<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1997
COMMISSION FILE NUMBER 0-10161
FIRSTMERIT CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 34-1339938
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
III CASCADE PLAZA, 7TH FLOOR, AKRON, OHIO 44308-1103
(Address of principal Executive Offices)
(330) 996-6300
(Telephone Number)
OUTSTANDING SHARES OF COMMON STOCK, AS OF JUNE 30, 1997
31,194,611
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
<PAGE> 2
FIRSTMERIT CORPORATION
PART I - FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
- - - -----------------------------
The following statements included in the quarterly unaudited report to
shareholders are incorporated by reference:
Consolidated Balance Sheets as of June 30, 1997, December 31, 1996 and
June 30, 1996
Consolidated Statements of Income for the three-month and six-month
periods ended June 30, 1997 and 1996
Consolidated Statements of Changes in Shareholders' Equity for the
year ended December 31, 1996 and for the six months ended June 30,
1997
Consolidated Statements of Cash Flows for the six months ended June
30, 1997 and 1996
Notes to Consolidated Financial Statements as of June 30, 1997,
December 31, 1996, and June 30, 1996
Management's Discussion and Analysis of Financial Conditions as of
June 30, 1997, December 31, 1996 and June 30, 1996 and Results of
Operations for the quarter and six months ended June 30, 1997 and 1996
and for the year ended December 31, 1996.
<PAGE> 3
<TABLE>
<CAPTION>
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- - - ---------------------------------------
(In thousands)
--------------------------------------------------------------
(Unaudited) (Unaudited)
June 30 December 31 June 30
--------------------------------------------------------------
1997 1996 1996
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities $ 1,072,734 1,187,524 1,274,464
Federal funds sold 3,590 15,550 7,098
Commercial loans 1,508,604 1,373,806 1,350,506
Mortgage loans 931,530 944,887 1,242,316
Installment loans 1,183,530 1,072,921 1,008,166
Bankcard loans 89,426 90,028 84,210
Tax-free loans 12,908 15,119 18,154
Leases 151,687 159,237 152,545
----------------------------------------------------------
Loans less unearned income 3,877,685 3,655,998 3,855,897
Less allowance for possible loan losses 50,893 49,336 47,772
-------------------------------------------------------------
Net loans 3,826,792 3,606,662 3,808,125
-------------------------------------------------------------
Total earning assets 4,903,116 4,809,736 5,089,687
Cash and due from banks 203,276 222,164 253,292
Premises and equipment, net 100,320 102,139 104,013
Accrued interest receivable and other assets 110,406 93,941 89,724
-------------------------------------------------------------
$ 5,317,118 5,227,980 5,536,716
=============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-non-interest bearing $ 747,964 799,771 758,965
Demand-interest bearing 448,137 450,187 458,053
Savings 1,285,563 1,309,275 1,413,676
Certificates and other time deposits 1,721,152 1,645,642 1,740,398
-------------------------------------------------------------
Total deposits 4,202,816 4,204,875 4,371,092
Securities sold under agreements to repurchase
and other borrowings 514,680 423,701 577,848
-------------------------------------------------------------
Total funds 4,717,496 4,628,576 4,948,940
Accrued taxes, expenses, and other liabilities 82,462 75,697 61,917
-------------------------------------------------------------
Total liabilities 4,799,958 4,704,273 5,010,857
Shareholders' equity:
Series preferred stock, without par value:
authorized and unissued 7,000,000 shares - - -
Common stock, without par value:
authorized 80,000,000 shares; issued 33,970,672
33,859,875 and 33,680,544 shares, respectively 109,752 107,343 104,808
Treasury stock, 2,776,061, 1,903,482 and 1,073,324 shares,
respectively (90,956) (59,258) (30,153)
Net unrealized holding gains (losses)
on available for sale securities (2,143) (2,217) (12,853)
Retained earnings 500,507 477,839 464,057
-------------------------------------------------------------
Total shareholders' equity 517,160 523,707 525,859
-------------------------------------------------------------
$ 5,317,118 5,227,980 5,536,716
=============================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
FIRSTMERIT CORPORATION AND SUBSIDIARIES
AVERAGE CONSOLIDATED BALANCE SHEETS
- - - ------------------------------------
(In thousands except ratios)
(Unaudited)
Quarters
-----------------------------------------------------------------------------------
1997 1996
-----------------------------------------------------------------------------------
2nd 1st 4th 3rd 2nd
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment securities $ 1,091,932 1,148,175 1,271,617 1,279,273 1,313,661
Federal funds sold 686 7,404 36,692 7,844 13,735
Loans less unearned income 3,818,378 3,692,250 3,797,123 3,858,654 3,829,106
Less allowance for possible
loan losses 50,471 49,666 46,563 47,476 48,151
--------------------------------------------------------------------------------
Net loans 3,767,907 3,642,584 3,750,560 3,811,178 3,780,955
--------------------------------------------------------------------------------
Total earning assets 4,860,525 4,798,163 5,058,869 5,098,295 5,108,351
Cash and due from banks 172,099 183,034 201,148 202,548 217,967
Premises and equipment, net 100,487 101,606 104,875 104,442 101,933
Accrued interest receivable
and other assets 101,854 79,602 74,989 83,146 78,603
--------------------------------------------------------------------------------
$ 5,234,965 5,162,405 5,439,881 5,488,431 5,506,854
================================================================================
LIABILITIES
Deposits:
Demand-non-interest bearing $ 731,273 711,995 759,224 747,318 768,507
Demand-interest bearing 447,398 446,893 453,654 448,771 453,118
Savings 1,283,787 1,288,069 1,353,270 1,388,472 1,423,458
Certificates and other time
deposits 1,696,932 1,647,357 1,784,786 1,759,320 1,746,516
--------------------------------------------------------------------------------
Total deposits 4,159,390 4,094,314 4,350,934 4,343,881 4,391,599
Securities sold under agreements to
repurchase and other borrowings 478,178 454,334 488,189 553,743 520,575
--------------------------------------------------------------------------------
Total funds 4,637,568 4,548,648 4,839,123 4,897,624 4,912,174
Accrued taxes, expenses and
other liabilities 85,395 87,938 78,350 65,973 65,567
--------------------------------------------------------------------------------
Total liabilities 4,722,963 4,636,586 4,917,473 4,963,597 4,977,741
SHAREHOLDERS' EQUITY 512,002 525,819 522,408 524,834 529,113
--------------------------------------------------------------------------------
$ 5,234,965 5,162,405 5,439,881 5,488,431 5,506,854
================================================================================
RATIOS
Net income as a percentage of:
Average assets 1.63% 1.59% 1.39% 0.97% 1.40%
Average shareholders' equity 16.70% 15.61% 14.48% 10.19% 14.61%
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- - - ----------------------------------------------
(Unaudited)
(In thousands except per share data)
