Earnings Release |
Pages 1-4 | |||
Consolidated Financial Highlights |
Page 5 | |||
Consolidated Balance Sheets |
Page 6 | |||
Average Consolidated Balance Sheets |
Page 7 | |||
Average Consolidated Balance Sheets |
Page 8 | |||
(Fully-tax Equivalent Interest Rates and Interest Differential) |
||||
Consolidated Statements of Income and Comprehensive Income |
Page 9 | |||
Consolidated Statements of Income and Comprehensive Income |
Page 10 | |||
(Linked Quarters) |
||||
Asset Quality Information |
Page 11 | |||
Non Interest Income and Non Interest Expense Detail |
Page 12 | |||
Allowance for Loan Losses – Net Charge-off Detail |
Page 13 |
FirstMerit Corporation | ||
III Cascade Plaza | ||
Akron, Ohio 44308 | ||
Investor Relations: | ||
Tom O’Malley | ||
p. 330-384-7109 |
For Release July 20, 2006, 7:30 a.m. EST | ||
Analysts: Tom O’Malley | ||
(330) 384-7109 |
• | Diluted earnings per share of $0.35 | ||
• | Net income of $27.7 million | ||
• | Return on average common equity of 12.75% | ||
• | Return on average assets of 1.10% |
1
2
3
4
FIRSTMERIT CORPORATION AND SUBSIDIARIES Consolidated Financial Highlights (Unaudited) (Dollars in thousands) |
Quarters | ||||||||||||||||||||
2006 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||
EARNINGS | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||
Net interest income FTE (a) |
$ | 86,377 | 86,563 | 88,152 | 88,347 | 88,432 | ||||||||||||||
Provision for loan losses |
13,159 | 6,106 | 16,260 | 9,974 | 5,972 | |||||||||||||||
Other income |
52,078 | 45,397 | 47,586 | 47,846 | 50,095 | |||||||||||||||
Other expenses |
85,218 | 81,899 | 79,274 | 78,926 | 79,397 | |||||||||||||||
FTE adjustment (a) |
647 | 590 | 650 | 641 | 655 | |||||||||||||||
Net income |
27,661 | 29,964 | 27,656 | 36,594 | 36,145 | |||||||||||||||
Diluted EPS |
0.35 | 0.37 | 0.34 | 0.43 | 0.43 | |||||||||||||||
PERFORMANCE RATIOS |
||||||||||||||||||||
Return on average assets (ROA) |
1.10 | % | 1.20 | % | 1.07 | % | 1.41 | % | 1.40 | % | ||||||||||
Return on average common equity (ROE) |
12.75 | % | 13.67 | % | 11.52 | % | 14.90 | % | 15.07 | % | ||||||||||
Net interest margin FTE (a) |
3.78 | % | 3.80 | % | 3.73 | % | 3.70 | % | 3.74 | % | ||||||||||
Efficiency ratio |
61.39 | % | 61.90 | % | 58.26 | % | 57.81 | % | 57.14 | % | ||||||||||
Number of full-time equivalent employees |
2,986 | 3,104 | 3,057 | 3,073 | 3,078 | |||||||||||||||
MARKET DATA |
||||||||||||||||||||
Book value/common share |
$ | 10.88 | 10.91 | 11.39 | 11.65 | 11.69 | ||||||||||||||
Period-end common share mkt value |
20.94 | 24.66 | 25.91 | 26.79 | 26.11 | |||||||||||||||
Market as a % of book |
193 | % | 226 | % | 228 | % | 230 | % | 223 | % | ||||||||||
Cash dividends/common share |
$ | 0.28 | 0.28 | 0.28 | 0.28 | 0.27 | ||||||||||||||
Common stock dividend payout ratio |
80.00 | % | 75.68 | % | 82.35 | % | 65.12 | % | 62.79 | % | ||||||||||
Average basic common shares |
79,983 | 80,374 | 82,786 | 83,489 | 83,603 | |||||||||||||||
Average diluted common shares |
80,203 | 80,648 | 83,082 | 83,978 | 83,890 | |||||||||||||||
Period end common shares |
80,058 | 79,766 | 82,335 | 83,442 | 83,522 | |||||||||||||||
Common shares repurchased |
1,329 | 2,618,588 | 1,228,293 | 178,872 | 145,143 | |||||||||||||||
Common stock market capitalization |
$ | 1,676,415 | 1,967,030 | 2,133,300 | 2,235,411 | 2,180,759 | ||||||||||||||
ASSET QUALITY |
||||||||||||||||||||
Gross charge-offs |
$ | 18,038 | 14,914 | 22,736 | 14,207 | 15,422 | ||||||||||||||
Net charge-offs |
13,021 | 9,178 | 18,379 | 10,002 | 10,278 | |||||||||||||||
Allowance for loan losses |
87,727 | 87,589 | 90,661 | 92,780 | 92,808 | |||||||||||||||
Reserve for unfunded lending commitments |
5,716 | 5,853 | 6,072 | 5,857 | 5,785 | |||||||||||||||
Nonperforming assets (NPAs) |
58,786 | 72,941 | 72,257 | 51,398 | 53,985 | |||||||||||||||
Net charge-off/average loans ratio |
0.78 | % | 0.56 | % | 1.09 | % | 0.60 | % | 0.62 | % | ||||||||||
Allowance for loan losses/period-end loans |
1.29 | % | 1.31 | % | 1.36 | % | 1.39 | % | 1.40 | % | ||||||||||
Allowance for credit losses/period-end loans |
1.37 | % | 1.40 | % | 1.45 | % | 1.47 | % | 1.49 | % | ||||||||||
