FirstMerit Reports First Quarter 2015 EPS of $0.33 Per Share

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April 28, 2015 7:30 AM UTC

AKRON, Ohio, April 28, 2015 /PRNewswire/ --

Quarterly Highlights include:

  • Profitability Sustained: 64th consecutive quarter of profitability.
  • Loan growth continued: Total loan growth of $164.7 million, or 1.07% from the prior quarter.
  • Credit quality remained solid: Net charge-offs to average originated loans of 0.13%; nonperforming assets as a percent of period end originated loans plus other real estate at 0.53%.
  • Balance sheet remained strong: Strong tangible common equity ratio1 at 8.14%.

FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported first quarter 2015 net income of $57.1 million, or $0.33 per diluted share.  This compares with $61.1 million, or $0.36 per diluted share, for the fourth quarter 2014 and $53.5 million, or $0.31 per diluted share, for the first quarter 2014.

Returns on average common equity ("ROE") and average assets ("ROA") for the first quarter 2015 were 8.08% and 0.93%, respectively, compared with 8.50% and 0.98%, respectively, for the fourth quarter 2014 and 7.93% and 0.90%, respectively, for the first quarter 2014. 

"In the quarter our profitable balance sheet expansion was led by increases in our originated commercial loans portfolio and core deposit growth.  The new relationships we are bringing into the Company are aligned with our disciplined credit philosophy which is sustaining our solid asset quality performance.  As business conditions and the unemployment rates throughout our Midwest footprint improve, we continue to penetrate our existing and newer markets to win market share.  We also are sticking to our strategy of building and maintaining capital levels that will keep us sound throughout the economic cycle," 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.

Net Interest Income

Net interest income on a fully tax-equivalent ("TE")1 basis was $189.6 million in the first quarter 2015 compared with $196.5 million in the fourth quarter 2014 and $197.9 million in the first quarter 2014.

Net interest margin on TE basis1 was 3.48% for the first quarter 2015 compared with 3.56% for the fourth quarter 2014 and 3.84% for the first quarter 2014.  Net interest margin compression in the first quarter, compared with the prior quarter, resulted from anticipated lower accretion from the acquired and FDIC acquired loan portfolios due to the continued decline in the loan balances.

Average originated loans were $12.7 billion during the first quarter 2015, an increase of $383.6 million, or 3.12%, compared with the fourth quarter 2014, and an increase of $2.2 billion, or 21.45%, compared with the first quarter 2014.  Average originated commercial loans increased $245.0 million, or 3.17%, compared with the prior quarter, and increased $1.2 billion, or 17.02%, compared with the year-ago quarter.

Average deposits were $19.8 billion during the first quarter 2015, an increase of $338.3 million, or 1.74%, compared with the fourth quarter 2014, and an increase of $152.4 million, or 0.78%, compared with the first quarter 2014.  During the first quarter 2015, average core deposits, which exclude time deposits, increased $370.8 million, or 2.17%, compared with the fourth quarter 2014 and increased $246.7 million, or 1.43%, compared with the first quarter 2014.  Average time deposits decreased $32.6 million, or 1.39%, and decreased $94.3 million, or 3.92%, respectively, over the prior and year-ago quarters.  For the first quarter 2015, average core deposits accounted for 88.33% of total average deposits, compared with 87.96% for the fourth quarter 2014 and 87.76% for the first quarter 2014.

Average investments increased $53.5 million, or 0.81%, compared with the fourth quarter 2014 and increased $183.2 million, or 2.82%, compared with the first quarter 2014.

Noninterest Income

Noninterest income, excluding gains and losses on securities transactions1, for the first quarter 2015 was $65.5 million, a decrease of $6.5 million, or 8.97%, from the fourth quarter 2014 and a decrease of $1.7 million or 2.56% from the first quarter 2014.  Included in noninterest income this quarter were costs of $1.2 million associated with branch closures.  Additionally, BOLI income decreased as compared the prior quarter due to $3.5 million of death benefit proceeds received in the fourth quarter of 2014.

Noninterest income, excluding net securities gains and losses, as a percentage of net revenue1 for the first quarter 2015 was 25.68% compared with 26.80% for fourth quarter 2014 and 25.36% for the first quarter 2014.

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

Noninterest Expense

Noninterest expense for the first quarter 2015 was $160.7 million, a decrease of $4.4 million, or 2.66%, from the fourth quarter 2014 and a decrease of $8.7 million, or 5.13%, from the first quarter 2014.  Noninterest expense in the current quarter included $1.8 million of restructure costs. The Corporation's efficiency ratio1 was 61.97% for the first quarter 2015, compared with 60.39% for the fourth quarter 2014 and 62.77% for the first quarter 2014.

The effective tax rate was 30.80% for the first quarter 2015 compared with 29.09% for the fourth quarter 2014 and 30.85% for the first quarter 2014.

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.

Net charge-offs on originated loans totaled $4.2 million in the first quarter 2015, compared to $3.8 million in the fourth quarter 2014, and $8.0 million in the first quarter 2014. Net charge-offs on originated loans were 0.13% of average originated loans at March 31, 2015, compared to 0.12% at December 31, 2014 and 0.31% at March 31, 2014. 

Nonperforming assets totaled $68.6 million at March 31, 2015, an increase of $13.6 million, or 24.65%, compared with December 31, 2014 and an increase of $5.9 million, or 9.40%, compared with March 31, 2014. Nonperforming assets at March 31, 2015 represented 0.53% of period-end originated loans plus other real estate compared with 0.44% at December 31, 2014 and 0.58% at March 31, 2014. Included in first quarter 2015 nonperforming assets were $3.4 million of OREO no longer covered by FDIC loss share agreements.

