FirstMerit Reports Fourth Quarter 2015 EPS of $0.33 per Share
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AKRON, OH -- (Marketwired) -- 01/26/16 -- 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
basis(1) 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 revenue(1) 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 ratio(1) 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-
equivalen
t
adjustmen
t 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
amortizat
ion 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/(lo
sses) (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/(recap
ture) for
acquired loan
losses 1,503 144 (952) 2,214 3,407
Provision/(recap
ture) 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
----------------------------------------------------
FDIC
Originated Acquired Acquired
(In thousands) Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
CORPORATIO
N AND
SUBSIDIARI
ES
AVERAGE
CONSOLIDAT
ED BALANCE
SHEETS
Three Months Ended
----------------------------------------------------------------
September
(Unaudited) December 31, 30, June 30, March 31, December 31,
(In
thousands) 2015 2015 2015 2015 2014
------------ ------------ ------------ ------------ ------------
ASSETS
Cash and
cash
equivalent
s $ 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
investmen
ts 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:
Noninteres
t-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
Certificat
es 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
liabilitie
s 381,593 365,526 366,722 368,678 321,652
------------ ------------ ------------ ------------ ------------
Total
liabilit
ies 22,427,678 22,308,196 22,237,427 22,038,732 21,815,369
SHAREHOLDER
S' 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
comprehens
ive 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
sharehol
ders'
equity 2,943,268 2,909,660 2,892,432 2,866,362 2,849,618
------------ ------------ ------------ ------------ ------------
TOTAL
LIABILITIE
S AND
SHAREHOLDE
RS' 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
---------------------------------------------------
FDIC
Originated Acquired Acquired
Loans Loans (1) 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
--------------------------- ---------------------------
December 31, 2015 September 30, 2015
--------------------------- ---------------------------
Avera Avera
(Unaudited) Average ge Average ge
(Dollars in Interest Interest
thousands) Balance (1) Rate Balance (1) Rate
------------ -------- ----- ------------ -------- -----
ASSETS
Cash and cash
equivalents $ 415,756 $ 457,317
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%
Obligations of
states and
political
subdivisions
(tax exempt) 768,288 8,349 4.31% 737,323 8,245 4.44%
Other securities
and federal
funds sold 595,687 5,300 3.53% 572,376 5,134 3.56%
------------------- ------------ -------- ------------ --------
Total
investment
securities and
federal funds
sold 6,820,863 41,393 2.41% 6,783,921 40,886 2.39%
Loans held for sale 5,028 59 4.66% 4,929 66 5.31%
Loans, including
loss share
receivable (2) 15,921,740 162,865 4.06% 15,760,127 162,903 4.10%
------------------- ------------ -------- ------------ --------
Total earning
assets 22,747,631 $204,317 3.56% 22,548,977 $203,855 3.59%
Total allowance for
loan losses (151,192) (147,136)
Other assets 2,358,751 2,358,698
------------------- ------------ ------------
Total assets $25,370,946 $25,217,856
============ ============
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Deposits:
Noninterest-
bearing $ 5,982,186 $ — —% $ 5,897,768 $ — —%
Interest-bearing 3,352,908 754 0.09% 3,353,541 750 0.09%
Savings and money
market accounts 8,408,703 5,611 0.26% 8,480,682 5,639 0.26%
Certificates and
other time
deposits 2,258,996 3,378 0.59% 2,225,595 2,757 0.49%
------------------- ------------ -------- ------------ --------
Total deposits 20,002,793 9,743 0.19% 19,957,586 9,146 0.18%
Securities sold
under agreements
to repurchase 1,131,659 300 0.11% 1,109,924 254 0.09%
