FirstMerit Reports First Quarter 2015 EPS of $0.33 Per Share

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Apr 28, 2015, 07:30 ET

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

Quarterly Highlights include:

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

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

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

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

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

Net Interest Income

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

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

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

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

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

Noninterest Income

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

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

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

Noninterest Expense

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

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

Asset Quality (excluding acquired loans and covered assets)

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

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

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

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

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

Balance Sheet

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

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

On January 1, 2015, the Corporation became subject to the Basel III capital framework and standardized approach for calculating risk-weighted assets. At March 31, 2015, Basel III capital ratios on a transitional basis remain well in excess of applicable regulatory requirements, with a total risk-based capital ratio of 13.73%, and a common equity tier 1 risk-based capital ratio of 10.60%.

Non-GAAP Financial Measures

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

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

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

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

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

Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis
		Quarters
(unaudited)		2015			2014			2014			2014			2014
(Dollars in thousands)		1st qtr			4th qtr			3rd qtr			2nd qtr			1st qtr
Net interest income (GAAP)		$	185,623		$	192,511		$	193,578		$	195,577		$	193,900
Plus:	Fully taxable-equivalent adjustment	3,931			3,998			4,066			4,089			3,954
Net interest income on a fully taxable-equivalent basis (non-GAAP)		189,554			196,509			197,644			199,666			197,854
Average earning assets		22,100,417			21,920,889			21,804,243			21,367,496			20,903,863
Net interest margin on a fully taxable-equivalent basis (non-GAAP)		3.48		%	3.56		%	3.60		%	3.75		%	3.84		%

Reconciliation of noninterest income and noninterest expense to adjusted noninterest income and adjusted noninterest expense
		Quarters
(unaudited)		2015			2014			2014			2014			2014
(Dollars in thousands)		1st qtr			4th qtr			3rd qtr			2nd qtr			1st qtr
Noninterest expense (GAAP)		$	160,652		$	165,041		$	163,145		$	167,400		$	169,331
Less:	Intangible asset amortization	2,598			2,933			2,933			2,933			2,936
Adjusted noninterest expense (non-GAAP)		158,054			162,108			160,212			164,467			166,395
Noninterest income (GAAP)		65,847			71,960			69,733			72,560			67,270
Less:	Securities losses/(gains)	354			16			14			80			56
Adjusted noninterest income (non-GAAP)		65,493			71,944			69,719			72,480			67,214
Net interest income on a fully taxable-equivalent basis (non-GAAP)		189,554			196,509			197,644			199,666			197,854
Adjusted revenue (non-GAAP)		255,047			268,453			267,363			272,146			265,068
Efficiency ratio (non-GAAP)		61.97		%	60.39		%	59.92		%	60.43		%	62.77		%

Reconciliation of shareholders' equity to tangible common equity, and total assets to tangible assets
		Quarters
		2015			2014			2014			2014			2014
(Dollars in thousands, except per share amounts)		1st qtr			4th qtr			3rd qtr			2nd qtr			1st qtr
Shareholders' equity (GAAP)		$	2,888,786		$	2,834,281		$	2,820,431		$	2,791,738		$	2,742,966
Less:	Preferred stock	100,000			100,000			100,000			100,000			100,000
Common shareholders' equity (non-GAAP)		2,788,786			2,734,281			2,720,431			2,691,738			2,642,966
Less:	Intangible assets	68,422			71,020			73,953			76,886			79,819
	Goodwill	741,740			741,740			741,740			741,740			741,740
Tangible common equity (non-GAAP)		1,978,624			1,921,521			1,904,738			1,873,112			1,821,407
Total assets (GAAP)		$	25,118,120		$	24,902,347		$	24,608,207		$	24,564,431		$	24,498,661
Less:	Intangible assets	68,422			71,020			73,953			76,886			79,819
	Goodwill	741,740			741,740			741,740			741,740			741,740
Tangible assets (non-GAAP)		$	24,307,958		$	24,089,587		$	23,792,514		$	23,745,805		$	23,677,102
Period end common shares		165,453			165,390			165,384			165,393			165,087
Tangible book value per common share		$	11.96		$	11.62		$	11.52		$	11.33		$	11.03
Tangible common equity to tangible assets ratio (non-GAAP)		8.14		%	7.98		%	8.01		%	7.89		%	7.69		%

First Quarter 2015 Conference Call

FirstMerit (Nasdaq: FMER) senior management will host an earnings conference call today at 11:00 a.m. (Eastern Time) to provide an overview of first quarter results and highlights. To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 27622276. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on April 28, 2015 through May 12, 2015 by dialing (855) 859-2056, and entering the PIN: 27622276. The Corporation will provide a slide presentation, which management will speak to during the conference call. A copy of the presentation will be available at https://www.firstmerit.com/about-us/investors/index.html; click on the Presentations link to access the slide presentation.

About FirstMerit Corporation

FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $25.1 billion as of March 31, 2015, and 384 banking offices and 412 ATM locations in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal affiliates include: FirstMerit Bank, N.A., FirstMerit Mortgage Corporation and FirstMerit Title Agency, Ltd.