The allowance for originated loan losses totaled $97.5 million at March 31, 2015.  At March 31, 2015, the allowance for originated loan losses was 0.76% of period-end originated loans, compared with 0.77% at December 31, 2014 and 0.85% at March 31, 2014.  The allowance for originated loan losses at March 31, 2015 compared to December 31, 2014 increased by $1.8 million.  The allowance for credit losses is the sum of the allowance for originated loan losses and the reserve for unfunded lending commitments.  For comparative purposes, the allowance for credit losses was 0.79% of period end originated loans at March 31, 2015, compared with 0.81% at December 31, 2014 and 0.92% at March 31, 2014.  The allowance for credit losses to nonperforming loans was 221.06% at March 31, 2015, compared with 293.34% at December 31, 2014 and 229.23% at March 31, 2014.

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

Balance Sheet

The Corporation's total assets at March 31, 2015 were $25.1 billion, an increase of $215.8 million, or 0.87%, compared with December 31, 2014 and an increase of $619.5 million, or 2.53%, compared with March 31, 2014.  Total gross loans (originated, acquired, and FDIC acquired) and total deposits were $15.5 billion and $19.9 billion, respectively, at March 31, 2015,  $15.3 billion and $19.5 billion, respectively, at December 31, 2014 and $14.6 billion and $19.8 billion, respectively, at March 31, 2014.  Core deposits totaled $17.6 billion at March 31, 2015, an increase of $339.3 million, or 1.97%, from December 31, 2014 and an increase of $126.7 million, or 0.73%, from March 31, 2014. 

Shareholders' equity was $2.9 billion, $2.8 billion and $2.7 billion as of March 31, 2015, December 31, 2014, and March 31, 2014.  The Corporation maintained a strong capital position as tangible common equity1 to assets was 8.14% at March 31, 2015, compared with 7.98% at December 31, 2014  and 7.69% at March 31, 2014.  The common share cash dividend paid in the first quarter 2015 was $0.16 per share.

On January 1, 2015, the Corporation became subject to the Basel III capital framework and standardized approach for calculating risk-weighted assets.  At March 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 13.73%, and a common equity tier 1 risk-based capital ratio of 10.60%.

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 analyses (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.

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

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

2014

2014

2014

2014

(Dollars in thousands)

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Net interest income (GAAP)

$

185,623

$

192,511

$

193,578

$

195,577

$

193,900

Plus:

Fully taxable-equivalent adjustment

3,931

3,998

4,066

4,089

3,954

Net interest income on a fully taxable-equivalent basis (non-GAAP)

189,554

196,509

197,644

199,666

197,854

Average earning assets

22,100,417

21,920,889

21,804,243

21,367,496

20,903,863

Net interest margin on a fully taxable-equivalent basis (non-GAAP)

3.48

%

3.56

%

3.60

%

3.75

%

3.84

%

 

Reconciliation of noninterest income and noninterest expense to adjusted noninterest income and adjusted noninterest expense

Quarters

(unaudited)

2015

2014

2014

2014

2014

(Dollars in thousands)

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Noninterest expense (GAAP)

$

160,652

$

165,041

$

163,145

$

167,400

$

169,331

Less:

Intangible asset amortization

2,598

2,933

2,933

2,933

2,936

Adjusted noninterest expense (non-GAAP)

158,054

162,108

160,212

164,467

166,395

Noninterest income (GAAP)

65,847

71,960

69,733

72,560

67,270

Less:

Securities losses/(gains)

354

16

14

80

56

Adjusted noninterest income  (non-GAAP)

65,493

71,944

69,719

72,480

67,214

Net interest income on a fully taxable-equivalent basis (non-GAAP)

189,554

196,509

197,644

199,666

197,854

Adjusted revenue (non-GAAP)

255,047

268,453

267,363

272,146

265,068

Efficiency ratio (non-GAAP)

61.97

%

60.39

%

59.92

%

60.43

%

62.77

%

 

 

Reconciliation of shareholders' equity to tangible common equity, and total assets to tangible assets

Quarters

2015

2014

2014

2014

2014

(Dollars in thousands, except per share amounts)

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Shareholders' equity (GAAP)

$

2,888,786

$

2,834,281

$

2,820,431

$

2,791,738

$

2,742,966

Less:

Preferred stock

100,000

100,000

100,000

100,000

100,000

Common shareholders' equity (non-GAAP)

2,788,786

2,734,281

2,720,431

2,691,738

2,642,966

Less:

Intangible assets

68,422

71,020

73,953

76,886

79,819

Goodwill

741,740

741,740

741,740

741,740

741,740

Tangible common equity (non-GAAP)

1,978,624

1,921,521

1,904,738

1,873,112

1,821,407

Total assets (GAAP)

$

25,118,120

$

24,902,347

$

24,608,207

$

24,564,431

$

24,498,661

Less:

Intangible assets

68,422

71,020

73,953

76,886

79,819

Goodwill

741,740

741,740

741,740

741,740

741,740

Tangible assets (non-GAAP)

$

24,307,958

$

24,089,587

$

23,792,514

$

23,745,805

$

23,677,102

Period end common shares

165,453

165,390

165,384

165,393

165,087

Tangible book value per common share

$

11.96

$

11.62

$

11.52

$

11.33

$

11.03

Tangible common equity to tangible assets ratio (non-GAAP)

8.14

%

7.98

%

8.01

%

7.89

%

7.69

%

First Quarter 2015 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 first quarter results and highlights.  To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 27622276.  A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on April 28, 2015 through May 12, 2015 by dialing (855) 859-2056, and entering the PIN: 27622276.  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/about-us/investors/index.html; 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 approximately $25.1 billion as of March 31, 2015, and 384 banking offices and 412 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., FirstMerit Mortgage Corporation and FirstMerit Title Agency, Ltd.

Subsequent Events

The Corporation is required under GAAP to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended March 31, 2015 on Form 10-Q.  As a result, the Corporation will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of March 31, 2015 and will adjust amounts preliminarily reported, if necessary.