-------------------------------------------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 85,165 82,989 165,765 163,298
Interest and dividends on securities:
Taxable 15,918 18,754 32,674 38,557
Exempt from Federal income taxes 1,123 1,377 2,243 2,665
Interest on Federal funds sold 9 265 95 492
-------------------------------- ----------------------------------
Total interest income 102,215 103,385 200,777 205,012
-------------------------------- ----------------------------------
Interest expense:
Interest on deposits:
Demand-interest bearing 1,681 1,983 3,448 2,899
Savings 7,609 8,135 14,912 17,640
Certificates and other time deposits 22,659 23,301 44,335 47,942
Interest on securities sold under agreements
to repurchase and other borrowings 6,025 6,461 11,337 12,636
-------------------------------- ----------------------------------
Total interest expense 37,974 39,880 74,032 81,117
-------------------------------- ----------------------------------
Net interest income 64,241 63,505 126,745 123,895
Provision for possible loan losses 5,033 3,170 9,194 6,127
-------------------------------- ----------------------------------
Net interest income after provision
for possible loan losses 59,208 60,335 117,551 117,768
-------------------------------- ----------------------------------
Other income:
Trust department income 3,288 3,227 6,399 6,191
Service charges on depositors' accounts 6,423 6,086 12,930 11,475
Credit card fees 3,633 2,994 6,593 5,487
Service fees - other 1,845 1,450 3,823 3,061
Securities gains (losses) 477 (55) 940 212
Gain on sales of loans, net 881 1,081 2,004 1,812
Other operating income 3,271 2,901 6,705 9,079
-------------------------------- ----------------------------------
Total other income 19,818 17,684 39,394 37,317
-------------------------------- ----------------------------------
79,026 78,019 156,945 155,085
-------------------------------- ----------------------------------
Other expenses:
Salaries, wages, pension and employee benefits 23,489 23,839 46,470 47,933
Net occupancy expense 3,970 4,298 8,631 8,622
Equipment expense 3,217 2,995 6,714 6,247
Other operating expense 16,903 18,208 33,511 34,787
-------------------------------- ----------------------------------
Total other expenses 47,579 49,340 95,326 97,589
-------------------------------- ----------------------------------
Income before Federal income taxes 31,447 28,679 61,619 57,496
Federal income taxes 10,128 9,458 20,067 19,022
-------------------------------- ----------------------------------
Net income $ 21,319 19,221 41,552 38,474
================================ ==================================
Per share data based on average number of
shares outstanding:
Net Income $ 0.67 0.59 1.31 1.17
================================ ==================================
Dividends paid $ 0.29 0.27 0.58 0.54
Weighted average number of shares
outstanding 31,451,196 32,812,388 31,648,363 33,030,297
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
<TABLE>
<CAPTION>
FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- - - ---------------------------------------------------------------
Year Ended December 31, 1996 and
Six Months Ended June 30, 1997
(In Thousands)
-----------------------------------------------------------------------------
Net unrealized
holding gains
(losses) on Total
Common Treasury available for Retained Shareholders'
Stock Stock sale securities Earnings Equity
----------- ------------ ---------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $103,861 (2,963) (1,292) 443,275 542,881
Net Income -- -- -- 70,940 70,940
Cash dividends ($1.10 per share) -- -- -- (36,376) (36,376)
Stock options exercised 3,482 -- -- -- 3,482
Treasury shares purchased -- (56,295) -- -- (56,295)
Market adjustment investment securities -- -- (925) -- (925)
-------- -------- -------- -------- --------
Balance at December 31, 1996 107,343 (59,258) (2,217) 477,839 523,707
Net Income -- -- -- 41,552 41,552
Cash dividends ($0.58 per share) -- -- -- (18,884) (18,884)
Stock options exercised 2,409 -- -- -- 2,409
Treasury shares purchased -- (31,698) -- -- (31,698)
Market adjustment investment securities -- -- 74 -- 74
-------- -------- -------- -------- --------
Balance at June 30, 1997 $109,752 (90,956) (2,143) 500,507 517,160
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
<TABLE>
<CAPTION>
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996
(In thousands)
------------------------
1997 1996
-------- -------
Operating Activities
----------------------------
<S> <C> <C>
Net income $ 41,552 38,474
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 9,194 6,127
Provision for depreciation and amortization 5,217 4,738
Amortization of investment securities premiums, net 1,826 1,606
Amortization of income for lease financing (6,560) (6,873)
Gains on sales of investment securities, net (940) (212)
Deferred federal income taxes 10,992 4,048
Increase in interest receivable (235) (3,396)
Increase in interest payable 406 156
Amortization of values ascribed to acquired intangibles 936 1,611
Other increases (decreases) (21,836) (13,227)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 40,552 33,052
--------- --------
Investing Activities
----------------------------
Dispositions of investment securities:
Available-for-sale - sales 100,678 27,468
Available-for-sale - maturities 116,892 166,656
Purchases of investment securities available-for-sale (103,555) (84,708)
Net decrease in federal funds sold 11,960 5,477
Net increase in loans and leases (222,764) (83,853)
Purchases of premises and equipment (5,682) (15,487)
Sales of premises and equipment 2,284 894
--------- --------
NET CASH PROVIDED\(USED) BY INVESTING ACTIVITIES (100,187) 16,447
--------- --------
Financing Activities
----------------------------
Net decrease in demand, NOW and savings deposits (77,569) (67,539)
Net increase (decrease) in time deposits 75,510 (63,294)
Net increase in securities sold under repurchase
agreements and other borrowings 90,979 90,890
Cash dividends (18,884) (17,692)
Purchase of treasury shares (31,698) (27,190)
Proceeds from exercise of stock options 2,409 947
-------- --------
NET CASH PROVIDED\(USED) BY FINANCING ACTIVITIES 40,747 (83,878)
Decrease) in cash and cash equivalents (18,888) (34,379)
Cash and cash equivalents at beginning of year 222,164 267,671
-------- --------
Cash and cash equivalents at end of year $203,276 253,292
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
----------------------------------------------------
Cash paid during the year for:
Interest, net of amounts capitalized $ 74.894 46,788
Income taxes $ 20,000 15,462
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 8
FIRSTMERIT CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997, December 31, 1996 and
June 30, 1996
1. FirstMerit Corporation ("Corporation"), is a bank holding company
whose principal assets are the common stock of its wholly owned subsidiaries,
First National Bank of Ohio, The Old Phoenix National Bank of Medina, EST
National Bank, Citizens National Bank, Peoples National Bank, and Peoples
Bank, N.A. In addition FirstMerit Corporation owns all of the common stock of
Citizens Investment Corporation, Citizens Savings Corporation of Stark County,
FirstMerit Community Development Corporation, and FirstMerit Credit Life
Insurance Company.