Wholesale
borrowings 402,679 1,202 1.18% 377,594 1,171 1.23%
Long-term debt 508,954 4,093 3.19% 497,566 4,165 3.32%
------------------- ------------ -------- ------------ --------
Total interest-
bearing
liabilities 16,063,899 15,338 0.38% 16,044,902 14,736 0.36%
Other liabilities 381,593 365,526
Shareholders'
equity 2,943,268 2,909,660
------------------- ------------ ------------
Total
liabilities
and
shareholders'
equity $25,370,946 $25,217,856
============ ============
Net yield on
earning assets $22,747,631 $188,979 3.30% $22,548,977 $189,119 3.33%
============ ======== ===== ============ ======== =====
Interest rate
spread 3.18% 3.23%
===== =====
============================================================================
Three months ended
---------------------------
December 31, 2014
---------------------------
Avera
(Unaudited) Average ge
(Dollars in Interest
thousands) Balance (1) Rate
------------ -------- -----
ASSETS
Cash and cash
equivalents $ 500,559
Investment
securities and
federal funds
sold:
U.S. treasury
securities and
U.S. government
agency
obligations
(taxable) 5,257,657 $ 26,803 2.02%
Obligations of
states and
political
subdivisions
(tax exempt) 767,026 8,636 4.47%
Other securities
and federal
funds sold 589,608 5,213 3.51%
------------------------------- --------
Total
investment
securities and
federal funds
sold 6,614,291 40,652 2.44%
Loans held for sale 16,708 145 3.44%
Loans, including
loss share
receivable (2) 15,289,890 169,302 4.39%
------------------------------- --------
Total earning
assets 21,920,889 $210,099 3.80%
Total allowance for
loan losses (138,540)
Other assets 2,382,079
-------------------------------
Total assets $24,664,987
============
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Deposits:
Noninterest-
bearing $ 5,706,631 $ — —%
Interest-bearing 3,021,188 727 0.10%
Savings and money
market accounts 8,381,548 5,496 0.26%
Certificates and
other time
deposits 2,341,280 2,525 0.43%
------------------------------- --------
Total deposits 19,450,647 8,748 0.18%
Securities sold
under agreements
to repurchase 1,241,948 294 0.09%
Wholesale
borrowings 450,587 1,292 1.14%
Long-term debt 350,535 3,256 3.69%
------------------------------- --------
Total interest-
bearing
liabilities 15,787,086 13,590 0.34%
Other liabilities 321,652
Shareholders'
equity 2,849,618
-------------------------------
Total
liabilities
and
shareholders'
equity $24,664,987
============
Net yield on
earning assets $21,920,889 $196,509 3.56%
============ ======== =====
Interest rate
spread 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
--------------------------- ---------------------------
Avera Avera
(Unaudited) Average ge Average ge
(Dollars in Interest Interest
thousands) Balance (1) Rate Balance (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)
Unrealized
gains and
losses on
securities
available for
sale:
Changes in
unrealized
securities'
holding
gains/(losses
) (51,008) (22,144) (28,864) (19,842) (11,253) (8,589)
Changes in
unrealized
securities'
holding
gains/(losses
) that result
from
securities
being
transferred
from
available-
for-sale into
held-to-
maturity (1,111) (403) (708) (3,456) (1,254) (2,202)
Net
losses/(gains
) realized on
sale of
securities
reclassified
to
noninterest
income 5 2 3 (957) (348) (609)
--------- --------- --------- --------- --------- ---------
Net change in
unrealized
gains/(losses)
on securities
available for
sale (52,114) (22,545) (29,569) (24,255) (12,855) (11,400)
Pension plans
and other
postretirement
benefits:
Net
gains/(losses
) arising
during the
period 116 42 74 116 42 74
Amortization
of actuarial
gain 1,138 413 725 4,552 1,652 2,900
Amortization
of prior
service cost
reclassified
to other
noninterest
expense 410 149 261 1,640 596 1,044
--------- --------- --------- --------- --------- ---------
Net change from
defined
benefit
pension plans 1,664 604 1,060 6,308 2,290 4,018
--------- --------- --------- --------- --------- ---------
Total other
comprehensive
gains/(losses) (50,450) (21,941) (28,509) (17,947) (10,565) (7,382)
