FirstMerit Reports Second Quarter 2014 EPS of $0.35 Per Share

News provided by

Jul 22, 2014, 07:30 ET

AKRON, Ohio, July 22, 2014 /PRNewswire/ --

Quarterly Highlights include:

Profitability Sustained: 61^st consecutive quarter of profitability.
Organic growth continued: Total loan growth of $361.0 million, or 2.47% from the prior quarter.
Credit quality remained solid: Net charge-offs to average originated loans of 0.22%; 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 ratio at 7.89%.

FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported second quarter 2014 net income of $59.5 million, or $0.35 per diluted share. This compares with $53.5 million, or $0.31 per diluted share, for the first quarter 2014 and $48.5 million, or $0.29 per diluted share, for the second quarter 2013. Pre-tax costs associated with branch closures of $4.0 million were recognized in the second quarter of 2014 and are included within noninterest income.

Returns on average common equity ("ROE") and average assets ("ROA") for the second quarter 2014 were 8.62% and 0.98%, respectively, compared with 7.93% and 0.90%, respectively, for the first quarter 2014 and 7.56% and 0.85%, respectively, for the second quarter 2013.

"Our second quarter 2014 results demonstrate solid execution on our strategies to grow organically, maintain strong asset quality and generate robust capital levels to both support profitable growth across our footprint and to allow us to pay a healthy dividend to our shareholders," said Paul Greig, chairman, president and CEO, FirstMerit Corporation.

"Acquired loans," as used herein, are those assumed in the Citizens acquisition. As used herein, "originated loans" refer to loans that have been originated in the normal course of business and "covered loans" refer to loans covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

Net Interest Income

Net interest income on a fully tax-equivalent ("TE") basis was $199.7 million in the second quarter 2014 compared with $197.9 million in the first quarter 2014 and $201.6 million in the second quarter 2013.

Net interest margin was 3.75% for the second quarter 2014 compared with 3.84% for the first quarter 2014 and 4.12% for the second quarter 2013. Second quarter 2014 net interest margin compression compared with the first quarter 2014 was primarily driven by declining volume in the acquired loan portfolio and lower investment portfolio yields, partially offset by increased volume of originated loans and day count.

Average originated loans were $11.1 billion during the second quarter 2014, an increase of $643.7 million, or 6.16%, compared with the first quarter 2014, and an increase of $2.2 billion, or 24.94%, compared with the second quarter 2013. Average originated commercial loans increased $365.5 million, or 5.36%, compared with the prior quarter, and increased $1.3 billion, or 22.01%, compared with the year-ago quarter.

Average deposits were $19.5 billion during the second quarter 2014, a decrease of $139.7 million, or 0.71%, compared with the first quarter 2014, and an increase of $1.2 billion, or 6.34%, compared with the second quarter 2013. During the second quarter 2014, average core deposits, which exclude time deposits, decreased $70.6 million, or 0.41%, compared with the first quarter 2014 and increased $1.5 billion, or 9.64%, compared with the second quarter 2013. Average time deposits decreased $69.1 million, or 2.88%, and decreased $346.5 million, or 12.93%, respectively, over the prior and year-ago quarters. For the second quarter 2014, average core deposits accounted for 88.03% of total average deposits, compared with 87.76% for the first quarter 2014 and 85.38% for the second quarter 2013.

Average investments increased $170.4 million, or 2.63%, compared with the first quarter 2014 and increased $725.2 million, or 12.23% compared with the second quarter 2013.

Noninterest Income

Noninterest income, excluding gains and losses on securities transactions, for the second quarter 2014 was $72.5 million, an increase of $5.3 million, or 7.83%, from the first quarter 2014 and an increase of $0.2 million, or 0.34%, from the second quarter 2013. Included in noninterest income in the second quarter 2014 was $4.1 million of gains on covered loans paid in full, compared to $1.6 million and $1.0 million in the first quarter 2014 and second quarter 2013, respectively. Also included in noninterest income in the second quarter of 2014 were costs of $4.0 million associated with branch closures.

Noninterest income, excluding net securities gains and losses, as a percentage of net revenue for the second quarter 2014 was 26.63% compared with 25.36% for first quarter 2014 and 26.38% for the second quarter 2013. Net revenue is defined as net interest income, on an TE basis, plus other income, excluding gains and losses from securities sales.

Noninterest Expense

Noninterest expense for the second quarter 2014 was $167.4 million, a decrease of $1.9 million, or 1.14%, from the first quarter 2014 and a decrease of $21.5 million, or 11.38%, from the second quarter 2013. Included in noninterest expense in the first quarter 2014 and second quarter 2013 were merger related costs associated with the Citizens acquisition of $1.0 million and $32.1 million, respectively. The Corporation's efficiency ratio was 60.43% for the second quarter 2014, compared with 62.77% for the first quarter 2014 and 68.10% for the second quarter 2013.

The effective tax rate was 30.37% for the second quarter 2014 compared with 30.85% for the first quarter 2014 and 32.02% for the second quarter 2013.

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 $6.2 million, or 0.22% of average originated loans in the second quarter 2014, compared with $8.0 million, or 0.31% of average originated loans, in the first quarter 2014 and $3.3 million, or 0.15% of average originated loans, in the second quarter 2013.

Nonperforming assets totaled $60.9 million at June 30, 2014, a decrease of $1.8 million, or 2.85%, compared with March 31, 2014 and a decrease of $5.3 million, or 7.94%, compared with June 30, 2013. Nonperforming assets at June 30, 2014 represented 0.53% of period-end originated loans plus other real estate compared with 0.58% at March 31, 2014 and 0.72% at June 30, 2013.

The allowance for originated loan losses totaled $92.0 million at June 30, 2014. At June 30, 2014, the allowance for originated loan losses was 0.80% of period-end originated loans compared with 0.85% at March 31, 2014 and 1.08% at June 30, 2013. 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 0.86% of period end originated loans at June 30, 2014, compared with 0.92% at March 31, 2014 and 1.17% at June 30, 2013. The allowance for credit losses to nonperforming loans was 269.61% at June 30, 2014, compared with 229.23% at March 31, 2014 and 234.82% at June 30, 2013.

