CST: 30/06/2016 01:41:21   

FirstMerit Reports Fourth Quarter 2015 EPS of $0.33 per Share

156 Days ago

AKRON, OH --(Marketwired - January 26, 2016) -  FirstMerit Corporation (NASDAQ: FMER)

Quarterly Highlights include:

  • FirstMerit announces a merger between Huntington Bancshares Incorporated and FirstMerit Corporation
  • Profitability Sustained : 67th consecutive quarter of profitability.
  • Loan growth continued: Total loan growth of $277.7 million, or 1.76% from the prior quarter.
  • Credit quality remained solid:  Net charge-offs to average originated loans of 0.33%.
  • Balance sheet remained strong:  Strong tangible common equity ratio1 at 8.24%.

FirstMerit Corporation (NASDAQ: FMER) (the "Corporation") today announced a merger with Huntington Bancshares Incorporated. The details of the merger are contained within a joint press release issued by the two companies today. The Corporation reported fourth quarter 2015 net income of $56.7 million, or $0.33 per diluted share. This compares with $59.0 million, or $0.34 per diluted share, for the third quarter 2015 and $61.1 million, or $0.36 per diluted share, for the fourth quarter 2014.

"Today's announcement of the merger with Huntington Bancshares reflects a compelling and strategic opportunity to join two great companies and create enhanced value for our shareholders. Prior to the closing of the announced transaction, we will continue to focus on growing organically, increasing our loan portfolio and maintaining our balance sheet strength. As we exhibited this quarter and throughout 2015, this focus resulted in strong credit quality, core deposit growth and solid customer relationships. We plan for a smooth and seamless integration for our customers and employees," said Paul Greig, Chairman, President and CEO of FirstMerit Corporation.

1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

Earnings Summary

                     
                Change 4Q 2015 vs.
    2015   2015   2014   2015   2014
(Dollars in thousands, except per share amounts)   4th qtr   3rd qtr   4th qtr   3rd qtr   4th qtr
Net interest income TE 1   $ 188,979     $ 189,119     $ 196,509     (0.07 )%   (3.83 )%
Diluted earnings per common share     0.33       0.34       0.36     (2.94 )   (8.33 )
Net interest margin on TE basis1     3.30 %     3.33 %     3.56 %            
Return on average assets     0.89       0.93       0.98              
Return on average common equity     7.65       8.05       8.50              
Return on average tangible common equity 1     11.04       11.69       12.52              
                                     
                                     

 Net interest income TE was flat as compared to the third quarter 2015. Higher interest income on originated loans offset lower interest income on acquired and FDIC acquired loans. The net interest margin on a TE basis in the fourth quarter of 2015 declined three basis points over the prior quarter primarily from runoff in the acquired and FDIC acquired portfolios, and marginally lower yields on earning assets.

Loans

Average originated loans were $13.9 billion during the fourth quarter 2015, an increase of $335.6 million, or 2.48%, compared with the third quarter 2015, and an increase of $1.6 billion, or 12.66%, compared with the fourth quarter 2014. The loan growth was driven primarily by commercial and installment loans. Average originated commercial loans increased $137.3 million, or 1.58%, compared with the prior quarter, and increased $735.5 million, or 9.10%, compared with the year-ago quarter. 

Average originated installment loans increased $133.7 million, or 4.75%, compared with the prior quarter, and increased $597.4 million, or 25.38%, compared with the year-ago quarter.

Deposits

Average deposits were $20.0 billion during the fourth quarter 2015, an increase of $45.2 million, or 0.23%, compared with the third quarter 2015, and an increase of $552.1 million, or 2.84%, compared with the fourth quarter 2014. Average core deposits were $17.7 billion during the fourth quarter 2015, or 88.71% of total average deposits, an increase of $11.8 million, or 0.07%, compared with the third quarter 2015 and an increase of $634.4 million, or 3.71%, compared with the fourth quarter 2014.

1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

Noninterest Income

                     
                Change 4Q 2015 vs.
    2015   2015   2014   2015   2014
(Dollars in thousands)   4th qtr   3rd qtr   4th qtr   3rd qtr   4th qtr
Trust department income   $ 10,208     $ 10,948     $ 9,831     (6.76 )%   3.83 %
Service charges on deposits     16,793       17,295       17,597     (2.90 )   (4.57 )
Credit card fees     13,931       13,939       13,305     (0.06 )   4.70  
ATM and other service fees     6,626       6,518       6,181     1.66     7.20  
Bank owned life insurance income     3,836       4,622       7,337     (17.01 )   (47.72 )
Investment services and insurance     3,816       4,032       4,171     (5.36 )   (8.51 )
Investment securities gains/(losses), net     (5 )     41       16     (112.20 )   (131.25 )
Loan sales and servicing income     2,276       2,414       3,112     (5.72 )   (26.86 )
Other operating income     7,662       11,617       10,410     (34.04 )   (26.40 )
Total noninterest income   $ 65,143     $ 71,426     $ 71,960     (8.80 )%   (9.47 )%
                                     
Noninterest income, excluding net securities gains, as a percentage of net revenue1     25.64 %     27.40 %     26.80 %            
                                     

Noninterest income, excluding gains and losses on securities transactions1, for the fourth quarter 2015 was $65.1 million, a decrease of $6.2 million, or 8.74%, from the third quarter 2015 and a decrease of $6.8 million, or 9.45%, from the fourth quarter 2014. Other operating income decreased $4.0 million, or 34.04%, from the prior quarter primarily due to the denial in the fourth quarter by the FDIC of four disputed claims of $6.0 million claimed on the final commercial loss share certificate at June 30, 2015.