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

2014

2014

2014

2014

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

EARNINGS

Net interest income TE (1)

$

189,554

$

196,509

$

197,644

$

199,666

$

197,854

TE adjustment (1)

3,931

3,998

4,066

4,089

3,954

Provision for originated loan losses

6,036

8,662

4,862

5,993

3,654

Provision for acquired loan losses

2,214

3,407

4,411

5,815

7,827

Provision/(recapture) for covered loan losses

(2)

1,228

(81)

3,445

3,055

Noninterest income

65,847

71,960

69,733

72,560

67,270

Noninterest expense

160,652

165,041

163,145

167,400

169,331

Net income

57,139

61,079

63,898

59,519

53,455

Diluted EPS (3)

0.33

0.36

0.37

0.35

0.31

PERFORMANCE RATIOS

Return on average assets (ROA)

0.93

%

0.98

%

1.03

%

0.98

%

0.90

%

Return on average equity (ROE)

8.08

%

8.50

%

9.03

%

8.62

%

7.93

%

Return on average tangible common equity (1)

11.85

%

12.52

%

13.41

%

12.92

%

11.98

%

Net interest margin TE (1)

3.48

%

3.56

%

3.60

%

3.75

%

3.84

%

Efficiency ratio (1)

61.97

%

60.39

%

59.92

%

60.43

%

62.77

%

Number of full-time equivalent employees

4,103

4,273

4,302

4,392

4,521

MARKET DATA

Book value per common share

$

17.46

$

17.14

$

17.05

$

16.88

$

16.62

Tangible book value per common share (1)

11.96

11.62

11.52

11.33

11.03

Period end common share market value

19.06

18.89

17.62

19.75

20.83

Market as a % of book

109

%

110

%

103

%

117

%

125

%

Cash dividends per common share

$

0.16

$

0.16

$

0.16

$

0.16

$

0.16

Common Stock dividend payout ratio

48.48

%

44.44

%

43.24

%

45.71

%

51.61

%

Average basic common shares

165,411

165,395

165,389

165,335

165,060

Average diluted common shares

166,003

165,974

165,804

166,147

166,004

Period end common shares

165,453

165,390

165,384

165,393

165,087

Common shares repurchased

66

15

10

186

51

Common Stock market capitalization

$

3,153,534

$

3,124,217

$

2,914,066

$

3,266,512

$

3,438,762

ASSET QUALITY (excluding acquired, FDIC acquired loans and covered OREO) (2)

Gross charge-offs

$

8,567

$

9,205

$

11,410

$

11,148

$

13,160

Net charge-offs

4,187

3,849

5,929

6,159

8,022

Allowance for originated loan losses

97,545

95,696

90,883

91,950

92,116

Reserve for unfunded lending commitments

4,330

5,848

6,966

7,107

7,481

Nonperforming assets (NPAs)

68,606

55,038

63,119

60,922

62,711

Net charge-offs to average loans ratio

0.13

%

0.12

%

0.20

%

0.22

%

0.31

%

Allowance for originated loan losses to period-end loans

0.76

%

0.77

%

0.75

%

0.80

%

0.85

%

Allowance for credit losses to period-end loans

0.79

%

0.81

%

0.81

%

0.86

%

0.92

%

NPAs to loans and other real estate

0.53

%

0.44

%

0.52

%

0.53

%

0.58

%

Allowance for originated loan losses to nonperforming loans

211.66

%

276.44

%

231.13

%

250.27

%

212.01

%

Allowance for credit losses to nonperforming loans

221.06

%

293.34

%

248.85

%

269.61

%

229.23

%

CAPITAL & LIQUIDITY

Period end tangible common equity to assets (1)

8.14

%

7.98

%

8.01

%

7.89

%

7.69

%

Average equity to assets

11.51

%

11.55

%

11.42

%

11.40

%

11.32

%

Average equity to total loans

18.60

%

18.67

%

18.58

%

18.90

%

19.04

%

Average total loans to deposits

77.86

%

78.47

%

77.36

%

75.15

%

73.11

%

AVERAGE BALANCES

Assets

$

24,905,094

$

24,664,987

$

24,583,776

$

24,291,276

$

24,144,570

Deposits

19,788,925

19,450,647

19,531,800

19,496,795

19,636,506

Originated loans

12,689,791

12,306,171

11,814,314

11,092,101

10,448,383

Acquired loans, including FDIC acquired loans, less loss share receivable

2,717,884

2,956,867

3,295,547

3,558,810

3,907,802

Earning assets

22,100,417

21,920,889

21,804,243

21,367,496

20,903,863

Shareholders' equity

2,866,362

2,849,618

2,807,886

2,768,352

2,733,226

ENDING BALANCES

Assets

$

25,118,120

$

24,902,347

$

24,608,207

$

24,564,431

$

24,498,661

Deposits

19,925,595

19,504,665

19,366,911

19,298,396

19,811,674

Originated loans

12,856,037

12,493,812

12,071,759

11,467,193

10,826,913

Acquired loans, including FDIC acquired loans, less loss share receivable

2,614,847

2,810,302

3,139,521

3,458,453

3,726,952

Goodwill

741,740

741,740

741,740

741,740

741,740

Intangible assets

68,422

71,020

73,953

76,886

79,819

Earning assets

22,395,343

22,153,552

21,930,840

21,789,773

21,715,302

Total shareholders' equity

2,888,786

2,834,281

2,820,431

2,791,738

2,742,966

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. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015. As of March 31, 2015, $174.6 million and $110.4 million of FDIC acquired loans remained covered by non-single family loss share agreement and single family loss share agreements, respectively, 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)

March 31,

December 31,

March 31,

(Unaudited, except December 31, 2014, which is derived from the audited financial statements)

2015

2014

2014

ASSETS

Cash and due from banks

$

426,247

$

480,998

$

520,976

Interest-bearing deposits in banks

106,178

216,426

438,309

Total cash and cash equivalents

532,425

697,424

959,285

Investment securities:

Held-to-maturity

2,855,174

2,903,609

3,079,620

Available-for-sale

3,791,059

3,545,288

3,433,171

Other investments

148,475

148,654

148,446

Loans held for sale

3,568

13,428

7,143

Loans

15,490,889

15,326,147

14,608,613

Allowance for loan losses

(146,552)

(143,649)

(145,060)

