FirstMerit Reports Third Quarter 2015 EPS of $0.34 Per Share

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Oct 27, 2015, 07:30 ET

AKRON, Ohio, Oct. 27, 2015 /PRNewswire/ --

Quarterly Highlights include:

Profitability Sustained: 66^th consecutive quarter of profitability.
Loan growth continued: Total loan growth of $94.2 million, or 0.60% from the prior quarter.
Credit quality remained solid: Net charge-offs to average originated loans of 0.24%.
Balance sheet remained strong: Strong tangible common equity ratio¹ at 8.31%.

FirstMerit Corporation (Nasdaq: FMER) (the "Corporation") reported third quarter 2015 net income of $59.0 million, or $0.34 per diluted share. This compares with $56.6 million, or $0.33 per diluted share, for the second quarter 2015 and $63.9 million, or $0.37 per diluted share, for the third quarter 2014.

"FirstMerit's third quarter financial performance reflects success in our strategic focus on profitable organic growth across our markets. This past quarter we increased both our originated commercial and consumer loan portfolios while maintaining disciplined credit management. We also lowered expenses over the prior quarter and improved our efficiency ratio. Additionally, our solid results this past quarter supported a 6.25% increase in the quarterly dividend, which we announced in August," said Paul Greig, Chairman, President and CEO of FirstMerit Corporation.

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

Earnings Summary


										Change 3Q 2015 vs.
	2015			2015			2014			2015		2014
(Dollars in thousands, except per share amounts)	3rd qtr			2nd qtr			3rd qtr			2nd qtr		3rd qtr
Net interest income TE ¹	$	189,119		$	189,018		$	197,644		0.05	%	(4.31)	%
Diluted earnings per common share	0.34			0.33			0.37			3.03		(8.11)

Net interest margin on TE basis¹	3.33		%	3.39		%	3.60		%
Return on average assets	0.93			0.90			1.03
Return on average common equity	8.05			7.85			9.03
Return on average tangible common equity ¹	11.69			11.44			13.41

The increase in net interest income TE compared to the second quarter 2015 was attributable to higher earning assets and an additional day in the current quarter, partially offset by lower interest income on acquired and FDIC acquired loans. The net interest margin in the third quarter of 2015 declined six basis points over the prior quarter primarily from runoff in the acquired and FDIC acquired portfolios and slightly lower yields on the investment portfolio. Originated portfolio yields increased in the third quarter 2015 primarily due to an increased mix of consumer loans.

Loans

Average originated loans were $13.5 billion during the third quarter 2015, an increase of $435.3 million, or 3.32%, compared with the second quarter 2015, and an increase of $1.7 billion, or 14.51%, compared with the third quarter 2014. The loan growth was driven primarily by installment loans. Average originated installment loans increased $198.9 million, or 7.60%, compared with the prior quarter, and increased $646.0 million, or 29.75%, compared with the year-ago quarter. This growth is a result of introducing recreational lending into the Corporation's legacy markets and expanding indirect auto lending into Michigan and Wisconsin. Average originated commercial loans also increased $177.3 million, or 2.08%, compared with the prior quarter, and increased $822.6 million, or 10.46%, compared with the year-ago quarter.

Deposits

Average deposits were $20.0 billion during the third quarter 2015, an increase of $274.9 million, or 1.40%, compared with the second quarter 2015, and an increase of $425.8 million, or 2.18%, compared with the third quarter 2014. Average core deposits were $17.7 billion during the third quarter 2015, or 88.85% of total average deposits, an increase of $338.1 million, or 1.94%, compared with the second quarter 2015 and an increase of $535.8 million, or 3.12%, compared with the third quarter 2014. Partially offsetting the increases in average core deposits was a decrease in average time deposits of $63.1 million, or 2.76%, and $110.0 million, or 4.71%, over the prior and year-ago quarters, respectively.

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

Noninterest Income


										Change 3Q 2015 vs.
	2015			2015			2014			2015		2014
(Dollars in thousands)	3rd qtr			2nd qtr			3rd qtr			2nd qtr		3rd qtr
Trust department income	$	10,948		$	10,820		$	10,300		1.18	%	6.29	%
Service charges on deposits	17,295			16,704			18,684			3.54		(7.43)
Credit card fees	13,939			14,124			13,754			(1.31)		1.35
ATM and other service fees	6,518			6,345			6,182			2.73		5.44
Bank owned life insurance income	4,622			3,697			4,218			25.02		9.58
Investment services and insurance	4,032			3,871			3,606			4.16		11.81
Investment securities gains/(losses), net	41			567			14			(92.77)		192.86
Loan sales and servicing income	2,414			3,276			4,740			(26.31)		(49.07)
Other operating income	11,617			7,178			8,235			61.84		41.07
Total noninterest income	$	71,426		$	66,582		$	69,733		7.28	%	2.43	%

Noninterest income, excluding net securities gains, as a percentage of net revenue¹	27.40		%	25.88		%	26.08		%

Noninterest income, excluding gains and losses on securities transactions¹, for the third quarter 2015 was $71.4 million, an increase of $5.4 million, or 8.13%, from the second quarter 2015 and an increase of $1.7 million, or 2.39%, from the third quarter 2014. Fee based income increased across multiple areas including wealth management, treasury management, and service charges on deposits accounts. Loan sales and servicing income decreased from the prior quarter primarily due to interest rate fluctuations that negatively impacted the value of the mortgage servicing rights. Other operating income increased over the prior quarter as a result of higher loan commitment fees, fees on interest rate swaps, and income on resolution of FDIC acquired loans. Additionally, other operating income in the prior quarter was reduced by $1.8 million from losses on branch closures.

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

Noninterest Expense


										Change 3Q 2015 vs.
	2015			2015			2014			2015		2014
(Dollars in thousands)	3rd qtr			2nd qtr			3rd qtr			2nd qtr		3rd qtr
Salaries and wages	$	68,775		$	67,485		$	71,769		1.91	%	(4.17)	%
Pension and employee benefits	16,997			18,535			18,824			(8.30)	%	(9.71)	%
Net occupancy expense	13,540			13,727			13,887			(1.36)	%	(2.50)	%
Equipment expense	12,235			12,592			12,188			(2.84)	%	0.39	%
Taxes, other than federal income taxes	2,003			2,032			1,286			(1.43)	%	55.75	%
Stationary, supplies and postage	3,304			3,370			3,723			(1.96)	%	(11.25)	%
Bankcard, loan processing and other costs	12,335			12,461			11,151			(1.01)	%	10.62	%
Advertising	4,278			3,103			3,942			37.87	%	8.52	%
Professional services	5,154			5,358			5,270			(3.81)	%	(2.20)	%
Telephone	2,480			2,599			2,831			(4.58)	%	(12.40)	%
Amortization of intangibles	2,598			2,598			2,933			—	%	(11.42)	%
FDIC expense	5,234			5,077			2,988			3.09	%	75.17	%
Other operating expenses	11,809			12,737			12,353			(7.29)	%	(4.40)	%
Total noninterest expense	$	160,742		$	161,674		$	163,145		(0.58)	%	(1.47)	%

Efficiency ratio¹	60.71		%	62.37		%	59.92		%

Noninterest expense for the third quarter 2015 was $160.7 million, a decrease of $0.9 million, or 0.58%, from the second quarter 2015, and a decrease of $2.4 million, or 1.47%, from the third quarter 2014. Salaries and wages and employee benefits were down $4.8 million, or 5.3%, compared with the year ago-period reflecting 341, or 7.9%, fewer full time equivalent employees. Compared to the second quarter of 2015, salaries and wages increased $1.3 million, or 1.91%, reflecting the impact of merit increases and an additional day in the current quarter.