2. In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 ("SFAS 128"), "Earnings per Share" ("EPS"). SFAS 128
simplifies the standards for computing earnings per share previously found in
APB Opinion No. 15 ("APB 15"), "Earnings per Share," and makes the standards
comparable to recently adopted international EPS guidelines. SFAS 128 replaces
the presentation of "Primary" EPS with the presentation of "Basic" EPS. It
also requires dual presentation of Basic and Diluted EPS on the face of the
statements of income and a reconciliation of the numerator and denominator
between the Basic EPS and Diluted EPS calculations. Basic EPS excludes
dilution and is computed by dividing net income by the weighted-average number
of common shares outstanding. Diluted EPS reflects the dilution that would
occur if securities or other contracts to issue common stock were exercised or
converted to common stock (e.g., exercising of common stock options). SFAS 128
is effective for financial statements issued for periods ending after December
15, 1997, including interim periods; earlier application is not permitted. An
entity is, however, permitted to disclose pro forma Earnings per Share amounts
using SFAS 128 in the notes to the financial statements in periods before
adoption. After the effective date, all prior period EPS data must be
restated.
In the accompanying Statements of Income, net income per share
calculated under existing standard APB 15 was $0.67 for the quarter ended June
30, 1997 and $1.31 for the 1997 year-to-date period. For the comparable 1996
quarter and six-month periods, APB 15 EPS was $0.59 and $1.17, respectively.
Basic EPS, calculated under SFAS 128, also resulted in earnings per share
totals of $0.67 for the 1997 second quarter, $1.31 for the six months ended
June 30, 1997, $0.59 for the quarter ended June 30, 1996, and $1.17 for the
1996 first half. Diluted EPS for the 1997 second quarter totaled $0.67
compared to $0.58 for the same quarter last year. For the year-to-date
periods, diluted EPS was $1.30 for 1997 and $1.16 for 1996.
For the quarter ended June 30, 1997, under SFAS 128, the potential
dilution of unexercised stock options added 306,000 shares to the existing
31,451,196 weighted-average shares outstanding. For the six months ended June
30, 1997, the potential dilution of unexercised stock options under SFAS 128
added 277,206 shares to the existing weighted-average totals of 31,648,363.
If SFAS 128 had been applied to the three months ended June 30, 1996,
outstanding common stock options would have added 193,099 to the existing
outstanding shares total of
<PAGE> 9
32,812,388. For the 1996 first half, SFAS 128 requirements would have
increased weighted-average outstanding shares by 210,529. For all periods
presented, there were no differences in the numerators for the proforma Basic
and Diluted EPS computations.
3. The Corporation cautions that any forward looking statements
contained in this report, in a report incorporated by reference to this report
or made by management of the Corporation, involve risks and uncertainties and
are subject to change based upon various factors. Actual results could differ
materially from those expressed or implied.
4. Management believes the interim consolidated financial statements
reflect all adjustments consisting only of normal recurring accruals, necessary
for fair presentation of the June 30, 1997 and June 30, 1996 statements of
condition and the results of operations for the quarters and six month periods
ended June 30, 1997 and 1996.