     Net loans

15,344,337

15,182,498

14,463,553

Premises and equipment, net

320,392

332,297

323,335

Goodwill

741,740

741,740

741,740

Intangible assets

68,422

71,020

79,819

FDIC acquired other real estate

43,660

49,641

59,848

Accrued interest receivable and other assets

1,268,868

1,216,748

1,202,701

    Total assets

$

25,118,120

$

24,902,347

$

24,498,661

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$

5,666,752

$

5,786,662

$

5,595,899

Interest-bearing

3,277,118

3,028,888

3,081,658

Savings and money market accounts

8,610,553

8,399,612

8,750,182

Certificates and other time deposits

2,371,172

2,289,503

2,383,935

Total deposits

19,925,595

19,504,665

19,811,674

Federal funds purchased and securities sold under agreements to repurchase

1,113,371

1,272,591

926,195

Wholesale borrowings

316,628

428,071

349,277

Long-term debt

512,625

505,192

324,430

Accrued taxes, expenses, and other liabilities

361,115

357,547

344,119

Total liabilities

22,229,334

22,068,066

21,755,695

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

100,000

Common stock warrant

3,000

3,000

3,000

Common Stock, without par value;  authorized 300,000,000 shares; issued: March 31, 2015, December 31, 2014 and March 31, 2014 - 170,183,540 shares

127,937

127,937

127,937

Capital surplus

1,394,933

1,393,090

1,393,749

Accumulated other comprehensive loss

(49,267)

(71,892)

(55,504)

Retained earnings

1,433,926

1,404,717

1,303,626

Treasury stock, at cost: March 31, 2015 - 4,730,374; December 31, 2014 - 4,793,566 shares; March 31, 2014 - 5,096,157 shares

(121,743)

(122,571)

(129,842)

  Total shareholders' equity

2,888,786

2,834,281

2,742,966

    Total liabilities and shareholders' equity

$

25,118,120

$

24,902,347

$

24,498,661

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Period End Loans by Product Type

(Unaudited)

(In thousands)

As of March 31, 2015

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans (2)

Total Loans

Commercial

$

8,031,892

$

1,011,170

$

179,547

$

9,222,609

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

Leases

388,873

—

—

388,873

    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

Total Loans

Commercial

$

7,830,085

$

1,086,899

$

211,607

$

9,128,591

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

Leases

370,179

—

—

370,179

    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

As of September 30, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans

Total Loans

Commercial

$

7,626,166

$

1,272,244

$

262,319

$

9,160,729

Mortgage

605,998

410,065

43,672

1,059,735

Installment

2,277,533

809,820

5,148

3,092,501

Home equity

1,062,013

252,975

83,278

1,398,266

Credit card

160,113

—

—

160,113

Leases

339,936

—

—

339,936

    Subtotal

12,071,759

2,745,104

394,417

15,211,280

Loss share receivable

—

—

30,746

30,746

    Total loans

12,071,759

2,745,104

425,163

15,242,026

Allowance for loan losses

(90,883)

(6,206)

(42,988)

(140,077)

Net loans

$

11,980,876

$

2,738,898

$

382,175

$

15,101,949

As of June 30, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans

Total Loans

Commercial

$

7,365,499

$

1,457,903

$

292,782

$

9,116,184

Mortgage

580,166

425,584

46,705

1,052,455

Installment

2,051,587

872,034

5,364

2,928,985

Home equity

998,179

268,266

89,815

1,356,260

Credit card

151,967

—

—

151,967

Leases

319,795

—

—

319,795

    Subtotal

11,467,193

3,023,787

434,666

14,925,646

Loss share receivable

—

—

43,981

43,981

    Total loans

11,467,193

3,023,787

478,647

14,969,627

Allowance for loan losses

(91,950)

(4,977)

(45,109)

(142,036)

Net loans

$

11,375,243

$

3,018,810

$

433,538

$

14,827,591

As of March 31, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans

Total Loans

Commercial

$

7,083,192

$

1,562,878

$

341,267

$

8,987,337

Mortgage

555,971

446,374

49,411

1,051,756

Installment

1,835,522

943,354

5,531

2,784,407

Home equity

946,802

283,309

94,828

1,324,939

Credit card

147,917

—

—

147,917

Leases

257,509

—

—

257,509

    Subtotal

10,826,913

3,235,915

491,037

14,553,865

Loss share receivable

—

—

54,748

54,748

    Total loans

10,826,913

3,235,915

545,785

14,608,613

Allowance for loan losses

(92,116)

(2,974)

(49,970)

(145,060)

Net loans

$

10,734,797

$

3,232,941

$

495,815

$

14,463,553

(1) Loans assumed from Citizens.

(2) Loans acquired in an FDIC-assisted transaction. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015. As of March 31, 2015, $174.6 million and $110.4 million of FDIC acquired loans remained covered by non-single family loss share agreements and single family loss share agreements, respectively, providing considerable protection against credit risk.

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

AVERAGE CONSOLIDATED BALANCE SHEETS

Quarterly Periods

(Unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

(In thousands)

2015

2014

2014

2014

2014

ASSETS

Cash and cash equivalents

$

563,265

$

500,559

$

521,210

$

662,000

$

959,071

Investment securities:

Held-to-maturity

2,874,169

2,966,127

3,029,971

3,061,711

2,983,831

Available-for-sale

3,645,057

3,499,528

3,460,312

3,444,830

3,332,358

Other investments

148,532

148,636

148,427

148,440

168,389

Loans held for sale

5,478

16,708

17,433

10,196

6,804

Loans

15,427,181

15,289,890

15,148,100

14,702,319

14,412,481

Less: allowance for loan losses

144,363

138,540

140,026

146,368

138,891

Net loans

15,282,818

15,151,350

15,008,074

14,555,951

14,273,590

Total earning assets

22,100,417

21,920,889

21,804,243

21,367,496

20,903,863

Premises and equipment, net

322,431

321,187

317,366

323,175

327,845

Accrued interest receivable and other assets

2,063,344

2,060,892

2,080,983

2,084,973

2,092,682

TOTAL ASSETS

$

24,905,094

$

24,664,987

$

24,583,776

$

24,291,276

$

24,144,570

LIABILITIES

Deposits:

Noninterest-bearing

$

5,728,763

$

5,706,631

$

5,603,104

$

5,515,807

$

5,488,751

Interest-bearing

3,209,285

3,021,188

3,100,904

3,066,201

3,045,952

Savings and money market accounts

8,542,154

8,381,548

8,492,172

8,580,928

8,698,817

Certificates and other time deposits

2,308,723

2,341,280

2,335,620

2,333,859

2,402,986

Total deposits

19,788,925

19,450,647

19,531,800

19,496,795

19,636,506

Federal funds purchased and securities sold under

agreements to repurchase

1,024,863

1,241,948

1,182,507

1,024,598

884,065

Wholesale borrowings

350,991

450,587

438,941

373,213

276,324

Long-term debt

505,275

350,535

320,387

324,431

324,428

Total funds

21,670,054

21,493,717

21,473,635

21,219,037

21,121,323

Accrued taxes, expenses and other liabilities

368,678

321,652

302,255

303,887

290,021

Total liabilities

22,038,732

21,815,369

21,775,890

21,522,924

21,411,344

SHAREHOLDERS' EQUITY

Preferred stock

100,000

100,000

100,000

100,000

100,000

Common stock warrant

3,000

3,000

3,000

3,000

3,000

Common stock

127,937

127,937

127,937

127,937

127,937

Capital surplus

1,393,682

1,391,189

1,388,423

1,386,497

1,391,695

Accumulated other comprehensive loss

(58,025)

(38,827)

(41,963)

(44,952)

(52,940)

Retained earnings

1,422,067

1,388,661

1,352,867

1,319,515

1,293,379

Treasury stock

(122,299)

(122,342)

(122,378)

(123,645)

(129,845)

Total shareholders' equity

2,866,362

2,849,618

2,807,886

2,768,352

2,733,226

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

24,905,094

$

24,664,987

$

24,583,776

$

24,291,276

$

24,144,570

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

Average Loans by Product Type

(Unaudited)

(In thousands)

Quarter ended March 31, 2015

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans (2)

Total Loans

Commercial

$

7,979,901

$

1,053,601

$

196,421

$

9,229,923

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

Leases

368,025

—

—

368,025

    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

Less 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

Quarter ended December 31, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans (2)

Total Loans

Commercial

$

7,734,881

$

1,170,536

$

231,531

$

9,136,948

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

Leases

351,222

—

—

351,222

    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

Less 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

Quarter Ended September 30, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans (2)

Total Loans

Commercial

$

7,534,848

$

1,373,103

$

271,299

$

9,179,250

Mortgage

594,258

416,417

44,672

1,055,347

Installment

2,171,246

838,687

5,278

3,015,211

Home equity

1,030,256

259,867

86,224

1,376,347

Credit card

156,866

—

—

156,866

Leases

326,840

—

—

326,840

    Subtotal

11,814,314

2,888,074

407,473

15,109,861

Loss share receivable

—

—

38,239

38,239

    Total loans

11,814,314

2,888,074

445,712

15,148,100

Less allowance for loan losses

91,888

6,088

42,050

140,026

Net loans

$

11,722,426

$

2,881,986

$

403,662

$

15,008,074

Quarter Ended June 30, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans (2)

Total Loans

Commercial

$

7,185,060

$

1,492,139

$

303,721

$

8,980,920

Mortgage

565,703

434,936

48,258

1,048,897

Installment

1,939,802

907,069

5,445

2,852,316

Home equity

969,592

275,387

91,855

1,336,834

Credit card

149,903

—

—

149,903

Leases

282,041

—

—

282,041

    Subtotal

11,092,101

3,109,531

449,279

14,650,911

Loss share receivable

—

—

51,408

51,408

    Total loans

11,092,101

3,109,531

500,687

14,702,319

Less allowance for loan losses

94,063

3,034

49,271

146,368

Net loans

$

10,998,038

$

3,106,497

$

451,416

$

14,555,951

Quarter ended March 31, 2014

Originated Loans

Acquired Loans (1)

FDIC Acquired Loans (2)

Total Loans

Commercial

$

6,819,522

$

1,678,267

$

357,033

$

8,854,822

Mortgage

538,151

459,842

49,921

1,047,914

Installment

1,771,434

972,711

6,012

2,750,157

Home equity

929,362

288,529

95,487

1,313,378

Credit card

147,265

—

—

147,265

Leases

242,649

—

—

242,649

    Subtotal

10,448,383

3,399,349

508,453

14,356,185

Loss share receivable

—

—

56,296

56,296

    Total loans

10,448,383

3,399,349

564,749

14,412,481

Less allowance for loan losses

96,789

(617)

42,719

138,891

Net loans

$

10,351,594

$

3,399,966

$

522,030

$

14,273,590

(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.

 

 

FIRSTMERIT CORPORATION AND SUBIDARIES

AVERAGE CONSOLIDATED BALANCE SHEETS

Fully Tax-equivalent Interest Rates and Interest Differential

Three months ended

Three months ended

Three months ended

March 31, 2015

December 31, 2014

March 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

$

563,265

$

500,559

$

959,071

Investment securities and federal funds sold:

U.S. treasury securities and U.S. government agency obligations (taxable)

5,329,725

$

26,760

2.04

%

5,257,657

$

26,803

2.02

%

5,151,341

$

25,910

2.04

%

Obligations of states and political subdivisions (tax exempt)

733,157

9,147

5.06

%

767,026

8,636

4.47

%

739,875

8,613

4.72

%

Other securities and federal funds sold

604,876

5,190

3.48

%

589,608

5,213

3.51

%

593,362

6,113

4.18

%

Total investment securities and federal funds sold

6,667,758

41,097

2.50

%

6,614,291

40,652

2.44

%

6,484,578

40,636

2.54

%

Loans held for sale

5,478

57

4.22

%

16,708

145

3.44

%

6,804

59

3.53

%

Loans, including loss share receivable (2)