Subsequent Events

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

Forward-Looking Statements

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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited)							Quarters
(Dollars in thousands, except per share amounts)	2015			2014			2014			2014			2014
	1st qtr			4th qtr			3rd qtr			2nd qtr			1st qtr
EARNINGS
Net interest income TE ⁽¹⁾	$	189,554		$	196,509		$	197,644		$	199,666		$	197,854
TE adjustment ⁽¹⁾	3,931			3,998			4,066			4,089			3,954
Provision for originated loan losses	6,036			8,662			4,862			5,993			3,654
Provision for acquired loan losses	2,214			3,407			4,411			5,815			7,827
Provision/(recapture) for covered loan losses	(2)			1,228			(81)			3,445			3,055
Noninterest income	65,847			71,960			69,733			72,560			67,270
Noninterest expense	160,652			165,041			163,145			167,400			169,331
Net income	57,139			61,079			63,898			59,519			53,455
Diluted EPS ⁽³⁾	0.33			0.36			0.37			0.35			0.31
PERFORMANCE RATIOS
Return on average assets (ROA)	0.93		%	0.98		%	1.03		%	0.98		%	0.90		%
Return on average equity (ROE)	8.08		%	8.50		%	9.03		%	8.62		%	7.93		%
Return on average tangible common equity ⁽¹⁾	11.85		%	12.52		%	13.41		%	12.92		%	11.98		%
Net interest margin TE ⁽¹⁾	3.48		%	3.56		%	3.60		%	3.75		%	3.84		%
Efficiency ratio ⁽¹⁾	61.97		%	60.39		%	59.92		%	60.43		%	62.77		%
Number of full-time equivalent employees	4,103			4,273			4,302			4,392			4,521
MARKET DATA
Book value per common share	$	17.46		$	17.14		$	17.05		$	16.88		$	16.62
Tangible book value per common share ⁽¹⁾	11.96			11.62			11.52			11.33			11.03
Period end common share market value	19.06			18.89			17.62			19.75			20.83
Market as a % of book	109		%	110		%	103		%	117		%	125		%
Cash dividends per common share	$	0.16		$	0.16		$	0.16		$	0.16		$	0.16
Common Stock dividend payout ratio	48.48		%	44.44		%	43.24		%	45.71		%	51.61		%
Average basic common shares	165,411			165,395			165,389			165,335			165,060
Average diluted common shares	166,003			165,974			165,804			166,147			166,004
Period end common shares	165,453			165,390			165,384			165,393			165,087
Common shares repurchased	66			15			10			186			51
Common Stock market capitalization	$	3,153,534		$	3,124,217		$	2,914,066		$	3,266,512		$	3,438,762
ASSET QUALITY (excluding acquired, FDIC acquired loans and covered OREO) ⁽²⁾
Gross charge-offs	$	8,567		$	9,205		$	11,410		$	11,148		$	13,160
Net charge-offs	4,187			3,849			5,929			6,159			8,022
Allowance for originated loan losses	97,545			95,696			90,883			91,950			92,116
Reserve for unfunded lending commitments	4,330			5,848			6,966			7,107			7,481
Nonperforming assets (NPAs)	68,606			55,038			63,119			60,922			62,711
Net charge-offs to average loans ratio	0.13		%	0.12		%	0.20		%	0.22		%	0.31		%
Allowance for originated loan losses to period-end loans	0.76		%	0.77		%	0.75		%	0.80		%	0.85		%
Allowance for credit losses to period-end loans	0.79		%	0.81		%	0.81		%	0.86		%	0.92		%
NPAs to loans and other real estate	0.53		%	0.44		%	0.52		%	0.53		%	0.58		%
Allowance for originated loan losses to nonperforming loans	211.66		%	276.44		%	231.13		%	250.27		%	212.01		%
Allowance for credit losses to nonperforming loans	221.06		%	293.34		%	248.85		%	269.61		%	229.23		%
CAPITAL & LIQUIDITY
Period end tangible common equity to assets ⁽¹⁾	8.14		%	7.98		%	8.01		%	7.89		%	7.69		%
Average equity to assets	11.51		%	11.55		%	11.42		%	11.40		%	11.32		%
Average equity to total loans	18.60		%	18.67		%	18.58		%	18.90		%	19.04		%
Average total loans to deposits	77.86		%	78.47		%	77.36		%	75.15		%	73.11		%
AVERAGE BALANCES
Assets	$	24,905,094		$	24,664,987		$	24,583,776		$	24,291,276		$	24,144,570
Deposits	19,788,925			19,450,647			19,531,800			19,496,795			19,636,506
Originated loans	12,689,791			12,306,171			11,814,314			11,092,101			10,448,383
Acquired loans, including FDIC acquired loans, less loss share receivable	2,717,884			2,956,867			3,295,547			3,558,810			3,907,802
Earning assets	22,100,417			21,920,889			21,804,243			21,367,496			20,903,863
Shareholders' equity	2,866,362			2,849,618			2,807,886			2,768,352			2,733,226
ENDING BALANCES
Assets	$	25,118,120		$	24,902,347		$	24,608,207		$	24,564,431		$	24,498,661
Deposits	19,925,595			19,504,665			19,366,911			19,298,396			19,811,674
Originated loans	12,856,037			12,493,812			12,071,759			11,467,193			10,826,913
Acquired loans, including FDIC acquired loans, less loss share receivable	2,614,847			2,810,302			3,139,521			3,458,453			3,726,952
Goodwill	741,740			741,740			741,740			741,740			741,740
Intangible assets	68,422			71,020			73,953			76,886			79,819
Earning assets	22,395,343			22,153,552			21,930,840			21,789,773			21,715,302
Total shareholders' equity	2,888,786			2,834,281			2,820,431			2,791,738			2,742,966
NOTES:


(1) Represents a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this press release for a reconciliation to GAAP financial measures.
(2) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and FDIC acquired loans and covered OREO are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015. As of March 31, 2015, $174.6 million and $110.4 million of FDIC acquired loans remained covered by non-single family loss share agreement and single family loss share agreements, respectively, providing considerable protection against credit risk.
(3) Net income used to determine diluted EPS was reduced by the cash dividends payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A of approximately $1.5 million in each of the quarters presented.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)				March 31,		December 31,		March 31,
(Unaudited, except December 31, 2014, which is derived from the audited financial statements)				2015		2014		2014
ASSETS
	Cash and due from banks			$	426,247	$	480,998	$	520,976
	Interest-bearing deposits in banks			106,178		216,426		438,309
		Total cash and cash equivalents		532,425		697,424		959,285
	Investment securities:
		Held-to-maturity		2,855,174		2,903,609		3,079,620
		Available-for-sale		3,791,059		3,545,288		3,433,171
		Other investments		148,475		148,654		148,446
	Loans held for sale			3,568		13,428		7,143
	Loans			15,490,889		15,326,147		14,608,613
	Allowance for loan losses			(146,552)		(143,649)		(145,060)
	Net loans			15,344,337		15,182,498		14,463,553
	Premises and equipment, net			320,392		332,297		323,335
	Goodwill			741,740		741,740		741,740
	Intangible assets			68,422		71,020		79,819
	FDIC acquired other real estate			43,660		49,641		59,848
	Accrued interest receivable and other assets			1,268,868		1,216,748		1,202,701
			Total assets	$	25,118,120	$	24,902,347	$	24,498,661
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
		Noninterest-bearing		$	5,666,752	$	5,786,662	$	5,595,899
		Interest-bearing		3,277,118		3,028,888		3,081,658
		Savings and money market accounts		8,610,553		8,399,612		8,750,182
		Certificates and other time deposits		2,371,172		2,289,503		2,383,935
			Total deposits	19,925,595		19,504,665		19,811,674
		Federal funds purchased and securities sold under agreements to repurchase		1,113,371		1,272,591		926,195
		Wholesale borrowings		316,628		428,071		349,277
		Long-term debt		512,625		505,192		324,430
		Accrued taxes, expenses, and other liabilities		361,115		357,547		344,119
			Total liabilities	22,229,334		22,068,066		21,755,695
		Shareholders' equity:
			5.875% Non-Cumulative Perpetual Preferred stock, Series A, without par value: authorized 115,000 shares; 100,000 issued	100,000		100,000		100,000
			Common stock warrant	3,000		3,000		3,000
			Common Stock, without par value; authorized 300,000,000 shares; issued: March 31, 2015, December 31, 2014 and March 31, 2014 - 170,183,540 shares	127,937		127,937		127,937
			Capital surplus	1,394,933		1,393,090		1,393,749
			Accumulated other comprehensive loss	(49,267)		(71,892)		(55,504)
			Retained earnings	1,433,926		1,404,717		1,303,626
			Treasury stock, at cost: March 31, 2015 - 4,730,374; December 31, 2014 - 4,793,566 shares; March 31, 2014 - 5,096,157 shares	(121,743)		(122,571)		(129,842)
			Total shareholders' equity	2,888,786		2,834,281		2,742,966
			Total liabilities and shareholders' equity	$	25,118,120	$	24,902,347	$	24,498,661

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Period End Loans by Product Type
(Unaudited)
(In thousands)	As of March 31, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
Commercial	$	8,031,892	$	1,011,170	$	179,547	$	9,222,609
Mortgage	639,980		378,192		40,470		1,058,642
Installment	2,500,288		717,693		4,781		3,222,762
Home equity	1,134,238		217,824		65,170		1,417,232
Credit card	160,766		—		—		160,766
Leases	388,873		—		—		388,873
Subtotal	12,856,037		2,324,879		289,968		15,470,884
Loss share receivable	—		—		20,005		20,005
Total loans	12,856,037		2,324,879		309,973		15,490,889
Allowance for loan losses	(97,545)		(7,493)		(41,514)		(146,552)
Net loans	$	12,758,492	$	2,317,386	$	268,459	$	15,344,337


	As of December 31, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans		Total Loans
Commercial	$	7,830,085	$	1,086,899	$	211,607	$	9,128,591
Mortgage	625,283		394,484		41,276		1,061,043
Installment	2,393,451		764,168		4,874		3,162,493
Home equity	1,110,336		233,629		73,365		1,417,330
Credit card	164,478		—		—		164,478
Leases	370,179		—		—		370,179
Subtotal	12,493,812		2,479,180		331,122		15,304,114
Loss share receivable	—		—		22,033		22,033
Total loans	12,493,812		2,479,180		353,155		15,326,147
Allowance for loan losses	(95,696)		(7,457)		(40,496)		(143,649)
Net loans	$	12,398,116	$	2,471,723	$	312,659	$	15,182,498


	As of September 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans		Total Loans
Commercial	$	7,626,166	$	1,272,244	$	262,319	$	9,160,729
Mortgage	605,998		410,065		43,672		1,059,735
Installment	2,277,533		809,820		5,148		3,092,501
Home equity	1,062,013		252,975		83,278		1,398,266
Credit card	160,113		—		—		160,113
Leases	339,936		—		—		339,936
Subtotal	12,071,759		2,745,104		394,417		15,211,280
Loss share receivable	—		—		30,746		30,746
Total loans	12,071,759		2,745,104		425,163		15,242,026
Allowance for loan losses	(90,883)		(6,206)		(42,988)		(140,077)
Net loans	$	11,980,876	$	2,738,898	$	382,175	$	15,101,949