--------- --------- --------- --------- --------- ---------
Comprehensive
income $ 30,691 $ 2,451 $ 28,240 $308,556 $ 86,454 $222,102
========= ========= ========= ========= ========= =========
Quarter Ended Year Ended
----------------------------- -----------------------------
December 31, 2014 December 31, 2014
----------------------------- -----------------------------
Pre-tax Tax After-tax Pre-tax Tax After-tax
--------- --------- --------- --------- --------- ---------
Net Income $ 86,133 $ 25,054 $ 61,079 $339,894 $101,943 $237,951
Other
comprehensive
income/(loss)
Unrealized
gains and
losses on
securities
available for
sale:
Changes in
unrealized
securities'
holding
gains/(losses
) 14,571 5,100 9,471 38,864 13,602 25,262
Changes in
unrealized
securities'
holding
gains/(losses
) that result
from
securities
being
transferred
from
available-
for-sale into
held-to-
maturity (606) (210) (396) (2,157) (753) (1,404)
Net
losses/(gains
) realized on
sale of
securities
reclassified
to
noninterest
income (16) (6) (10) (166) (58) (108)
--------- --------- --------- --------- --------- ---------
Net change in
unrealized
gains/(losses)
on securities
available for
sale 13,949 4,884 9,065 36,541 12,791 23,750
--------- --------- --------- --------- --------- ---------
Pension plans
and other
postretirement
benefits:
Net
gains/(losses
) arising
during the
period (49,552) (17,342) (32,210) (49,552) (17,344) (32,208)
Amortization
of actuarial
gain 767 268 499 3,166 1,108 2,058
Amortization
of prior
service cost
reclassified
to other
noninterest
expense 517 180 337 2,131 747 1,384
--------- --------- --------- --------- --------- ---------
Net change from
defined
benefit
pension plans (48,268) (16,894) (31,374) (44,255) (15,489) (28,766)
--------- --------- --------- --------- --------- ---------
Total other
comprehensive
gains/(losses) (34,319) (12,010) (22,309) (7,714) (2,698) (5,016)
--------- --------- --------- --------- --------- ---------
Comprehensive
income $ 51,814 $ 13,044 $ 38,770 $332,180 $ 99,245 $232,935
========= ========= ========= ========= ========= =========
============================================================================
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME---LINKED QUARTERS
Quarterly Results
---------------------------------------------
(In thousands, except per
share amounts) 2015 2015 2015 2015 2014
(Unaudited) 4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
---------------------------------------- -------- -------- -------- --------
Interest Income:
Loans and loans held for sale $162,168 $162,204 $161,872 $161,539 $168,650
Investment securities 38,401 37,855 37,502 37,976 37,451
---------------------------------------- -------- -------- -------- --------
Total interest income 200,569 200,059 199,374 199,515 206,101
Interest expense:
Deposits:
Interest-bearing 754 750 783 767 727
Savings and money market
accounts 5,611 5,639 5,588 5,547 5,496
Certificates and other
time deposits 3,378 2,757 2,510 2,177 2,525
Federal funds purchased and
securities sold under
agreements to repurchase 300 254 329 243 294
Wholesale borrowings 1,202 1,171 1,129 1,160 1,292
Long-term debt 4,093 4,165 3,917 3,998 3,256
---------------------------------------- -------- -------- -------- --------
Total interest expense 15,338 14,736 14,256 13,892 13,590
---------------------------------------- -------- -------- -------- --------
Net interest income 185,231 185,323 185,118 185,623 192,511
Provision for loan losses 13,611 14,275 8,966 8,248 13,297
---------------------------------------- -------- -------- -------- --------
Net interest income
after provision for
loan losses 171,620 171,048 176,152 177,375 179,214
Noninterest income:
Trust department income 10,208 10,948 10,820 10,149 9,831
Service charges on deposits 16,793 17,295 16,704 15,668 17,597
Credit card fees 13,931 13,939 14,124 12,649 13,305
ATM and other service fees 6,626 6,518 6,345 6,099 6,181
Bank owned life insurance
income 3,836 4,622 3,697 3,592 7,337
Investment services and