NPAs/loans and other real estate |
0.86 | % | 1.09 | % | 1.08 | % | 0.77 | % | 0.82 | % | ||||||||||
Allowance for loan losses/nonperforming loans |
174.80 | % | 136.22 | % | 145.61 | % | 221.46 | % | 208.74 | % | ||||||||||
Allowance for credit losses/nonperforming loans |
186.19 | % | 145.32 | % | 155.36 | % | 235.44 | % | 221.76 | % | ||||||||||
CAPITAL & LIQUIDITY |
||||||||||||||||||||
Period-end tangible equity to assets |
7.20 | % | 7.31 | % | 7.94 | % | 8.18 | % | 8.19 | % | ||||||||||
Average equity to assets |
8.66 | % | 8.79 | % | 9.33 | % | 9.46 | % | 9.32 | % | ||||||||||
Average equity to loans |
12.93 | % | 13.27 | % | 14.22 | % | 14.66 | % | 14.58 | % | ||||||||||
Average loans to deposits |
90.63 | % | 91.58 | % | 92.11 | % | 91.73 | % | 90.16 | % | ||||||||||
AVERAGE BALANCES |
||||||||||||||||||||
Assets |
$ | 10,051,623 | 10,111,553 | 10,211,619 | 10,295,827 | 10,329,167 | ||||||||||||||
Deposits |
7,426,029 | 7,313,509 | 7,273,980 | 7,245,562 | 7,321,860 | |||||||||||||||
Loans |
6,730,531 | 6,697,732 | 6,699,997 | 6,646,112 | 6,601,204 | |||||||||||||||
Earning assets |
9,174,008 | 9,245,882 | 9,368,139 | 9,465,288 | 9,489,431 | |||||||||||||||
Shareholders’ equity |
870,234 | 888,818 | 952,715 | 974,147 | 962,239 | |||||||||||||||
ENDING BALANCES |
||||||||||||||||||||
Assets |
$ | 10,254,773 | 10,100,717 | 10,154,359 | 10,285,329 | 10,313,955 | ||||||||||||||
Deposits |
7,402,239 | 7,510,562 | 7,233,650 | 7,352,026 | 7,173,857 | |||||||||||||||
Loans |
6,804,769 | 6,672,102 | 6,667,327 | 6,685,462 | 6,610,385 | |||||||||||||||
Goodwill |
139,245 | 139,245 | 139,245 | 139,245 | 139,245 | |||||||||||||||
Intangible assets |
3,311 | 3,533 | 3,756 | 3,978 | 4,200 | |||||||||||||||
Earning assets |
9,315,062 | 9,193,741 | 9,256,389 | 9,419,355 | 9,491,957 | |||||||||||||||
Total shareholders’ equity |
870,698 | 870,552 | 937,580 | 972,348 | 976,016 |
5
FIRSTMERIT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited, except December 31, 2005, which is derived from the audited financial statements) |
June 30, | December 31, | June 30, | ||||||||||
2006 | 2005 | 2005 | ||||||||||
ASSETS |
||||||||||||
Cash and due from banks |
$ | 228,690 | 225,953 | 201,240 | ||||||||
Investment securities (at fair value) |
2,436,086 | 2,546,496 | 2,828,127 | |||||||||
Federal funds sold |
25,000 | — | 890 | |||||||||
Loans held for sale |
49,207 | 42,566 | 52,555 | |||||||||
Loans: |
||||||||||||
Commercial loans |
3,659,687 | 3,519,483 | 3,422,758 | |||||||||
Mortgage loans |
618,560 | 628,581 | 634,777 | |||||||||
Installment loans |
1,561,757 | 1,524,355 | 1,601,022 | |||||||||
Home equity loans |
763,585 | 778,697 | 737,207 | |||||||||
Credit card loans |
136,966 | 145,592 | 138,335 | |||||||||
Leases |
64,214 | 70,619 | 76,286 | |||||||||
Total loans |
6,804,769 | 6,667,327 | 6,610,385 | |||||||||
Less allowance for loan losses |
(87,727 | ) | (90,661 | ) | (92,808 | ) | ||||||
Net loans |
6,717,042 | 6,576,666 | 6,517,577 | |||||||||
Premises and equipment, net |
119,233 | 120,420 | 118,038 | |||||||||
Goodwill |
139,245 | 139,245 | 139,245 | |||||||||
Intangible assets |
3,311 | 3,756 | 4,200 | |||||||||
Accrued interest receivable and other assets |
536,959 | 499,257 | 452,083 | |||||||||
Total assets |
$ | 10,254,773 | 10,154,359 | 10,313,955 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Deposits: |
||||||||||||
Demand-non-interest bearing |
$ | 1,466,628 | 1,523,731 | 1,439,800 | ||||||||
Demand-interest bearing |
842,354 | 830,248 | 834,315 | |||||||||
Savings and money market accounts |
2,261,557 | 2,304,177 | 2,350,829 | |||||||||
Certificates and other time deposits |
2,831,700 | 2,575,494 | 2,548,913 | |||||||||
Total deposits |
7,402,239 | 7,233,650 | 7,173,857 | |||||||||
Securities sold under agreements to repurchase |
1,156,346 | 1,426,037 | 1,699,337 | |||||||||
Wholesale borrowings |
658,720 | 401,104 | 333,627 | |||||||||
Accrued taxes, expenses, and other liabilities |
166,770 | 155,988 | 131,118 | |||||||||
Total liabilities |
9,384,075 | 9,216,779 | 9,337,939 | |||||||||
Commitments and contingencies |
||||||||||||
Shareholders’ equity: |
||||||||||||
Preferred stock, without par value:
authorized and unissued 7,000,000 shares |
— | — | — | |||||||||
Preferred stock, Series A, without par value:
designated 800,000 shares; none outstanding |
— | — | — | |||||||||
Convertible preferred stock, Series B, without par value:
designated 220,000 shares; none outstanding |
— | — | — | |||||||||
Common stock, without par value:
authorized 300,000,000 shares; issued 92,026,350 at
June 30, 2006, December 31, 2005 and June 30, 2005 |
127,937 | 127,937 | 127,937 | |||||||||
Capital surplus |
105,397 | 108,210 | 108,736 | |||||||||
Accumulated other comprehensive loss |
(62,013 | ) | (42,850 | ) | (19,651 | ) | ||||||
Retained earnings |
1,007,346 | 994,487 | 977,052 | |||||||||
Treasury stock, at cost, 11,968,035, 9,691,424 and 8,504,487
shares at June 30, 2006, December 31, 2005
and June 30, 2005, respectively |
(307,969 | ) | (250,204 | ) | (218,058 | ) | ||||||
Total shareholders’ equity |
870,698 | 937,580 | 976,016 | |||||||||
Total liabilities and shareholders’ equity |
$ | 10,254,773 | 10,154,359 | 10,313,955 | ||||||||
6
FIRSTMERIT CORPORATION AND SUBSIDIARIES AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) |
Quarterly Periods | ||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
2006 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and due from banks |
$ | 188,915 | 194,042 | 192,189 | 197,412 | 197,548 | ||||||||||||||
Investment securities/fed funds sold |
2,392,208 | 2,500,021 | 2,619,248 | 2,764,724 | 2,833,818 | |||||||||||||||
Loans held for sale |
51,269 | 48,129 | 48,894 | 54,452 | 54,409 | |||||||||||||||
Loans: |
||||||||||||||||||||
Commercial loans |
3,603,083 | 3,567,263 | 3,519,807 | 3,441,231 | 3,434,946 | |||||||||||||||
Mortgage loans |
626,476 | 630,702 | 637,877 | 641,532 | 641,865 | |||||||||||||||
Installment loans |
1,526,094 | 1,513,938 | 1,556,212 | 1,594,801 | 1,601,775 | |||||||||||||||
Home equity loans |
772,196 | 775,728 | 772,757 | 754,492 | 704,054 | |||||||||||||||
Credit card loans |
137,545 | 141,821 | 142,743 | 140,873 | 137,919 | |||||||||||||||
Leases |
65,137 | 68,280 | 70,601 | 73,183 | 80,645 | |||||||||||||||
Total loans |
6,730,531 | 6,697,732 | 6,699,997 | 6,646,112 | 6,601,204 | |||||||||||||||
Less allowance for loan losses (a) |
86,583 | 90,229 | 91,916 | 91,852 | 96,342 | |||||||||||||||
Net loans |
6,643,948 | 6,607,503 | 6,608,081 | 6,554,260 | 6,504,862 | |||||||||||||||
Total earning assets |
9,174,008 | 9,245,882 | 9,368,139 | 9,465,288 | 9,489,431 | |||||||||||||||
Premises and equipment, net |
119,666 | 120,155 | 117,387 | 117,471 | 118,392 | |||||||||||||||
Accrued interest receivable and other assets |
655,617 | 641,703 | 625,820 | 607,508 | 620,138 | |||||||||||||||
TOTAL ASSETS |
$ | 10,051,623 | 10,111,553 | 10,211,619 | 10,295,827 | 10,329,167 | ||||||||||||||
LIABILITIES |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Demand-non-interest bearing |
$ | 1,455,229 | 1,462,671 | 1,488,679 | 1,457,487 | 1,470,673 | ||||||||||||||
Demand-interest bearing |
865,563 | 848,209 | 817,009 | 838,549 | 834,708 | |||||||||||||||
Savings and money market accounts |
2,280,657 | 2,292,865 | 2,332,528 | 2,333,331 | 2,370,280 | |||||||||||||||
Certificates and other time deposits |
2,824,580 | 2,709,764 | 2,635,764 | 2,616,195 | 2,646,199 | |||||||||||||||
Total deposits |
7,426,029 | 7,313,509 | 7,273,980 | 7,245,562 | 7,321,860 | |||||||||||||||
Securities sold under agreements to repurchase |
1,212,470 | 1,295,178 | 1,443,740 | 1,478,857 | 1,385,644 | |||||||||||||||
Wholesale borrowings |
371,309 | 433,257 | 375,167 | 442,035 | 498,088 | |||||||||||||||
Total funds |
9,009,808 | 9,041,944 | 9,092,887 | 9,166,454 | 9,205,592 | |||||||||||||||
Accrued taxes, expenses and other liabilities (a) |
171,581 | 180,791 | 166,017 | 155,226 | 161,336 | |||||||||||||||
Total liabilities |
9,181,389 | 9,222,735 | 9,258,904 | 9,321,680 | 9,366,928 | |||||||||||||||
SHAREHOLDERS’ EQUITY |
||||||||||||||||||||
Preferred stock |
— | — | — | — | — | |||||||||||||||
Common stock |
127,937 | 127,937 | 127,937 | 127,937 | 127,937 | |||||||||||||||
Capital surplus |
104,477 | 108,330 | 108,303 | 108,564 | 108,559 | |||||||||||||||
Accumulated other comprehensive (loss) income |