<PAGE> 10
<TABLE>
<CAPTION>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Average Consolidated Balance Sheet, Fully-tax Equivalent Interest Rates and Interest Differential
(Dollars in thousands)
Quarter ended June 30, Year ended December 31,
------------------------------------- -------------------------------------
1997 1996
------------------------------------- -------------------------------------
Average Average Average
Balance Interest Rate Balance Interest Rate
- - - ------------------------------------------- ------------------------------------- --------------------------------------
ASSETS
Investment securities 1,091,932 17,732 6.51% 1,311,188 82,903 6.32%
Federal funds sold 686 9 5.26% 19,233 934 4.86%
Loans, net of unearned income 3,818,378 85,293 8.96% 3,812,900 330,951 8.68%
Less allowance for possible loan losses 50,471 47,392
------------- ------------ ----------- -----------
Net loans 3,767,907 85,293 9.08% 3,765,508 330,951 8.79%
Cash and due from banks 172,099 - - 207,533 - -
Other assets 202,341 - - 175,020 - -
------------- ------------ ----------- -----------
Total assets 5,234,965 103,034 - 5,478,482 414,788 -
============= ============ ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-
non-interest bearing 731,273 - - 745,102 - -
Demand-
interest bearing 447,398 1,681 1.51% 447,524 7,839 1.75%
Savings 1,283,787 7,609 2.38% 1,399,011 32,446 2.32%
Certificates and other time deposits 1,696,932 22,659 5.36% 1,772,150 95,379 5.38%
-------------------------- ----------- ----------
Total deposits 4,159,390 31,949 3.08% 4,363,787 135,664 3.11%
Federal funds purchased, securities sold
under agreements to repurchase and 478,178 6,025 5.05% 515,556 25,109 4.87%
other borrowings
Other liabilities 85,395 - 71,240 -
Shareholders' equity 512,002 - 527,899 -
------------- ------------ ----------- ------------
Total liabilities and shareholders' equity 5,234,965 37,974 - 5,478,482 160,773 -
============= ============ =========== ===========
Total earning assets 4,860,525 103,034 8.50% 5,095,929 414,788 8.14%
============= ============ =========== ===========
Total interest bearing liabilities 3,906,295 37,974 3.90% 4,134,241 160,773 3.89%
============= ============ =========== ===========
Net yield on earning assets 65,060 5.37% 254,015 4.98%
============ ====== ========== ======
Interest rate spread 4.60% 4.25%
====== ======
<CAPTION>
Quarter ended June 30,
-------------------------------------
1996
-------------------------------------
Average
Balance Interest Rate
-------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities 1,313,661 20,740 6.35%
Federal funds sold 13,735 265 7.76%
Loans, net of unearned income 3,829,106 83,147 8.73%
Less allowance for possible loan losses 48,151
------------- ----------
Net loans 3,780,955 83,147 8.84%
Cash and due from banks 217,967 - -
Other assets 180,536 - -
------------- ----------
Total assets 5,506,854 104,152 -
============= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand-
non-interest bearing 768,507 - -
Demand-
interest bearing 453,118 1,983 1.76%
Savings 1,423,458 8,135 2.30%
Certificates and other time deposits 1,746,516 23,301 5.37%
------------ ----------
Total deposits 4,391,599 33,419 3.06%
Federal funds purchased, securities sold
under agreements to repurchase and 520,575 6,461 4.99%
other borrowings
Other liabilities 65,567 -
Shareholders' equity 529,113 -
------------ ----------
Total liabilities and shareholders' equity 5,506,854 39,880 -
============ ==========
Total earning assets 5,108,351 104,152 8.20%
============ ==========
Total interest bearing liabilities 4,143,667 39,880 3.87%
============ ==========
Net yield on earning assets 64,272 5.06%
========== ======
Interest rate spread 4.33%
======
</TABLE>
*Interest income on tax-exempt securities and loans have been adjusted to a
fully taxable equivalent basis.
*Non-accrual loans have been included in the average balances.
<PAGE> 11
RESULTS OF OPERATIONS
FirstMerit Corporation's net income for the quarter ended June 30, 1997
was $21,319,000, 11% higher than last year's second quarter income of
$19,221,000. Return on average equity was 16.70% and return on average assets
was 1.63%. The same profitability ratios for the 1996 second quarter were 14.61%
and 1.40%, respectively.
For the first half ended June 30, 1997, net income was $41,552,000, up
8% from last year's six-month earnings of $38,474,000. Return on average equity
was 16.37%, and return on average assets was 1.61%. The comparable ratios for
the same period last year were 14.51% and 1.41%, respectively.
Fully taxable equivalent ("FTE") net interest income for the second
quarter was $65,060,000, a $788,000 increase over the same period last year. FTE
net interest income for the 1997 six-month period was $128,425,000, up 2% from
$125,454,000 one year ago. A higher net interest margin increased net interest
income for both 1997 periods even though earning assets declined since last
year. Specifically, average earning assets were down 5% for the quarter and 6 %
for the half. The asset decline since last year was primarily due to a planned
strategy to reduce low-yielding assets through the liquidation of investment
securities and sale of less profitable branches. The net interest margin for
both the quarter and six-month periods was 5.37%, 31 basis points higher than
last year's second quarter margin of 5.06% and an improvement of 44 basis points
from 1996's year-to-date margin of 4.93%.
Other income rose 12% during the quarter from $17,684,000 to
$19,818,000. Increased credit card fees and service charge income accounted for
$1,371,000, or 64% of the increase. Higher credit card fees and service charges
also contributed to the $2,077,000 increase in total year-to-date other income
that was achieved despite pre-tax branch sale gains of $3,186,000 recorded
during the first quarter of 1996.
Other expenses totaled $47,579,000 for the quarter, a decline of 4%
from last year's level. Similarly, six-month other expenses were $95,326,000
compared to 1996's operating costs of $97,589,000. Regulatory changes that
reduced deposit insurance premiums, effective September 30, 1996, lowered the
1997 second quarter insurance expense by $616,000 and the six-month expense by
$1,254,000. The continued improvement in the efficiency ratio of 55.82% for the
quarter and 56.56% for the half-year period demonstrates FirstMerit's on-going
commitment to expense control.
Nonperforming assets were 0.27% of total loans and Other Real Estate
compared to 0.30% at June 30, 1996. Net charge-offs to average loans, on an
annualized basis, were 0.41% for the six-month period versus 0.27% for the same
period last year. At June 30, 1997, the allowance for loan losses as a
percentage of outstanding loans totaled 1.31%, up from 1.24% one year ago. The
allowance to
<PAGE> 12
nonperforming loan coverage ratio totaled 5.22 times at quarter-end and 4.47
times at June 30, 1996.
Earnings per share for the second quarter were $0.67, an increase of
14% over last year's quarterly earnings of $0.59. For the six months ended June
30, 1997, earnings per share were $1.31, 12% higher than the $1.17 recorded for
the 1996 first half. The components of change in per share income for the
quarters and six months ended June 30, 1997 and 1996 are summarized in the
following table:
<TABLE>
<CAPTION>
CHANGES IN EARNINGS PER SHARE
Three months ended Six months ended
June 30, June 30,
1997/1996 1997/1996
-------------------------------------------
<S> <C> <C>
Net income per share June 30, 1996 $0.59 1.17
Increases (decreases) due to:
Net interest income - taxable equivalent 0.02 0.09
Provision for possible loan losses (0.06) (0.10)
Other income 0.07 0.07
Other expenses 0.05 0.07
Federal income taxes - taxable equivalent (0.02) (0.04)
Reduction in weighted-average shares
outstanding due to share repurchases 0.02 0.05
-------------------------------------
Net change in net income per share 0.08 0.14
-------------------------------------
Net income per share June 30, 1997 $0.67 1.31
=====================================
</TABLE>
NET INTEREST INCOME
Net interest income, the Corporation's principal source of earnings, is
the difference between the interest income generated by earning assets
(primarily loans and investment securities) and the total interest paid on
interest bearing funds (namely deposits and other borrowings). For the purpose
of this discussion, net interest income is presented on a fully-taxable
equivalent ("FTE") basis, to provide a comparison among
<PAGE> 13
types of interest earning assets. That is, interest on tax-free securities and
tax-exempt loans has been restated as if such interest were taxed at the
statutory Federal income tax rate of 35%, adjusted for the non-deductible
portion of interest expense incurred to acquire the tax-free assets.
Net interest income FTE for the quarter ended June 30, 1997 was
$65,060,000 compared to $64,272,000 for the same period one year ago, an
increase of $788,000. The increase in net interest income occurred as the drop
in interest paid on deposits and borrowings outpaced the decline in interest
income.
The lower interest income was a result of a tactic to reinvest lower
yielding investment securities and mortgage loans into higher earning
commercial and consumer credits. Specifically, the reduction in outstanding
investment securities reduced quarterly income by $3,601,000, when compared to
the same period last year, but higher loan yields recovered $2,386,000 or
two-thirds of the decline. For the second quarter, the yield on average loans
increased 23 basis points from 8.73% in 1996 to 8.96%.
The trend of the drop in interest expense exceeding the decline in
interest income, and the redeployment of maturing and sold assets into higher
yielding loans was also prevalent during the 1997 six-month period. For the
first half, higher yielding loans and securities recovered $5,616,000, or 60% of
the drop in interest income caused by fewer securities and loans outstanding.
Loan yields for the first six months averaged 8.91%, a quarter of one percent
better than the 8.66% earned during last year's first half.
With regard to interest bearing liabilities, declining balances
contributed $2,046,000 and $7,657,000, to the quarterly and year-to-date
reductions in interest expense, respectively. The average cost of funds for the
quarter was 3.90%, up slightly from the 3.87% recorded one year ago. For the
six-month period, cost of funds averaged 3.86% compared to 3.93% last year.
The following schedule illustrates in more detail the change in net
interest income FTE by rate and volume components for both interest earning
assets and interest bearing liabilities.
<PAGE> 14
<TABLE>
<CAPTION>
CHANGES IN NET INTEREST DIFFERENTIAL -
FULLY-TAX EQUIVALENT RATE/VOLUME ANALYSIS
(DOLLARS IN THOUSANDS)
Quarters ended Six Months Ended
June 30, June 30,
1997 and 1996 1997 and 1996
------------- -------------
Increase (Decrease) Increase (Decrease)
Interest Income/Expense Interest Income/Expense
----------------------- -----------------------
Volume Yield Rate Total Volume Yield Rate Total
---------------------------------------------------------------------------
INTEREST INCOME
<S> <C> <C> <C> <C> <C> <C>
Investment Securities $(3,601) 593 (3,008) (7,345) 1,235 (6,110)
Loans (240) 2,386 2,146 (1,985) 4,381 2,396
Federal funds sold (171) (85) (256) (1,299) 902 (397)
---------------------------------------------------------------------------
Total interest income $(4,012) 2,894 (1,118) (10,629) 6,518 (4,111)
INTEREST EXPENSE
Interest on deposits:
Demand-interest bearing (21) (281) (302) (2,262) 2,811 549
Savings (828) 302 (526) (1,646) (1,082) (2,728)
Certificates and other
time deposits (662) 20 (642) (2,684) (923) (3,607)
Federal Funds Purchased,
REPOs & other borrowings (534) 98 (436) (1,065) (234) (1,299)
---------------------------------------------------------------------------
Total interest expense $(2,045) 139 (1,906) (7,657) 572 (7,085)
---------------------------------------------------------------------------
Net interest income $(1,967) 2,755 788 (2,972) 5,946 2,974
===========================================================================
</TABLE>
NET INTEREST MARGIN
The net interest margin, net interest income FTE divided by average
earning assets, is affected by changes in the level of earning assets, the
proportion of earning assets funded by non-interest bearing liabilities, the
interest rate spread, and changes in the corporate tax rates. A meaningful
comparison of the net interest margin requires an adjustment for the changes in
the statutory Federal income tax rate noted above. The schedule below shows the
relationship of the tax equivalent adjustment and the net interest margin.
<PAGE> 15
<TABLE>
<CAPTION>
NET INTEREST MARGIN
(DOLLARS IN THOUSANDS)
Quarters Ended Six Months Ended
June 30, June 30,
----------------------------------------------------------------------
1997 1996 1997 1996
--------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
Net interest income per
financial statements $64,241 63,505 126,745 123,895
Tax equivalent adjustment 819 767 1,680 1,559
--------------------------------- -----------------------------------
Net interest income - FTE $65,060 64,272 128,425 125,454
================================= ===================================
Average earning assets $4,860,525 5,108,351 4,826,540 5,115,362
================================= ===================================
Net interest margin 5.37% 5.06% 5.37% 4.93%
======================================================================
</TABLE>
Average loans outstanding for the quarter ended June 30, 1997 were
$3,818,378,000, down less than one-half of one percent from $3,829,106,000 for
the same quarter last year. The decline occurred because loan sales,
securitizations, and repayments over the last twelve months were slightly more
than new loans originated. Similarly, for the first half of 1997, average loan
outstandings totaled $3,755,597,000, down one percent from $3,800,498,000 for
the prior year. Average outstanding loans for the quarter and six-month periods
equaled 78.6% and 77.8% of average earning assets, respectively.