insurance 3,816 4,032 3,871 3,704 4,171
Investment securities
gains/(losses), net (5) 41 567 354 16
Loan sales and servicing
income 2,276 2,414 3,276 1,600 3,112
Other operating income 7,662 11,617 7,178 12,032 10,410
---------------------------------------- -------- -------- -------- --------
Total noninterest income 65,143 71,426 66,582 65,847 71,960
---------------------------------------- -------- -------- -------- --------
Noninterest expenses:
Salaries, wages, pension and
employee benefits 86,490 85,772 86,020 90,526 89,899
Net occupancy expense 12,716 13,540 13,727 15,954 14,188
Equipment expense 12,074 12,235 12,592 11,025 12,133
Stationery, supplies and
postage 3,222 3,304 3,370 3,528 3,767
Bankcard, loan processing
and other costs 11,146 12,335 12,461 11,139 11,830
Professional services 5,056 5,154 5,358 4,010 6,440
Amortization of intangibles 2,598 2,598 2,598 2,598 2,933
FDIC insurance expense 5,252 5,234 5,077 5,167 5,989
Other operating expense 17,068 20,570 20,471 16,705 17,862
---------------------------------------- -------- -------- -------- --------
Total noninterest expenses 155,622 160,742 161,674 160,652 165,041
---------------------------------------- -------- -------- -------- --------
Income before income tax
expense 81,141 81,732 81,060 82,570 86,133
Income tax expense 24,392 22,720 24,476 25,431 25,054
---------------------------------------- -------- -------- -------- --------
Net income 56,749 59,012 56,584 57,139 61,079
Less: Net income allocated to
participating shareholders 453 477 467 407 496
Preferred stock
dividends 1,469 1,469 1,469 1,469 1,469
---------------------------------------- -------- -------- -------- --------
Net income attributable to
common shareholders $ 54,827 $ 57,066 $ 54,648 $ 55,263 $ 59,114
========= ======== ======== ======== ========
Net income used in diluted EPS
calculation $ 54,827 $ 57,066 $ 54,648 $ 55,263 $ 59,114
========= ======== ======== ======== ========
Weighted-average number of
common shares outstanding -
basic 165,762 165,762 165,736 165,411 165,395
Weighted-average number of
common shares outstanding-
diluted 166,222 166,058 166,277 166,003 165,974
Basic earnings per common
share $ 0.33 $ 0.34 $ 0.33 $ 0.33 $ 0.36
Diluted earnings per common
share $ 0.33 $ 0.34 $ 0.33 $ 0.33 $ 0.36
Cash dividends per common
share $ 0.17 $ 0.17 $ 0.16 $ 0.16 $ 0.16
------------------------------==============================================
FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL
(Unaudited)
(In thousands)
2015 2015 2015 2015 2014
Noninterest income detail 4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
---------------------------------------- -------- -------- -------- --------
Trust department income $ 10,208 $ 10,948 $ 10,820 $ 10,149 $ 9,831
Service charges on deposits 16,793 17,295 16,704 15,668 17,597
Credit card fees 13,931 13,939 14,124 12,649 13,305
ATM and other service fees 6,626 6,518 6,345 6,099 6,181
Bank owned life insurance
income 3,836 4,622 3,697 3,592 7,337
Investment services and
insurance 3,816 4,032 3,871 3,704 4,171
Investment securities
gains/(losses), net (5) 41 567 354 16
Loan sales and servicing
income 2,276 2,414 3,276 1,600 3,112
Other operating income 7,662 11,617 7,178 12,032 10,410
---------------------------------------- -------- -------- -------- --------
Total Noninterest Income $ 65,143 $ 71,426 $ 66,582 $ 65,847 $ 71,960
========= ======== ======== ======== ========
2015 2015 2015 2015 2014
Noninterest expense detail 4th qtr 3rd qtr 2nd qtr 1st qtr 4th qtr
---------------------------------------- -------- -------- -------- --------
Salaries and wages $ 68,151 $ 68,775 $ 67,485 $ 71,914 $ 71,638
Pension and employee benefits 18,339 16,997 18,535 18,612 18,261
Net occupancy expense 12,716 13,540 13,727 15,954 14,188
Equipment expense 12,074 12,235 12,592 11,025 12,133
Taxes, other than federal
income taxes 2,096 2,003 2,032 2,014 1,661
Stationery, supplies and
postage 3,222 3,304 3,370 3,528 3,767
Bankcard, loan processing and
other costs 11,146 12,335 12,461 11,139 11,830