Balance Sheet

The Corporation's total assets at June 30, 2014 were $24.6 billion, an increase of $65.8 million, or 0.27%, compared with March 31, 2014 and an increase of $1.0 billion, or 4.37%, compared with June 30, 2013.

Total deposits were $19.3 billion at June 30, 2014, a decrease of $513.3 million, or 2.59%, from March 31, 2014 and an increase of $178.7 million, or 0.93%, from June 30, 2013. Core deposits totaled $17.0 billion at June 30, 2014, a decrease of $397.7 million, or 2.28%, from March 31, 2014 and an increase of $727.2 million, or 4.46%, from June 30, 2013.

Shareholders' equity was $2.8 billion as of June 30, 2014, and $2.7 billion as of March 31, 2014 and June 30, 2013. The Corporation maintained a strong capital position as tangible common equity to assets was 7.89% at June 30, 2014, compared with 7.69% at March 31, 2014 and 7.58% at June 30, 2013. The common share cash dividend paid in the second quarter 2014 was $0.16 per share.

Second Quarter 2014 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 second 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: 71490061. A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on July 22, 2014 through August 5, 2014 by dialing (855) 859-2056, and entering the PIN: 71490061. 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/personal/investors.aspx; click on the Presentations link to access the slide presentation.

Non-GAAP Measures: This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation's management uses these non-GAAP measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes that these non-GAAP 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.

About FirstMerit Corporation

FirstMerit Corporation is a diversified financial services company headquartered in Akron, Ohio, with assets of approximately $24.6 billion as of June 30, 2014, and 379 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 generally accepted accounting principles to evaluate subsequent events through the filing of the its consolidated financial statements for the quarter ended June 30, 2014 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 June 30, 2014 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, the Corporation's ability to realize the synergies and benefits contemplated by the acquisition of Citizens, such as it being accretive to earnings and expanding the Corporation's geographic presence, in the time frame anticipated or at all, 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
Analysts: Thomas O'Malley/Investor Relations Officer
Phone: 330.384.7109
Media Contact: Robert Townsend/Media Relations Officer
Phone: 330.384.7075

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited)							Quarters
(Dollars in thousands, except per share amounts)	2014			2014			2013			2013			2013
	2nd qtr			1st qtr			4th qtr			3rd qtr			2nd qtr
EARNINGS
Net interest income TE ^(a)	$	199,666		$	197,854		$	202,145		$	207,079		$	201,605
TE adjustment ^(a)	4,089			3,954			4,077			3,739			3,574
Provision for originated loan losses	5,993			3,654			1,552			2,523			3,151
Provision for acquired loan losses	5,815			7,827			5,515			2,033			—
Provision for covered loan losses	3,445			3,055			2,983			1,823			4,158
Noninterest income	72,560			67,270			72,420			71,090			69,439
Noninterest expense	167,400			169,331			178,620			210,599			188,888
Net income	59,519			53,455			57,174			40,715			48,450
Diluted EPS ^(c)	0.35			0.31			0.33			0.23			0.29
PERFORMANCE RATIOS
Return on average assets (ROA)	0.98		%	0.90		%	0.94		%	0.67		%	0.85		%
Return on average equity (ROE)	8.62		%	7.93		%	8.48		%	6.07		%	7.56		%
Return on average tangible common equity ^(d)	12.92		%	11.98		%	12.96		%	9.29		%	11.49		%
Net interest margin TE ^(a)	3.75		%	3.84		%	3.89		%	4.05		%	4.12		%
Efficiency ratio ^(e)	60.43		%	62.77		%	64.08		%	74.64		%	68.10		%
Number of full-time equivalent employees	4,392			4,521			4,570			4,666			4,619
MARKET DATA
Book value per common share	$	16.88		$	16.62		$	16.38		$	16.08		$	16.06
Tangible book value per common share ^(d)	11.33			11.03			10.77			10.47			10.43
Period end common share market value	19.75			20.83			22.23			21.72			20.03
Market as a % of book	117		%	125		%	136		%	135		%	125		%
Cash dividends per common share	$	0.16		$	0.16		$	0.16		$	0.16		$	0.16
Common Stock dividend payout ratio	45.71		%	51.61		%	48.48		%	69.57		%	55.17		%
Average basic common shares	165,335			165,060			165,054			165,044			157,863
Average diluted common shares	166,147			166,004			166,097			165,874			158,390
Period end common shares	165,393			165,087			165,056			165,045			165,045
Common shares repurchased	186			51			17			7			168
Common Stock market capitalization	$	3,266,512		$	3,438,762		$	3,669,195		$	3,584,777		$	3,305,851
ASSET QUALITY (excluding acquired and covered loans) ^(b)
Gross charge-offs	$	11,148		$	13,160		$	9,913		$	8,515		$	10,969
Net charge-offs	6,159			8,022			3,359			2,877			3,349
Allowance for originated loan losses	91,950			92,116			96,484			98,291			98,645
Reserve for unfunded lending commitments	7,107			7,481			7,907			8,493			8,114
Nonperforming assets (NPAs)	60,922			62,711			60,883			55,426			66,177
Net charge-offs to average loans ratio	0.22		%	0.31		%	0.13		%	0.12		%	0.15		%
Allowance for originated loan losses to period-end loans	0.80		%	0.85		%	0.94		%	1.00		%	1.08		%
Allowance for credit losses to period-end loans	0.86		%	0.92		%	1.02		%	1.09		%	1.17		%
NPAs to loans and other real estate	0.53		%	0.58		%	0.60		%	0.57		%	0.72		%
Allowance for originated loan losses to nonperforming loans	250.27		%	212.01		%	228.62		%	276.19		%	216.97		%
Allowance for credit losses to nonperforming loans	269.61		%	229.23		%	247.35		%	300.06		%	234.82		%
CAPITAL & LIQUIDITY
Period end tangible common equity to assets ^(d)	7.89		%	7.69		%	7.70		%	7.41		%	7.58		%
Average equity to assets	11.40		%	11.32		%	11.12		%	11.08		%	11.28		%
Average equity to total loans	18.90		%	19.04		%	18.81		%	18.97		%	18.95		%
Average total loans to deposits	75.15		%	73.11		%	72.84		%	72.11		%	74.04		%
AVERAGE BALANCES
Assets	$	24,291,276		$	24,144,570		$	24,034,846		$	24,013,594		$	22,810,702
Deposits	19,496,795			19,636,506			19,517,476			19,456,231			18,334,244
Originated loans	11,092,101			10,448,383			9,988,587			9,377,826			8,877,754
Acquired loans, including covered loans, less loss share receivable	3,558,810			3,907,802			4,227,693			4,652,101			4,696,740
Earning assets	21,367,496			20,903,863			20,593,750			20,276,825			19,609,974
Shareholders' equity	2,768,352			2,733,226			2,673,635			2,661,546			2,571,964
ENDING BALANCES
Assets	$	24,564,431		$	24,498,661		$	23,912,028		$	24,137,730		$	23,534,873
Deposits	19,298,396			19,811,674			19,533,601			19,489,533			19,119,722
Originated loans	11,467,193			10,826,913			10,213,387			9,789,139			9,132,625
Acquired loans, including covered loans, less loss share receivable	3,458,453			3,726,952			4,025,758			4,401,711			4,926,888
Goodwill	741,740			741,740			741,740			741,740			741,740
Intangible assets	76,886			79,819			82,755			85,447			88,419
Earning assets	21,789,773			21,715,302			21,048,910			21,297,250			20,772,749
Total shareholders' equity	2,791,738			2,742,966			2,702,894			2,654,645			2,650,909
NOTES:

(a) - 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 Comprehensive Income.

(b) - 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 covered assets are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.

(c) - 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.

(d) - Tangible book value per common share is a non-GAAP financial measure and is calculated based on tangible common equity divided by period end common shares outstanding. Tangible common equity excludes goodwill, intangible assets, and preferred stock. Management believes this non-GAAP measure serves as a useful tool to help evaluate the strength and discipline of a company's capital management strategies and as an additional, conservative measure of total company value.

(e) - The efficiency ratio is calculated as noninterest expense divided by total revenue, excluding net gains on the sale of securities of $0.1 million and $0.1 million in the quarters ended June 30, 2014 and March 31, 2014, respectively, and a net loss of $2.8 million in the quarter ended June 30, 2013.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)				June 30,		December 31,		June 30,
(Unaudited, except December 31, 2013, which is derived from the audited financial statements)				2014		2013		2013
ASSETS
	Cash and due from banks			$	523,027	$	571,171	$	421,836
	Interest-bearing deposits in banks			119,543		346,651		487,654
		Total cash and cash equivalents		642,570		917,822		909,490
	Investment securities:
		Held-to-maturity		3,052,118		2,935,688		2,551,860
		Available-for-sale		3,478,420		3,273,174		3,299,392
		Other investments		148,433		180,803		267,565
	Loans held for sale			21,632		11,622		22,855
	Loans			14,969,627		14,300,972		14,143,423
	Allowance for loan losses			(142,036)		(141,252)		(147,714)
	Net loans			14,827,591		14,159,720		13,995,709
	Premises and equipment, net			315,770		327,054		316,877
	Goodwill			741,740		741,740		741,740
	Intangible assets			76,886		82,755		88,419
	Covered other real estate			51,072		65,234		67,786
	Accrued interest receivable and other assets			1,208,199		1,216,416		1,273,180
			Total assets	$	24,564,431	$	23,912,028	$	23,534,873
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
		Noninterest-bearing		$	5,525,484	$	5,459,029	$	5,277,647
		Interest-bearing		3,028,479		3,026,735		2,504,368
		Savings and money market accounts		8,476,096		8,587,167		8,520,806
		Certificates and other time deposits		2,268,337		2,460,670		2,816,901
			Total deposits	19,298,396		19,533,601		19,119,722
		Federal funds purchased and securities sold under agreements to repurchase		1,218,855		851,535		844,871
		Wholesale borrowings		649,021		200,600		201,337
		Long-term debt		324,433		324,428		324,422
		Accrued taxes, expenses, and other liabilities		281,988		298,970		393,612
			Total liabilities	21,772,693		21,209,134		20,883,964
		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: June 30, 2014 and December 31, 2013 - 170,183,540 shares; June 30, 2013 - 170,179,911 shares	127,937		127,937		127,937
			Capital surplus	1,387,253		1,390,643		1,386,063
			Accumulated other comprehensive loss	(39,507)		(66,876)		(71,897)
			Retained earnings	1,335,371		1,277,975		1,235,530
			Treasury stock, at cost: June 30, 2014 - 4,790,517 December 31, 2013 - 5,127,332 shares; June 30, 2013 - 5,134,463 shares	(122,316)		(129,785)		(129,724)
			Total shareholders' equity	2,791,738		2,702,894		2,650,909
			Total liabilities and shareholders' equity	$	24,564,431	$	23,912,028	$	23,534,873



FIRSTMERIT CORPORATION AND SUBSIDIARIES Period End Loans by Product Type (Unaudited) (Dollars in thousands)
	As of June 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		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⁾		Covered Loans ⁽²⁾		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


	As of December 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,648,279	$	1,725,970	$	375,860	$	8,750,109
Mortgage	529,253		470,652		50,679		1,050,584
Installment	1,727,925		1,004,569		6,162		2,738,656
Home equity	920,066		294,424		97,442		1,311,932
Credit card	148,313		—		—		148,313
Leases	239,551		—		—		239,551
Subtotal	10,213,387		3,495,615		530,143		14,239,145
Loss share receivable	—		—		61,827		61,827
Total loans	10,213,387		3,495,615		591,970		14,300,972
Allowance for loan losses	(96,484)		(741)		(44,027)		(141,252)
Net loans	$	10,116,903	$	3,494,874	$	547,943	$	14,159,720