(54,132 | ) | (44,150 | ) | (39,834 | ) | (25,682 | ) | (26,883 | ) | ||||||||||
Retained earnings |
1,001,647 | 998,173 | 994,301 | 982,419 | 968,408 | |||||||||||||||
Treasury stock |
(309,695 | ) | (301,472 | ) | (237,992 | ) | (219,091 | ) | (215,782 | ) | ||||||||||
Total shareholders’ equity |
870,234 | 888,818 | 952,715 | 974,147 | 962,239 | |||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 10,051,623 | 10,111,553 | 10,211,619 | 10,295,827 | 10,329,167 | ||||||||||||||
7
Three months ended | Year ended | Three months ended | ||||||||||||||||||||||||||||||||||
June 30, 2006 | December 31, 2005 | June 30, 2005 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||
Cash and due from banks |
$ | 188,915 | 194,485 | 197,548 | ||||||||||||||||||||||||||||||||
Investment securities and federal funds sold: |
||||||||||||||||||||||||||||||||||||
U.S. Treasury securities and U.S. Government
agency obligations (taxable) |
2,054,338 | 20,102 | 3.92 | % | 2,416,360 | 91,814 | 3.80 | % | 2,478,319 | 23,722 | 3.84 | % | ||||||||||||||||||||||||
Obligations of states and political
subdivisions (tax exempt) |
88,144 | 1,490 | 6.78 | % | 99,487 | 6,707 | 6.74 | % | 99,756 | 1,673 | 6.73 | % | ||||||||||||||||||||||||
Other securities and federal funds sold |
249,726 | 3,823 | 6.14 | % | 255,568 | 12,291 | 4.81 | % | 255,743 | 3,037 | 4.76 | % | ||||||||||||||||||||||||
Total investment securities and federal
funds sold |
2,392,208 | 25,415 | 4.26 | % | 2,771,415 | 110,812 | 4.00 | % | 2,833,818 | 28,432 | 4.02 | % | ||||||||||||||||||||||||
Loans held for sale |
51,269 | 512 | 4.01 | % | 52,740 | 2,854 | 5.41 | % | 54,409 | 804 | 5.93 | % | ||||||||||||||||||||||||
Loans |
6,730,531 | 122,990 | 7.33 | % | 6,610,509 | 430,402 | 6.51 | % | 6,601,204 | 105,196 | 6.39 | % | ||||||||||||||||||||||||
Total earning assets |
9,174,008 | 148,917 | 6.51 | % | 9,434,664 | 544,068 | 5.77 | % | 9,489,431 | 134,432 | 5.68 | % | ||||||||||||||||||||||||
Allowance for loan losses |
(86,583 | ) | (94,118 | ) | (96,342 | ) | ||||||||||||||||||||||||||||||
Other assets |
775,283 | 729,398 | 738,530 | |||||||||||||||||||||||||||||||||
Total assets |
$ | 10,051,623 | 10,264,429 | 10,329,167 | ||||||||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||||||||||||||
Demand — non-interest bearing |
$ | 1,455,229 | — | — | 1,466,106 | — | — | 1,470,673 | — | — | ||||||||||||||||||||||||||
Demand — interest bearing |
865,563 | 2,583 | 1.20 | % | 827,829 | 5,871 | 0.71 | % | 834,708 | 1,230 | 0.59 | % | ||||||||||||||||||||||||
Savings and money market accounts |
2,280,657 | 12,079 | 2.12 | % | 2,356,813 | 32,944 | 1.40 | % | 2,370,280 | 7,517 | 1.27 | % | ||||||||||||||||||||||||
Certificates and other time deposits |
2,824,580 | 29,326 | 4.16 | % | 2,647,908 | 86,764 | 3.28 | % | 2,646,199 | 20,696 | 3.14 | % | ||||||||||||||||||||||||
Total deposits |
7,426,029 | 43,988 | 2.38 | % | 7,298,656 | 125,579 | 1.72 | % | 7,321,860 | 29,443 | 1.61 | % | ||||||||||||||||||||||||
Securities sold under agreements to repurchase |
1,212,470 | 12,957 | 4.29 | % | 1,409,135 | 45,423 | 3.22 | % | 1,385,644 | 10,624 | 3.08 | % | ||||||||||||||||||||||||
Wholesale borrowings |
371,309 | 5,595 | 6.04 | % | 431,787 | 21,449 | 4.97 | % | 498,088 | 5,933 | 4.78 | % | ||||||||||||||||||||||||
Total interest bearing liabilities |
7,554,579 | 62,540 | 3.32 | % | 7,673,472 | 192,451 | 2.51 | % | 7,734,919 | 46,000 | 2.39 | % | ||||||||||||||||||||||||
Other liabilities |
171,581 | 158,125 | 161,336 | |||||||||||||||||||||||||||||||||
Shareholders’ equity |
870,234 | 966,726 | 962,239 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 10,051,623 | 10,264,429 | 10,329,167 | ||||||||||||||||||||||||||||||||
Net yield on earning assets |
$ | 9,174,008 | 86,377 | 3.78 | % | 9,434,664 | 351,617 | 3.73 | % | 9,489,431 | 88,432 | 3.74 | % | |||||||||||||||||||||||
Interest rate spread |
3.19 | % | 3.26 | % | 3.30 | % | ||||||||||||||||||||||||||||||
Notes: | Interest income on tax-exempt securities and loans have been adjusted to a fully-taxable equivalent basis. Nonaccrual loans have been included in the average balances. |
8