	As of June 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans		Total Loans
Commercial	$	7,365,499	$	1,457,903	$	292,782	$	9,116,184
Mortgage	580,166		425,584		46,705		1,052,455
Installment	2,051,587		872,034		5,364		2,928,985
Home equity	998,179		268,266		89,815		1,356,260
Credit card	151,967		—		—		151,967
Leases	319,795		—		—		319,795
Subtotal	11,467,193		3,023,787		434,666		14,925,646
Loss share receivable	—		—		43,981		43,981
Total loans	11,467,193		3,023,787		478,647		14,969,627
Allowance for loan losses	(91,950)		(4,977)		(45,109)		(142,036)
Net loans	$	11,375,243	$	3,018,810	$	433,538	$	14,827,591


	As of March 31, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans		Total Loans
Commercial	$	7,083,192	$	1,562,878	$	341,267	$	8,987,337
Mortgage	555,971		446,374		49,411		1,051,756
Installment	1,835,522		943,354		5,531		2,784,407
Home equity	946,802		283,309		94,828		1,324,939
Credit card	147,917		—		—		147,917
Leases	257,509		—		—		257,509
Subtotal	10,826,913		3,235,915		491,037		14,553,865
Loss share receivable	—		—		54,748		54,748
Total loans	10,826,913		3,235,915		545,785		14,608,613
Allowance for loan losses	(92,116)		(2,974)		(49,970)		(145,060)
Net loans	$	10,734,797	$	3,232,941	$	495,815	$	14,463,553


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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
	Quarterly Periods
(Unaudited)	March 31,		December 31,		September 30,		June 30,		March 31,
(In thousands)	2015		2014		2014		2014		2014
ASSETS
Cash and cash equivalents	$	563,265	$	500,559	$	521,210	$	662,000	$	959,071
Investment securities:
Held-to-maturity	2,874,169		2,966,127		3,029,971		3,061,711		2,983,831
Available-for-sale	3,645,057		3,499,528		3,460,312		3,444,830		3,332,358
Other investments	148,532		148,636		148,427		148,440		168,389
Loans held for sale	5,478		16,708		17,433		10,196		6,804
Loans	15,427,181		15,289,890		15,148,100		14,702,319		14,412,481
Less: allowance for loan losses	144,363		138,540		140,026		146,368		138,891
Net loans	15,282,818		15,151,350		15,008,074		14,555,951		14,273,590
Total earning assets	22,100,417		21,920,889		21,804,243		21,367,496		20,903,863
Premises and equipment, net	322,431		321,187		317,366		323,175		327,845
Accrued interest receivable and other assets	2,063,344		2,060,892		2,080,983		2,084,973		2,092,682
TOTAL ASSETS	$	24,905,094	$	24,664,987	$	24,583,776	$	24,291,276	$	24,144,570
LIABILITIES
Deposits:
Noninterest-bearing	$	5,728,763	$	5,706,631	$	5,603,104	$	5,515,807	$	5,488,751
Interest-bearing	3,209,285		3,021,188		3,100,904		3,066,201		3,045,952
Savings and money market accounts	8,542,154		8,381,548		8,492,172		8,580,928		8,698,817
Certificates and other time deposits	2,308,723		2,341,280		2,335,620		2,333,859		2,402,986
Total deposits	19,788,925		19,450,647		19,531,800		19,496,795		19,636,506
Federal funds purchased and securities sold under
agreements to repurchase	1,024,863		1,241,948		1,182,507		1,024,598		884,065
Wholesale borrowings	350,991		450,587		438,941		373,213		276,324
Long-term debt	505,275		350,535		320,387		324,431		324,428
Total funds	21,670,054		21,493,717		21,473,635		21,219,037		21,121,323
Accrued taxes, expenses and other liabilities	368,678		321,652		302,255		303,887		290,021
Total liabilities	22,038,732		21,815,369		21,775,890		21,522,924		21,411,344
SHAREHOLDERS' EQUITY
Preferred stock	100,000		100,000		100,000		100,000		100,000
Common stock warrant	3,000		3,000		3,000		3,000		3,000
Common stock	127,937		127,937		127,937		127,937		127,937
Capital surplus	1,393,682		1,391,189		1,388,423		1,386,497		1,391,695
Accumulated other comprehensive loss	(58,025)		(38,827)		(41,963)		(44,952)		(52,940)
Retained earnings	1,422,067		1,388,661		1,352,867		1,319,515		1,293,379
Treasury stock	(122,299)		(122,342)		(122,378)		(123,645)		(129,845)
Total shareholders' equity	2,866,362		2,849,618		2,807,886		2,768,352		2,733,226
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	24,905,094	$	24,664,987	$	24,583,776	$	24,291,276	$	24,144,570

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Average Loans by Product Type
(Unaudited)
(In thousands)	Quarter ended March 31, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
Commercial	$	7,979,901	$	1,053,601	$	196,421	$	9,229,923
Mortgage	631,761		386,033		40,800		1,058,594
Installment	2,424,956		742,095		4,822		3,171,873
Home equity	1,122,988		224,444		69,668		1,417,100
Credit card	162,160		—		—		162,160
Leases	368,025		—		—		368,025
Subtotal	12,689,791		2,406,173		311,711		15,407,675
Loss share receivable	—		—		19,506		19,506
Total loans	12,689,791		2,406,173		331,217		15,427,181
Less allowance for loan losses	95,952		8,287		40,124		144,363
Net loans	$	12,593,839	$	2,397,886	$	291,093	$	15,282,818