1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

Noninterest Expense

                     
                Change 4Q 2015 vs.
    2015   2015   2014   2015   2014
(Dollars in thousands)   4th qtr   3rd qtr   4th qtr   3rd qtr   4th qtr
Salaries and wages   $ 68,151     $ 68,775     $ 71,638     (0.91 )%   (4.87 )%
Pension and employee benefits     18,339       16,997       18,261     7.90     0.43  
Net occupancy expense     12,716       13,540       14,188     (6.09 )   (10.37 )
Equipment expense     12,074       12,235       12,133     (1.32 )   (0.49 )
Taxes, other than federal income taxes     2,096       2,003       1,661     4.64     26.19  
Stationary, supplies and postage     3,222       3,304       3,767     (2.48 )   (14.47 )
Bankcard, loan processing and other costs     11,146       12,335       11,830     (9.64 )   (5.78 )
Advertising     3,386       4,278       3,586     (20.85 )   (5.58 )
Professional services     5,056       5,154       6,440     (1.90 )   (21.49 )
Telephone     2,530       2,480       2,779     2.02     (8.96 )
Amortization of intangibles     2,598       2,598       2,933     -     (11.42 )
FDIC expense     5,252       5,234       5,989     0.34     (12.31 )
Other operating expenses     9,056       11,809       9,836     (23.31 )   (7.93 )
Total noninterest expense   $ 155,622     $ 160,742     $ 165,041     (3.19 )%   (5.71 )%
                                     
Efficiency ratio1     60.22 %     60.71 %     60.39 %            
                                     

Noninterest expense for the fourth quarter 2015 was $155.6 million, a decrease of $5.1 million, or 3.19%, from the third quarter 2015, and a decrease of $9.4 million, or 5.71%, from the fourth quarter 2014. Salaries and wages and employee benefits decreased $3.4 million, or 3.8%, compared with the year ago-period reflecting 347, or 8.1%, fewer full time equivalent employees. Other operating expense decreased $2.8 million, or 23.31%, from the prior quarter primarily due to the favorable re-estimation of certain repurchase reserve liabilities as of December 31, 2015.

Provision for Income Taxes

The effective tax rate was 30.06% for the fourth quarter 2015, compared with 27.80% for the third quarter 2015, and 29.09% for the fourth quarter 2014.

1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

Asset Quality (excluding acquired loans and covered assets)

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

                     
                Change 4Q 2015 vs.
    2015   2015   2014   2015   2014
(Dollars in thousands)   4th qtr   3rd qtr   4th qtr   3rd qtr   4th qtr
Net charge-offs   $ 11,407     $ 8,029     $ 3,849     42.07 %   196.36 %
Net charge-offs on average originated loans     0.33 %     0.24 %     0.12 %            
Nonperforming loans at period end   $ 44,105     $ 47,036     $ 34,617     (6.23 )   27.41  
Nonperforming assets at period end     94,498       107,058       55,038     (11.73 )   71.70  
Allowance for loan losses     105,135       104,055       95,696     1.04     9.86  
Allowance for loan losses to nonperforming loans     238.37 %     221.22 %     276.44 %            
Provision for originated loan losses   $ 12,487     $ 10,402     $ 8,662     20.04     44.16  
                                     
                                     

Nonperforming assets totaled $94.5 million at December 31, 2015, a decrease of $12.6 million, or 11.73%, compared with September 30, 2015 and an increase of $39.5 million, or 71.70%, compared with December 31, 2014. Nonperforming assets at December 31, 2015 represented 0.67% of period-end originated loans plus noncovered other real estate compared with 0.78% at September 30, 2015 and 0.44% at December 31, 2014. Included in nonperforming assets as of December 31, 2015 were $33.5 million of OREO no longer covered by FDIC loss share agreements.

The allowance for originated loan losses totaled $105.1 million at December 31, 2015. At December 31, 2015, the allowance for originated loan losses was 0.74% of period-end originated loans, compared with 0.76% at September 30, 2015 and 0.77% at December 31, 2014. The allowance for originated loan losses at December 31, 2015 compared to September 30, 2015 increased by $1.1 million and increased by $9.4 million compared to December 31, 2014 due to continued loan growth. The allowance for credit losses is the sum of the allowance for originated loan losses and the reserve for unfunded lending commitments. The allowance for credit losses was 0.77% of period end originated loans at December 31, 2015, compared with 0.79% at September 30, 2015 and 0.81% at December 31, 2014. The allowance for credit losses to nonperforming loans was 247.60% at December 31, 2015, compared with 228.82% at September 30, 2015 and 293.34% at December 31, 2014.

Capital

Shareholders' equity was $2.9 billion at both, December 31, 2015 and September 30, 2015 and $2.8 billion as of December 31, 2014. The Corporation continued to have a strong capital position as tangible common equity1 to assets was 8.24% at December 31, 2015, compared with 8.31% at September 30, 2015 and 7.98% at December 31, 2014. The common share cash dividend paid in the fourth quarter 2015 was $0.17 per share, and $0.66 for full year of 2015.

1 - See Non-GAAP Financial Measures section of this release for a reconciliation to financial measures as defined by GAAP.

On January 1, 2015, the Corporation became subject to the Basel III capital framework and standardized approach for calculating risk-weighted assets. At December 31, 2015, Basel III capital ratios on a transitional basis remain well in excess of applicable regulatory requirements, with a total risk-based capital ratio of 13.77%, and a common equity tier 1 risk-based capital ratio of 10.68%.

Non-GAAP Financial Measures

In addition to results presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this news release contains certain non-GAAP financial information and performance measures. The Corporation's management uses these non-GAAP financial measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations of the Corporation and enhance comparability of results with prior periods, and facilitate investors' assessments of business and performance trends in comparison to others in the financial services industry. The Corporation believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. The Corporation's management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the Corporation's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The Corporation evaluates its net interest income on a fully taxable-equivalent basis, a non-GAAP financial measure. The Corporation believes managing the business with net interest income on a fully taxable-equivalent basis provides a more accurate picture of the interest margin for comparative purposes. Total revenue, net of interest expense, includes net interest income on a fully taxable-equivalent basis and noninterest income excluding gains and losses on the sale of securities. The Corporation views related ratios and analysis (i.e., efficiency ratios) on a fully taxable-equivalent basis. To derive the fully taxable-equivalent basis, net interest income is adjusted to reflect tax-exempt income on an equivalent before-tax basis with a corresponding increase in income tax expense. For purposes of this calculation, the Corporation uses the federal statutory tax rate of 35 percent. This measure ensures comparability of net interest income arising from taxable and tax-exempt sources.

The Corporation also evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents an adjusted shareholders' equity or common shareholders' equity amount which has been reduced by goodwill and intangible assets. Return on average tangible common shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average common shareholders' equity. The tangible common equity ratio represents adjusted ending common shareholders' equity divided by total assets less goodwill and intangible assets. Return on average tangible shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average total shareholders' equity. The tangible equity ratio represents adjusted ending shareholders' equity divided by total assets less goodwill and intangible assets. Tangible book value per common share represents adjusted ending common shareholders' equity divided by ending common shares outstanding. These measures are used to evaluate the Corporation's use of equity. In addition, profitability, relationship and investment models all use return on average tangible shareholders' equity as key measures to support our overall growth goals.

The following tables provide reconciliations of these non-GAAP measures to financial measures defined by GAAP.

Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis
 
  Quarters
(unaudited) 2015 2015 2015 2015 2014
(Dollars in thousands) 4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
Net interest income (GAAP) $ 185,231   $ 185,323   $ 185,118   $ 185,623   $ 192,511  
Plus: Fully taxable-equivalent adjustment   3,748     3,796     3,900     3,931     3,998  
Net interest income on a fully taxable-equivalent basis (non-GAAP)   188,979     189,119     189,018     189,554     196,509  
Average earning assets   22,747,631     22,548,977     22,352,721     22,100,417     21,920,889  
Net interest margin on a fully taxable-equivalent basis (non-GAAP)   3.30 %   3.33 %   3.39 %   3.48 %   3.56 %
                                 
Reconciliation of noninterest income and noninterest expense to adjusted noninterest income and adjusted noninterest expense 
   
  Quarters
(unaudited) 2015 2015 2015 2015 2014
(Dollars in thousands) 4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
Noninterest expense (GAAP) $ 155,622   $ 160,742   $ 161,674   $ 160,652   $ 165,041  
Less: Intangible asset amortization   2,598     2,598     2,598     2,598     2,933  
Adjusted noninterest expense (non-GAAP)   153,024     158,144     159,076     158,054     162,108  
Noninterest income (GAAP)   65,143     71,426     66,582     65,847     71,960  
Less: Securities gains/(losses)   (5 )   41     567     354     16  
Adjusted noninterest income (non-GAAP)   65,148     71,385     66,015     65,493     71,944  
Net interest income on a fully taxable-equivalent basis (non-GAAP)   188,979     189,119     189,018     189,554     196,509  
Adjusted revenue (non-GAAP)   254,127     260,504     255,033     255,047     268,453  
Efficiency ratio (non-GAAP)   60.22 %   60.71 %   62.37 %   61.97 %   60.39 %
     
Reconciliation of shareholders' equity to tangible common equity, and total assets to tangible assets
 
  Quarters
(unaudited) 2015 2015 2015 2015 2014
(Dollars in thousands, except per share amounts) 4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
Shareholders' equity (GAAP) $ 2,940,095   $ 2,937,300   $ 2,887,957   $ 2,888,786   $ 2,834,281  
Less: Preferred stock   100,000     100,000     100,000     100,000     100,000  
Common shareholders' equity (non-GAAP)   2,840,095     2,837,300     2,787,957     2,788,786     2,734,281  
Less: Intangible assets   60,628     63,226     65,824     68,422     71,020  
  Goodwill   741,740     741,740     741,740     741,740     741,740  
Tangible common equity (non-GAAP)   2,037,727     2,032,334     1,980,393     1,978,624     1,921,521  
Total assets (GAAP) $ 25,524,604   $ 25,246,917   $ 25,297,014   $ 25,118,120   $ 24,902,347  
Less: Intangible assets   60,628     63,226     65,824     68,422     71,020  
  Goodwill   741,740     741,740     741,740     741,740     741,740  
Tangible assets (non-GAAP) $ 24,722,236   $ 24,441,951   $ 24,489,450   $ 24,307,958   $ 24,089,587  
Period end common shares   165,758     165,759     165,773     165,453     165,390  
Tangible book value per common share $ 12.29   $ 12.26   $ 11.95   $ 11.96   $ 11.62  
Tangible common equity to tangible assets ratio (non-GAAP)   8.24 %   8.31 %   8.09 %   8.14 %   7.98 %
                               

Subsequent Events

The Corporation is required under GAAP to evaluate subsequent events through the filing of its consolidated financial statements for the year ended December 31, 2015 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, 2015 and will adjust amounts preliminarily reported, if necessary.

Fourth Quarter 2015 Conference Call

In light of today's merger announcement with Huntington Bancshares, FirstMerit senior management will not be hosting a conference call today to discuss 4Q15 earnings as previously scheduled.

About FirstMerit Corporation

FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $25.5 billion as of December 31, 2015, and 366 banking offices and 400 ATM locations in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal affiliates include: FirstMerit Bank, N.A. and FirstMerit Mortgage Corporation.