Quarters ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Interest income: |
||||||||||||||||
Interest and fees on loans, including held for sale |
$ | 123,450 | 105,975 | 241,190 | 206,124 | |||||||||||
Interest and dividends on investment securities and federal funds sold |
24,820 | 27,802 | 50,152 | 55,494 | ||||||||||||
Total interest income |
148,270 | 133,777 | 291,342 | 261,618 | ||||||||||||
Interest expense: |
||||||||||||||||
Interest on deposits: |
||||||||||||||||
Demand-interest bearing |
2,583 | 1,230 | 4,945 | 2,186 | ||||||||||||
Savings and money market accounts |
12,079 | 7,517 | 22,827 | 13,892 | ||||||||||||
Certificates and other time deposits |
29,326 | 20,696 | 55,427 | 41,296 | ||||||||||||
Interest on securities sold under agreements to repurchase |
12,957 | 10,624 | 24,880 | 19,465 | ||||||||||||
Interest on wholesale borrowings |
5,595 | 5,933 | 11,560 | 10,992 | ||||||||||||
Total interest expense |
62,540 | 46,000 | 119,639 | 87,831 | ||||||||||||
Net interest income |
85,730 | 87,777 | 171,703 | 173,787 | ||||||||||||
Provision for loan losses |
13,159 | 5,972 | 19,265 | 17,586 | ||||||||||||
Net interest income after provision for loan losses |
72,571 | 81,805 | 152,438 | 156,201 | ||||||||||||
Other income: |
||||||||||||||||
Trust department income |
5,744 | 5,684 | 11,138 | 11,189 | ||||||||||||
Service charges on deposits |
18,010 | 17,800 | 34,076 | 32,620 | ||||||||||||
Credit card fees |
11,478 | 10,523 | 22,149 | 19,934 | ||||||||||||
ATM and other service fees |
3,273 | 3,298 | 6,381 | 6,257 | ||||||||||||
Bank owned life insurance income |
5,310 | 3,024 | 8,296 | 6,098 | ||||||||||||
Investment services and insurance |
2,581 | 2,828 | 5,178 | 5,686 | ||||||||||||
Manufactured housing income |
35 | 40 | 38 | 142 | ||||||||||||
Investment securities gains, net |
4 | (25 | ) | 20 | 1,847 | |||||||||||
Loan sales and servicing income |
2,833 | 1,520 | 4,278 | 2,653 | ||||||||||||
Other operating income |
2,810 | 5,403 | 5,921 | 8,608 | ||||||||||||
Total other income |
52,078 | 50,095 | 97,475 | 95,034 | ||||||||||||
Other expenses: |
||||||||||||||||
Salaries, wages, pension and employee benefits |
46,721 | 41,351 | 89,752 | 80,744 | ||||||||||||
Net occupancy expense |
6,120 | 5,881 | 12,669 | 12,417 | ||||||||||||
Equipment expense |
2,914 | 3,002 | 5,872 | 6,187 | ||||||||||||
Stationery, supplies and postage |
2,403 | 2,484 | 4,856 | 4,945 | ||||||||||||
Bankcard, loan processing and other costs |
7,417 | 5,444 | 13,244 | 11,168 | ||||||||||||
Professional services |
3,738 | 3,843 | 6,501 | 5,993 | ||||||||||||
Amortization of intangibles |
222 | 222 | 445 | 445 | ||||||||||||
Other operating expense |
15,683 | 17,170 | 33,778 | 33,409 | ||||||||||||
Total other expenses |
85,218 | 79,397 | 167,117 | 155,308 | ||||||||||||
Income before federal income tax expense |
39,431 | 52,503 | 82,796 | 95,927 | ||||||||||||
Federal income tax expense |
11,770 | 16,358 | 25,171 | 29,694 | ||||||||||||
Net income |
$ | 27,661 | 36,145 | 57,625 | 66,233 | |||||||||||
Other comprehensive income (loss), net of taxes |
||||||||||||||||
Unrealized securities’ holding losses, net of taxes |
(8,652 | ) | 18,111 | (18,400 | ) | (4,493 | ) | |||||||||
Unrealized hedging gain (loss), net of taxes |
37 | 538 | (750 | ) | 556 | |||||||||||
Minimum pension liability adjustment, net of taxes |
— | (122 | ) | — | (305 | ) | ||||||||||
Less: reclassification adjustment for securities’ gains losses realized in net income,
net of taxes |
3 | (16 | ) | 13 | 1,201 | |||||||||||
Total other comprehensive income (loss), net of taxes |
(8,618 | ) | 18,543 | (19,163 | ) | (5,443 | ) | |||||||||
Comprehensive income |
$ | 19,043 | 54,688 | 38,462 | 60,790 | |||||||||||
Net income applicable to common shares |
$ | 27,661 | 36,145 | 57,625 | 66,233 | |||||||||||
Net income used in diluted EPS calculation |
$ | 27,666 | 36,152 | 57,635 | 66,247 | |||||||||||
Weighted average number of common shares outstanding — basic |
79,983 | 83,603 | 80,177 | 83,849 | ||||||||||||
Weighted average number of common shares outstanding — diluted |
80,203 | 83,890 | 80,420 | 84,187 | ||||||||||||
Basic earnings per share |
$ | 0.35 | 0.43 | 0.72 | 0.79 | |||||||||||