	Quarter ended December 31, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
Commercial	$	7,734,881	$	1,170,536	$	231,531	$	9,136,948
Mortgage	617,803		401,173		42,409		1,061,385
Installment	2,353,599		785,035		4,944		3,143,578
Home equity	1,087,123		242,878		78,361		1,408,362
Credit card	161,543		—		—		161,543
Leases	351,222		—		—		351,222
Subtotal	12,306,171		2,599,622		357,245		15,263,038
Loss share receivable	—		—		26,852		26,852
Total loans	12,306,171		2,599,622		384,097		15,289,890
Less allowance for loan losses	91,178		6,203		41,159		138,540
Net loans	$	12,214,993	$	2,593,419	$	342,938	$	15,151,350


	Quarter Ended September 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
Commercial	$	7,534,848	$	1,373,103	$	271,299	$	9,179,250
Mortgage	594,258		416,417		44,672		1,055,347
Installment	2,171,246		838,687		5,278		3,015,211
Home equity	1,030,256		259,867		86,224		1,376,347
Credit card	156,866		—		—		156,866
Leases	326,840		—		—		326,840
Subtotal	11,814,314		2,888,074		407,473		15,109,861
Loss share receivable	—		—		38,239		38,239
Total loans	11,814,314		2,888,074		445,712		15,148,100
Less allowance for loan losses	91,888		6,088		42,050		140,026
Net loans	$	11,722,426	$	2,881,986	$	403,662	$	15,008,074


	Quarter Ended June 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
Commercial	$	7,185,060	$	1,492,139	$	303,721	$	8,980,920
Mortgage	565,703		434,936		48,258		1,048,897
Installment	1,939,802		907,069		5,445		2,852,316
Home equity	969,592		275,387		91,855		1,336,834
Credit card	149,903		—		—		149,903
Leases	282,041		—		—		282,041
Subtotal	11,092,101		3,109,531		449,279		14,650,911
Loss share receivable	—		—		51,408		51,408
Total loans	11,092,101		3,109,531		500,687		14,702,319
Less allowance for loan losses	94,063		3,034		49,271		146,368
Net loans	$	10,998,038	$	3,106,497	$	451,416	$	14,555,951


	Quarter ended March 31, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
Commercial	$	6,819,522	$	1,678,267	$	357,033	$	8,854,822
Mortgage	538,151		459,842		49,921		1,047,914
Installment	1,771,434		972,711		6,012		2,750,157
Home equity	929,362		288,529		95,487		1,313,378
Credit card	147,265		—		—		147,265
Leases	242,649		—		—		242,649
Subtotal	10,448,383		3,399,349		508,453		14,356,185
Loss share receivable	—		—		56,296		56,296
Total loans	10,448,383		3,399,349		564,749		14,412,481
Less allowance for loan losses	96,789		(617)		42,719		138,891
Net loans	$	10,351,594	$	3,399,966	$	522,030	$	14,273,590

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.
(2) Loans acquired in an FDIC-assisted transaction. Includes non-single family loans for which the loss share agreement expired on March 31, 2015.

FIRSTMERIT CORPORATION AND SUBIDARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
Fully Tax-equivalent Interest Rates and Interest Differential

	Three months ended						Three months ended						Three months ended
	March 31, 2015						December 31, 2014						March 31, 2014
(Unaudited)	Average				Average		Average				Average		Average				Average
(Dollars in thousands)	Balance		Interest ⁽¹⁾		Rate		Balance		Interest ⁽¹⁾		Rate		Balance		Interest ⁽¹⁾		Rate
ASSETS
Cash and cash equivalents	$	563,265					$	500,559					$	959,071
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	5,329,725		$	26,760	2.04	%	5,257,657		$	26,803	2.02	%	5,151,341		$	25,910	2.04	%
Obligations of states and political subdivisions (tax exempt)	733,157		9,147		5.06	%	767,026		8,636		4.47	%	739,875		8,613		4.72	%
Other securities and federal funds sold	604,876		5,190		3.48	%	589,608		5,213		3.51	%	593,362		6,113		4.18	%
Total investment securities and federal funds sold	6,667,758		41,097		2.50	%	6,614,291		40,652		2.44	%	6,484,578		40,636		2.54	%
Loans held for sale	5,478		57		4.22	%	16,708		145		3.44	%	6,804		59		3.53	%
Loans, including loss share receivable⁽²⁾	15,427,181		162,292		4.27	%	15,289,890		169,302		4.39	%	14,412,481		171,135		4.82	%
Total earning assets	22,100,417		$	203,446	3.73	%	21,920,889		$	210,099	3.80	%	20,903,863		$	211,830	4.11	%
Total allowance for loan losses	(144,363)						(138,540)						(138,891)
Other assets	2,385,775						2,382,079						2,420,527
Total assets	$	24,905,094					$	24,664,987					$	24,144,570
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,728,763	$	—	—	%	$	5,706,631	$	—	—	%	$	5,488,751	$	—	—	%
Interest-bearing	3,209,285		767		0.10	%	3,021,188		727		0.10	%	3,045,952		737		0.10	%
Savings and money market accounts	8,542,154		5,547		0.26	%	8,381,548		5,496		0.26	%	8,698,817		5,559		0.26	%
Certificates and other time deposits	2,308,723		2,177		0.38	%	2,341,280		2,525		0.43	%	2,402,986		2,464		0.42	%
Total deposits	19,788,925		8,491		0.17	%	19,450,647		8,748		0.18	%	19,636,506		8,760		0.18	%
Securities sold under agreements to repurchase	1,024,863		243		0.10	%	1,241,948		294		0.09	%	884,065		197		0.09	%
Wholesale borrowings	350,991		2,340		2.70	%	450,587		2,360		2.08	%	276,324		1,129		1.66	%
Long-term debt	505,275		2,818		2.26	%	350,535		2,188		2.48	%	324,428		3,890		4.86	%
Total interest-bearing liabilities	15,941,291		13,892		0.35	%	15,787,086		13,590		0.34	%	15,632,572		13,976		0.36	%
Other liabilities	368,678						321,652						290,021
Shareholders' equity	2,866,362						2,849,618						2,733,226
Total liabilities and shareholders' equity	$	24,905,094					$	24,664,987					$	24,144,570
Net yield on earning assets	$	22,100,417	$	189,554	3.48	%	$	21,920,889	$	196,509	3.56	%	$	20,903,863	$	197,854	3.84	%
Interest rate spread					3.38	%					3.46	%					3.75	%


(1) The net yield on earning assets is calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal and/or state income taxes. As such, these tax-exempt securities typically yield lower returns than taxable securities. To provide more meaningful comparisons of net interest margins for all earning assets, net interest income on a taxable-equivalent basis is used in calculating net interest margin by increasing the interest earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under U.S. generally accepted accounting principles in the Consolidated Statements of Income. The taxable-equivalent adjustments to net interest income were $3.9 million, $4.0 million, and $4.0 million for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, respectively.
(2) Nonaccrual loans have been included in the average balances.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)				Quarters Ended
(Unaudited)				March 31,
				2015		2014
Interest income:
	Loans and loans held for sale			$	161,539	$	170,514
	Investment securities:
		Taxable		31,950		32,022
		Tax-exempt		6,026		5,340
		Total investment securities interest		37,976		37,362
			Total interest income	199,515		207,876
Interest expense:
	Deposits:
		Interest-bearing		767		737
		Savings and money market accounts		5,547		5,559
		Certificates and other time deposits		2,177		2,464
	Federal funds purchased and securities sold under agreements to repurchase			243		197
	Wholesale borrowings			2,340		1,129
	Long-term debt			2,818		3,890
		Total interest expense		13,892		13,976
		Net interest income		185,623		193,900
	Provision for loan losses			8,248		14,536
		Net interest income after provision for loan losses		177,375		179,364
Noninterest income:
	Trust department income			10,149		9,748
	Service charges on deposits			15,668		16,648
	Credit card fees			12,649		12,152
	ATM and other service fees			6,099		5,819
	Bank owned life insurance income			3,592		3,582
	Investment services and insurance			3,704		3,516
	Investment securities gains/(losses), net			354		56
	Loan sales and servicing income			1,600		3,730
	Other operating income			12,032		12,019
		Total noninterest income		65,847		67,270
Noninterest expenses:
	Salaries, wages, pension and employee benefits			90,526		89,013
	Net occupancy expense			15,954		17,014
	Equipment expense			11,025		11,911
	Stationery, supplies and postage			3,528		4,108
	Bankcard, loan processing and other costs			11,139		10,834
	Professional services			4,010		5,359
	Amortization of intangibles			2,598		2,936
	FDIC insurance expense			5,167		5,971
	Other operating expense			16,705		22,185
		Total noninterest expenses		160,652		169,331
Income before income tax expense				82,570		77,303
Income tax expense				25,431		23,848
			Net income	$	57,139	$	53,455
Less:			Net income allocated to participating shareholders	407		380
			Preferred stock dividends	1,469		1,469
Net income attributable to common shareholders				$	55,263	$	51,606
Net income used in diluted EPS calculation				$	55,263	$	51,606
Weighted average number of common shares outstanding - basic				165,411		165,060
Weighted average number of common shares outstanding - diluted				166,003		166,004
Basic earnings per common share				$	0.33	$	0.31
Diluted earnings per common share				$	0.33	$	0.31
Cash dividends per common share				$	0.16	$	0.16

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)	Quarter Ended
(In thousands)	March 31, 2015
	Pre-tax		Tax		After-tax
Net Income	$	82,570	$	25,431	$	57,139
Other comprehensive income/(loss)
Unrealized gains and losses on securities available for sale:
Changes in unrealized securities' holding gains/(losses)	34,117		11,941		22,176
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity	(504)		(176)		(328)
Net losses/(gains) realized on sale of securities reclassified to noninterest income	(354)		(124)		(230)
Net change in unrealized gains/(losses) on securities available for sale	33,259		11,641		21,618
Pension plans and other postretirement benefits:
Amortization of actuarial gain	1,138		398		740
Amortization of prior service cost reclassified to other noninterest expense	410		143		267
Net change from defined benefit pension plans	1,548		541		1,007
Total other comprehensive gains/(losses)	34,807		12,182		22,625
Comprehensive income	$	117,377	$	37,613	$	79,764

(Unaudited)	Quarter Ended
(In thousands)	March 31, 2014
	Pre-tax		Tax		After-tax
Net Income	$	77,303	$	23,848	$	53,455
Other comprehensive income/(loss)
Unrealized gains and losses on securities available for sale:
Changes in unrealized securities' holding gains/(losses)	18,044		6,315		11,729
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity	(494)		(173)		(321)
Net losses/(gains) realized on sale of securities reclassified to noninterest income	(56)		(20)		(36)
Net change in unrealized gains/(losses) on securities available for sale	17,494		6,122		11,372
Total other comprehensive gains/(losses)	17,494		6,122		11,372
Comprehensive income	$	94,797	$	29,970	$	64,827

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME---LINKED QUARTERS

	Quarterly Results
(In thousands, except per share amounts)	2015		2014		2014		2014		2014
(Unaudited)	1st qtr		4th qtr		3rd qtr		2nd qtr		1st qtr
Interest Income:
Loans and loans held for sale	$	161,539	$	168,650	$	170,648	$	172,517	$	170,514
Investment securities	37,976		37,451		37,549		37,808		37,362
Total interest income	199,515		206,101		208,197		210,325		207,876
Interest expense:
Deposits:
Interest-bearing	767		727		755		745		737
Savings and money market accounts	5,547		5,496		5,570		5,477		5,559
Certificates and other time deposits	2,177		2,525		2,846		3,009		2,464
Federal funds purchased and securities sold under agreements to repurchase	243		294		268		233		197
Wholesale borrowings	2,340		2,360		1,397		1,391		1,129
Long-term debt	2,818		2,188		3,783		3,893		3,890
Total interest expense	13,892		13,590		14,619		14,748		13,976
Net interest income	185,623		192,511		193,578		195,577		193,900
Provision for loan losses	8,248		13,297		9,192		15,253		14,536
Net interest income after provision for loan losses	177,375		179,214		184,386		180,324		179,364
Noninterest income:
Trust department income	10,149		9,831		10,300		10,070		9,748
Service charges on deposits	15,668		17,597		18,684		18,528		16,648
Credit card fees	12,649		13,305		13,754		13,455		12,152
ATM and other service fees	6,099		6,181		6,182		5,996		5,819
Bank owned life insurance income	3,592		7,337		4,218		4,040		3,582
Investment services and insurance	3,704		4,171		3,606		3,852		3,516
Investment securities gains/(losses), net	354		16		14		80		56
Loan sales and servicing income	1,600		3,112		4,740		4,462		3,730
Other operating income	12,032		10,410		8,235		12,077		12,019
Total noninterest income	65,847		71,960		69,733		72,560		67,270
Noninterest expenses:
Salaries, wages, pension and employee benefits	90,526		89,899		90,593		89,465		89,013
Net occupancy expense	15,954		14,188		13,887		14,347		17,014
Equipment expense	11,025		12,133		12,188		12,267		11,911
Stationery, supplies and postage	3,528		3,767		3,723		3,990		4,108
Bankcard, loan processing and other costs	11,139		11,830		11,151		11,810		10,834
Professional services	4,010		6,440		5,270		4,745		5,359
Amortization of intangibles	2,598		2,933		2,933		2,933		2,936
FDIC insurance expense	5,167		5,989		2,988		5,533		5,971
Other operating expense	16,705		17,862		20,412		22,310		22,185
Total noninterest expenses	160,652		165,041		163,145		167,400		169,331
Income before income tax expense	82,570		86,133		90,974		85,484		77,303
Income tax expense	25,431		25,054		27,076		25,965		23,848
Net income	57,139		61,079		63,898		59,519		53,455
Less: Net income allocated to participating shareholders	407		496		519		489		380
Preferred stock dividends	1,469		1,469		1,469		1,469		1,469
Net income attributable to common shareholders	$	55,263	$	59,114	$	61,910	$	57,561	$	51,606
Net income used in diluted EPS calculation	$	55,263	$	59,114	$	61,910	$	57,561	$	51,606
Weighted-average number of common shares outstanding - basic	165,411		165,395		165,389		165,335		165,060
Weighted-average number of common shares outstanding- diluted	166,003		165,974		165,804		166,147		166,004
Basic earnings per common share	$	0.33	$	0.36	$	0.37	$	0.35	$	0.31
Diluted earnings per common share	$	0.33	$	0.36	$	0.37	$	0.35	$	0.31
Cash dividends per common share	$	0.16	$	0.16	$	0.16	$	0.16	$	0.16

FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION (excluding acquired loans, FDIC acquired loans, and covered OREO) ⁽¹⁾


(Unaudited)	(Unaudited)															(Audited)
(Dollars in thousands)	Quarterly Periods															Annual Period
	March 31,			December 31,			September 30,			June 30,			March 31,			December 31,
Allowance for Credit Losses	2015			2014			2014			2014			2014			2014
Allowance for originated loan losses, beginning of period	$	95,696		$	90,883		$	91,950		$	92,116		$	96,484		$	96,484
Provision for originated loan losses	6,036			8,662			4,862			5,993			3,654			23,171
Charge-offs	8,567			9,205			11,410			11,148			13,160			44,923
Recoveries	4,380			5,356			5,481			4,989			5,138			20,964
Net charge-offs	4,187			3,849			5,929			6,159			8,022			23,959
Allowance for originated loan losses, end of period	$	97,545		$	95,696		$	90,883		$	91,950		$	92,116		$	95,696
Reserve for unfunded lending commitments,
beginning of period	$	5,848		$	6,966		$	7,107		$	7,481		$	7,907		$	7,907
Provision for (relief of) credit losses	(1,518)			(1,118)			(141)			(374)			(426)			(2,059)
Reserve for unfunded lending commitments,
end of period	$	4,330		$	5,848		$	6,966		$	7,107		$	7,481		$	5,848
Allowance for Credit Losses	$	101,875		$	101,544		$	97,849		$	99,057		$	99,597		$	101,544
Ratios
Provision for loan losses to average loans	0.19		%	0.28		%	0.16		%	0.22		%	0.14		%	0.20		%
Net charge-offs to average loans	0.13		%	0.12		%	0.20		%	0.22		%	0.31		%	0.21		%
Allowance for loan losses to period-end loans	0.76		%	0.77		%	0.75		%	0.80		%	0.85		%	0.77		%
Allowance for credit losses to period-end loans	0.79		%	0.81		%	0.81		%	0.86		%	0.92		%	0.81		%
Allowance for loan losses to nonperforming loans	211.66		%	276.44		%	231.13		%	250.27		%	212.01		%	276.44		%
Allowance for credit losses to nonperforming loans	221.06		%	293.34		%	248.85		%	269.61		%	229.23		%	293.34		%
Asset Quality
Impaired originated loans:
Commercial loans	$	28,478		$	17,147		$	22,347		$	21,072		$	27,122		$	17,147
Consumer loans	17,607			17,470			16,974			15,669			16,326			17,470
Total nonperforming loans	46,085			34,617			39,321			36,741			43,448			34,617
Other real estate owned ("OREO") ⁽²⁾	22,521			20,421			23,798			24,181			19,263			20,421
Total nonperforming assets ("NPAs") ⁽²⁾	$	68,606		$	55,038		$	63,119		$	60,922		$	62,711		$	55,038
NPAs to period-end loans + OREO ⁽²⁾	0.53		%	0.44		%	0.52		%	0.53		%	0.58		%	0.44		%
Accruing originated loans past due 90 days or more	$	7,914		$	12,156		$	8,538		$	15,643		$	11,860		$	12,156


(1) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired loans and FDIC acquired loans, and covered OREO are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. Certain non-single family loss share agreements with the FDIC expired at March 31, 2015. As of March 31, 2015, $174.6 million and $110.4 million of FDIC acquired loans remained covered by non-single family loss share agreement and single family loss share agreements, respectively, providing considerable protection against credit risk.
(2) As of March 31, 2015, $3.4 million of OREO was no longer covered by a FDIC loss share agreement, and therefore, was included in NPAs. OREO that remains covered by FDIC loss share agreements has considerable protection against credit risk and is not reported as NPAs.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL

(Unaudited)
(In thousands)
	2015		2014		2014		2014		2014
Noninterest income detail	1st qtr		4th qtr		3rd qtr		2nd qtr		1st qtr
Trust department income	$	10,149	$	9,831	$	10,300	$	10,070	$	9,748
Service charges on deposits	15,668		17,597		18,684		18,528		16,648
Credit card fees	12,649		13,305		13,754		13,455		12,152
ATM and other service fees	6,099		6,181		6,182		5,996		5,819
Bank owned life insurance income	3,592		7,337		4,218		4,040		3,582
Investment services and insurance	3,704		4,171		3,606		3,852		3,516
Investment securities gains/(losses), net	354		16		14		80		56
Loan sales and servicing income	1,600		3,112		4,740		4,462		3,730
Other operating income	12,032		10,410		8,235		12,077		12,019
Total Noninterest Income	$	65,847	$	71,960	$	69,733	$	72,560	$	67,270

	2015		2014		2014		2014		2014
Noninterest expense detail	1st qtr		4th qtr		3rd qtr		2nd qtr		1st qtr
Salaries and wages	$	71,914	$	71,638	$	71,769	$	69,892	$	71,669
Pension and employee benefits	18,612		18,261		18,824		19,573		17,344
Net occupancy expense	15,954		14,188		13,887		14,347		17,014
Equipment expense	11,025		12,133		12,188		12,267		11,911
Taxes, other than federal income taxes	2,014		1,661		1,286		2,576		2,774
Stationery, supplies and postage	3,528		3,767		3,723		3,990		4,108
Bankcard, loan processing and other costs	11,139		11,830		11,151		11,810		10,834
Advertising	2,747		3,586		3,942		3,801		3,516
Professional services	4,010		6,440		5,270		4,745		5,359
Telephone	2,574		2,779		2,831		2,857		2,908
Amortization of intangibles	2,598		2,933		2,933		2,933		2,936
FDIC insurance expense	5,167		5,989		2,988		5,533		5,971
Other operating expense	9,370		9,836		12,353		13,076		12,987
Total Noninterest Expense	$	160,652	$	165,041	$	163,145	$	167,400	$	169,331

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

(Unaudited)	Quarters Ended						Year Ended
(Dollars in thousands)	March 31,						December 31,
	2015			2014			2014
Allowance for originated loan losses - beginning of period	$	95,696		$	96,484		$	96,484
Loans charged off:
Commercial	685			5,153			12,701
Mortgage	424			559			2,031
Installment	4,605			4,584			17,932
Home equity	911			838			4,831
Credit cards	1,452			1,455			4,604
Leases	—			—			—
Overdrafts	490			571			2,824
Total	8,567			13,160			44,923
Recoveries:
Commercial	325			1,029			4,332
Mortgage	35			38			318
Installment	2,868			2,738			10,513
Home equity	613			699			2,940
Credit cards	366			418			1,716
Manufactured housing	13			11			87
Leases	4			—			379
Overdrafts	156			205			679
Total	4,380			5,138			20,964
Net charge-offs	4,187			8,022			23,959
Provision for originated loan losses	6,036			3,654			23,171
Allowance for originated loan losses-end of period	$	97,545		$	92,116		$	95,696

Average originated loans	$	12,689,791		$	10,448,383		$	11,421,426
Ratio (annualized) to average originated loans:
Originated net charge-offs	0.13		%	0.31		%	0.21		%
Provision for originated loan losses	0.19		%	0.14		%	0.20		%
Originated Loans, period-end	$	12,856,037		$	10,826,913		$	12,493,812

Allowance for credit losses:	$	101,875		$	99,597		$	101,544
To (annualized) net charge-offs	6.00			3.06			4.24
Allowance for originated loan losses:
To period-end originated loans	0.76		%	0.85		%	0.77		%
To (annualized) net originated charge-offs	5.74			2.83			3.99


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

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

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SOURCE FirstMerit Corporation

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