Advertising 3,386 4,278 3,103 2,747 3,586
Professional services 5,056 5,154 5,358 4,010 6,440
Telephone 2,530 2,480 2,599 2,574 2,779
Amortization of intangibles 2,598 2,598 2,598 2,598 2,933
FDIC insurance expense 5,252 5,234 5,077 5,167 5,989
Other operating expense 9,056 11,809 12,737 9,370 9,836
---------------------------------------- -------- -------- -------- --------
Total Noninterest Expense $155,622 $160,742 $161,674 $160,652 $165,041
========= ======== ======== ======== ========
============================================================================
FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION (excluding acquired loans, FDIC acquired loans,
and covered OREO) (1)
(Unaudited) (Audited)
(Dollars in Annual
thousands) Quarterly Periods Period
------------------------------------------------- ---------
December September December December
31, 30, June 30, March 31, 31, 31,
Allowance for
Credit Losses 2015 2015 2015 2015 2014 2014
---------------- --------- --------- --------- --------- --------- ---------
Allowance for
originated loan
losses,
beginning of
period $104,055 $101,682 $ 97,545 $ 95,696 $ 90,883 $ 96,484
Provision for
originated loan
losses 12,487 10,402 10,809 6,036 8,662 23,171
Charge-offs 15,514 13,398 11,298 8,567 9,205 44,923
Recoveries 4,107 5,369 4,626 4,380 5,356 20,964
--------- --------- --------- --------- --------- ---------
Net charge-offs 11,407 8,029 6,672 4,187 3,849 23,959
--------- --------- --------- --------- --------- ---------
Allowance for
originated loan
losses, end of
period $105,135 $104,055 $101,682 $ 97,545 $ 95,696 $ 95,696
========= ========= ========= ========= ========= =========
Reserve for
unfunded
lending
commitments,
beginning of
period $ 3,574 $ 3,905 $ 4,330 $ 5,848 $ 6,966 $ 7,907
Provision for
(relief of)
credit losses 494 (331) (425) (1,518) (1,118) (2,059)
--------- --------- --------- --------- --------- ---------
Reserve for
unfunded
lending
commitments,
end of period $ 4,068 $ 3,574 $ 3,905 $ 4,330 $ 5,848 $ 5,848
========= ========= ========= ========= ========= =========
Allowance for
Credit Losses $109,203 $107,629 $105,587 $101,875 $101,544 $101,544
========= ========= ========= ========= ========= =========
----------------
Ratios
----------------
Provision for
loan losses to
average loans 0.36% 0.31% 0.33% 0.19% 0.28% 0.20%
Net charge-offs
to average
loans 0.33% 0.24% 0.20% 0.13% 0.12% 0.21%
Allowance for
loan losses to
period-end
loans 0.74% 0.76% 0.76% 0.76% 0.77% 0.77%
Allowance for
credit losses
to period-end
loans 0.77% 0.79% 0.79% 0.79% 0.81% 0.81%
Allowance for
loan losses to
nonperforming
loans 238.37% 221.22% 184.40% 211.66% 276.44% 276.44%
Allowance for
credit losses
to
nonperforming
loans 247.60% 228.82% 191.48% 221.06% 293.34% 293.34%
----------------
Asset Quality
----------------
Impaired
originated
loans:
Commercial loans $ 28,108 $ 30,821 $ 37,889 $ 28,478 $ 17,147 $ 17,147
Consumer loans 15,997 16,215 17,253 17,607 17,470 17,470
--------- --------- --------- --------- --------- ---------
Total
nonperforming
loans 44,105 47,036 55,142 46,085 34,617 34,617
Other real
estate owned
("OREO"),
noncovered (2) 50,393 60,022 62,169 22,521 20,421 20,421
--------- --------- --------- --------- --------- ---------
Total
nonperforming
assets ("NPAs")
(2) $ 94,498 $107,058 $117,311 $ 68,606 $ 55,038 $ 55,038
========= ========= ========= ========= ========= =========
NPAs to period-
end loans +
noncovered OREO
(2) 0.67% 0.78% 0.87% 0.53% 0.44% 0.44%
========= ========= ========= ========= ========= =========
Accruing
originated
loans past due
90 days or more $ 8,022 $ 9,888 $ 8,009 $ 7,914 $ 12,156 $ 12,156
========= ========= ========= ========= ========= =========
============================================================================
(1) Due to the impact of business combination accounting and the protection afforded by 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. George Washington and Midwest 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.