	As of September 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	6,420,369		$	1,963,746	$	422,225	$	8,806,340
Mortgage	487,283		466,594		52,796		1,006,673
Installment	1,647,095		1,080,298		6,361		2,733,754
Home equity	889,372		306,783		102,908		1,299,063
Credit card	145,113		—		—		145,113
Leases	199,907		—		—		199,907
Subtotal	9,789,139		3,817,421		584,290		14,190,850
Loss share receivable	—		—		69,986		69,986
Total loans	9,789,139		3,817,421		654,276		14,260,836
Allowance for loan losses	(98,291)		—		(45,544)		(143,835)
Net loans	$	9,690,848	$	3,817,421	$	608,732	$	14,117,001


	As of June 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,997,812	$	2,267,811	$	505,706	$	8,771,329
Mortgage	462,427		439,380		56,056		957,863
Installment	1,496,663		1,221,060		7,794		2,725,517
Home equity	845,051		322,111		106,970		1,274,132
Credit card	142,319		—		—		142,319
Leases	188,353		—		—		188,353
Subtotal	9,132,625		4,250,362		676,526		14,059,513
Loss share receivable	—		—		83,910		83,910
Total loans	9,132,625		4,250,362		760,436		14,143,423
Allowance for loan losses	(98,645)		—		(49,069)		(147,714)
Net loans	$	9,033,980	$	4,250,362	$	711,367	$	13,995,709

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.
(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
	Quarterly Periods
(Unaudited)	June 30,		March 31,		December 31,		September 30,		June 30,
(Dollars in thousands)	2014		2014		2013		2013		2013
ASSETS
Cash and cash equivalents	$	662,000	$	959,071	$	1,135,601	$	1,415,430	$	806,129
Investment securities:
Held-to-maturity	3,061,711		2,983,831		2,763,517		2,640,807		1,953,094
Available-for-sale	3,444,830		3,332,358		3,284,635		3,243,173		3,723,002
Other investments	148,440		168,389		253,490		267,743		253,649
Loans held for sale	10,196		6,804		10,248		18,265		17,394
Loans	14,702,319		14,412,481		14,281,860		14,106,837		13,662,835
Less: allowance for loan losses	146,368		138,891		177,628		146,509		146,705
Net loans	14,555,951		14,273,590		14,104,232		13,960,328		13,516,130
Total earning assets	21,367,496		20,903,863		20,593,750		20,276,825		19,609,974
Premises and equipment, net	323,175		327,845		326,632		322,236		299,979
Accrued interest receivable and other assets	2,084,973		2,092,682		2,156,491		2,145,612		2,241,325
TOTAL ASSETS	$	24,291,276	$	24,144,570	$	24,034,846	$	24,013,594	$	22,810,702
LIABILITIES
Deposits:
Noninterest-bearing	$	5,515,807	$	5,488,751	$	5,546,316	$	5,443,800	$	5,095,977
Interest-bearing	3,066,201		3,045,952		2,875,375		2,720,592		2,347,155
Savings and money market accounts	8,580,928		8,698,817		8,544,097		8,570,910		8,210,780
Certificates and other time deposits	2,333,859		2,402,986		2,551,688		2,720,929		2,680,332
Total deposits	19,496,795		19,636,506		19,517,476		19,456,231		18,334,244
Federal funds purchased and securities sold under
agreements to repurchase	1,024,598		884,065		948,959		1,011,991		927,451
Wholesale borrowings	373,213		276,324		200,622		201,012		237,887
Long-term debt	324,431		324,428		324,426		324,424		314,597
Total funds	21,219,037		21,121,323		20,991,483		20,993,658		19,814,179
Accrued taxes, expenses and other liabilities	303,887		290,021		369,728		358,390		424,559
Total liabilities	21,522,924		21,411,344		21,361,211		21,352,048		20,238,738
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		2,637
Common stock	127,937		127,937		127,937		127,937		127,937
Capital surplus	1,386,497		1,391,695		1,389,222		1,386,931		1,274,758
Accumulated other comprehensive loss	(44,952)		(52,940)		(79,431)		(82,598)		(29,033)
Retained earnings	1,319,515		1,293,379		1,262,705		1,256,052		1,225,380
Treasury stock	(123,645)		(129,845)		(129,798)		(129,776)		(129,715)
Total shareholders' equity	2,768,352		2,733,226		2,673,635		2,661,546		2,571,964
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	24,291,276	$	24,144,570	$	24,034,846	$	24,013,594	$	22,810,702



FIRSTMERIT CORPORATION AND SUBSIDIARIES Average Loans by Product Type (Unaudited) (Dollars in thousands)
	Quarter ended June 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		Covered 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⁾		Covered 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


	Quarter Ended December 31, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,526,243	$	1,866,064	$	400,105	$	8,792,412
Mortgage	509,685		472,771		51,304		1,033,760
Installment	1,697,651		1,032,245		6,279		2,736,175
Home equity	905,172		298,212		100,712		1,304,096
Credit card	146,805		—		—		146,805
Leases	203,031		—		—		203,031
Subtotal	9,988,587		3,669,292		558,401		14,216,280
Loss share receivable	—		—		65,580		65,580
Total loans	9,988,587		3,669,292		623,981		14,281,860
Less allowance for loan losses	134,890		(2,091)		44,829		177,628
Net loans	$	9,853,697	$	3,671,383	$	579,152	$	14,104,232


	Quarter Ended September 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	6,131,423	$	2,118,803	$	460,242	$	8,710,468
Mortgage	472,281		448,206		54,403		974,890
Installment	1,570,124		1,145,824		7,180		2,723,128
Home equity	866,001		312,681		104,762		1,283,444
Credit card	143,637		—		—		143,637
Leases	194,360		—		—		194,360
Subtotal	9,377,826		4,025,514		626,587		14,029,927
Loss share receivable	—		—		76,910		76,910
Total loans	9,377,826		4,025,514		703,497		14,106,837
Less allowance for loan losses	97,693		68		48,748		146,509
Net loans	$	9,280,133	$	4,025,446	$	654,749	$	13,960,328