Forward-Looking Statements

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

 
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited) Quarters
(Dollars in thousands, except per share amounts) 2015 2015 2015 2015 2014
  4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
EARNINGS                              
Net interest income TE (1) $ 188,979   $ 189,119   $ 189,018   $ 189,554   $ 196,509  
TE adjustment (1)   3,748     3,796     3,900     3,931     3,998  
Provision for originated loan losses   12,487     10,402     10,809     6,036     8,662  
Provision/(recapture) for acquired loan losses   1,503     144     (952 )   2,214     3,407  
Provision/(recapture) for FDIC acquired loan losses   (379 )   3,729     (891 )   (2 )   1,228  
Noninterest income   65,143     71,426     66,582     65,847     71,960  
Noninterest expense   155,622     160,742     161,674     160,652     165,041  
Net income   56,749     59,012     56,584     57,139     61,079  
Diluted EPS (3)   0.33     0.34     0.33     0.33     0.36  
PERFORMANCE RATIOS                              
Return on average assets (ROA)   0.89 %   0.93 %   0.90 %   0.93 %   0.98 %
Return on average equity (ROE)   7.65 %   8.05 %   7.85 %   8.08 %   8.50 %
Return on average tangible common equity (1)   11.04 %   11.69 %   11.44 %   11.85 %   12.52 %
Net interest margin TE (1)   3.30 %   3.33 %   3.39 %   3.48 %   3.56 %
Efficiency ratio (1)   60.22 %   60.71 %   62.37 %   61.97 %   60.39 %
Number of full-time equivalent employees   3,926     3,961     4,017     4,103     4,273  
MARKET DATA                              
Book value per common share $ 17.74   $ 17.72   $ 17.42   $ 17.46   $ 17.14  
Tangible book value per common share (1)   12.29     12.26     11.95     11.96     11.62  
Period end common share market value   18.65     17.67     20.83     19.06     18.89  
Market as a % of book   105 %   100 %   120 %   109 %   110 %
Cash dividends per common share $ 0.17   $ 0.17   $ 0.16   $ 0.16   $ 0.16  
Common Stock dividend payout ratio   51.52 %   50.00 %   48.48 %   48.48 %   44.44 %
Average basic common shares   165,762     165,762     165,736     165,411     165,395  
Average diluted common shares   166,222     166,058     166,277     166,003     165,974  
Period end common shares   165,758     165,759     165,773     165,453     165,390  
Common shares repurchased   15     20     211     66     15  
Common Stock market capitalization $ 3,091,387   $ 2,928,962   $ 3,453,052   $ 3,153,534   $ 3,124,217  
ASSET QUALITY (excluding acquired, FDIC acquired loans and covered OREO) (2)                              
Gross charge-offs $ 15,514   $ 13,398   $ 11,298   $ 8,567   $ 9,205  
Net charge-offs   11,407     8,029     6,672     4,187     3,849  
Allowance for originated loan losses   105,135     104,055     101,682     97,545     95,696  
Reserve for unfunded lending commitments   4,068     3,574     3,905     4,330     5,848  
Nonperforming assets (NPAs)   94,498     107,058     117,311     68,606     55,038  
Net charge-offs to average loans ratio   0.33 %   0.24 %   0.20 %   0.13 %   0.12 %
Allowance for originated loan losses to period-end loans   0.74 %   0.76 %   0.76 %   0.76 %   0.77 %
Allowance for credit losses to period-end loans   0.77 %   0.79 %   0.79 %   0.79 %   0.81 %
NPAs to loans and other real estate   0.67 %   0.78 %   0.87 %   0.53 %   0.44 %
Allowance for originated loan losses to nonperforming loans   238.37 %   221.22 %   184.40 %   211.66 %   276.44 %
Allowance for credit losses to nonperforming loans   247.60 %   228.82 %   191.48 %   221.06 %   293.34 %
CAPITAL & LIQUIDITY                              
Period end tangible common equity to assets (1)   8.24 %   8.31 %   8.09 %   8.14 %   7.98 %
Average equity to assets   11.60 %   11.54 %   11.51 %   11.51 %   11.55 %
Average equity to total loans   18.50 %   18.48 %   18.59 %   18.60 %   18.67 %
Average total loans to deposits   79.54 %   78.91 %   79.06 %   77.86 %   78.47 %
AVERAGE BALANCES                              
Assets $ 25,370,946   $ 25,217,856   $ 25,129,859   $ 24,905,094   $ 24,664,987  
Deposits   20,002,793     19,957,586     19,682,662     19,788,925     19,450,647  
Originated loans   13,863,910     13,528,268     13,092,972     12,689,791     12,306,171  
Acquired loans, including FDIC acquired loans, less loss share receivable   2,047,167     2,219,488     2,468,035     2,717,884     2,956,867  
Earning assets   22,747,631     22,548,977     22,352,721     22,100,417     21,920,889  
Shareholders' equity   2,943,268     2,909,660     2,892,432     2,866,362     2,849,618  
ENDING BALANCES                              
Assets $ 25,524,604   $ 25,246,917   $ 25,297,014   $ 25,118,120   $ 24,902,347  
Deposits   20,108,003     19,821,916     19,673,850     19,925,595     19,504,665  
Originated loans   14,118,505     13,648,325     13,355,912     12,856,037     12,493,812  
Acquired loans, including FDIC acquired loans, less loss share receivable   1,948,493     2,140,029     2,337,378     2,614,847     2,810,302  
Goodwill   741,740     741,740     741,740     741,740     741,740  
Intangible assets   60,628     63,226     65,824     68,422     71,020  
Earning assets   22,955,435     22,661,171     22,599,272     22,395,343     22,153,552  
Total shareholders' equity   2,940,095     2,937,300     2,887,957     2,888,786     2,834,281  
NOTES:                              
                               

(1) Represents a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this press release for a reconciliation to GAAP financial measures.

(2) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and FDIC acquired loans and covered OREO are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. George Washington and Midwest non-single family loss share agreements with the FDIC expired at March 31, 2015 and June 30, 2015, respectively. As of December 31, 2015, $76.3 million of FDIC acquired loans remained covered by single family loss share agreements, providing considerable protection against credit risk.

(3) Net income used to determine diluted EPS was reduced by the cash dividends payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A of approximately $1.5 million in each of the quarters presented.

         
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
         
(In thousands, except per share amounts)   December 31,   December 31,
(Unaudited, except December 31, 2014, which is derived from the audited financial statements)   2015   2014
ASSETS                
  Cash and due from banks   $ 380,799     $ 480,998  
  Interest-bearing deposits in banks     83,018       216,426  
    Total cash and cash equivalents     463,817       697,424  
  Investment securities:                
    Held-to-maturity     2,674,093       2,903,609  
    Available-for-sale     3,967,735       3,545,288  
    Other investments     148,172       148,654  
  Loans held for sale     5,472       13,428  
  Loans     16,076,945       15,326,147  
  Allowance for loan losses     (153,691 )     (143,649 )
    Net loans     15,923,254       15,182,498  
  Premises and equipment, net     319,488       332,297  
  Goodwill     741,740       741,740  
  Intangible assets     60,628       71,020  
  Covered other real estate     2,134       49,641  
  Accrued interest receivable and other assets     1,218,071       1,216,748  
    Total assets   $ 25,524,604     $ 24,902,347  
LIABILITIES AND SHAREHOLDERS' EQUITY                
  Deposits:                
    Noninterest-bearing   $ 5,942,248     $ 5,786,662  
    Interest-bearing     3,476,729       3,028,888  
    Savings and money market accounts     8,450,123       8,399,612  
    Certificates and other time deposits     2,238,903       2,289,503  
      Total deposits     20,108,003       19,504,665  
    Federal funds purchased and securities sold under agreements to repurchase     1,037,075       1,272,591  
    Wholesale borrowings     580,648       428,071  
    Long-term debt     505,173       505,192  
    Accrued taxes, expenses, and other liabilities     353,610       357,547  
      Total liabilities     22,584,509       22,068,066  
    Shareholders' equity:                
      5.875% Non-Cumulative Perpetual Preferred stock, Series A, without par value: authorized 115,000 shares; 100,000 issued     100,000       100,000  
      Common stock warrant     -       3,000  
      Common Stock, without par value; authorized 300,000,000 shares; issued: December 31, 2015 and 2014 - 170,183,515 shares     127,937       127,937  
      Capital surplus     1,386,677       1,393,090  
      Accumulated other comprehensive loss     (79,274 )     (71,892 )
      Retained earnings     1,519,438       1,404,717  
      Treasury stock, at cost: December 31, 2015 - 4,425,927; December 31, 2014 - 4,793,566 shares     (114,683 )     (122,571 )
        Total shareholders' equity     2,940,095       2,834,281  
        Total liabilities and shareholders' equity   $ 25,524,604     $ 24,902,347  
                 
                 
                 
                 
FIRSTMERIT CORPORATION AND SUBSIDIARIES Period End Loans by Product Type                
(Unaudited)   As of December 31, 2015
(In thousands)   Originated Loans   Acquired Loans (1)   FDIC Acquired Loans (2)   Total Loans
C&I   $ 5,793,408     $ 240,145     $ 35,466     $ 6,069,019  
CRE     2,077,344       430,891       87,774       2,596,009  
Construction     645,337       6,113       5,869       657,319  
Leases     491,741       -       -       491,741  
  Total Commercial     9,007,830       677,149       129,109       9,814,088  
Mortgage     689,045       324,008       35,568       1,048,621  
Installment     2,990,349       573,372       2,077       3,565,798  
Home equity     1,248,438       168,542       38,668       1,455,648  
Credit card     182,843       -       -       182,843  
  Total Consumer     5,110,675       1,065,922       76,313       6,252,910  
  Subtotal     14,118,505       1,743,071       205,422       16,066,998  
Loss share receivable     -       -       9,947       9,947  
Total loans     14,118,505       1,743,071       215,369       16,076,945  
Allowance for loan losses     (105,135 )     (3,877 )     (44,679 )     (153,691 )
    Net loans   $ 14,013,370     $ 1,739,194     $ 170,690     $ 15,923,254  
                         
                         
      As of September 30, 2015
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,521,955     $ 274,552     $ 38,787     $ 5,835,294  
CRE     2,089,533       497,690       94,531       2,681,754  
Construction     619,569       6,172       5,859       631,600  
Leases     461,642       -       -       461,642  
  Total Commercial     8,692,699       778,414       139,177       9,610,290  
Mortgage     673,591       341,278       36,362       1,051,231  
Installment     2,899,559       611,061       2,156       3,512,776  
Home equity     1,212,084       184,211       47,370       1,443,665  
Credit card     170,392       -       -       170,392  
  Total Consumer     4,955,626       1,136,550       85,888       6,178,064  
  Subtotal     13,648,325       1,914,964       225,065       15,788,354  
Loss share receivable     -       -       10,926       10,926  
Total loans     13,648,325       1,914,964       235,991       15,799,280  
Allowance for loan losses     (104,055 )     (4,199 )     (45,196 )     (153,450 )
    Net loans   $ 13,544,270     $ 1,910,765     $ 190,795     $ 15,645,830  
                         
                         
      As of June 30, 2015
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,471,363     $ 337,423     $ 38,138     $ 5,846,924  
CRE     2,138,373       533,945       101,808       2,774,126  
Construction     586,894       6,230       5,875       598,999  
Leases     436,702       -       -       436,702  
  Total Commercial     8,633,332       877,598       145,821       9,656,751  
Mortgage     653,143       358,559       38,029       1,049,731  
Installment     2,720,059       659,348       2,299       3,381,706  
Home equity     1,180,802       200,179       55,545       1,436,526  
Credit card     168,576       -       -       168,576  
  Total Consumer     4,722,580       1,218,086       95,873       6,036,539  
  Subtotal     13,355,912       2,095,684       241,694       15,693,290  
Loss share receivable     -       -       11,820       11,820  
Total loans     13,355,912       2,095,684       253,514       15,705,110  
Allowance for loan losses     (101,682 )     (4,950 )     (41,627 )     (148,259 )
    Net loans   $ 13,254,230     $ 2,090,734     $ 211,887     $ 15,556,851  
                         
                         
      As of March 31, 2015
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,317,897     $ 420,810     $ 42,814     $ 5,781,521  
CRE     2,133,017       584,072       127,908       2,844,997  
Construction     580,978       6,288       8,825       596,091  
Leases     388,873       -       -       388,873  
  Total Commercial     8,420,765       1,011,170       179,547       9,611,482  
Mortgage     639,980       378,192       40,470       1,058,642  
Installment     2,500,288       717,693       4,781       3,222,762  
Home equity     1,134,238       217,824       65,170       1,417,232  
Credit card     160,766       -       -       160,766  
  Total Consumer     4,435,272       1,313,709       110,421       5,859,402  
  Subtotal     12,856,037       2,324,879       289,968       15,470,884  
Loss share receivable     -       -       20,005       20,005  
Total loans     12,856,037       2,324,879       309,973       15,490,889  
Allowance for loan losses     (97,545 )     (7,493 )     (41,514 )     (146,552 )
    Net loans   $ 12,758,492     $ 2,317,386     $ 268,459     $ 15,344,337  
                         
                         
      As of December 31, 2014
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,175,201     $ 449,254     $ 48,837     $ 5,673,292  
CRE     2,117,118       630,674       153,508       2,901,300  
Construction     537,766       6,971       9,262       553,999  
Leases     370,179       -       -       370,179  
  Total Commercial     8,200,264       1,086,899       211,607       9,498,770  
Mortgage     625,283       394,484       41,276       1,061,043  
Installment     2,393,451       764,168       4,874       3,162,493  
Home equity     1,110,336       233,629       73,365       1,417,330  
Credit card     164,478       -       -       164,478  
  Total Consumer     4,293,548       1,392,281       119,515       5,805,344  
  Subtotal     12,493,812       2,479,180       331,122       15,304,114  
Loss share receivable     -       -       22,033       22,033  
Total loans     12,493,812       2,479,180       353,155       15,326,147  
Allowance for loan losses     (95,696 )     (7,457 )     (40,496 )     (143,649 )
    Net loans   $ 12,398,116     $ 2,471,723     $ 312,659     $ 15,182,498  
                         

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.

(2) Loans acquired in an FDIC-assisted transaction. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015 and June 30, 2015. As of December 31, 2015, $76.3 million of FDIC acquired loans remained covered by single family loss share agreements, providing considerable protection against credit risk.

                     
FIRSTMERIT CORPORATION AND SUBSIDIARIES                    
AVERAGE CONSOLIDATED BALANCE SHEETS                    
    Three Months Ended
(Unaudited)   December 31,   September 30,   June 30,   March 31,   December 31,
(In thousands)   2015   2015   2015   2015   2014
ASSETS                              
Cash and cash equivalents   $ 415,756     $ 457,317     $ 518,820     $ 563,265     $ 500,559  
Investment securities:                              
  Held-to-maturity     2,713,636       2,754,001       2,806,325       2,874,169       2,966,127  
  Available-for-sale     3,959,051       3,881,959       3,816,827       3,645,057       3,499,528  
  Other investments     148,176       147,961       148,577       148,532       148,636  
Loans held for sale     5,028       4,929       3,631       5,478       16,708  
Loans     15,921,740       15,760,127       15,577,361       15,427,181       15,289,890  
Allowance for loan losses     (151,192 )     (147,136 )     (146,558 )     (144,363 )     (138,540 )
  Net loans     15,770,548       15,612,991       15,430,803       15,282,818       15,151,350  
Total earning assets     22,747,631       22,548,977       22,352,721       22,100,417       21,920,889  
Premises and equipment, net     312,771       313,336       320,492       322,431       321,187  
Accrued interest receivable and other assets     2,045,980       2,045,362       2,084,384       2,063,344       2,060,892  
TOTAL ASSETS   $ 25,370,946     $ 25,217,856     $ 25,129,859     $ 24,905,094     $ 24,664,987  
LIABILITIES                              
Deposits:                              
  Noninterest-bearing   $ 5,982,186     $ 5,897,768     $ 5,722,240     $ 5,728,763     $ 5,706,631  
  Interest-bearing     3,352,908       3,353,541       3,203,836       3,209,285       3,021,188  
  Savings and money market accounts     8,408,703       8,480,682       8,467,845       8,542,154       8,381,548  
  Certificates and other time deposits     2,258,996       2,225,595       2,288,741       2,308,723       2,341,280  
    Total deposits     20,002,793       19,957,586       19,682,662       19,788,925       19,450,647  
Federal funds purchased and securities sold under agreements to repurchase     1,131,659       1,109,924       1,285,920       1,024,863       1,241,948  
Wholesale borrowings     402,679       377,594       393,379       350,991       450,587  
Long-term debt     508,954       497,566       508,744       505,275       350,535  
    Total funds     22,046,085       21,942,670       21,870,705       21,670,054       21,493,717  
Accrued taxes, expenses and other liabilities     381,593       365,526       366,722       368,678       321,652  
    Total liabilities     22,427,678       22,308,196       22,237,427       22,038,732       21,815,369  
SHAREHOLDERS' EQUITY                              
Preferred stock     100,000       100,000       100,000       100,000       100,000  
Common stock warrant     -       -       1,385       3,000       3,000  
Common stock     127,937       127,937       127,937       127,937       127,937  
Capital surplus     1,383,777       1,380,622       1,382,717       1,393,682       1,391,189  
Accumulated other comprehensive loss     (60,821 )     (63,402 )     (51,571 )     (58,025 )     (38,827 )
Retained earnings     1,507,069       1,479,181       1,447,195       1,422,067       1,388,661  
Treasury stock     (114,694 )     (114,678 )     (115,231 )     (122,299 )     (122,342 )
    Total shareholders' equity     2,943,268       2,909,660       2,892,432       2,866,362       2,849,618  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 25,370,946     $ 25,217,856     $ 25,129,859     $ 24,905,094     $ 24,664,987  
                               
                 
                 
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Average Loans by Product Type
(Unaudited)
               
(In thousands)   Three Months Ended December 31, 2015
    Originated Loans   Acquired Loans (1)   FDIC Acquired Loans (2)   Total Loans
C&I   $ 5,640,987     $ 263,937     $ 36,903     $ 5,941,827  
CRE     2,090,700       463,379       91,944       2,646,023  
Construction     628,139       6,143       5,858       640,140  
Leases     461,798       -       -       461,798  
  Total Commercial     8,821,624       733,459       134,705       9,689,788  
Mortgage     682,185       331,283       35,919       1,049,387  
Installment     2,950,953       590,352       2,108       3,543,413  
Home equity     1,232,035       175,827       43,514       1,451,376  
Credit card     177,113       -       -       177,113  
  Total Consumer     5,042,286       1,097,462       81,541       6,221,289  
  Subtotal     13,863,910       1,830,921       216,246       15,911,077  
Loss share receivable     -       -       10,663       10,663  
Total loans     13,863,910       1,830,921       226,909       15,921,740  
Allowance for loan losses     (102,524 )     (2,750 )     (45,918 )     (151,192 )
    Net loans   $ 13,761,386     $ 1,828,171     $ 180,991     $ 15,770,548  
                         
                         
      Three Months Ended September 30, 2015
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,503,191     $ 291,727     $ 38,332     $ 5,833,250  
CRE     2,139,943       516,945       96,739       2,753,627  
Construction     599,652       6,200       5,916       611,768  
Leases     441,513       -       -       441,513  
  Total Commercial     8,684,299       814,872       140,987       9,640,158  
Mortgage     662,909       348,863       36,809       1,048,581  
Installment     2,817,221       632,789       2,227       3,452,237  
Home equity     1,194,165       190,947       51,994       1,437,106  
Credit card     169,674       -       -       169,674  
  Total Consumer     4,843,969       1,172,599       91,030       6,107,598  
  Subtotal     13,528,268       1,987,471       232,017       15,747,756  
Loss share receivable     -       -       12,371       12,371  
Total loans     13,528,268       1,987,471       244,388       15,760,127  
Allowance for loan losses     (102,153 )     (4,143 )     (40,840 )     (147,136 )
    Net loans   $ 13,426,115     $ 1,983,328     $ 203,548     $ 15,612,991  
                         
                         
      Three Months Ended June 30, 2015
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,362,893     $ 376,541     $ 42,100     $ 5,781,534  
CRE     2,156,511       554,681       112,035       2,823,227  
Construction     579,249       6,258       8,082       593,589  
Leases     408,384       -       -       408,384  
  Total Commercial     8,507,037       937,480       162,217       9,606,734  
Mortgage     647,418       367,871       39,438       1,054,727  
Installment     2,618,297       688,465       3,823       3,310,585  
Home equity     1,156,019       209,185       59,556       1,424,760  
Credit card     164,201       -       -       164,201  
  Total Consumer     4,585,935       1,265,521       102,817       5,954,273  
  Subtotal     13,092,972       2,203,001       265,034       15,561,007  
Loss share receivable     -       -       16,354       16,354  
Total loans     13,092,972       2,203,001       281,388       15,577,361  
Allowance for loan losses     (98,529 )     (7,434 )     (40,595 )     (146,558 )
    Net loans   $ 12,994,443     $ 2,195,567     $ 240,793     $ 15,430,803  
                         
                         
      Three Months Ended March 31, 2015
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,281,194     $ 440,103     $ 45,307     $ 5,766,604  
CRE     2,141,764       606,652       142,101       2,890,517  
Construction     556,943       6,846       9,013       572,802  
Leases     368,025       -       -       368,025  
  Total Commercial     8,347,926       1,053,601       196,421       9,597,948  
Mortgage     631,761       386,033       40,800       1,058,594  
Installment     2,424,956       742,095       4,822       3,171,873  
Home equity     1,122,988       224,444       69,668       1,417,100  
Credit card     162,160       -       -       162,160  
  Total Consumer     4,341,865       1,352,572       115,290       5,809,727  
  Subtotal     12,689,791       2,406,173       311,711       15,407,675  
Loss share receivable     -       -       19,506       19,506  
Total loans     12,689,791       2,406,173       331,217       15,427,181  
Allowance for loan losses     (95,952 )     (8,287 )     (40,124 )     (144,363 )
    Net loans   $ 12,593,839     $ 2,397,886     $ 291,093     $ 15,282,818  
                         
                         
      Three Months Ended December 31, 2014
      Originated Loans     Acquired Loans (1)     FDIC Acquired Loans (2)     Total Loans
C&I   $ 5,112,469     $ 491,419     $ 49,902     $ 5,653,790  
CRE     2,131,879       672,099       172,327       2,976,305  
Construction     490,533       7,018       9,302       506,853  
Leases     351,222       -       -       351,222  
  Total Commercial     8,086,103       1,170,536       231,531       9,488,170  
Mortgage     617,803       401,173       42,409       1,061,385  
Installment     2,353,599       785,035       4,944       3,143,578  
Home equity     1,087,123       242,878       78,361       1,408,362  
Credit card     161,543       -       -       161,543  
  Total Consumer     4,220,068       1,429,086       125,714       5,774,868  
  Subtotal     12,306,171       2,599,622       357,245       15,263,038  
Loss share receivable     -       -       26,852       26,852  
Total loans     12,306,171       2,599,622       384,097       15,289,890  
Allowance for loan losses     (91,178 )     (6,203 )     (41,159 )     (138,540 )
    Net loans   $ 12,214,993     $ 2,593,419     $ 342,938     $ 15,151,350  
                         
                         

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.

(2) Loans acquired in an FDIC-assisted transaction. Includes non-single family loans for which the loss share agreement expired on March 31, 2015 and June 30, 2015.

 
 
 
FIRSTMERIT CORPORATION AND SUBSIDARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
 
    Three months ended   Three months ended   Three months ended
    December 31, 2015   September 30, 2015   December 31, 2014
(Unaudited)   Average       Average   Average       Average   Average       Average
(Dollars in thousands)   Balance   Interest (1)   Rate   Balance   Interest (1)   Rate   Balance   Interest (1)   Rate
ASSETS                                                
Cash and cash equivalents   $ 415,756               $ 457,317               $ 500,559            
Investment securities and federal funds sold:                                                
  U.S. treasury securities and U.S. government agency obligations (taxable)     5,456,888     $ 27,744   2.02 %     5,474,222     $ 27,507   1.99 %     5,257,657     $ 26,803   2.02 %
  Obligations of states and political subdivisions (tax exempt)     768,288       8,349   4.31 %     737,323       8,245   4.44 %     767,026       8,636   4.47 %
  Other securities and federal funds sold     595,687       5,300   3.53 %     572,376       5,134   3.56 %     589,608       5,213   3.51 %
    Total investment securities and federal funds sold     6,820,863       41,393   2.41 %     6,783,921       40,886   2.39 %     6,614,291       40,652   2.44 %
Loans held for sale     5,028       59   4.66 %     4,929       66   5.31 %     16,708       145   3.44 %
Loans, including loss share receivable (2)     15,921,740       162,865   4.06 %     15,760,127       162,903   4.10 %     15,289,890       169,302   4.39 %
    Total earning assets     22,747,631     $ 204,317   3.56 %     22,548,977     $ 203,855   3.59 %     21,920,889     $ 210,099   3.80 %
Total allowance for loan losses     (151,192 )               (147,136 )               (138,540 )          
Other assets     2,358,751                 2,358,698                 2,382,079            
    Total assets   $ 25,370,946               $ 25,217,856               $ 24,664,987            
LIABILITIES AND SHAREHOLDERS' EQUITY                                                  
Deposits:                                                
  Noninterest-bearing   $ 5,982,186     $   %   $ 5,897,768     $   %   $ 5,706,631     $   %
  Interest-bearing     3,352,908       754   0.09 %     3,353,541       750   0.09 %     3,021,188       727   0.10 %
  Savings and money market accounts     8,408,703       5,611   0.26 %     8,480,682       5,639   0.26 %     8,381,548       5,496   0.26 %
  Certificates and other time deposits     2,258,996       3,378   0.59 %     2,225,595       2,757   0.49 %     2,341,280       2,525   0.43 %
    Total deposits     20,002,793       9,743   0.19 %     19,957,586       9,146   0.18 %     19,450,647       8,748   0.18 %
Securities sold under agreements to repurchase     1,131,659       300   0.11 %     1,109,924       254   0.09 %     1,241,948       294   0.09 %
Wholesale borrowings     402,679       1,202   1.18 %     377,594       1,171   1.23 %     450,587       1,292   1.14 %
Long-term debt     508,954       4,093   3.19 %     497,566       4,165   3.32 %     350,535       3,256   3.69 %
    Total interest-bearing liabilities     16,063,899       15,338   0.38 %     16,044,902       14,736   0.36 %     15,787,086       13,590   0.34 %
Other liabilities     381,593                 365,526                 321,652            
Shareholders' equity     2,943,268                 2,909,660                 2,849,618            
    Total liabilities and shareholders' equity   $ 25,370,946               $ 25,217,856               $ 24,664,987            
Net yield on earning assets   $ 22,747,631     $ 188,979   3.30 %   $ 22,548,977     $ 189,119   3.33 %   $ 21,920,889     $ 196,509   3.56 %
Interest rate spread               3.18 %               3.23 %               3.46 %
                                                 
                                                 

(1) The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes. As such, these tax-exempt securities typically yield lower returns than taxable securities. To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under U.S. generally accepted accounting principles in the Consolidated Statements of Income. The taxable-equivalent adjustments to net interest income were $3.7 million, $3.8 million, and $4.0 million for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively.