Average certificates and other time deposits totaled $1,696,932 at June
30, 1997, down 2.8% from $1,746,516,000 at June 30, 1996. On a percentage basis,
however, average certificates and other time deposits increased from 42.1% of
total interest bearing funds at June 30, 1996 to 43.4% at June 30, 1997. Average
savings deposits decreased from 34.4% of interest bearing funds at June 30, 1996
to 32.9% at June 30, 1997, while total demand deposits increased from 29.5% of
total interest bearing funds at June 30, 1996 to 30.2% at June 30, 1997.
Interest bearing deposits increased from 87.4% of interest bearing funds at the
end of the 1996 second quarter to 87.8% at the end of the 1997 second quarter.
Conversely, other borrowings decreased from 12.6% of total interest bearing
funds at June 30, 1996 to 12.2% at June 30, 1997.
In summary, on a percentage basis, during the twelve months ended June
30, 1997, customer deposits shifted from savings into demand deposits and
certificates and other time deposits. The Corporation also used excess funds to
pay down other borrowings.
<PAGE> 16
During the second quarter 1997, interest bearing liabilities funded
80.4% of average earning assets compared to 81.1% one year ago. The decline in
use of interest bearing liabilities as a loan and investment securities funding
source helped keep the cost of funds rate at a level comparable with last year's
second quarter.
OTHER INCOME
Other income for the quarter ended June 30, 1997 was $19,818,000, an
increase of $2,134,000 or 12%, over the $17,684,000 earned during the same
period last year. Excluding securities sales, the increase in other income was
$1,602,000, or 9%. For the six-month period, other income totaled $39,394,000
compared to $37,317,000 a year ago. The sale of three branches during the 1996
first quarter, contributed $3,186,000 to last year's first half other income.
The prior year gains from the branch sales were included in the "other operating
income" category of the income statement.
Trust department income for the second quarter was $3,288,000, up
slightly from the $3,227,000 earned one year ago. Service charges on depositors'
accounts increased 5.5% to $6,423,000 from $6,086,000 for last year's second
quarter. Credit card fees increased 21.3% to $3,633,000 for the quarter compared
to $2,994,000 for the three months ended June 30, 1996. Other service fees,
including Automated Teller Machine (ATM) revenue, were $1,845,000, an increase
of 27.2% over last year's second quarter total of $1,450,000.
For the 1997 first half, compared to the same period last year, trust
department income increased 3.4% to $6,399,000, service charges on depositors'
accounts increased 12.7% to $12,930,000, credit card fees increased 20.2% to
$6,593,000, and other service fees, which include ATM revenue, increased 24.9%
to $3,823,000.
Other income is especially important to banks as it provides a source
of revenues not sensitive to the interest rate environment. To complement the
increases in fee income attained during the first half of 1997, the Corporation
acquired, in May 1997, Abell & Associates, Inc., a nationally known life
insurance and financial consulting firm. This acquisition represents a major
step for the Corporation in the creation of a single center of excellence for
wealth management. Abell & Associates will concentrate on the high net worth
segment of FirstMerit's customer base, providing services to executives of
public corporations, professionals, and owners of closely-held companies. This
acquisition along with the investment and wealth-building activities of
FirstMerit Investment Services Group (which includes discount brokerage,
insurance, annuities, mutual funds, and trust services) should help the
Corporation continue to improve on the 1997 trend of increased fee income.
<PAGE> 17
OTHER EXPENSES
Other expenses were $47,579,000 for the second quarter, a decline of
$1,761,000 or 3.6%, over the $49,340,000 recorded during the same quarter last
year. For the first half of 1997, other expenses totaled $95,326,000 versus
$97,589,000 a year ago.
The reduction in operating costs, coupled with higher net interest
income and increased other income, reduced the efficiency ratio for the quarter
from 59.20% in 1996 to 55.82% in 1997. A similar improvement in the year-to-date
period was noted as the current year first half efficiency ratio was 56.56%
compared to 59.10% last year. The second quarter efficiency ratio of 55.82%
indicates that for every one dollar of pretax profit earned, 55.82 cents were
used to cover operating costs. The continuing reduction in operating expenses
demonstrates the Corporation's committment to keeping other expenses under
control and in line with or better than peer results.
During the quarter, salaries, wages, pension and employee benefits, the
largest component of other expenses, decreased one and one-half percent to
$23,489,000. For the six-month period, salaries, wages, pension and employee
benefits dropped 3.1% to $46,470,000. The decline in personnel costs was
attributable to continued refinement of teller staffing models and consolidation
of responsibilities, where appropriate. Regulatory changes that reduced deposit
insurance premiums, effective September 30, 1996, lowered 1997 second quarter
insurance expense by $616,000 and the reduced the six-month expense by
$1,254,000.
<PAGE> 18
FINANCIAL CONDITIONS
INVESTMENT SECURITIES
All investment securities of the Corporation are classified as
available for sale. The available for sale classification provides the
Corporation with more flexibility to respond, through the portfolio, to changes
in market interest rates, or to increases in loan demand or deposit withdrawals.
The book value and market value of investment securities classified as
available-for-sale are as follows:
<TABLE>
<CAPTION>
June 30, 1997
-------------
Gross Gross
Book Unrealized Unrealized Market
Value Gains Losses Value
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and U.S. Government agency
obligations $ 605,888 1,747 5,316 602,319
Obligations of state and
political subdivisions 87,236 227 248 87,215
Mortgage-backed securities 282,017 1,895 1,938 281,974
Other securities 100,885 825 484 101,226
---------------- ---------------- ---------------- ----------------
$1,076,026 4,694 7,986 1,072,734
================ ================ ================ ================
---------------- ----------------
Due in one year or less $98,663 98,651
Due after one year through five years 337,116 336,730
Due after five years through ten years 159,545 159,320
Due after ten years 480,702 478,033
---------------- ----------------
$1,076,026 1,072,734
================ ================
</TABLE>
The book value and market value of investment securities including
mortgage-backed securities and derivatives at June 30, 1997, by contractual
maturity, are shown above. Expected maturities will differ from contractual
maturities based on the issuers' right to call or prepay obligations with or
without call or prepayment penalties.
<PAGE> 19
The carrying value of investment securities pledged to secure trust and public
deposits and for purposes required or permitted by law amounted to approximately
$689,623,000 at June 30, 1997, $724,886,000 at December 31, 1996 and
$719,847,000 at June 30, 1996.
Securities with remaining maturities over five years reflected in the
foregoing schedule consist of mortgage and asset backed securities. These
securities are purchased within an overall strategy to maximize future earnings
taking into account an acceptable level of interest rate risk. While the
maturities of these mortgage and asset backed securities are beyond five years,
these instruments provide periodic principal payments and include securities
with adjustable interest rates, reducing the interest rate risk associated with
longer term investments.
LOANS
Total loans outstanding at June 30, 1997 amounted to $3,877,685,000
compared to $3,655,998,000 at December 31, 1996 and $3,855,897,000 at June 30,
1996. Steady demand since year end has resulted in growth of 6% through the
first half, or approximately 12% on an annualized basis. At June 30, 1997,
compared to the same quarter-end balances last year, commercial loans were
$1,508,604,000 or 12% higher than last year's total; mortgage loans were
$931,530,000, down 25%; and installment and bankcard loans (on a combined
basis) were $1,272,956,000, up 17%. The shift in mix from lower yielding
mortgage loans to higher earning commercial and consumer credits is clearly
evident in the preceding loan category totals. The loan to funds ratio, a
measure of the Corporation's liquidity, equaled 82.2% at June 30, 1997
compared to 79.0% at December 31, 1996 and 77.9% at June 30, 1996.
ASSET QUALITY
Total nonperforming assets (non-accrual and restructured loans and
other real estate loans) amounted to $10,327,000 at June 30, 1997 or 0.27% of
total loans and other real estate outstanding. At December 31, 1996,
nonperforming assets totaled $10,576,000 or 0.29% of outstanding loans and other
real estate compared to $11,489,000 or 0.30% of outstanding loans and other real
estate at June 30, 1996. Effective December 31, 1995, the Corporation adopted
Statement of Financial Accounting Standard No. 114, "Accounting by Creditors for
Impairment of a Loan," and Statement No. 118, an amendment of Statement No. 114,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures." These statements prescribe how the allowance for loan losses
related to impaired loans should be determined and illustrate the required
impaired loan disclosures. Impaired loans are loans for which, based on current
information or events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan agreement.
Impaired loans must be valued based on the present value of the loans'
<PAGE> 20
expected future cash flows at the loans' effective interest rates, at the loans'
observable market prices, or the fair value of the underlying collateral. Under
the Corporation's credit policies and practices, and in conjunction with
provisions within Statements No. 114 and No. 118, all nonaccrual and
restructured commercial, agricultural, construction, and commercial real estate
loans, meet the definition of impaired loans.
<TABLE>
<CAPTION>
(Dollars in thousands)
June 30, December 31, June 30,
1997 1996 1996
----------------- ---------------- ------------------
<S> <C> <C> <C>
Impaired Loans:
Non-accrual $7,248 9,579 7,799
Restructured 90 92 1,367
- - - --------------------------------------------------------------------------------------------------------
Total impaired loans 7,338 9,671 9,166
------------------ ---------------- ------------------
Other Loans:
Non-accrual 2,418 787 1,528
Restructured --- --- ---
- - - ---------------------------------------------------------------------------------------------------------
Total other nonperforming loans 2,418 787 1,528
- - - ---------------------------------------------------------------------------------------------------------
Total nonperforming loans 9,756 10,458 10,694
- - - ---------------------------------------------------------------------------------------------------------
Other real estate owned 571 118 795
------------------ ---------------- ------------------
Total nonperforming assets $10,327 10,576 11,489
=========================================================================================================
Loans past due 90 days or more
accruing interest $6,222 8,380 7,806
=========================================================================================================
Total nonperforming assets as a
percent of total loans 0.27% 0.29% 0.30%
=========================================================================================================
<FN>
N/A = Not Available
</TABLE>
There is no concentration of loans in any particular industry or group of
industries. Most of the Corporation's business activity is with customers
located within the state of Ohio.
<PAGE> 21
ALLOWANCE FOR LOAN LOSSES
The allowance for possible loan losses at June 30, 1997 totaled
$50,893,000 or 1.31% of total loans outstanding compared to $49,336,000 or 1.35%
and $47,772,000 or 1.24% at December 31, 1996 and June 30, 1996, respectively.
<TABLE>
<CAPTION>
(Dollars in thousands)
June 30, December 31, June 30,
1997 1996 1996
----------------- ----------------- ----------------
<S> <C> <C> <C>
Balance at beginning of year $49,336 46,840 46,840
Provision charged to
operating expenses 9,194 17,751 6,127
Loans charged off 13,245 21,230 7,965
Recoveries on loans
previously charged off 5,608 5,975 2,770
----------------- ----------------- ----------------
$50,893 49,336 47,772
================= ================= ================
Net charge offs as a percent
of average loans 0.40% 0.40% 0.27%
Allowance for possible loan losses:
As a percent of loans
outstanding at end of
period 1.31% 1.35% 1.24%
As a multiple of annualized net
charge offs 3.30X 3.23X 4.57X
</TABLE>
The Corporation's Credit Policy Division manages credit risk by establishing
common credit policies for its subsidiary banks, participating in approval of
their largest loans, conducting reviews of their loan portfolios, providing them
with centralized consumer underwriting, collections and loan operation services,
and overseeing their loan workouts. The Corporation's objective is to minimize
losses from its commercial lending activities and to maintain consumer losses at
acceptable levels that are stable and consistent with growth and profitability
objectives.