	Quarter ended June 30, 2013
	Originated Loans		Acquired Loans ⁽¹⁾		Covered Loans ⁽²⁾		Total Loans
Commercial	$	5,888,935	$	2,141,015	$	575,859	$	8,605,809
Mortgage	453,813		408,723		56,825		919,361
Installment	1,388,765		1,107,076		7,912		2,503,753
Home equity	831,243		288,254		111,076		1,230,573
Credit card	141,785		—		—		141,785
Leases	173,213		—		—		173,213
Subtotal	8,877,754		3,945,068		751,672		13,574,494
Loss share receivable	—		—		88,341		88,341
Total loans	8,877,754		3,945,068		840,013		13,662,835
Less allowance for loan losses	99,411		—		47,294		146,705
Net loans	$	8,778,343	$	3,945,068	$	792,719	$	13,516,130

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.
(2) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

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
	June 30, 2014						March 31, 2014						June 30, 2013
(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	$	662,000					$	959,071					$	806,129
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	5,303,645		$	26,751	2.02	%	5,151,341		$	25,910	2.04	%	4,714,823		$	24,679	2.10	%
Obligations of states and political subdivisions (tax exempt)	767,731		8,753		4.57	%	739,875		8,613		4.72	%	710,579		9,217		5.20	%
Other securities and federal funds sold	583,605		5,501		3.78	%	593,362		6,112		4.18	%	504,343		4,459		3.55	%
Total investment securities and federal funds sold	6,654,981		41,005		2.47	%	6,484,578		40,635		2.54	%	5,929,745		38,355		2.59	%
Loans held for sale	10,196		89		3.51	%	6,804		59		3.53	%	17,394		143		3.30	%
Loans, including loss share receivable ⁽²⁾	14,702,319		173,320		4.73	%	14,412,481		171,136		4.82	%	13,662,835		178,847		5.25	%
Total earning assets	21,367,496		214,414		4.02	%	20,903,863		211,830		4.11	%	19,609,974		217,345		4.45	%
Total allowance for loan losses	(146,368)						(138,891)						(146,565)
Other assets	2,408,148						2,420,527						2,541,164
Total assets	$	24,291,276					$	24,144,570					$	22,810,702
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,515,807	—		—	%	$	5,488,751	—		—	%	$	5,095,977	—		—	%
Interest-bearing	3,066,201		745		0.10	%	3,045,952		737		0.10	%	2,347,155		656		0.11	%
Savings and money market accounts	8,580,928		5,477		0.26	%	8,698,817		5,559		0.26	%	8,210,780		6,469		0.32	%
Certificates and other time deposits	2,333,859		3,009		0.52	%	2,402,986		2,464		0.42	%	2,680,332		3,374		0.50	%
Total deposits	19,496,795		9,231		0.19	%	19,636,506		8,760		0.18	%	18,334,244		10,499		0.23	%
Securities sold under agreements to repurchase	1,024,598		233		0.09	%	884,065		197		0.09	%	927,451		329		0.14	%
Wholesale borrowings	373,213		1,391		1.49	%	276,324		1,129		1.66	%	237,887		1,169		1.97	%
Long-term debt	324,431		3,893		4.81	%	324,428		3,890		4.86	%	314,597		3,743		4.77	%
Total interest-bearing liabilities	15,703,230		14,748		0.38	%	15,632,572		13,976		0.36	%	14,718,202		15,740		0.43	%
Other liabilities	303,887						290,021						424,559
Shareholders' equity	2,768,352						2,733,226						2,571,964
Total liabilities and shareholders' equity	$	24,291,276					$	24,144,570					$	22,810,702
Net yield on earning assets	$	21,367,496	$	199,666	3.75	%	$	20,903,863	$	197,854	3.84	%	$	19,609,974	$	201,605	4.12	%
Interest rate spread					3.65	%					3.75	%					4.02	%

⁽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 $4.1 million, $4.0 million and $3.6 million for the three months ended June 30, 2014,

March 31, 2014 and June 30, 2013, respectively.

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

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

	Six Months Ended						Six Months Ended
	June 30, 2014						June 30, 2013
(Unaudited)	Average				Average		Average				Average
(Dollars in thousands)	Balance		Interest ⁽¹⁾		Rate		Balance		Interest ⁽¹⁾		Rate
ASSETS
Cash and cash equivalents	$	809,715					$	601,649
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	5,227,913		$	52,661	2.03	%	3,757,748		$	40,974	2.20	%
Obligations of states and political subdivisions (tax exempt)	753,880		17,365		4.65	%	626,265		15,812		5.09	%
Other securities and federal funds sold	588,457		11,614		3.98	%	436,014		7,403		3.42	%
Total investment securities and federal funds sold	6,570,250		81,640		2.51	%	4,820,027		64,189		2.69	%
Loans held for sale	8,510		148		3.52	%	16,146		287		3.58	%
Loans, including loss share receivable ⁽²⁾	14,558,200		344,453		4.77	%	11,690,339		277,852		4.79	%
Total earning assets	21,136,960		426,241		4.07	%	16,526,512		342,328		4.18	%
Total allowance for loan losses	(142,649)						(144,164)
Other assets	2,412,433						1,930,584
Total assets	$	24,216,459					$	18,914,581
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,502,354	—		—	%	$	4,213,720	—		—	%
Interest-bearing	3,056,132		1,481		0.10	%	1,826,876		974		0.11	%
Savings and money market accounts	8,639,547		11,035		0.26	%	7,029,826		11,784		0.34	%
Certificates and other time deposits	2,368,231		5,473		0.47	%	2,009,671		5,437		0.55	%
Total deposits	19,566,264		17,989		0.19	%	15,080,093		18,195		0.24	%
Securities sold under agreements to repurchase	954,719		429		0.09	%	917,141		642		0.14	%
Wholesale borrowings	325,036		2,520		1.56	%	187,373		2,019		2.17	%
Long-term debt	324,430		7,783		4.84	%	235,491		5,491		4.70	%
Total interest-bearing liabilities	15,668,095		28,721		0.37	%	12,206,378		26,347		0.44	%
Other liabilities	295,124						348,632
Shareholders' equity	2,750,886						2,145,851
Total liabilities and shareholders' equity	$	24,216,459					$	18,914,581
Net yield on earning assets	$	21,136,960	$	397,520	3.79	%	$	16,526,512	$	315,981	3.86	%
Interest rate spread					3.70	%					3.74	%

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 $8.0 million and $6.6 million for the six months ended June 30, 2014 and June 30, 2013, respectively.