(2) As of December 31, 2015, September 30, 2015, June 30, 2015, and March 31, 2015, $33.5 million, $40.0 million, $42.0 million, and $3.4 million, respectively, of OREO was no longer covered by FDIC loss share agreements, 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
ALLOWANCE FOR ORIGINATED LOAN LOSSES - Net Charge-off Detail (excluding
acquired and FDIC acquired loans) (1)
(Unaudited) Quarters Ended Years Ended
(Dollars in thousands) December 31, December 31,
------------------------- -------------------------
2015 2014 2015 2014
------------ ------------ ------------ ------------
Allowance for originated
loan losses - beginning
of period $ 104,055 $ 90,883 $ 95,696 $ 96,484
Loans charged off:
Commercial 6,532 445 15,270 12,701
Mortgage 237 547 1,443 2,031
Installment 5,866 4,949 19,546 17,932
Home equity 1,210 1,428 4,032 4,831
Credit cards 1,031 1,060 4,867 4,604
Leases - - 1,268 -
Overdrafts 638 776 2,352 2,824
------------ ------------ ------------ ------------
Total 15,514 9,205 48,778 44,923
------------ ------------ ------------ ------------
Recoveries:
Commercial 266 1,612 1,798 4,332
Mortgage 53 99 257 318
Installment 2,704 2,318 11,062 10,513
Home equity 590 713 2,606 2,940
Credit cards 339 456 1,395 1,716
Manufactured housing 5 9 31 87
Leases 50 5 787 379
Overdrafts 100 144 547 679
------------ ------------ ------------ ------------
Total 4,107 5,356 18,483 20,964
------------ ------------ ------------ ------------
Net charge-offs 11,407 3,849 30,295 23,959
Provision for originated
loan losses 12,487 8,662 39,734 23,171
------------ ------------ ------------ ------------
Allowance for originated
loan losses-end of
period $ 105,135 $ 95,696 $ 105,135 $ 95,696
============ ============ ============ ============
Average originated loans $13,863,910 $12,306,171 $13,297,594 $11,421,426
============ ============ ============ ============
Ratio (annualized) to
average originated
loans:
Originated net charge-
offs 0.33% 0.12% 0.23% 0.21%
============ ============ ============ ============
Provision for
originated loan
losses 0.36% 0.28% 0.30% 0.20%
============ ============ ============ ============
Originated Loans,
period-end $14,118,505 $12,493,812 $14,118,505 $12,493,812
============ ============ ============ ============
Allowance for credit
losses: $ 109,203 $ 101,544 $ 109,203 $ 101,544
============ ============ ============ ============
To (annualized) net
charge-offs 2.41 6.65 3.60 4.24
============ ============ ============ ============
Allowance for originated
loan losses:
To period-end
originated loans 0.74% 0.77% 0.74% 0.77%
============ ============ ============ ============
To (annualized) net
originated charge-
offs 2.32 6.27 3.47 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. 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.
FirstMerit CorporationAnalyst: Thomas O'MalleyInvestor Relations OfficerPhone: 330.384.7109 Media Contact: Robert TownsendMedia Relations OfficerPhone: 330.384.7075
Source: FirstMerit
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