<PAGE> 22
Deposits
The following schedule illustrates the change in composition of the
average balances of deposits and average rates paid for the noted periods.
<TABLE>
<CAPTION>
(Dollars in Thousands)
Three months and year ended
--------------------------------------------------------------------------------
June 30, 1997 December 31, 1996 June 30, 1996
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand Deposits -
non-interest bearing $731,273 - 745,102 - $768,507 -
Demand Deposits -
interest bearing 447,398 1.51% 447,524 1.75% 453,118 1.76%
Savings Deposits 1,283,787 2.38% 1,399,011 2.32% 1,423,458 2.30%
Certificates and other
time deposits 1,696,932 5.36% 1,772,150 5.38% 1,746,516 5.37%
--------------- -------------- --------------
$4,159,390 3.08% 4,363,787 3.11% $4,391,599 3.06%
=============== ============== ==============
</TABLE>
The following table summarizes the certificates and other time deposits
in amounts of $100,000 or more as of June 30, 1997 by time remaining until
maturity.
<TABLE>
<CAPTION>
Amount
Maturing in: (Dollars in Thousands)
<S> <C>
Under 3 months $215,808
3 to 12 months 110,702
Over 12 months 35,584
-----------------------
$362,094
=======================
</TABLE>
<PAGE> 23
CAPITAL RESOURCES
Shareholders' equity at June 30, 1997 totaled $517,160,000 compared to
$523,707,000 at December 31, 1996 and $525,859,000 at June 30, 1996.
The following table reflects the various measures of capital:
<TABLE>
<CAPTION>
As of As of As of
June 30, December 31, June 30,
1997 1996 1996
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Total equity $517,160 9.73% 523,707 10.02% 525,859 9.50%
Common equity 517,160 9.73% 523,707 10.02% 525,859 9.50%
Tangible common equity (a) 513,932 9.67% 519,950 9.95% 520,887 9.42%
Tier 1 capital (b) 517,690 11.79% 523,911 12.63% 517,307 12.40%
Total risk-based capital
(c) 568,583 12.95% 573,247 13.82% 565,079 13.54%
Leverage (d) 517,690 9.89% 523,911 9.63% 512,335 9.33%
<FN>
a) Common equity less all intangibles; computed as a ratio to total assets
less intangible assets.
(b) Shareholders' equity minus net unrealized holding gains on equity
securities, plus or minus net unrealized holding losses or gains on
available for sale debt securities, less goodwill; computed as a ratio
to risk-adjusted assets, as defined in the 1992 risk-based capital
guidelines.
(c) Tier 1 capital plus qualifying loan loss allowance, computed as a ratio
to risk-adjusted assets, as defined in the 1992 risk-based capital
guidelines.
(d) Tier 1 capital; computed as a ratio to the latest quarter's average
assets less goodwill.
</TABLE>
The risk-based capital guidelines issued by the Federal Reserve Bank in
1988 require banks to maintain capital equal to 8% of risk-adjusted assets
effective December 31, 1993. At June 30, 1997 the Corporation's risk-based
capital equaled 12.95% of risk adjusted assets, far exceeding the minimum
guidelines.
The cash dividend of $0.29 paid in the second quarter has an indicated
annual rate of $1.16 per share.
<PAGE> 24
PART II. - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 9, 1997, the Registrant held its Annual Meeting of
Shareholders for which the Board of Directors solicited proxies. At
the Annual Meeting, the shareholders adopted all proposals stated in
the Proxy Statement dated February 26, 1997. The proposals voted on
and approved by the shareholders are as follows:
1. The election of five Class III directors, being:
For Against Abstain
John C. Blickle 26,931,067 * 230,218
Robert M. Carter 26,891,860 * 269,425
Terry L. Haines 26,936,245 * 225,040
Robert G. Merzweiller 26,931,283 * 230,002
Justin T. Rogers, Jr. 26,875,670 * 285,615
All other Class I and Class II directors continued in
their positions.
* Proxies provide that shareholders may either cast a vote for, or
abstain from voting for, directors.
2. Approval of the proposal to adopt the 1997 Stock Plan
by a vote of 24,827,665 for, 1,691,225 against and 642,395
abstaining.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) FORM 8-K
None
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRSTMERIT CORPORATION
By: /s/ JACK R. GRAVO
-----------------------------------------
Jack R. Gravo, Executive Vice President
Finance and Administration
DATE: August 13, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000354869
<NAME> FIRSTMERIT CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 203,276
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,590
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,072,734
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 1,072,734
<LOANS> 3,877,685
<ALLOWANCE> 50,893
<TOTAL-ASSETS> 5,317,118
<DEPOSITS> 4,202,816
<SHORT-TERM> 514,680
<LIABILITIES-OTHER> 82,462
<LONG-TERM> 0
<COMMON> 18,796
0
0
<OTHER-SE> 498,364
<TOTAL-LIABILITIES-AND-EQUITY> 5,317,118
<INTEREST-LOAN> 85,165
<INTEREST-INVEST> 17,041
<INTEREST-OTHER> 9
<INTEREST-TOTAL> 102,215
<INTEREST-DEPOSIT> 31,949
<INTEREST-EXPENSE> 37,974
<INTEREST-INCOME-NET> 64,241
<LOAN-LOSSES> 5,033
<SECURITIES-GAINS> 477
<EXPENSE-OTHER> 47,579
<INCOME-PRETAX> 31,447
<INCOME-PRE-EXTRAORDINARY> 31,447
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,319
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.67
<YIELD-ACTUAL> 5.35
<LOANS-NON> 2,418
<LOANS-PAST> 6,222
<LOANS-TROUBLED> 90
<LOANS-PROBLEM> 23,043
<ALLOWANCE-OPEN> 49,637
<CHARGE-OFFS> 6,323
<RECOVERIES> 2,546
<ALLOWANCE-CLOSE> 50,893
<ALLOWANCE-DOMESTIC> 50,893
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