Provision for Income Taxes

The effective tax rate was 27.80% for the third quarter 2015, compared with 30.19% for the second quarter 2015, and 29.76% for the third quarter 2014.

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

Asset Quality (excluding acquired loans and covered assets)

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


										Change 3Q 2015 vs.
	2015			2015			2014			2015		2014
(Dollars in thousands)	3rd qtr			2nd qtr			3rd qtr			2nd qtr		3rd qtr
Net charge-offs	$	8,029		$	6,672		$	5,929		20.34	%	35.42	%
Net charge-offs on average originated loans	0.24		%	0.20		%	0.20		%
Nonperforming loans at period end	$	47,036		$	55,142		$	34,617		(14.70)	%	19.62	%
Nonperforming assets at period end	$	107,058		$	117,311		$	63,119		(8.74)	%	69.61	%
Allowance for loan losses	104,055			101,682			90,883			2.33	%	14.49	%
Allowance for loan losses to nonperforming loans	221.22		%	184.40		%	231.13		%
Provision for originated loan losses	$	10,402		$	10,809		$	4,862		(3.77)	%	113.94	%

Nonperforming assets totaled $107.1 million at September 30, 2015, a decrease of $10.3 million, or 8.74%, compared with June 30, 2015 and an increase of $43.9 million, or 69.61%, compared with September 30, 2014. Nonperforming assets at September 30, 2015 represented 0.78% of period-end originated loans plus noncovered other real estate compared with 0.87% at June 30, 2015 and 0.52% at September 30, 2014. Included in nonperforming assets as of September 30, 2015 and June 30, 2015 were $40.0 million and $42.0 million, respectively, of OREO no longer covered by FDIC loss share agreements.

The allowance for originated loan losses totaled $104.1 million at September 30, 2015. At September 30, 2015, the allowance for originated loan losses was 0.76% of period-end originated loans, compared with 0.76% at June 30, 2015 and 0.75% at September 30, 2014. The allowance for originated loan losses at September 30, 2015 compared to June 30, 2015 increased by $2.4 million and increased by $13.2 million compared to September 30, 2014. The allowance for credit losses is the sum of the allowance for originated loan losses and the reserve for unfunded lending commitments. The allowance for credit losses was 0.79% of period end originated loans at September 30, 2015, compared with 0.79% at June 30, 2015 and 0.81% at September 30, 2014. The allowance for credit losses to nonperforming loans was 228.82% at September 30, 2015, compared with 191.48% at June 30, 2015 and 248.85% at September 30, 2014.

Capital

Shareholders' equity was $2.9 billion, $2.9 billion and $2.8 billion as of September 30, 2015, June 30, 2015, and September 30, 2014, respectively. The Corporation maintained a strong capital position as tangible common equity¹ to assets was 8.31% at September 30, 2015, compared with 8.09% at June 30, 2015 and 8.01% at September 30, 2014. The common share cash dividend paid in the third quarter 2015 was $0.17 per share, an increase of $0.01 per share, or 6.25%, from the prior quarter.

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

On January 1, 2015, the Corporation became subject to the Basel III capital framework and standardized approach for calculating risk-weighted assets. At September 30, 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 13.71%, and a common equity tier 1 risk-based capital ratio of 10.58%.

Non-GAAP Financial Measures

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

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

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

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

Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis

		Quarters
(unaudited)		2015			2015			2015			2014			2014
(Dollars in thousands)		3rd qtr			2nd qtr			1st qtr			4th qtr			3rd qtr
Net interest income (GAAP)		$	185,323		$	185,118		$	185,623		$	192,511		$	193,578
Plus:	Fully taxable-equivalent adjustment	3,796			3,900			3,931			3,998			4,066
Net interest income on a fully taxable-equivalent basis (non-GAAP)		189,119			189,018			189,554			196,509			197,644
Average earning assets		22,548,977			22,352,721			22,100,417			21,920,889			21,804,243
Net interest margin on a fully taxable-equivalent basis (non-GAAP)		3.33		%	3.39		%	3.48		%	3.56		%	3.60		%


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

		Quarters
(unaudited)		2015			2015			2015			2014			2014
(Dollars in thousands)		3rd qtr			2nd qtr			1st qtr			4th qtr			3rd qtr
Noninterest expense (GAAP)		$	160,742		$	161,674		$	160,652		$	165,041		$	163,145
Less:	Intangible asset amortization	2,598			2,598			2,598			2,933			2,933
Adjusted noninterest expense (non-GAAP)		158,144			159,076			158,054			162,108			160,212
Noninterest income (GAAP)		71,426			66,582			65,847			71,960			69,733
Less:	Securities gains/(losses)	41			567			354			16			14
Adjusted noninterest income (non-GAAP)		71,385			66,015			65,493			71,944			69,719
Net interest income on a fully taxable-equivalent basis (non-GAAP)		189,119			189,018			189,554			196,509			197,644
Adjusted revenue (non-GAAP)		260,504			255,033			255,047			268,453			267,363
Efficiency ratio (non-GAAP)		60.71		%	62.37		%	61.97		%	60.39		%	59.92		%



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

		Quarters
(unaudited)		2015			2015			2015			2014			2014
(Dollars in thousands, except per share amounts)		3rd qtr			2nd qtr			1st qtr			4th qtr			3rd qtr
Shareholders' equity (GAAP)		$	2,937,300		$	2,887,957		$	2,888,786		$	2,834,281		$	2,820,431
Less:	Preferred stock	100,000			100,000			100,000			100,000			100,000
Common shareholders' equity (non-GAAP)		2,837,300			2,787,957			2,788,786			2,734,281			2,720,431
Less:	Intangible assets	63,226			65,824			68,422			71,020			73,953
	Goodwill	741,740			741,740			741,740			741,740			741,740
Tangible common equity (non-GAAP)		2,032,334			1,980,393			1,978,624			1,921,521			1,904,738
Total assets (GAAP)		$	25,246,917		$	25,297,014		$	25,118,120		$	24,902,347		$	24,608,207
Less:	Intangible assets	63,226			65,824			68,422			71,020			73,953
	Goodwill	741,740			741,740			741,740			741,740			741,740
Tangible assets (non-GAAP)		$	24,441,951		$	24,489,450		$	24,307,958		$	24,089,587		$	23,792,514
Period end common shares		165,759			165,773			165,453			165,390			165,384
Tangible book value per common share		$	12.26		$	11.95		$	11.96		$	11.62		$	11.52
Tangible common equity to tangible assets ratio (non-GAAP)		8.31		%	8.09		%	8.14		%	7.98		%	8.01		%

Subsequent Events

The Corporation is required under GAAP to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended September 30, 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 September 30, 2015 and will adjust amounts preliminarily reported, if necessary.

Third 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 third quarter results and highlights. To participate in the conference call, please dial (888) 708-5710 ten minutes before start time and provide the reservation number: 823849.

A replay of the conference call will be available at approximately 2:00 p.m. (Eastern Time) on October 27, 2015 through November 10, 2015 by dialing (888) 203-1112, and entering the PIN: 823849. 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 $25.2 billion as of September 30, 2015, and 367 banking offices and 399 ATM locations in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. FirstMerit provides a complete range of banking and other financial services to consumers and businesses through its core operations. Principal affiliates include: FirstMerit Bank, N.A. and FirstMerit Mortgage Corporation.

Forward-Looking Statements

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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Financial Highlights
(Unaudited)							Quarters
(Dollars in thousands, except per share amounts)	2015			2015			2015			2014			2014
	3rd qtr			2nd qtr			1st qtr			4th qtr			3rd qtr
EARNINGS
Net interest income TE ⁽¹⁾	$	189,119		$	189,018		$	189,554		$	196,509		$	197,644
TE adjustment ⁽¹⁾	3,796			3,900			3,931			3,998			4,066
Provision for originated loan losses	10,402			10,809			6,036			8,662			4,862
Provision/(recapture) for acquired loan losses	144			(952)			2,214			3,407			4,411
Provision/(recapture) for FDIC acquired loan losses	3,729			(891)			(2)			1,228			(81)
Noninterest income	71,426			66,582			65,847			71,960			69,733
Noninterest expense	160,742			161,674			160,652			165,041			163,145
Net income	59,012			56,584			57,139			61,079			63,898
Diluted EPS ⁽³⁾	0.34			0.33			0.33			0.36			0.37
PERFORMANCE RATIOS
Return on average assets (ROA)	0.93		%	0.90		%	0.93		%	0.98		%	1.03		%
Return on average equity (ROE)	8.05		%	7.85		%	8.08		%	8.50		%	9.03		%
Return on average tangible common equity ⁽¹⁾	11.69		%	11.44		%	11.85		%	12.52		%	13.41		%
Net interest margin TE ⁽¹⁾	3.33		%	3.39		%	3.48		%	3.56		%	3.60		%
Efficiency ratio ⁽¹⁾	60.71		%	62.37		%	61.97		%	60.39		%	59.92		%
Number of full-time equivalent employees	3,961			4,017			4,103			4,273			4,302
MARKET DATA
Book value per common share	$	17.72		$	17.42		$	17.46		$	17.14		$	17.05
Tangible book value per common share ⁽¹⁾	12.26			11.95			11.96			11.62			11.52
Period end common share market value	17.67			20.83			19.06			18.89			17.62
Market as a % of book	100		%	120		%	109		%	110		%	103		%
Cash dividends per common share	$	0.17		$	0.16		$	0.16		$	0.16		$	0.16
Common Stock dividend payout ratio	50.00		%	48.48		%	48.48		%	44.44		%	43.24		%
Average basic common shares	165,762			165,736			165,411			165,395			165,389
Average diluted common shares	166,058			166,277			166,003			165,974			165,804
Period end common shares	165,759			165,773			165,453			165,390			165,384
Common shares repurchased	20			211			66			15			10
Common Stock market capitalization	$	2,928,962		$	3,453,052		$	3,153,534		$	3,124,217		$	2,914,066
ASSET QUALITY (excluding acquired, FDIC acquired loans and covered OREO) ⁽²⁾
Gross charge-offs	$	13,398		$	11,298		$	8,567		$	9,205		$	11,410
Net charge-offs	8,029			6,672			4,187			3,849			5,929
Allowance for originated loan losses	104,055			101,682			97,545			95,696			90,883
Reserve for unfunded lending commitments	3,574			3,905			4,330			5,848			6,966
Nonperforming assets (NPAs)	107,058			117,311			68,606			55,038			63,119
Net charge-offs to average loans ratio	0.24		%	0.20		%	0.13		%	0.12		%	0.20		%
Allowance for originated loan losses to period-end loans	0.76		%	0.76		%	0.76		%	0.77		%	0.75		%
Allowance for credit losses to period-end loans	0.79		%	0.79		%	0.79		%	0.81		%	0.81		%
NPAs to loans and other real estate	0.78		%	0.87		%	0.53		%	0.44		%	0.52		%
Allowance for originated loan losses to nonperforming loans	221.22		%	184.40		%	211.66		%	276.44		%	231.13		%
Allowance for credit losses to nonperforming loans	228.82		%	191.48		%	221.06		%	293.34		%	248.85		%
CAPITAL & LIQUIDITY
Period end tangible common equity to assets ⁽¹⁾	8.31		%	8.09		%	8.14		%	7.98		%	8.01		%
Average equity to assets	11.54		%	11.51		%	11.51		%	11.55		%	11.42		%
Average equity to total loans	18.48		%	18.59		%	18.60		%	18.67		%	18.58		%
Average total loans to deposits	78.91		%	79.06		%	77.86		%	78.47		%	77.36		%
AVERAGE BALANCES
Assets	$	25,217,856		$	25,129,859		$	24,905,094		$	24,664,987		$	24,583,776
Deposits	19,957,586			19,682,662			19,788,925			19,450,647			19,531,800
Originated loans	13,528,268			13,092,972			12,689,791			12,306,171			11,814,314
Acquired loans, including FDIC acquired loans, less loss share receivable	2,219,488			2,468,035			2,717,884			2,956,867			3,295,547
Earning assets	22,548,977			22,352,721			22,100,417			21,920,889			21,804,243
Shareholders' equity	2,909,660			2,892,432			2,866,362			2,849,618			2,807,886
ENDING BALANCES
Assets	$	25,246,917		$	25,297,014		$	25,118,120		$	24,902,347		$	24,608,207
Deposits	19,821,916			19,673,850			19,925,595			19,504,665			19,366,911
Originated loans	13,648,325			13,355,912			12,856,037			12,493,812			12,071,759
Acquired loans, including FDIC acquired loans, less loss share receivable	2,140,029			2,337,378			2,614,847			2,810,302			3,139,521
Goodwill	741,740			741,740			741,740			741,740			741,740
Intangible assets	63,226			65,824			68,422			71,020			73,953
Earning assets	22,661,171			22,599,272			22,395,343			22,153,552			21,930,840
Total shareholders' equity	2,937,300			2,887,957			2,888,786			2,834,281			2,820,431
NOTES:

(1) Represents a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this press release for a reconciliation to GAAP financial measures.

(2) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and FDIC acquired loans and covered OREO are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. George Washington and Midwest non-single family loss share agreements with the FDIC expired at March 31, 2015 and June 30, 2015, respectively. As of September 30, 2015, $85.9 million of FDIC acquired loans remained covered by single family loss share agreements, providing considerable protection against credit risk.

(3) Net income used to determine diluted EPS was reduced by the cash dividends payable on the Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series A of approximately $1.5 million in each of the quarters presented.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)				September 30,		December 31,		September 30,
(Unaudited, except December 31, 2014, which is derived from the audited financial statements)				2015		2014		2014
ASSETS
	Cash and due from banks			$	357,397	$	480,998	$	429,699
	Interest-bearing deposits in banks			54,190		216,426		55,629
		Total cash and cash equivalents		411,587		697,424		485,328
	Investment securities:
		Held-to-maturity		2,728,638		2,903,609		3,002,262
		Available-for-sale		3,925,724		3,545,288		3,462,990
		Other investments		147,955		148,654		148,421
	Loans held for sale			5,384		13,428		19,512
	Loans			15,799,280		15,326,147		15,242,026
	Allowance for loan losses			(153,450)		(143,649)		(140,077)
	Net loans			15,645,830		15,182,498		15,101,949
	Premises and equipment, net			311,129		332,297		318,690
	Goodwill			741,740		741,740		741,740
	Intangible assets			63,226		71,020		73,953
	Covered other real estate			1,986		49,641		51,434
	Accrued interest receivable and other assets			1,263,718		1,216,748		1,201,928
			Total assets	$	25,246,917	$	24,902,347	$	24,608,207
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
		Noninterest-bearing		$	5,865,255	$	5,786,662	$	5,535,886
		Interest-bearing		3,335,190		3,028,888		3,043,952
		Savings and money market accounts		8,380,921		8,399,612		8,396,064
		Certificates and other time deposits		2,240,550		2,289,503		2,391,009
			Total deposits	19,821,916		19,504,665		19,366,911
		Federal funds purchased and securities sold under agreements to repurchase		1,208,275		1,272,591		1,273,290
		Wholesale borrowings		381,299		428,071		608,463
		Long-term debt		508,947		505,192		249,933
		Accrued taxes, expenses, and other liabilities		389,180		357,547		289,179
			Total liabilities	22,309,617		22,068,066		21,787,776
		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
			Common Stock, without par value; authorized 300,000,000 shares; issued: September 30, 2015, December 31, 2014 and September 30, 2014 - 170,183,515 shares	127,937		127,937		127,937
			Capital surplus	1,382,714		1,393,090		1,390,207
			Accumulated other comprehensive loss	(50,766)		(71,892)		(49,583)
			Retained earnings	1,492,245		1,404,717		1,371,453
			Treasury stock, at cost: September 30, 2015 - 4,424,712; December 31, 2014 - 4,793,566 shares; September 30, 2014 - 4,799,239 shares	(114,830)		(122,571)		(122,583)
			Total shareholders' equity	2,937,300		2,834,281		2,820,431
			Total liabilities and shareholders' equity	$	25,246,917	$	24,902,347	$	24,608,207

FIRSTMERIT CORPORATION AND SUBSIDIARIES Period End Loans by Product Type
(Unaudited)	As of September 30, 2015
(In thousands)	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	5,521,955	$	274,552	$	38,787	$	5,835,294
CRE	2,089,533		497,690		94,531		2,681,754
Construction	619,569		6,172		5,859		631,600
Leases	461,642		—		—		461,642
Total Commercial	8,692,699		778,414		139,177		9,610,290
Mortgage	673,591		341,278		36,362		1,051,231
Installment	2,899,559		611,061		2,156		3,512,776
Home equity	1,212,084		184,211		47,370		1,443,665
Credit card	170,392		—		—		170,392
Total Consumer	4,955,626		1,136,550		85,888		6,178,064
Subtotal	13,648,325		1,914,964		225,065		15,788,354
Loss share receivable	—		—		10,926		10,926
Total loans	13,648,325		1,914,964		235,991		15,799,280
Allowance for loan losses	(104,055)		(4,199)		(45,196)		(153,450)
Net loans	$	13,544,270	$	1,910,765	$	190,795	$	15,645,830


	As of June 30, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans⁽²⁾		Total Loans
C&I	$	5,471,363	$	337,423	$	38,138	$	5,846,924
CRE	2,138,373		533,945		101,808		2,774,126
Construction	586,894		6,230		5,875		598,999
Leases	436,702		—		—		436,702
Total Commercial	8,633,332		877,598		145,821		9,656,751
Mortgage	653,143		358,559		38,029		1,049,731
Installment	2,720,059		659,348		2,299		3,381,706
Home equity	1,180,802		200,179		55,545		1,436,526
Credit card	168,576		—		—		168,576
Total Consumer	4,722,580		1,218,086		95,873		6,036,539
Subtotal	13,355,912		2,095,684		241,694		15,693,290
Loss share receivable	—		—		11,820		11,820
Total loans	13,355,912		2,095,684		253,514		15,705,110
Allowance for loan losses	(101,682)		(4,950)		(41,627)		(148,259)
Net loans	$	13,254,230	$	2,090,734	$	211,887	$	15,556,851


	As of March 31, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	5,317,897	$	420,810	$	42,814	$	5,781,521
CRE	2,133,017		584,072		127,908		2,844,997
Construction	580,978		6,288		8,825		596,091
Leases	388,873		—		—		388,873
Total Commercial	8,420,765		1,011,170		179,547		9,611,482
Mortgage	639,980		378,192		40,470		1,058,642
Installment	2,500,288		717,693		4,781		3,222,762
Home equity	1,134,238		217,824		65,170		1,417,232
Credit card	160,766		—		—		160,766
Total Consumer	4,435,272		1,313,709		110,421		5,859,402
Subtotal	12,856,037		2,324,879		289,968		15,470,884
Loss share receivable	—		—		20,005		20,005
Total loans	12,856,037		2,324,879		309,973		15,490,889
Allowance for loan losses	(97,545)		(7,493)		(41,514)		(146,552)
Net loans	$	12,758,492	$	2,317,386	$	268,459	$	15,344,337


	As of December 31, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans⁽²⁾		Total Loans
C&I	$	5,175,201	$	449,254	$	48,837	$	5,673,292
CRE	2,117,118		630,674		153,508		2,901,300
Construction	537,766		6,971		9,262		553,999
Leases	370,179		—		—		370,179
Total Commercial	8,200,264		1,086,899		211,607		9,498,770
Mortgage	625,283		394,484		41,276		1,061,043
Installment	2,393,451		764,168		4,874		3,162,493
Home equity	1,110,336		233,629		73,365		1,417,330
Credit card	164,478		—		—		164,478
Total Consumer	4,293,548		1,392,281		119,515		5,805,344
Subtotal	12,493,812		2,479,180		331,122		15,304,114
Loss share receivable	—		—		22,033		22,033
Total loans	12,493,812		2,479,180		353,155		15,326,147
Allowance for loan losses	(95,696)		(7,457)		(40,496)		(143,649)
Net loans	$	12,398,116	$	2,471,723	$	312,659	$	15,182,498


	As of September 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans⁽²⁾		Total Loans
C&I	$	5,039,320	$	551,489	$	56,076	$	5,646,885
CRE	2,119,734		710,495		192,746		3,022,975
Construction	467,112		10,260		13,497		490,869
Leases	339,936		—		—		339,936
Total Commercial	7,966,102		1,272,244		262,319		9,500,665
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
Total Consumer	4,105,657		1,472,860		132,098		5,710,615
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

(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 and June 30, 2015. As of September 30, 2015, $85.9 million of FDIC acquired loans remained covered by single family loss share agreements, providing considerable protection against credit risk.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
	Three Months Ended
(Unaudited)	September 30,		June 30,		March 31,		December 31,		September 30,
(In thousands)	2015		2015		2015		2014		2014
ASSETS
Cash and cash equivalents	$	457,317	$	518,820	$	563,265	$	500,559	$	521,210
Investment securities:
Held-to-maturity	2,754,001		2,806,325		2,874,169		2,966,127		3,029,971
Available-for-sale	3,881,959		3,816,827		3,645,057		3,499,528		3,460,312
Other investments	147,961		148,577		148,532		148,636		148,427
Loans held for sale	4,929		3,631		5,478		16,708		17,433
Loans	15,760,127		15,577,361		15,427,181		15,289,890		15,148,100
Less: allowance for loan losses	147,136		146,558		144,363		138,540		140,026
Net loans	15,612,991		15,430,803		15,282,818		15,151,350		15,008,074
Total earning assets	22,548,977		22,352,721		22,100,417		21,920,889		21,804,243
Premises and equipment, net	313,336		320,492		322,431		321,187		317,366
Accrued interest receivable and other assets	2,045,362		2,084,384		2,063,344		2,060,892		2,080,983
TOTAL ASSETS	$	25,217,856	$	25,129,859	$	24,905,094	$	24,664,987	$	24,583,776
LIABILITIES
Deposits:
Noninterest-bearing	$	5,897,768	$	5,722,240	$	5,728,763	$	5,706,631	$	5,603,104
Interest-bearing	3,353,541		3,203,836		3,209,285		3,021,188		3,100,904
Savings and money market accounts	8,480,682		8,467,845		8,542,154		8,381,548		8,492,172
Certificates and other time deposits	2,225,595		2,288,741		2,308,723		2,341,280		2,335,620
Total deposits	19,957,586		19,682,662		19,788,925		19,450,647		19,531,800
Federal funds purchased and securities sold under
agreements to repurchase	1,109,924		1,285,920		1,024,863		1,241,948		1,182,507
Wholesale borrowings	377,594		393,379		350,991		450,587		438,941
Long-term debt	497,566		508,744		505,275		350,535		320,387
Total funds	21,942,670		21,870,705		21,670,054		21,493,717		21,473,635
Accrued taxes, expenses and other liabilities	365,526		366,722		368,678		321,652		302,255
Total liabilities	22,308,196		22,237,427		22,038,732		21,815,369		21,775,890
SHAREHOLDERS' EQUITY
Preferred stock	100,000		100,000		100,000		100,000		100,000
Common stock warrant	—		1,385		3,000		3,000		3,000
Common stock	127,937		127,937		127,937		127,937		127,937
Capital surplus	1,380,622		1,382,717		1,393,682		1,391,189		1,388,423
Accumulated other comprehensive loss	(63,402)		(51,571)		(58,025)		(38,827)		(41,963)
Retained earnings	1,479,181		1,447,195		1,422,067		1,388,661		1,352,867
Treasury stock	(114,678)		(115,231)		(122,299)		(122,342)		(122,378)
Total shareholders' equity	2,909,660		2,892,432		2,866,362		2,849,618		2,807,886
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	25,217,856	$	25,129,859	$	24,905,094	$	24,664,987	$	24,583,776

FIRSTMERIT CORPORATION AND SUBSIDIARIES Average Loans by Product Type (Unaudited)
(In thousands)	Three Months Ended September 30, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	5,503,191	$	291,727	$	38,332	$	5,833,250
CRE	2,139,943		516,945		96,739		2,753,627
Construction	599,652		6,200		5,916		611,768
Leases	441,513		—		—		441,513
Total Commercial	8,684,299		814,872		140,987		9,640,158
Mortgage	662,909		348,863		36,809		1,048,581
Installment	2,817,221		632,789		2,227		3,452,237
Home equity	1,194,165		190,947		51,994		1,437,106
Credit card	169,674		—		—		169,674
Total Consumer	4,843,969		1,172,599		91,030		6,107,598
Subtotal	13,528,268		1,987,471		232,017		15,747,756
Loss share receivable	—		—		12,371		12,371
Total loans	13,528,268		1,987,471		244,388		15,760,127
Less allowance for loan losses	102,153		4,143		40,840		147,136
Net loans	$	13,426,115	$	1,983,328	$	203,548	$	15,612,991


	Three Months ended June 30, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	5,362,893	$	376,541	$	42,100	$	5,781,534
CRE	2,156,511		554,681		112,035		2,823,227
Construction	579,249		6,258		8,082		593,589
Leases	408,384		—		—		408,384
Total Commercial	8,507,037		937,480		162,217		9,606,734
Mortgage	647,418		367,871		39,438		1,054,727
Installment	2,618,297		688,465		3,823		3,310,585
Home equity	1,156,019		209,185		59,556		1,424,760
Credit card	164,201		—		—		164,201
Total Consumer	4,585,935		1,265,521		102,817		5,954,273
Subtotal	13,092,972		2,203,001		265,034		15,561,007
Loss share receivable	—		—		16,354		16,354
Total loans	13,092,972		2,203,001		281,388		15,577,361
Less allowance for loan losses	98,529		7,434		40,595		146,558
Net loans	$	12,994,443	$	2,195,567	$	240,793	$	15,430,803


	Three Months Ended March 31, 2015
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	5,281,194	$	440,103	$	45,307	$	5,766,604
CRE	2,141,764		606,652		142,101		2,890,517
Construction	556,943		6,846		9,013		572,802
Leases	368,025		—		—		368,025
Total Commercial	8,347,926		1,053,601		196,421		9,597,948
Mortgage	631,761		386,033		40,800		1,058,594
Installment	2,424,956		742,095		4,822		3,171,873
Home equity	1,122,988		224,444		69,669		1,417,100
Credit card	162,160		—		—		162,160
Total Consumer	4,341,865		1,352,572		115,291		5,809,727
Subtotal	12,689,791		2,406,173		311,711		15,407,675
Loss share receivable	—		—		19,506		19,506
Total loans	12,689,791		2,406,173		331,217		15,427,181
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





	Three Months Ended December 31, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	5,112,469	$	491,419	$	49,902	$	5,653,790
CRE	2,131,879		672,099		172,327		2,976,305
Construction	490,533		7,018		9,302		506,853
Leases	351,222		—		—		351,222
Total Commercial	8,086,103		1,170,536		231,531		9,488,170
Mortgage	617,803		401,173		42,409		1,061,385
Installment	2,353,599		785,035		4,944		3,143,578
Home equity	1,087,123		242,878		78,361		1,408,362
Credit card	161,543		—		—		161,543
Total Consumer	4,220,068		1,429,086		125,714		5,774,868
Subtotal	12,306,171		2,599,622		357,245		15,263,038
Loss share receivable	—		—		26,852		26,852
Total loans	12,306,171		2,599,622		384,097		15,289,890
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


	Three Months Ended September 30, 2014
	Originated Loans		Acquired Loans ⁽¹⁾		FDIC Acquired Loans ⁽²⁾		Total Loans
C&I	$	4,983,014	$	610,765	$	54,075	$	5,647,854
CRE	2,115,834		750,808		202,781		3,069,423
Construction	436,000		11,530		14,443		461,973
Leases	326,840		—		—		326,840
Total Commercial	7,861,688		1,373,103		271,299		9,506,090
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
Total Consumer	3,952,626		1,514,971		136,174		5,603,771
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

(1) Loans assumed from Citizens. No allowance was brought forward on the date of acquisition in accordance with business combination accounting.

(2) Loans acquired in an FDIC-assisted transaction. Includes non-single family loans for which the loss share agreement expired on March 31, 2015 and June 30, 2015.

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

	Three months ended						Three months ended						Three months ended
	September 30, 2015						June 30, 2015						September 30, 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	$	457,317					$	518,820					$	521,210
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	5,474,222		$	27,507	1.99	%	5,452,598		$	27,098	1.99	%	5,276,354		$	26,502	1.99	%
Obligations of states and political subdivisions (tax exempt)	737,323		8,245		4.44	%	724,653		8,443		4.67	%	776,376		8,734		4.46	%
Other securities and federal funds sold	572,376		5,134		3.56	%	594,478		5,077		3.43	%	585,980		5,571		3.77	%
Total investment securities and federal funds sold	6,783,921		40,886		2.39	%	6,771,729		40,618		2.41	%	6,638,710		40,807		2.44	%
Loans held for sale	4,929		66		5.31	%	3,631		46		5.08	%	17,433		154		3.50	%
Loans, including loss share receivable⁽²⁾	15,760,127		162,903		4.10	%	15,577,361		162,610		4.19	%	15,148,100		171,302		4.49	%
Total earning assets	22,548,977		$	203,855	3.59	%	22,352,721		$	203,274	3.65	%	21,804,243		$	212,263	3.86	%
Total allowance for loan losses	(147,136)						(146,558)						(140,026)
Other assets	2,358,698						2,404,876						2,398,349
Total assets	$	25,217,856					$	25,129,859					$	24,583,776
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,897,768	$	—	—	%	$	5,722,240	$	—	—	%	$	5,603,104	$	—	—	%
Interest-bearing	3,353,541		750		0.09	%	3,203,836		783		0.10	%	3,100,904		755		0.10	%
Savings and money market accounts	8,480,682		5,639		0.26	%	8,467,845		5,588		0.26	%	8,492,172		5,570		0.26	%
Certificates and other time deposits	2,225,595		2,757		0.49	%	2,288,741		2,510		0.44	%	2,335,620		2,846		0.48	%
Total deposits	19,957,586		9,146		0.18	%	19,682,662		8,881		0.18	%	19,531,800		9,171		0.19	%
Securities sold under agreements to repurchase	1,109,924		254		0.09	%	1,285,920		329		0.10	%	1,182,507		268		0.09	%
Wholesale borrowings	377,594		1,171		1.23	%	393,379		1,129		1.15	%	438,941		1,397		1.26	%
Long-term debt	497,566		4,165		3.32	%	508,744		3,917		3.09	%	320,387		3,783		4.68	%
Total interest-bearing liabilities	16,044,902		14,736		0.36	%	16,148,465		14,256		0.35	%	15,870,531		14,619		0.37	%
Other liabilities	365,526						366,722						302,255
Shareholders' equity	2,909,660						2,892,432						2,807,886
Total liabilities and shareholders' equity	$	25,217,856					$	25,129,859					$	24,583,776
Net yield on earning assets	$	22,548,977	$	189,119	3.33	%	$	22,352,721	$	189,018	3.39	%	$	21,804,243	$	197,644	3.60	%
Interest rate spread					3.23	%					3.30	%					3.50	%

(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 $3.8 million, $3.9 million, and $4.1 million for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, 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

	Nine Months Ended						Nine Months Ended
	September 30, 2015						September 30, 2014
(Unaudited)	Average				Average		Average				Average
(Dollars in thousands)	Balance		Interest ⁽¹⁾		Rate		Balance		Interest ⁽¹⁾		Rate
ASSETS
Cash and cash equivalents	$	512,746					$	712,490
Investment securities and federal funds sold:
U.S. treasury securities and U.S. government agency obligations (taxable)	5,419,377		$	81,365	2.01	%	5,244,238		$	79,162	2.02	%
Obligations of states and political subdivisions (tax exempt)	731,726		25,835		4.72	%	761,461		26,100		4.58	%
Other securities and federal funds sold	590,458		15,401		3.49	%	587,622		17,185		3.91	%
Total investment securities and federal funds sold	6,741,561		122,601		2.43	%	6,593,321		122,447		2.48	%
Loans held for sale	4,678		169		4.83	%	11,517		302		3.51	%
Loans, including loss share receivable ⁽²⁾	15,589,444		487,805		4.18	%	14,756,994		515,757		4.67	%
Total earning assets	22,335,683		$	610,575	3.65	%	21,361,832		$	638,506	4.00	%
Total allowance for loan losses	(146,029)						(141,766)
Other assets	2,381,209						2,405,097
Total assets	$	25,083,609					$	24,337,653
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,783,542	$	—	—	%	$	5,536,306	$	—	—	%
Interest-bearing	3,256,082		2,300		0.09	%	3,071,220		2,236		0.10	%
Savings and money market accounts	8,496,668		16,774		0.26	%	8,589,882		16,605		0.26	%
Certificates and other time deposits	2,274,049		7,444		0.44	%	2,357,241		8,319		0.47	%
Total deposits	19,810,341		26,518		0.18	%	19,554,649		27,160		0.19	%
Securities sold under agreements to repurchase	1,140,547		826		0.10	%	1,031,483		697		0.09	%
Wholesale borrowings	374,085		3,459		1.24	%	363,422		3,917		1.44	%
Long-term debt	502,578		12,081		3.21	%	323,068		11,566		4.79	%
Total interest-bearing liabilities	16,044,009		42,884		0.36	%	15,736,316		43,340		0.37	%
Other liabilities	366,414						294,936
Shareholders' equity	2,889,644						2,770,095
Total liabilities and shareholders' equity	$	25,083,609					$	24,337,653
Net yield on earning assets	$	22,335,683	$	567,691	3.40	%	$	21,361,832	$	595,166	3.73	%
Interest rate spread					3.29	%					3.63	%

⁽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 $11.6 million and $12.1 million for the nine months ended September 30, 2015 and 2014, respectively.

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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)				Three Months Ended				Nine Months Ended
(In thousands, except per share amounts)				September 30,				September 30,
				2015		2014		2015		2014
Interest income:
	Loans and loans held for sale			$	162,204	$	170,648	$	485,615	$	513,678
	Investment securities:
		Taxable		32,641		32,072		96,766		96,347
		Tax-exempt		5,214		5,477		16,567		16,372
		Total investment securities interest		37,855		37,549		113,333		112,719
			Total interest income	200,059		208,197		598,948		626,397
Interest expense:
	Deposits:
		Interest-bearing		750		755		2,300		2,236
		Savings and money market accounts		5,639		5,570		16,774		16,605
		Certificates and other time deposits		2,757		2,846		7,444		8,319
	Federal funds purchased and securities sold under agreements to repurchase			254		268		826		697
	Wholesale borrowings			1,171		1,397		3,459		3,917
	Long-term debt			4,165		3,783		12,081		11,566
		Total interest expense		14,736		14,619		42,884		43,340
		Net interest income		185,323		193,578		556,064		583,057
	Provision for loan losses			14,275		9,192		31,489		38,982
		Net interest income after provision for loan losses		171,048		184,386		524,575		544,075
Noninterest income:
	Trust department income			10,948		10,300		31,917		30,118
	Service charges on deposits			17,295		18,684		49,667		53,860
	Credit card fees			13,939		13,754		40,712		39,361
	ATM and other service fees			6,518		6,182		18,962		17,998
	Bank owned life insurance income			4,622		4,218		11,911		11,840
	Investment services and insurance			4,032		3,606		11,607		10,974
	Investment securities gains/(losses), net			41		14		962		150
	Loan sales and servicing income			2,414		4,740		7,290		12,932
	Other operating income			11,617		8,235		30,827		32,331
		Total noninterest income		71,426		69,733		203,855		209,564
Noninterest expenses:
	Salaries, wages, pension and employee benefits			85,772		90,593		262,318		269,071
	Net occupancy expense			13,540		13,887		43,221		45,248
	Equipment expense			12,235		12,188		35,852		36,366
	Stationery, supplies and postage			3,304		3,723		10,202		11,820
	Bankcard, loan processing and other costs			12,335		11,151		35,935		33,795
	Professional services			5,154		5,270		14,522		15,373
	Amortization of intangibles			2,598		2,933		7,794		8,802
	FDIC insurance expense			5,234		2,988		15,478		14,492
	Other operating expense			20,570		20,412		57,746		64,911
		Total noninterest expenses		160,742		163,145		483,068		499,878
Income before income tax expense				81,732		90,974		245,362		253,761
Income tax expense				22,720		27,076		72,627		76,889
			Net income	$	59,012	$	63,898	$	172,735	$	176,872
Less:			Net income allocated to participating shareholders	477		519		1,401		1,433
			Preferred stock dividends	1,469		1,469		4,407		4,407
Net income attributable to common shareholders				$	57,066	$	61,910	$	166,927	$	171,032
Net income used in diluted EPS calculation				$	57,066	$	61,910	$	166,927	$	171,032
Weighted average number of common shares outstanding - basic				165,762		165,389		165,638		165,263
Weighted average number of common shares outstanding - diluted				166,058		165,804		165,939		165,916
Basic earnings per common share				$	0.34	$	0.37	$	1.01	$	1.03
Diluted earnings per common share				0.34		0.37		1.01		1.03
Cash dividends per common share				0.17		0.16		0.49		0.48

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)	Three Months Ended						Nine Months Ended
(In thousands)	September 30, 2015						September 30, 2015
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Net Income	$	81,732	$	22,720	$	59,012	$	245,362	$	72,627	$	172,735
Other comprehensive income/(loss)
Unrealized gains and losses on securities available for sale:
Changes in unrealized securities' holding gains/(losses)	25,691		8,991		16,700		31,166		10,908		20,258
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred from available-for-sale into held-to-maturity	(1,266)		(442)		(824)		(2,345)		(821)		(1,524)
Net losses/(gains) realized on sale of securities reclassified to noninterest income	(41)		(14)		(27)		(962)		(336)		(626)
Net change in unrealized gains/(losses) on securities available for sale	24,384		8,535		15,849		27,859		9,751		18,108
Pension plans and other postretirement benefits:
Amortization of actuarial gain	1,138		399		739		3,414		1,195		2,219
Amortization of prior service cost reclassified to other noninterest expense	410		144		266		1,230		431		799
Net change from defined benefit pension plans	1,548		543		1,005		4,644		1,626		3,018
Total other comprehensive gains/(losses)	25,932		9,078		16,854		32,503		11,377		21,126
Comprehensive income	$	107,664	$	31,798	$	75,866	$	277,865	$	84,004	$	193,861

	Three Months Ended						Nine Months Ended
	September 30, 2014						September 30, 2014
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Net Income	$	90,974	$	27,076	$	63,898	$	253,761	$	76,889	$	176,872
Other comprehensive income/(loss)
Unrealized gains and losses on securities available for sale:
Changes in unrealized securities' holding gains/(losses)	(16,207)		(5,672)		(10,535)		24,293		8,503		15,790
Changes in unrealized securities' holding gains/(losses) that result from securities being transferred from available-for-sale into held-to-maturity	(563)		(197)		(366)		(1,551)		(543)		(1,008)
Net losses/(gains) realized on sale of securities reclassified to noninterest income	(14)		(5)		(9)		(150)		(53)		(97)
Net change in unrealized gains/(losses) on securities available for sale	(16,784)		(5,874)		(10,910)		22,592		7,907		14,685
Pension plans and other postretirement benefits:
Amortization of actuarial gain	768		269		499		2,398		839		1,559
Amortization of prior service cost reclassified to other noninterest expense	516		181		335		1,614		565		1,049
Net change from defined benefit pension plans	1,284		450		834		4,012		1,404		2,608
Total other comprehensive gains/(losses)	(15,500)		(5,424)		(10,076)		26,604		9,311		17,293
Comprehensive income	$	75,474	$	21,652	$	53,822	$	280,365	$	86,200	$	194,165

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

	Quarterly Results
(In thousands, except per share amounts)	2015		2015		2015		2014		2014
(Unaudited)	3rd qtr		2nd qtr		1st qtr		4th qtr		3rd qtr
Interest Income:
Loans and loans held for sale	$	162,204	$	161,872	$	161,539	$	168,650	$	170,648
Investment securities	37,855		37,502		37,976		37,451		37,549
Total interest income	200,059		199,374		199,515		206,101		208,197
Interest expense:
Deposits:
Interest-bearing	750		783		767		727		755
Savings and money market accounts	5,639		5,588		5,547		5,496		5,570
Certificates and other time deposits	2,757		2,510		2,177		2,525		2,846
Federal funds purchased and securities sold under agreements to repurchase	254		329		243		294		268
Wholesale borrowings	1,171		1,129		1,160		1,292		1,397
Long-term debt	4,165		3,917		3,998		3,256		3,783
Total interest expense	14,736		14,256		13,892		13,590		14,619
Net interest income	185,323		185,118		185,623		192,511		193,578
Provision for loan losses	14,275		8,966		8,248		13,297		9,192
Net interest income after provision for loan losses	171,048		176,152		177,375		179,214		184,386
Noninterest income:
Trust department income	10,948		10,820		10,149		9,831		10,300
Service charges on deposits	17,295		16,704		15,668		17,597		18,684
Credit card fees	13,939		14,124		12,649		13,305		13,754
ATM and other service fees	6,518		6,345		6,099		6,181		6,182
Bank owned life insurance income	4,622		3,697		3,592		7,337		4,218
Investment services and insurance	4,032		3,871		3,704		4,171		3,606
Investment securities gains/(losses), net	41		567		354		16		14
Loan sales and servicing income	2,414		3,276		1,600		3,112		4,740
Other operating income	11,617		7,178		12,032		10,410		8,235
Total noninterest income	71,426		66,582		65,847		71,960		69,733
Noninterest expenses:
Salaries, wages, pension and employee benefits	85,772		86,020		90,526		89,899		90,593
Net occupancy expense	13,540		13,727		15,954		14,188		13,887
Equipment expense	12,235		12,592		11,025		12,133		12,188
Stationery, supplies and postage	3,304		3,370		3,528		3,767		3,723
Bankcard, loan processing and other costs	12,335		12,461		11,139		11,830		11,151
Professional services	5,154		5,358		4,010		6,440		5,270
Amortization of intangibles	2,598		2,598		2,598		2,933		2,933
FDIC insurance expense	5,234		5,077		5,167		5,989		2,988
Other operating expense	20,570		20,471		16,705		17,862		20,412
Total noninterest expenses	160,742		161,674		160,652		165,041		163,145
Income before income tax expense	81,732		81,060		82,570		86,133		90,974
Income tax expense	22,720		24,476		25,431		25,054		27,076
Net income	59,012		56,584		57,139		61,079		63,898
Less: Net income allocated to participating shareholders	477		467		407		496		519
Preferred stock dividends	1,469		1,469		1,469		1,469		1,469
Net income attributable to common shareholders	$	57,066	$	54,648	$	55,263	$	59,114	$	61,910
Net income used in diluted EPS calculation	$	57,066	$	54,648	$	55,263	$	59,114	$	61,910
Weighted-average number of common shares outstanding - basic	165,762		165,736		165,411		165,395		165,389
Weighted-average number of common shares outstanding- diluted	166,058		166,277		166,003		165,974		165,804
Basic earnings per common share	$	0.34	$	0.33	$	0.33	$	0.36	$	0.37
Diluted earnings per common share	$	0.34	$	0.33	$	0.33	$	0.36	$	0.37
Cash dividends per common share	$	0.17	$	0.16	$	0.16	$	0.16	$	0.16

FIRSTMERIT CORPORATION AND SUBSIDIARIES
NONINTEREST INCOME AND NONINTEREST EXPENSE DETAIL

(Unaudited)
(In thousands)
	2015		2015		2015		2014		2014
Noninterest income detail	3rd qtr		2nd qtr		1st qtr		4th qtr		3rd qtr
Trust department income	$	10,948	$	10,820	$	10,149	$	9,831	$	10,300
Service charges on deposits	17,295		16,704		15,668		17,597		18,684
Credit card fees	13,939		14,124		12,649		13,305		13,754
ATM and other service fees	6,518		6,345		6,099		6,181		6,182
Bank owned life insurance income	4,622		3,697		3,592		7,337		4,218
Investment services and insurance	4,032		3,871		3,704		4,171		3,606
Investment securities gains/(losses), net	41		567		354		16		14
Loan sales and servicing income	2,414		3,276		1,600		3,112		4,740
Other operating income	11,617		7,178		12,032		10,410		8,235
Total Noninterest Income	$	71,426	$	66,582	$	65,847	$	71,960	$	69,733

	2015		2015		2015		2014		2014
Noninterest expense detail	3rd qtr		2nd qtr		1st qtr		4th qtr		3rd qtr
Salaries and wages	$	68,775	$	67,485	$	71,914	$	71,638	$	71,769
Pension and employee benefits	16,997		18,535		18,612		18,261		18,824
Net occupancy expense	13,540		13,727		15,954		14,188		13,887
Equipment expense	12,235		12,592		11,025		12,133		12,188
Taxes, other than federal income taxes	2,003		2,032		2,014		1,661		1,286
Stationery, supplies and postage	3,304		3,370		3,528		3,767		3,723
Bankcard, loan processing and other costs	12,335		12,461		11,139		11,830		11,151
Advertising	4,278		3,103		2,747		3,586		3,942
Professional services	5,154		5,358		4,010		6,440		5,270
Telephone	2,480		2,599		2,574		2,779		2,831
Amortization of intangibles	2,598		2,598		2,598		2,933		2,933
FDIC insurance expense	5,234		5,077		5,167		5,989		2,988
Other operating expense	11,809		12,737		9,370		9,836		12,353
Total Noninterest Expense	$	160,742	$	161,674	$	160,652	$	165,041	$	163,145

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
	September 30,			June 30,			March 31,			December 31,			September 30,			December 31,
Allowance for Credit Losses	2015			2015			2015			2014			2014			2014
Allowance for originated loan losses, beginning of period	$	101,682		$	97,545		$	95,696		$	90,883		$	91,950		$	96,484
Provision for originated loan losses	10,402			10,809			6,036			8,662			4,862			23,171
Charge-offs	13,398			11,298			8,567			9,205			11,410			44,923
Recoveries	5,369			4,626			4,380			5,356			5,481			20,964
Net charge-offs	8,029			6,672			4,187			3,849			5,929			23,959
Allowance for originated loan losses, end of period	$	104,055		$	101,682		$	97,545		$	95,696		$	90,883		$	95,696
Reserve for unfunded lending commitments,
beginning of period	$	3,905		$	4,330		$	5,848		$	6,966		$	7,107		$	7,907
Provision for (relief of) credit losses	(331)			(425)			(1,518)			(1,118)			(141)			(2,059)
Reserve for unfunded lending commitments,
end of period	$	3,574		$	3,905		$	4,330		$	5,848		$	6,966		$	5,848
Allowance for Credit Losses	$	107,629		$	105,587		$	101,875		$	101,544		$	97,849		$	101,544
Ratios
Provision for loan losses to average loans	0.31		%	0.33		%	0.19		%	0.28		%	0.16		%	0.20		%
Net charge-offs to average loans	0.24		%	0.20		%	0.13		%	0.12		%	0.20		%	0.21		%
Allowance for loan losses to period-end loans	0.76		%	0.76		%	0.76		%	0.77		%	0.75		%	0.77		%
Allowance for credit losses to period-end loans	0.79		%	0.79		%	0.79		%	0.81		%	0.81		%	0.81		%
Allowance for loan losses to nonperforming loans	221.22		%	184.40		%	211.66		%	276.44		%	231.13		%	276.44		%
Allowance for credit losses to nonperforming loans	228.82		%	191.48		%	221.06		%	293.34		%	248.85		%	293.34		%
Asset Quality
Impaired originated loans:
Commercial loans	$	30,821		$	37,889		$	28,478		$	17,147		$	22,347		$	17,147
Consumer loans	16,215			17,253			17,607			17,470			16,974			17,470
Total nonperforming loans	47,036			55,142			46,085			34,617			39,321			34,617
Other real estate owned ("OREO"), noncovered ⁽²⁾	60,022			62,169			22,521			20,421			23,798			20,421
Total nonperforming assets ("NPAs") ⁽²⁾	$	107,058		$	117,311		$	68,606		$	55,038		$	63,119		$	55,038
NPAs to period-end loans + noncovered OREO ⁽²⁾	0.78		%	0.87		%	0.53		%	0.44		%	0.52		%	0.44		%
Accruing originated loans past due 90 days or more	$	9,888		$	8,009		$	7,914		$	12,156		$	8,538		$	12,156

(1) Due to the impact of business combination accounting and the protection afforded by FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired loans and FDIC acquired loans, and covered OREO are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. George Washington and Midwest non-single family loss share agreements with the FDIC expired at March 31, 2015 and June 30, 2015. As of September 30, 2015, $85.9 million of FDIC acquired loans remained covered by single family loss share agreements, providing considerable protection against credit risk.

(2) As of September 30, 2015 and June 30, 2015, $40.0 million and $42.0 million, respectively, of OREO was no longer covered by FDIC loss share agreements, and therefore, was included in NPAs. OREO that remains covered by FDIC loss share agreements has considerable protection against credit risk and is not reported as NPAs.

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

(Unaudited)	Three Months Ended						Nine Months Ended						Year Ended
(Dollars in thousands)	September 30,						September 30,						December 31,
	2015			2014			2015			2014			2014
Allowance for originated loan losses - beginning of period	$	101,682		$	91,950		$	95,696		$	96,484		$	96,484
Loans charged off:
Commercial	4,476			4,046			8,738			12,256			12,701
Mortgage	409			91			1,206			1,484			2,031
Installment	4,456			4,323			13,682			12,983			17,932
Home equity	940			1,361			2,822			3,403			4,831
Credit cards	1,173			778			3,834			3,544			4,604
Leases	1,268			—			1,268			—			—
Overdrafts	676			811			1,713			2,048			2,824
Total	13,398			11,410			33,263			35,718			44,923
Recoveries:
Commercial	759			1,287			1,532			2,720			4,332
Mortgage	80			114			204			219			318
Installment	2,774			2,729			8,358			8,195			10,513
Home equity	564			708			2,016			2,227			2,940
Credit cards	331			403			1,055			1,260			1,716
Manufactured housing	7			54			26			78			87
Leases	730			2			737			374			379
Overdrafts	124			184			447			535			679
Total	5,369			5,481			14,375			15,608			20,964
Net charge-offs	8,029			5,929			18,888			20,110			23,959
Provision for originated loan losses	10,402			4,862			27,247			14,509			23,171
Allowance for originated loan losses-end of period	$	104,055		$	90,883		$	104,055		$	90,883		$	95,696

Average originated loans	$	13,528,268		$	11,814,314		$	13,106,749		$	11,123,269		$	11,421,426
Ratio (annualized) to average originated loans:
Originated net charge-offs	0.24		%	0.20		%	0.19		%	0.24		%	0.21		%
Provision for originated loan losses	0.31		%	0.16		%	0.28		%	0.17		%	0.20		%
Originated Loans, period-end	$	13,648,325		$	12,071,759		$	13,648,325		$	12,071,759		$	12,493,812

Allowance for credit losses:	$	107,629		$	97,849		$	107,629		$	97,849		$	101,544
To (annualized) net charge-offs	3.38			4.16			4.26			3.64			4.24
Allowance for originated loan losses:
To period-end originated loans	0.76		%	0.75		%	0.76		%	0.75		%	0.77		%
To (annualized) net originated charge-offs	3.27			3.86			4.12			3.38			3.99

(1) Due to the impact of business combination accounting and protection of FDIC loss sharing agreements, which provide considerable protection against credit risk, acquired and FDIC acquired loans are excluded from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. George Washington and Midwest non-single family loss share agreements with the FDIC expired at March 31, 2015 and June 30, 2015. As of September 30, 2015, $85.9 million of FDIC acquired loans remained covered by single family loss share agreements, 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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