15,427,181

162,292

4.27

%

15,289,890

169,302

4.39

%

14,412,481

171,135

4.82

%

Total earning assets

22,100,417

$

203,446

3.73

%

21,920,889

$

210,099

3.80

%

20,903,863

$

211,830

4.11

%

Total allowance for loan losses

(144,363)

(138,540)

(138,891)

Other assets

2,385,775

2,382,079

2,420,527

Total assets

$

24,905,094

$

24,664,987

$

24,144,570

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$

5,728,763

$

—

—

%

$

5,706,631

$

—

—

%

$

5,488,751

$

—

—

%

Interest-bearing

3,209,285

767

0.10

%

3,021,188

727

0.10

%

3,045,952

737

0.10

%

Savings and money market accounts

8,542,154

5,547

0.26

%

8,381,548

5,496

0.26

%

8,698,817

5,559

0.26

%

Certificates and other time deposits

2,308,723

2,177

0.38

%

2,341,280

2,525

0.43

%

2,402,986

2,464

0.42

%

Total deposits

19,788,925

8,491

0.17

%

19,450,647

8,748

0.18

%

19,636,506

8,760

0.18

%

Securities sold under agreements to repurchase

1,024,863

243

0.10

%

1,241,948

294

0.09

%

884,065

197

0.09

%

Wholesale borrowings

350,991

2,340

2.70

%

450,587

2,360

2.08

%

276,324

1,129

1.66

%

Long-term debt

505,275

2,818

2.26

%

350,535

2,188

2.48

%

324,428

3,890

4.86

%

Total interest-bearing liabilities

15,941,291

13,892

0.35

%

15,787,086

13,590

0.34

%

15,632,572

13,976

0.36

%

Other liabilities

368,678

321,652

290,021

Shareholders' equity

2,866,362

2,849,618

2,733,226

Total liabilities and shareholders' equity

$

24,905,094

$

24,664,987

$

24,144,570

Net yield on earning assets

$

22,100,417

$

189,554

3.48

%

$

21,920,889

$

196,509

3.56

%

$

20,903,863

$

197,854

3.84

%

Interest rate spread

3.38

%

3.46

%

3.75

%

(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 $3.9 million, $4.0 million, and $4.0 million for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, respectively.

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

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

Quarters Ended

(Unaudited)

March 31,

2015

2014

Interest income:

Loans and loans held for sale

$

161,539

$

170,514

Investment securities:

Taxable

31,950

32,022

Tax-exempt

6,026

5,340

Total investment securities interest

37,976

37,362

Total interest income

199,515

207,876

Interest expense:

Deposits:

Interest-bearing

767

737

Savings and money market accounts

5,547

5,559

Certificates and other time deposits

2,177

2,464

Federal funds purchased and securities sold under agreements to repurchase

243

197

Wholesale borrowings

2,340

1,129

Long-term debt

2,818

3,890

Total interest expense

13,892

13,976

Net interest income

185,623

193,900

Provision for loan losses

8,248

14,536

Net interest income after provision for loan losses

177,375

179,364

Noninterest income:

Trust department income

10,149

9,748

Service charges on deposits

15,668

16,648

Credit card fees

12,649

12,152

ATM and other service fees

6,099

5,819

Bank owned life insurance income

3,592

3,582

Investment services and insurance

3,704

3,516

Investment securities gains/(losses), net

354

56

Loan sales and servicing income

1,600

3,730

Other operating income

12,032

12,019

Total noninterest income

65,847

67,270

Noninterest expenses:

Salaries, wages, pension and employee benefits

90,526

89,013

Net occupancy expense

15,954

17,014

Equipment expense

11,025

11,911

Stationery, supplies and postage

3,528

4,108

Bankcard, loan processing and other costs

11,139

10,834

Professional services

4,010

5,359

Amortization of intangibles

2,598

2,936

FDIC insurance expense

5,167

5,971

Other operating expense

16,705

22,185

Total noninterest expenses

160,652

169,331

Income before income tax expense

82,570

77,303

Income tax expense

25,431

23,848

Net income

$

57,139

$

53,455

Less:

Net income allocated to participating shareholders

407

380

Preferred stock dividends

1,469

1,469

Net income attributable to common shareholders

$

55,263

$

51,606

Net income used in diluted EPS calculation

$

55,263

$

51,606

Weighted average number of common shares outstanding - basic

165,411

165,060

Weighted average number of common shares outstanding - diluted

166,003

166,004

Basic earnings per common share

$

0.33

$

0.31

Diluted earnings per common share

$

0.33

$

0.31

Cash dividends per common share

$

0.16

$

0.16

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Quarter Ended

(In thousands)

March 31, 2015

Pre-tax

Tax

After-tax

Net Income

$

82,570

$

25,431

$

57,139

Other comprehensive income/(loss)

Unrealized gains and losses on securities available for sale:

Changes in unrealized securities' holding gains/(losses)

34,117

11,941

22,176

Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity

(504)

(176)

(328)

Net losses/(gains) realized on sale of securities reclassified to noninterest income

(354)

(124)

(230)

Net change in unrealized gains/(losses) on securities available for sale

33,259

11,641

21,618

Pension plans and other postretirement benefits:

Amortization of actuarial gain

1,138

398

740

Amortization of prior service cost reclassified to other noninterest expense

410

143

267

Net change from defined benefit pension plans

1,548

541

1,007

Total other comprehensive gains/(losses)

34,807

12,182

22,625

Comprehensive income

$

117,377

$

37,613

$

79,764

 

(Unaudited)

Quarter Ended

(In thousands)

March 31, 2014

Pre-tax

Tax

After-tax

Net Income

$

77,303

$

23,848

$

53,455

Other comprehensive income/(loss)

Unrealized gains and losses on securities available for sale:

Changes in unrealized securities' holding gains/(losses)

18,044

6,315

11,729

Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity

(494)

(173)

(321)

Net losses/(gains) realized on sale of securities reclassified to noninterest income

(56)

(20)

(36)

Net change in unrealized gains/(losses) on securities available for sale

17,494

6,122

11,372

Total other comprehensive gains/(losses)

17,494

6,122

11,372

Comprehensive income

$

94,797

$

29,970

$

64,827

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME---LINKED QUARTERS

Quarterly Results

(In thousands, except per share amounts)

2015

2014

2014

2014

2014

(Unaudited)

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Interest Income:

Loans and loans held for sale

$

161,539

$

168,650

$

170,648

$

172,517

$

170,514

Investment securities

37,976

37,451

37,549

37,808

37,362

Total interest income

199,515

206,101

208,197

210,325

207,876

Interest expense:

Deposits:

Interest-bearing

767

727

755

745

737

Savings and money market accounts

5,547

5,496

5,570

5,477

5,559

Certificates and other time deposits

2,177

2,525

2,846

3,009

2,464

Federal funds purchased and securities sold under agreements to repurchase

243

294

268

233

197

Wholesale borrowings

2,340

2,360

1,397

1,391

1,129

Long-term debt

2,818

2,188

3,783

3,893

3,890

Total interest expense

13,892

13,590

14,619

14,748

13,976

Net interest income

185,623

192,511

193,578

195,577

193,900

Provision for loan losses

8,248

13,297

9,192

15,253

14,536

Net interest income after provision for loan losses

177,375

179,214

184,386

180,324

179,364

Noninterest income:

Trust department income

10,149

9,831

10,300

10,070

9,748

Service charges on deposits

15,668

17,597

18,684

18,528

16,648

Credit card fees

12,649

13,305

13,754

13,455

12,152

ATM and other service fees

6,099

6,181

6,182

5,996

5,819

Bank owned life insurance income

3,592

7,337

4,218

4,040

3,582

Investment services and insurance

3,704

4,171

3,606

3,852

3,516

Investment securities gains/(losses), net

354

16

14

80

56

Loan sales and servicing income

1,600

3,112

4,740

4,462

3,730

Other operating income

12,032

10,410

8,235

12,077

12,019

Total noninterest income

65,847

71,960

69,733

72,560

67,270

Noninterest expenses:

Salaries, wages, pension and employee benefits

90,526

89,899

90,593

89,465

89,013

Net occupancy expense

15,954

14,188

13,887

14,347

17,014

Equipment expense

11,025

12,133

12,188

12,267

11,911

Stationery, supplies and postage

3,528

3,767

3,723

3,990

4,108

Bankcard, loan processing and other costs

11,139

11,830

11,151

11,810

10,834

Professional services

4,010

6,440

5,270

4,745

5,359

Amortization of intangibles

2,598

2,933

2,933

2,933

2,936

FDIC  insurance expense

5,167

5,989

2,988

5,533

5,971

Other operating expense

16,705

17,862

20,412

22,310

22,185

Total noninterest expenses

160,652

165,041

163,145

167,400

169,331

Income before income tax expense

82,570

86,133

90,974

85,484

77,303

Income tax expense

25,431

25,054

27,076

25,965

23,848

Net income

57,139

61,079

63,898

59,519

53,455

Less:  Net income allocated to participating shareholders

407

496

519

489

380

Preferred stock dividends

1,469

1,469

1,469

1,469

1,469

Net income attributable to common shareholders

$

55,263

$

59,114

$

61,910

$

57,561

$

51,606

Net income used in diluted EPS calculation

$

55,263

$

59,114

$

61,910

$

57,561

$

51,606

Weighted-average number of common shares outstanding - basic

165,411

165,395

165,389

165,335

165,060

Weighted-average number of common shares outstanding- diluted

166,003

165,974

165,804

166,147

166,004

Basic earnings per common share

$

0.33

$

0.36

$

0.37

$

0.35

$

0.31

Diluted earnings per common share

$

0.33

$

0.36

$

0.37

$

0.35

$

0.31

Cash dividends per common share

$

0.16

$

0.16

$

0.16

$

0.16

$

0.16

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

ASSET QUALITY INFORMATION (excluding acquired loans, FDIC acquired loans, and covered OREO) (1)

(Unaudited)

(Unaudited)

(Audited)

(Dollars in thousands)

Quarterly Periods

Annual Period

March 31,

December 31,

September 30,

June 30,

March 31,

December 31,

Allowance for Credit Losses

2015

2014

2014

2014

2014

2014

Allowance for originated loan losses, beginning of period

$

95,696

$

90,883

$

91,950

$

92,116

$

96,484

$

96,484

Provision for originated loan losses

6,036

8,662

4,862

5,993

3,654

23,171

Charge-offs

8,567

9,205

11,410

11,148

13,160

44,923

Recoveries

4,380

5,356

5,481

4,989

5,138

20,964

Net charge-offs

4,187

3,849

5,929

6,159

8,022

23,959

Allowance for originated loan losses, end of period

$

97,545

$

95,696

$

90,883

$

91,950

$

92,116

$

95,696

Reserve for unfunded lending commitments,

beginning of period

$

5,848

$

6,966

$

7,107

$

7,481

$

7,907

$

7,907

Provision for (relief of) credit losses

(1,518)

(1,118)

(141)

(374)

(426)

(2,059)

Reserve for unfunded lending commitments,

end of period

$

4,330

$

5,848

$

6,966

$

7,107

$

7,481

$

5,848

Allowance for Credit Losses

$

101,875

$

101,544

$

97,849

$

99,057

$

99,597

$

101,544

Ratios

Provision for loan losses to average loans

0.19

%

0.28

%

0.16

%

0.22

%

0.14

%

0.20

%

Net charge-offs to average loans

0.13

%

0.12

%

0.20

%

0.22

%

0.31

%

0.21

%

Allowance for loan losses to period-end loans

0.76

%

0.77

%

0.75

%

0.80

%

0.85

%

0.77

%

Allowance for credit losses to period-end loans

0.79

%

0.81

%

0.81

%

0.86

%

0.92

%

0.81

%

Allowance for loan losses to nonperforming loans

211.66

%

276.44

%

231.13

%

250.27

%

212.01

%

276.44

%

Allowance for credit losses to nonperforming loans

221.06

%

293.34

%

248.85

%

269.61

%

229.23

%

293.34

%

Asset Quality

Impaired originated loans:

Commercial loans

$

28,478

$

17,147

$

22,347

$

21,072

$

27,122

$

17,147

Consumer loans

17,607

17,470

16,974

15,669

16,326

17,470

Total nonperforming loans

46,085

34,617

39,321

36,741

43,448

34,617

Other real estate owned ("OREO") (2)

22,521

20,421

23,798

24,181

19,263

20,421

Total nonperforming assets ("NPAs") (2)

$

68,606

$

55,038

$

63,119

$

60,922

$

62,711

$

55,038

NPAs to period-end loans + OREO (2)

0.53

%

0.44

%

0.52

%

0.53

%

0.58

%

0.44

%

Accruing originated loans past due 90 days or more

$

7,914

$

12,156

$

8,538

$

15,643

$

11,860

$

12,156

(1) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired loans 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. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015. As of March 31, 2015, $174.6 million and $110.4 million of FDIC acquired loans remained covered by non-single family loss share agreement and single family loss share agreements, respectively, providing considerable protection against credit risk.

(2) As of March 31, 2015, $3.4 million of OREO was no longer covered by a FDIC loss share agreement, and therefore, was included in NPAs. OREO that remains covered by FDIC loss share agreements has considerable protection against credit risk and is not reported as NPAs.

 

 

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL

(Unaudited)

(In thousands)

2015

2014

2014

2014

2014

Noninterest income detail

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Trust department income

$

10,149

$

9,831

$

10,300

$

10,070

$

9,748

Service charges on deposits

15,668

17,597

18,684

18,528

16,648

Credit card fees

12,649

13,305

13,754

13,455

12,152

ATM and other service fees

6,099

6,181

6,182

5,996

5,819

Bank owned life insurance income

3,592

7,337

4,218

4,040

3,582

Investment services and insurance

3,704

4,171

3,606

3,852

3,516

Investment securities gains/(losses), net

354

16

14

80

56

Loan sales and servicing income

1,600

3,112

4,740

4,462

3,730

Other operating income

12,032

10,410

8,235

12,077

12,019

Total Noninterest Income

$

65,847

$

71,960

$

69,733

$

72,560

$

67,270

2015

2014

2014

2014

2014

Noninterest expense detail

1st qtr

4th qtr

3rd qtr

2nd qtr

1st qtr

Salaries and wages

$

71,914

$

71,638

$

71,769

$

69,892

$

71,669

Pension and employee benefits

18,612

18,261

18,824

19,573

17,344

Net occupancy expense

15,954

14,188

13,887

14,347

17,014

Equipment expense

11,025

12,133

12,188

12,267

11,911

Taxes, other than federal income taxes

2,014

1,661

1,286

2,576

2,774

Stationery, supplies and postage

3,528

3,767

3,723

3,990

4,108

Bankcard, loan processing and other costs

11,139

11,830

11,151

11,810

10,834

Advertising

2,747

3,586

3,942

3,801

3,516

Professional services

4,010

6,440

5,270

4,745

5,359

Telephone

2,574

2,779

2,831

2,857

2,908

Amortization of intangibles

2,598

2,933

2,933

2,933

2,936

FDIC insurance expense

5,167

5,989

2,988

5,533

5,971

Other operating expense

9,370

9,836

12,353

13,076

12,987

Total Noninterest Expense

$

160,652

$

165,041

$

163,145

$

167,400

$

169,331

 

FIRSTMERIT CORPORATION AND SUBSIDIARIES

ALLOWANCE FOR ORIGINATED LOAN LOSSES - Net Charge-off Detail (excluding acquired and FDIC acquired loans) (1)

(Unaudited)

Quarters Ended

Year Ended

(Dollars in thousands)

March 31,

December 31,

2015

2014

2014

Allowance for originated loan losses - beginning of period

$

95,696

$

96,484

$

96,484

Loans charged off:

Commercial

685

5,153

12,701

Mortgage

424

559

2,031

Installment

4,605

4,584

17,932

Home equity

911

838

4,831

Credit cards

1,452

1,455

4,604

Leases

—

—

—

Overdrafts

490

571

2,824

Total

8,567

13,160

44,923

Recoveries:

Commercial

325

1,029

4,332

Mortgage

35

38

318

Installment

2,868

2,738

10,513

Home equity

613

699

2,940

Credit cards

366

418

1,716

Manufactured housing

13

11

87

Leases

4

—

379

Overdrafts

156

205

679

Total

4,380

5,138

20,964

Net charge-offs

4,187

8,022

23,959

Provision for originated loan losses

6,036

3,654

23,171

Allowance for originated loan losses-end of period

$

97,545

$

92,116

$

95,696

Average originated loans

$

12,689,791

$

10,448,383

$

11,421,426

Ratio (annualized) to average originated loans:

Originated net charge-offs

0.13

%

0.31

%

0.21

%

Provision for originated loan losses

0.19

%

0.14

%

0.20

%

Originated Loans, period-end

$

12,856,037

$

10,826,913

$

12,493,812

Allowance for credit losses:

$

101,875

$

99,597

$

101,544

To (annualized) net charge-offs

6.00

3.06

4.24

Allowance for originated loan losses:

To period-end originated loans

0.76

%

0.85

%

0.77

%

To (annualized) net originated charge-offs

5.74

2.83

3.99

(1) 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 are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015. As of March 31, 2015, $174.6 million and $110.4 million of FDIC acquired loans remained covered by non-single family loss share agreement and single family loss share agreements, respectively, providing considerable protection against credit risk.

 

FirstMerit Corporation Analyst: Thomas O'Malley/Investor Relations Officer Phone: 330.384.7109  Media Contact: Robert Townsend/Media Relations Officer Phone: 330.384.7075

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/firstmerit-reports-first-quarter-2015-eps-of-033-per-share-300072826.html

SOURCE FirstMerit Corporation


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