period-end loans + ORE 1.06% 1.21% 1.38% 1.61% 1.78% 1.78%
==== ==== ==== ==== ==== ====
Past due 90 days or more & accruing interest $8,866 $6,268 $10,424 $5,652 $22,017 $22,017
(a) Excludes acquired loans and loss share receivable with a period end balance of $1.6 billion, $1.6 billion, $1.7 billion and $2.1 billion, and $2.3 billion and ORE covered by an FDIC loss share with a period end balance of $54.5 million, $61.9 million, $58.5 million, $58.7 million, $54.7 million at December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011, and
December 2010, respectively, which, as required by current accounting guidance, were recorded at fair value on the date of acquisition.
FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
(Unaudited)
(Dollars in
thousands)
2011 2011 2011 2011 2010
QUARTERLY OTHER
INCOME DETAIL 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- -------
Trust department
income $5,413 $5,607 $5,863 $5,514 $5,627
Service charges on
deposits 15,622 17,838 15,712 14,910 15,938
Credit card fees 10,182 13,640 13,510 12,207 12,678
ATM and other
service fees 3,920 3,801 3,063 2,917 2,910
Bank owned life
insurance income 3,381 3,182 3,015 5,241 3,192
Investment
services and
insurance 1,844 1,965 1,972 2,447 2,300
Investment
securities gains,
net 5,790 4,402 889 0 146
Loan sales and
servicing income 5,875 1,036 2,609 5,012 9,221
Other operating
income 7,710 9,301 4,858 4,508 2,299
Total Other Income $59,737 $60,772 $51,491 $52,756 $54,311
======= ======= ======= ======= =======
2011 2011 2011 2011 2010
QUARTERLY OTHER
EXPENSES DETAIL 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- -------
Salaries, wages,
pension and
employee benefits $62,546 $61,232 $56,713 $59,871 $62,331
Net occupancy
expense 7,270 8,464 8,086 8,594 9,236
Equipment expense 7,234 7,073 6,816 6,836 7,549
Taxes, other than
federal income
taxes 1,389 1,507 922 1,960 2,021
Stationery,
supplies and
postage 2,719 2,517 2,750 2,705 3,183
Bankcard, loan
processing and
other costs 7,948 8,449 8,266 7,562 7,810
Advertising 2,275 2,391 2,287 2,384 3,094
Professional
services 5,763 5,732 5,940 5,793 7,731
Telephone 1,525 1,570 1,462 1,486 1,579
Amortization of
intangibles 543 543 543 543 1,006
FDIC expense 5,119 3,240 4,581 4,366 4,342
Other operating
expense 19,543 13,239 11,702 12,345 12,570
Total Other
Expenses $123,874 $115,957 $110,068 $114,445 $122,452
======== ======== ======== ======== ========
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR NONCOVERED LOAN LOSSES - Net Charge-off Detail
(Unaudited)
(Dollars in thousands)
Quarters ended Twelve months ended
December 31, December 31,
2011 2010 2011 2010
---- ---- ---- ----
Allowance for
noncovered loan
losses -beginning
of period $109,187 $116,528 $114,690 $115,092
Loans charged off:
Commercial 7,418 13,225 31,943 39,766
Mortgage 1,033 962 4,819 5,156
Installment 5,635 8,665 25,839 34,054
Home equity 2,491 1,158 8,691 7,912
Credit cards 1,711 2,497 7,846 13,577
Leases 0 204 778 896
Overdrafts 696 842 2,852 3,171
Total 18,984 27,553 82,768 104,532
------ ------ ------ -------
Recoveries:
Commercial 850 647 2,703 1,952
Mortgage 29 62 221 263
Installment 2,890 4,003 13,639 13,047
Home equity 730 417 1,985 1,599
Credit cards 475 518 2,264 2,199
Manufactured housing 56 34 119 156
Leases 2 27 37 267
Overdrafts 189 191 774 864
Total 5,221 5,899 21,742 20,347
----- ----- ------ ------
Net charge-offs 13,763 21,654 61,026 84,185
Provision for noncovered loan
losses 12,275 19,816 54,035 83,783
Allowance for
noncovered loan
losses -end of
period $107,699 $114,690 $107,699 $114,690
Average loans (a) $7,520,400 $6,868,222 $7,217,349 $6,818,962
Ratio to average loans (a):
(Annualized) net charge-offs 0.73% 1.25% 0.85% 1.23%
==== ==== ==== ====
Provision for loan losses 0.65% 1.14% 0.75% 1.23%
==== ==== ==== ====
Loans, period-end
(a) $7,635,776 $6,937,142 7,635,776 $6,937,142
Allowance for credit losses (a):
As a multiple of (annualized)
net charge-offs 114,072 $123,539 $114,072 $123,539
======= ======== ======== ========
Allowance for loan losses (a): 2.09 1.44 1.87 1.47
==== ==== ==== ====
As a percent of period-end
loans
As a multiple of (annualized)
net noncovered charge-offs 1.41% 1.65% 1.41% 1.65%
==== ==== ==== ====
1.97 1.34 1.76 1.36
==== ==== ==== ====
(a) Excludes acquired loans and loss share receivable.
FirstMerit Corporation
Analysts: Thomas O'Malley/Investor Relations Officer
Phone: 330.384.7109
Media Contact: Robert Townsend/Media Relations Officer
Phone: 330.384.7075
SOURCE FirstMerit Corporation