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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)				Quarters Ended				Six Months Ended
(Dollars in thousands except per share data)				June 30,				June 30,
				2014		2013		2014		2013
Interest income:
	Loans and loans held for sale			$	172,517	$	178,535	$	343,030	$	277,206
	Investment securities:
		Taxable		32,253		29,138		64,275		48,377
		Tax-exempt		5,555		6,098		10,895		10,143
		Total investment securities interest		37,808		35,236		75,170		58,520
			Total interest income	210,325		213,771		418,200		335,726
Interest expense:
	Deposits:
		Interest-bearing		745		656		1,481		974
		Savings and money market accounts		5,477		6,469		11,035		11,784
		Certificates and other time deposits		3,009		3,374		5,473		5,437
	Securities sold under agreements to repurchase			233		329		429		642
	Wholesale borrowings			1,391		1,169		2,520		2,019
	Long-term debt			3,893		3,743		7,783		5,491
		Total interest expense		14,748		15,740		28,721		26,347
		Net interest income		195,577		198,031		389,479		309,379
	Provision for loan losses			15,253		7,309		29,790		17,256
		Net interest income after provision for loan losses		180,324		190,722		359,689		292,123
Noninterest income:
	Trust department income			10,070		9,167		19,818		14,907
	Service charges on deposits			18,528		20,582		35,176		33,168
	Credit card fees			13,455		14,317		25,607		24,540
	ATM and other service fees			5,996		4,945		11,816		8,280
	Bank owned life insurance income			4,040		3,641		7,622		8,538
	Investment services and insurance			3,852		3,429		7,368		5,844
	Investment securities gains/(losses), net			80		(2,794)		136		(2,803)
	Loan sales and servicing income			4,462		7,985		8,192		15,848
	Other operating income			12,077		8,167		24,096		18,510
		Total noninterest income		72,560		69,439		139,831		126,832
Noninterest expenses:
	Salaries, wages, pension and employee benefits			89,465		105,099		178,478		163,005
	Net occupancy expense			14,347		13,346		31,361		21,628
	Equipment expense			12,267		10,309		24,178		17,659
	Stationery, supplies and postage			3,990		3,407		8,097		5,503
	Bankcard, loan processing and other costs			11,810		12,417		22,644		20,257
	Professional services			4,745		17,144		10,103		22,554
	Amortization of intangibles			2,933		2,411		5,869		2,728
	FDIC insurance expense			5,533		4,149		11,504		7,675
	Other operating expense			22,310		20,606		44,499		34,025
		Total noninterest expenses		167,400		188,888		336,733		295,034
Income before income tax expense				85,484		71,273		162,787		123,921
Income tax expense				25,965		22,823		49,813		38,125
			Net income	$	59,519	$	48,450	$	112,974	$	85,796
Less:			Net income allocated to participating shareholders	489		383		926		813
			Preferred stock dividends	1,469		1,469		2,938		2,399
Net income attributable to common shareholders				$	57,561	$	46,598	$	109,110	$	82,584
Net income used in diluted EPS calculation				$	57,561	$	46,598	$	109,110	$	82,584
Weighted average number of common shares outstanding - basic				165,335		157,863		165,198		133,909
Weighted average number of common shares outstanding - diluted				166,147		158,390		166,052		134,406
Basic earnings per common share				$	0.35	$	0.30	$	0.66	$	0.62
Diluted earnings per common share				$	0.35	$	0.29	$	0.66	$	0.61
Dividend per common share				$	0.16	$	0.16	$	0.32	$	0.32



FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)	Quarter Ended						Six Months Ended
(Dollars in thousands)	June 30, 2014						June 30, 2014
	Pretax		Tax		After-tax		Pre-tax		Tax		After-tax
Net Income	$	85,484	$	25,965	$	59,519	$	162,787	$	49,813	$	112,974
Other comprehensive income/(loss)
Unrealized gains and losses on securities available for sale:
Changes in unrealized securities' holding gains/(losses)	22,456		7,860		14,596		40,500		14,175		26,325
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity	(494)		(173)		(321)		(988)		(346)		(642)
Net losses/(gains) realized on sale of securities reclassified to noninterest income	(80)		(28)		(52)		(136)		(48)		(88)
Net change in unrealized gains/(losses) on securities available for sale	21,882		7,659		14,223		39,376		13,781		25,595
Pension plans and other postretirement benefits:
Net gains/(losses) arising during the period	—		—		—		—		—		—
Amortization of prior service cost reclassified to other noninterest expense	1,631		571		1,060		1,631		571		1,060
Amortization of actuarial gain	1,097		383		714		1,097		383		714
Net change from defined benefit pension plans	2,728		954		1,774		2,728		954		1,774
Total other comprehensive gains/(losses)	24,610		8,613		15,997		42,104		14,735		27,369
Comprehensive income	$	110,094	$	34,578	$	75,516	$	204,891	$	64,548	$	140,343
	Quarter Ended						Six Months Ended
	June 30, 2013						June 30, 2013
	Pretax		Tax		After-tax		Pretax		Tax		After-tax
Net Income	$	71,273	$	22,823	$	48,450	$	123,921	$	38,125	$	85,796
Other comprehensive income (loss)
Unrealized gains and losses on securities available for sale:
Changes in unrealized securities' holding gains/(losses)	(75,729)		(26,505)		(49,224)		(87,362)		(30,577)		(56,785)
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred into available-for-sale from held-to-maturity	(568)		(199)		(369)		(1,120)		(392)		(728)
Net losses/(gains) realized on sale of securities reclassified to noninterest income	2,794		978		1,816		2,803		981		1,822
Net change in unrealized gains/(losses) on securities available for sale	(73,503)		(25,726)		(47,777)		(85,679)		(29,988)		(55,691)
Pension plans and other postretirement benefits:
Net gains/(losses) arising during the period	—		—		—		—		—		—
Amortization of prior service cost reclassified to other noninterest expense	—		—		—		—		—		—
Amortization of actuarial gain	—		—		—		—		—		—
Net change from defined benefit pension plans	—		—		—		—		—		—
Total other comprehensive gains/(losses)	(73,503)		(25,726)		(47,777)		(85,679)		(29,988)		(55,691)
Comprehensive income	$	(2,230)	$	(2,903)	$	673	$	38,242	$	8,137	$	30,105