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

 
 
 
FIRSTMERIT CORPORATION AND SUBSIDARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential
         
    Year Ended   Year Ended
    December 31, 2015   December 31, 2014
(Unaudited)   Average       Average   Average       Average
(Dollars in thousands)   Balance   Interest (1)   Rate   Balance   Interest (1)   Rate
ASSETS                                
Cash and cash equivalents   $ 488,299               $ 659,072            
Investment securities and federal funds sold:                                
  U.S. treasury securities and U.S. government agency obligations (taxable)     5,428,832     $ 109,109   2.01 %     5,247,620     $ 105,966   2.02 %
  Obligations of states and political subdivisions (tax exempt)     740,942       34,184   4.61 %     762,864       34,736   4.55 %
  Other securities and federal funds sold     591,776       20,700   3.50 %     588,123       22,398   3.81 %
    Total investment securities and federal funds sold     6,761,550       163,993   2.43 %     6,598,607       163,100   2.47 %
Loans held for sale     4,766       228   4.78 %     12,825       447   3.49 %
Loans, including loss share receivable (2)     15,673,200       650,671   4.15 %     14,891,315       685,058   4.60 %
    Total earning assets     22,439,516     $ 814,892   3.63 %     21,502,747     $ 848,605   3.95 %
Total allowance for loan losses     (147,330 )               (140,953 )          
Other assets     2,375,307                 2,397,345            
    Total assets   $ 25,155,792               $ 24,418,211            
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
Deposits:                                
  Noninterest-bearing   $ 5,833,611     $ -   - %   $ 5,579,237     $ -   - %
  Interest-bearing     3,280,488       3,054   0.09 %     3,058,609       2,963   0.10 %
  Savings and money market accounts     8,474,496       22,385   0.26 %     8,537,371       22,101   0.26 %
  Certificates and other time deposits     2,270,255       10,822   0.48 %     2,353,218       10,844   0.46 %
    Total deposits     19,858,850       36,261   0.18 %     19,528,435       35,908   0.18 %
Securities sold under agreements to repurchase     1,138,307       1,126   0.10 %     1,084,532       991   0.09 %
Wholesale borrowings     381,293       4,662   1.22 %     385,392       5,210   1.35 %
Long-term debt     504,185       16,173   3.21 %     329,991       14,821   4.49 %
    Total interest-bearing liabilities     16,049,024       58,222   0.36 %     15,749,113       56,930   0.36 %
Other liabilities     369,997                 299,722            
Shareholders' equity     2,903,160                 2,790,139            
    Total liabilities and shareholders' equity   $ 25,155,792               $ 24,418,211            
Net yield on earning assets   $ 22,439,516     $ 756,670   3.37 %   $ 21,502,747     $ 791,675   3.68 %
Interest rate spread               3.27 %               3.59 %
                                 

(1) The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes. As such, these tax-exempt securities typically yield lower returns than taxable securities. To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles in the Consolidated Statements of Income. The taxable-equivalent adjustments to net interest income were $15.4 million and $16.1 million for the year ended December 31, 2015 and 2014, respectively.

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

         
         
         
FIRSTMERIT CORPORATION AND SUBSIDIARIES        
CONSOLIDATED STATEMENTS OF INCOME        
(Unaudited)   Quarters Ended   Years Ended
(In thousands, except per share amounts)   December 31,   December 31,
    2015   2014   2015   2014
Interest income:                        
  Loans and loans held for sale   $ 162,168     $ 168,650   $ 647,783   $ 682,328
  Investment securities:                        
    Taxable     33,043       32,016     129,809     128,363
    Tax-exempt     5,358       5,435     21,925     21,807
    Total investment securities interest     38,401       37,451     151,734     150,170
      Total interest income     200,569       206,101     799,517     832,498
Interest expense:                        
  Deposits:                        
    Interest-bearing     754       727     3,054     2,963
    Savings and money market accounts     5,611       5,496     22,385     22,101
    Certificates and other time deposits     3,378       2,525     10,822     10,844
  Federal funds purchased and securities sold under agreements to repurchase     300       294     1,126     991
  Wholesale borrowings     1,202       1,292     4,662     5,210
  Long-term debt     4,093       3,256     16,173     14,821
    Total interest expense     15,338       13,590     58,222     56,930
    Net interest income     185,231       192,511     741,295     775,568
  Provision for loan losses     13,611       13,297     45,100     52,279
    Net interest income after provision for loan losses     171,620       179,214     696,195     723,289
Noninterest income:                        
  Trust department income     10,208       9,831     42,125     39,949
  Service charges on deposits     16,793       17,597     66,460     71,457
  Credit card fees     13,931       13,305     54,643     52,666
  ATM and other service fees     6,626       6,181     25,588     24,179
  Bank owned life insurance income     3,836       7,337     15,747     19,177
  Investment services and insurance     3,816       4,171     15,423     15,145
  Investment securities gains/(losses), net     (5 )     16     957     166
  Loan sales and servicing income     2,276       3,112     9,566     16,044
  Other operating income     7,662       10,410     38,489     42,741
    Total noninterest income     65,143       71,960     268,998     281,524
Noninterest expenses:                        
  Salaries, wages, pension and employee benefits     86,490       89,899     348,808     358,970
  Net occupancy expense     12,716       14,188     55,937     59,436
  Equipment expense     12,074       12,133     47,926     48,499
  Stationery, supplies and postage     3,222       3,767     13,424     15,587
  Bankcard, loan processing and other costs     11,146       11,830     47,081     45,625
  Professional services     5,056       6,440     19,578     21,813
  Amortization of intangibles     2,598       2,933     10,392     11,735
  FDIC insurance expense     5,252       5,989     20,730     20,481
  Other operating expense     17,068       17,862     74,814     82,773
    Total noninterest expenses     155,622       165,041     638,690     664,919
Income before income tax expense     81,141       86,133     326,503     339,894
Income tax expense     24,392       25,054     97,019     101,943
      Net income   $ 56,749     $ 61,079   $ 229,484   $ 237,951
Less: Net income allocated to participating shareholders     453       496     1,836     1,930
      Preferred stock dividends     1,469       1,469     5,876     5,876
Net income attributable to common shareholders   $ 54,827     $ 59,114   $ 221,772   $ 230,145
Net income used in diluted EPS calculation   $ 54,827     $ 59,114   $ 221,772   $ 230,145
Weighted average number of common shares outstanding - basic     165,762       165,395     165,669     165,296
Weighted average number of common shares outstanding - diluted     166,222       165,974     166,127     166,054
Basic earnings per common share   $ 0.33     $ 0.36   $ 1.34   $ 1.39
Diluted earnings per common share     0.33       0.36     1.33     1.39
Cash dividends per common share     0.17       0.16     0.66     0.64
                         
                         
             
             
FIRSTMERIT CORPORATION AND SUBSIDIARIES            
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME            
(Unaudited)   Quarter Ended   Year Ended
(In thousands)   December 31, 2015   December 31, 2015
    Pre-tax   Tax   After-tax   Pre-tax   Tax   After-tax
Net Income   $ 81,141     $ 24,392     $ 56,749     $ 326,503     $ 97,019     $ 229,484  
Other comprehensive income/(loss)