Diluted earnings per share |
$ | 0.35 | 0.43 | 0.72 | 0.79 | |||||||||||
Dividend per share |
$ | 0.28 | 0.27 | 0.56 | 0.54 | |||||||||||
9
FIRSTMERIT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME—LINKED QUARTERS (Unaudited) (Dollars in thousands, except share data) |
Quarterly Results | ||||||||||||||||||||
2006 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||
2nd Q | 1st Q | 4th Q | 3rd Q | 2nd Q | ||||||||||||||||
Interest and fees on loans, including held for sale |
$ | 123,450 | 117,740 | 115,850 | 111,169 | 105,975 | ||||||||||||||
Interest and dividends — securities and federal funds sold |
24,820 | 25,332 | 26,109 | 26,700 | 27,802 | |||||||||||||||
Total interest income |
148,270 | 143,072 | 141,959 | 137,869 | 133,777 | |||||||||||||||
Interest on deposits: |
||||||||||||||||||||
Demand-interest bearing |
2,583 | 2,362 | 1,953 | 1,732 | 1,230 | |||||||||||||||
Savings and money market accounts |
12,079 | 10,748 | 10,352 | 8,700 | 7,517 | |||||||||||||||
Certificates and other time deposits |
29,326 | 26,101 | 23,831 | 21,637 | 20,696 | |||||||||||||||
Securities sold under agreements to repurchase |
12,957 | 11,923 | 13,423 | 12,535 | 10,624 | |||||||||||||||
Wholesale borrowings |
5,595 | 5,965 | 4,898 | 5,559 | 5,933 | |||||||||||||||
Total interest expense |
62,540 | 57,099 | 54,457 | 50,163 | 46,000 | |||||||||||||||
Net interest income |
85,730 | 85,973 | 87,502 | 87,706 | 87,777 | |||||||||||||||
Provision for loan losses |
13,159 | 6,106 | 16,260 | 9,974 | 5,972 | |||||||||||||||
Net interest income after provision for loan losses |
72,571 | 79,867 | 71,242 | 77,732 | 81,805 | |||||||||||||||
Other income: |
||||||||||||||||||||
Trust department income |
5,744 | 5,394 | 5,430 | 5,515 | 5,684 | |||||||||||||||
Service charges on deposits |
18,010 | 16,066 | 17,884 | 18,561 | 17,800 | |||||||||||||||
Credit card fees |
11,478 | 10,671 | 10,601 | 10,437 | 10,523 | |||||||||||||||
ATM and other service fees |
3,273 | 3,108 | 3,157 | 3,453 | 3,298 | |||||||||||||||
Bank owned life insurance income |
5,310 | 2,986 | 3,092 | 3,074 | 3,024 | |||||||||||||||
Investment services and insurance |
2,581 | 2,597 | 2,696 | 2,226 | 2,828 | |||||||||||||||
Manufactured housing income |
35 | 3 | 3 | 3 | 40 | |||||||||||||||
Investment securities gains (losses), net |
4 | 16 | 39 | 40 | (25 | ) | ||||||||||||||
Loan sales and servicing income |
2,833 | 1,445 | 1,668 | 2,076 | 1,520 | |||||||||||||||
Other operating income |
2,810 | 3,111 | 3,016 | 2,461 | 5,403 | |||||||||||||||
Total other income |
52,078 | 45,397 | 47,586 | 47,846 | 50,095 | |||||||||||||||
Other expenses: |
||||||||||||||||||||
Salaries, wages, pension and employee benefits |
46,721 | 43,031 | 40,790 | 42,149 | 41,351 | |||||||||||||||
Net occupancy expense |
6,120 | 6,549 | 5,746 | 5,567 | 5,881 | |||||||||||||||
Equipment expense |
2,914 | 2,958 | 4,152 | 2,962 | 3,002 | |||||||||||||||
Stationery, supplies and postage |
2,403 | 2,453 | 2,546 | 2,559 | 2,484 | |||||||||||||||
Bankcard, loan processing and other costs |
7,417 | 5,827 | 7,042 | 5,802 | 5,444 | |||||||||||||||
Professional services |
3,738 | 2,763 | 3,389 | 2,632 | 3,843 | |||||||||||||||
Amortization of intangibles |
222 | 223 | 222 | 222 | 222 | |||||||||||||||
Other operating expense |
15,683 | 18,095 | 15,387 | 17,033 | 17,170 | |||||||||||||||
Total other expenses |
85,218 | 81,899 | 79,274 | 78,926 | 79,397 | |||||||||||||||
Income before income tax expense |
39,431 | 43,365 | 39,554 | 46,652 | 52,503 | |||||||||||||||
Federal income taxes |
11,770 | 13,401 | 11,898 | 10,058 | 16,358 | |||||||||||||||
Net income |
$ | 27,661 | 29,964 | 27,656 | 36,594 | 36,145 | ||||||||||||||
Other comprehensive income (loss), net of taxes |
(8,618 | ) | (10,545 | ) | (8,927 | ) | (14,272 | ) | 18,540 | |||||||||||
Comprehensive income |
$ | 19,043 | 19,419 | 18,729 | 22,322 | 54,685 | ||||||||||||||
Net income applicable to common shares |
27,661 | 29,964 | 27,656 | 36,594 | 36,145 | |||||||||||||||
Adjusted net income used in diluted EPS calculation |
27,666 | 29,969 | 27,659 | 36,601 | 36,152 | |||||||||||||||
Weighted-average common shares — basic |
79,983 | 80,374 | 82,786 | 83,489 | 83,603 | |||||||||||||||
Weighted-average common shares — diluted |
80,203 | 80,648 | 83,082 | 83,978 | 83,890 | |||||||||||||||
Basic net income per share |
$ | 0.35 | 0.37 | 0.33 | 0.44 | 0.43 | ||||||||||||||
Diluted net income per share |
$ | 0.35 | 0.37 | 0.34 | 0.43 | 0.43 | ||||||||||||||
10
FIRSTMERIT CORPORATION AND SUBSIDIARIES ASSET QUALITY INFORMATION (Unaudited, except December 31, 2005 annual period which is derived from the audited financial statements) (Dollars in thousands, except ratios) |
Quarterly Periods | Annual Period | |||||||||||||||||||||||
June 30 | Mar 31 | Dec 31 | Sep 30 | June 30 | Dec 31 | |||||||||||||||||||
2006 | 2006 | 2005 | 2005 | 2005 | 2005 | |||||||||||||||||||
Allowance for Credit Losses |
||||||||||||||||||||||||
Allowance for loan losses, beginning of period |
$ | 87,589 | 90,661 | 92,780 | 92,808 | 97,115 | 97,296 | |||||||||||||||||
Allowance related to loans sold |
— | — | — | — | — | — | ||||||||||||||||||
Provision for loan losses |
13,159 | 6,106 | 16,260 | 9,974 | 5,971 | 43,820 | ||||||||||||||||||
Charge-offs |
18,038 | 14,914 | 22,736 | 14,207 | 15,422 | 69,105 | ||||||||||||||||||
Recoveries |
5,017 | 5,736 | 4,357 | 4,205 | 5,144 | 18,650 | ||||||||||||||||||
Net charge-offs |
13,021 | 9,178 | 18,379 | 10,002 | 10,278 | 50,455 | ||||||||||||||||||
Allowance for loan losses, end of period |
$ | 87,727 | 87,589 | 90,661 | 92,780 | 92,808 | 90,661 | |||||||||||||||||
Reserve for unfunded lending commitments,
beginning of period |
$ | 5,853 | 6,072 | 5,857 | 5,785 | 6,479 | 5,774 | |||||||||||||||||
Provision for credit losses |
(137 | ) | (219 | ) | 215 | 72 | (694 | ) | 298 | |||||||||||||||
Reserve for unfunded lending commitments,
end of period |
$ | 5,716 | 5,853 | 6,072 | 5,857 | 5,785 | 6,072 | |||||||||||||||||
Allowance for Credit Losses |
$ | 93,443 | 93,442 | 96,733 | 98,637 | 98,593 | 96,733 | |||||||||||||||||
Ratios |
||||||||||||||||||||||||
Provision for loan losses as a % of average loans |
0.78 | % | 0.37 | % | 0.96 | % | 0.60 | % | 0.36 | % | 0.66 | % | ||||||||||||
Provision for credit losses as a % of average loans |
-0.01 | % | -0.01 | % | 0.01 | % | 0.00 | % | -0.04 | % | 0.00 | % | ||||||||||||
Net charge-offs as a % of average loans |
0.78 | % | 0.56 | % | 1.09 | % | 0.60 | % | 0.62 | % | 0.76 | % | ||||||||||||
Allowance for loan losses as a % of period-end loans |
1.29 | % | 1.31 | % | 1.36 | % | 1.39 | % | 1.40 | % | 1.36 | % | ||||||||||||
Allowance for credit losses as a % of period-end loans |
1.37 | % | 1.40 | % | 1.45 | % | 1.48 | % | 1.49 | % | 1.45 | % | ||||||||||||
Allowance for loan losses as a % of nonperforming
loans |
174.80 | % | 136.22 | % | 145.61 | % | 221.46 | % | 208.74 | % | 145.61 | % | ||||||||||||
Allowance for credit losses as a % of nonperforming
loans |
186.19 | % | 145.32 | % | 155.36 | % | 235.44 | % | 221.76 | % | 155.36 | % | ||||||||||||
Asset Quality |
||||||||||||||||||||||||
Impaired loans: |
||||||||||||||||||||||||
Nonaccrual |
$ | 41,927 | 56,258 | 54,176 | 34,144 | 38,124 | 54,176 | |||||||||||||||||
Other nonperforming loans: |
||||||||||||||||||||||||
Nonaccrual |
8,261 | 8,044 | 8,086 | 7,751 | 6,336 | 8,086 | ||||||||||||||||||
Total nonperforming loans |
50,188 | 64,302 | 62,262 | 41,895 | 44,460 | 62,262 | ||||||||||||||||||
Other real estate (“ORE”) |
8,598 | 8,639 | 9,995 | 9,503 | 9,525 | 9,995 | ||||||||||||||||||
Total nonperforming assets (“NPAs”) |
$ | 58,786 | 72,941 | 72,257 | 51,398 | 53,985 | 72,257 | |||||||||||||||||
NPAs as % of period-end loans + ORE |
0.86 | % | 1.09 | % | 1.08 | % | 0.77 | % | 0.82 | % | 1.08 | % | ||||||||||||
Past due 90 days or more & accruing interest |
$ | 16,483 | 18,640 | 17,931 | 21,451 | 17,969 | 17,931 | |||||||||||||||||
11
FIRSTMERIT CORPORATION NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL (Unaudited) (Dollars in thousands) |
2006 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||
QUARTERLY OTHER INCOME DETAIL | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||
Trust department income |
$ | 5,744 | 5,394 | 5,430 | 5,515 | 5,684 | ||||||||||||||
Service charges on deposits |
18,010 | 16,066 | 17,884 | 18,561 | 17,800 | |||||||||||||||
Credit card fees |
11,478 | 10,671 | 10,601 | 10,437 | 10,523 | |||||||||||||||
ATM and other service fees |
3,273 | 3,108 | 3,157 | 3,453 | 3,298 | |||||||||||||||
Bank owned life insurance income |
5,310 | 2,986 | 3,092 | 3,074 | 3,024 | |||||||||||||||
Investment services and insurance |
2,581 | 2,597 | 2,696 | 2,226 | 2,828 | |||||||||||||||
Manufactured housing income |
35 | 3 | 3 | 3 | 40 | |||||||||||||||
Investment securities gains (losses), net |
4 | 16 | 39 | 40 | (25 | ) | ||||||||||||||
Loan sales and servicing income |
2,833 | 1,445 | 1,668 | 2,076 | 1,520 | |||||||||||||||
Other operating income |
2,810 | 3,111 | 3,016 | 2,461 | 5,403 | |||||||||||||||
Total Other Income |
$ | 52,078 | 45,397 | 47,586 | 47,846 | 50,095 | ||||||||||||||
2006 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||
QUARTERLY OTHER EXPENSES DETAIL | 2nd Qtr | 1st Qtr | 4th Qtr | 3 Qtr | 2nd Qtr | |||||||||||||||
Salaries, wages, pension and employee benefits |
$ | 46,721 | 43,031 | 40,790 | 42,149 | 41,351 | ||||||||||||||
Net occupancy expense |
6,120 | 6,549 | 5,746 | 5,567 | 5,881 | |||||||||||||||
Equipment expense |
2,914 | 2,958 | 4,152 | 2,962 | 3,002 | |||||||||||||||
Taxes, other than federal income taxes |
1,802 | 1,819 | 1,578 | 849 | 880 | |||||||||||||||
Stationery, supplies and postage |
2,403 | 2,453 | 2,546 | 2,559 | 2,484 | |||||||||||||||
Bankcard, loan processing and other costs |
7,417 | 5,827 | 7,042 | 5,802 | 5,444 | |||||||||||||||
Advertising |
2,369 | 2,766 | 1,415 | 1,863 | 3,182 | |||||||||||||||
Professional services |
3,738 | 2,763 | 3,389 | 2,632 | 3,843 | |||||||||||||||
Telephone |
1,094 | 1,128 | 1,136 | 1,206 | 1,095 | |||||||||||||||
Amortization of intangibles |
222 | 223 | 222 | 222 | 222 | |||||||||||||||
Other operating expense |
10,418 | 12,382 | 11,258 | 13,115 | 12,013 | |||||||||||||||
Total Other Expenses |
$ | 85,218 | 81,899 | 79,274 | 78,926 | 79,397 | ||||||||||||||
12
FIRSTMERIT CORPORATION AND SUBSIDIARIES ALLOWANCE FOR LOAN LOSSES — Net Charge-off Detail (Unaudited) (Dollars in thousands) |
Quarters ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Allowance for loan losses — beginning of period |
$ | 87,589 | 97,115 | 90,661 | 97,296 | |||||||||||
Loans charged off: |
||||||||||||||||
Commercial |
10,086 | 4,502 | 16,152 | 8,653 | ||||||||||||
Mortgage |
325 | 415 | 698 | 682 | ||||||||||||
Installment |
4,524 | 6,514 | 10,554 | 14,057 | ||||||||||||
Home equity |
1,146 | 571 | 1,766 | 1,323 | ||||||||||||
Credit cards |
1,951 | 2,662 | 3,725 | 5,082 | ||||||||||||
Leases |
6 | 758 | 57 | 2,365 | ||||||||||||
Total |
18,038 | 15,422 | 32,952 | 32,162 | ||||||||||||
Recoveries: |
||||||||||||||||
Commercial |
945 | 1,184 | 2,382 | 2,212 | ||||||||||||
Mortgage |
30 | 52 | 86 | 107 | ||||||||||||
Installment |
2,965 | 2,580 | 6,111 | 5,305 | ||||||||||||
Home equity |
307 | 318 | 685 | 611 | ||||||||||||
Credit cards |
585 | 734 | 1,034 | 1,310 | ||||||||||||
Manufactured housing |
84 | 147 | 185 | 355 | ||||||||||||
Leases |
101 | 129 | 270 | 189 | ||||||||||||
Total |
5,017 | 5,144 | 10,753 | 10,089 | ||||||||||||
Net charge-offs |
13,021 | 10,278 | 22,199 | 22,073 | ||||||||||||
Provision for loan losses |
13,159 | 5,971 | 19,265 | 17,585 | ||||||||||||
Allowance for loan losses — end of period |
$ | 87,727 | 92,808 | 87,727 | 92,808 | |||||||||||
Average loans outstanding |
$ | 6,730,531 | 6,601,204 | 6,714,222 | 6,546,926 | |||||||||||
Ratio to average loans: |
||||||||||||||||
(Annualized) net charge-offs |
0.78 | % | 0.62 | % | 0.67 | % | 0.68 | % | ||||||||
Provision for loan losses |
0.78 | % | 0.36 | % | 0.58 | % | 0.54 | % | ||||||||
Loans outstanding — period-end |
$ | 6,804,769 | 6,610,385 | 6,804,769 | 6,610,385 | |||||||||||
Allowance for credit losses: |
93,443 | 98,593 | 93,443 | 98,593 | ||||||||||||
As a multiple of (annualized) net charge-offs |
1.79 | 2.39 | 2.09 | 2.21 | ||||||||||||
Allowance for loan losses: |
||||||||||||||||
As a percent of period-end loans outstanding |
1.29 | % | 1.40 | % | 1.29 | % | 1.40 | % | ||||||||
As a multiple of (annualized) net charge-offs |
1.68 | 2.25 | 1.96 | 2.09 | ||||||||||||
13