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

	Quarterly Results
(Unaudited)	2014		2014		2013		2013		2013
(Dollars in thousands, except share data)	2nd qtr		1st qtr		4th qtr		3rd qtr		2nd qtr
Loans and loans held for sale	$	172,517	$	170,514	$	176,559	$	182,107	$	178,535
Investment securities	37,808		37,362		36,021		35,390		35,236
Total interest income	210,325		207,876		212,580		217,497		213,771
Interest expense
Deposits:
Interest-bearing	745		737		759		809		656
Savings and money market accounts	5,477		5,559		6,127		6,495		6,469
Certificates and other time deposits	3,009		2,464		2,500		1,712		3,374
Securities sold under agreements to repurchase	233		197		291		306		329
Wholesale borrowings	1,391		1,129		938		936		1,169
Long-term debt	3,893		3,890		3,897		3,899		3,743
Total interest expense	14,748		13,976		14,512		14,157		15,740
Net interest income	195,577		193,900		198,068		203,340		198,031
Provision for loan losses	15,253		14,536		10,050		6,379		7,309
Net interest income after provision for loan losses	180,324		179,364		188,018		196,961		190,722
Noninterest income:
Trust department income	10,070		9,748		10,255		9,608		9,167
Service charges on deposits	18,528		16,648		19,084		22,146		20,582
Credit card fees	13,455		12,152		12,414		13,588		14,317
ATM and other service fees	5,996		5,819		5,659		5,216		4,945
Bank owned life insurance income	4,040		3,582		4,037		4,351		3,641
Investment services and insurance	3,852		3,516		3,530		3,403		3,429
Investment securities gains/(losses), net	80		56		—		—		(2,794)
Loan sales and servicing income	4,462		3,730		3,577		3,644		7,985
Other operating income	12,077		12,019		13,864		9,134		8,167
Total noninterest income	72,560		67,270		72,420		71,090		69,439
Noninterest expenses:
Salaries, wages, pension and employee benefits	89,465		89,013		93,621		97,390		105,099
Net occupancy expense	14,347		17,014		14,066		13,816		13,346
Equipment expense	12,267		11,911		13,177		11,040		10,309
Stationery, supplies and postage	3,990		4,108		4,895		3,801		3,407
Bankcard, loan processing and other costs	11,810		10,834		10,886		40,786		12,417
Professional services	4,745		5,359		8,358		9,768		17,144
Amortization of intangibles	2,933		2,936		2,692		2,972		2,411
FDIC insurance expense	5,533		5,971		5,106		4,925		4,149
Other operating expense	22,310		22,185		25,819		26,101		20,606
Total noninterest expenses	167,400		169,331		178,620		210,599		188,888
Income before income tax expense	85,484		77,303		81,818		57,452		71,273
Income tax expense	25,965		23,848		24,644		16,737		22,823
Net income	59,519		53,455		57,174		40,715		48,450
Less: Income allocated to participating shareholders	489		380		441		310		383
Preferred stock dividends	1,469		1,469		1,469		1,469		1,469
Net income attributable to common shareholders	$	57,561	$	51,606	$	55,264	$	38,936	$	46,598
Net income used in diluted EPS calculation	$	57,561	$	51,606	$	55,264	$	38,936	$	46,598
Weighted-average number of common shares outstanding - basic	165,335		165,060		165,054		165,044		157,863
Weighted-average number of common shares outstanding- diluted	166,147		166,004		166,097		165,874		158,390
Basic earnings per common share	$	0.35	$	0.31	$	0.33	$	0.24	$	0.30
Diluted earnings per common share	$	0.35	$	0.31	$	0.33	$	0.23	$	0.29

FIRSTMERIT CORPORATION AND SUBSIDIARIES
ASSET QUALITY INFORMATION (excluding acquired loans and covered assets) (a)


	(Unaudited)															(Audited)
(Dollars in thousands, except ratios)	Quarterly Periods															Annual Period
	June 30,			March 31,			December 31,			September 30,			June 30,			December 31,
Allowance for Credit Losses	2014			2014			2013			2013			2013			2013
Allowance for originated loan losses, beginning of period	$	92,116		$	96,484		$	98,291		$	98,645		$	98,843		$	98,942
Provision for originated loan losses	5,993			3,654			1,552			2,523			3,151			13,034
Charge-offs	11,148			13,160			9,913			8,515			10,969			40,173
Recoveries	4,989			5,138			6,554			5,638			7,620			24,681
Net charge-offs	6,159			8,022			3,359			2,877			3,349			15,492
Allowance for originated loan losses, end of period	$	91,950		$	92,116		$	96,484		$	98,291		$	98,645		$	96,484
Reserve for unfunded lending commitments,
beginning of period	$	7,481		$	7,907		$	8,493		$	8,114		$	4,941		$	5,433
Provision for (relief of) credit losses	(374)			(426)			(586)			379			3,173			2,474
Reserve for unfunded lending commitments,
end of period	$	7,107		$	7,481		$	7,907		$	8,493		$	8,114		$	7,907
Allowance for Credit Losses	$	99,057		$	99,597		$	104,391		$	106,784		$	106,759		$	104,391
Ratios
Provision for loan losses to average loans	0.22		%	0.14		%	0.06		%	0.11		%	0.14		%	0.14		%
Net charge-offs to average loans	0.22		%	0.31		%	0.13		%	0.12		%	0.15		%	0.17		%
Allowance for loan losses to period-end loans	0.80		%	0.85		%	0.94		%	1.00		%	1.08		%	0.94		%
Allowance for credit losses to period-end loans	0.86		%	0.92		%	1.02		%	1.09		%	1.17		%	1.02		%
Allowance for loan losses to nonperforming loans	250.27		%	212.01		%	228.62		%	276.19		%	216.97		%	228.62		%
Allowance for credit losses to nonperforming loans	269.61		%	229.23		%	247.35		%	300.06		%	234.82		%	247.35		%
Asset Quality
Impaired originated loans:
Nonaccrual	$	21,072		$	27,122		$	25,674		$	19,140		$	28,935		$	25,674
Other nonperforming loans:
Nonaccrual	15,669			16,326			16,529			16,448			16,529			16,529
Total nonperforming loans	36,741			43,448			42,203			35,588			45,464			42,203
Other real estate ("ORE")	24,181			19,263			18,680			19,838			20,713			18,680
Total nonperforming assets ("NPAs")	$	60,922		$	62,711		$	60,883		$	55,426		$	66,177		$	60,883
NPAs to period-end loans + ORE	0.53		%	0.58		%	0.60		%	0.57		%	0.72		%	0.60		%
Accruing originated loans past due 90 days or more	$	15,643		$	11,860		$	11,176		$	12,452		$	11,760		$	11,176
(a) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and covered loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.



FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL

(Unaudited)
(Dollars in thousands)
	2014		2014		2013		2013		2013
QUARTERLY NONINTEREST INCOME DETAIL	2nd qtr		1st qtr		4th qtr		3rd qtr		2nd qtr
Trust department income	$	10,070	$	9,748	$	10,255	$	9,608	$	9,167
Service charges on deposits	18,528		16,648		19,084		22,146		20,582
Credit card fees	13,455		12,152		12,414		13,588		14,317
ATM and other service fees	5,996		5,819		5,659		5,216		4,945
Bank owned life insurance income	4,040		3,582		4,037		4,351		3,641
Investment services and insurance	3,852		3,516		3,530		3,403		3,429
Investment securities gains/(losses), net	80		56		—		—		(2,794)
Loan sales and servicing income	4,462		3,730		3,577		3,644		7,985
Other operating income	12,077		12,019		13,864		9,134		8,167
Total Noninterest Income	$	72,560	$	67,270	$	72,420	$	71,090	$	69,439

	2014		2014		2013		2013		2013
QUARTERLY NONINTEREST EXPENSE DETAIL	2nd qtr		1st qtr		4th qtr		3rd qtr		2nd qtr
Salaries and wages	$	69,892	$	71,669	$	76,685	$	79,369	$	85,680
Pension and employee benefits	19,573		17,344		16,936		18,021		19,419
Net occupancy expense	14,347		17,014		14,066		13,816		13,346
Equipment expense	12,267		11,911		13,177		11,040		10,309
Taxes, other than income taxes	2,576		2,774		2,618		2,785		2,891
Stationery, supplies and postage	3,990		4,108		4,895		3,801		3,407
Bankcard, loan processing and other costs	11,810		10,834		10,886		40,786		12,417
Advertising	3,801		3,516		4,855		4,432		3,745
Professional services	4,745		5,359		8,358		9,768		17,144
Telephone	2,857		2,908		3,427		3,326		2,728
Amortization of intangibles	2,933		2,936		2,692		2,972		2,411
FDIC insurance expense	5,533		5,971		5,106		4,925		4,149
Other operating expense	13,076		12,987		14,919		15,558		11,242
Total Noninterest Expense	$	167,400	$	169,331	$	178,620	$	210,599	$	188,888



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

(Unaudited)	Quarters Ended						Six Months Ended						Year Ended
(Dollars in thousands)	June 30,						June 30,						December 31,
	2014			2013			2014			2013			2013
Allowance for originated loan losses - beginning of period	$	92,116		$	98,843		$	96,484		$	98,942		$	98,942
Loans charged off:
Commercial	3,057			2,750			8,210			5,422			7,637
Mortgage	834			414			1,393			684			1,903
Installment	4,076			3,612			8,660			8,206			16,683
Home equity	1,204			1,133			2,042			2,439			5,036
Credit cards	1,311			1,459			2,766			2,862			5,541
Leases	—			1,237			—			1,237			1,237
Overdrafts	666			364			1,237			895			2,136
Total	11,148			10,969			24,308			21,745			40,173
Recoveries:
Commercial	404			3,762			1,433			5,007			9,012
Mortgage	67			51			105			94			230
Installment	2,728			2,728			5,466			5,197			10,459
Home equity	820			486			1,519			833			2,492
Credit cards	439			469			857			982			1,841
Manufactured housing	13			11			24			38			60
Leases	372			—			372			89			100
Overdrafts	146			113			351			249			487
Total	4,989			7,620			10,127			12,489			24,681
Net charge-offs	6,159			3,349			14,181			9,256			15,492
Provision for originated loan losses	5,993			3,151			9,647			8,959			13,034
Allowance for originated loan losses-end of period	$	91,950		$	98,645		$	91,950		$	98,645		$	96,484

Average originated loans	$	11,092,101		$	8,877,754		$	10,772,020		$	8,806,924		$	9,252,555
Ratio (annualized) to average originated loans:
Originated net charge-offs	0.22		%	0.15		%	0.27		%	0.21		%	0.17		%
Provision for originated loan losses	0.22		%	0.14		%	0.18		%	0.21		%	0.14		%
Originated Loans, period-end	$	11,467,193		$	9,132,625		$	11,467,193		$	9,132,625		$	10,213,387

Allowance for credit losses:	$	99,057		$	106,759		$	99,057		$	106,759		$	104,391
To (annualized) net charge-offs	4.01			7.95			3.46			5.72			6.74
Allowance for originated loan losses:
To period-end originated loans	0.80		%	1.08		%	0.80		%	1.08		%	0.94		%
To (annualized) net originated charge-offs	3.72			7.34			3.22			5.28			6.23

(a) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and covered loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends.