<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 15, 1999
FIRSTMERIT CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 0-10161 34-1339938
(State or other jurisdiction of (Commission (IRS employer
incorporation or organization) file number) identification number)
III CASCADE PLAZA, 7TH FLOOR AKRON, OHIO 44308 (330) 996-6300
(Address of Principal Executive Offices) (Zip Code) (Telephone Number)
Correspondence to:
Kevin C. O'Neil
Brouse McDowell LPA
500 First National Tower
Akron, Ohio 44308-1471
(330) 434-5207
[email protected]
<PAGE> 2
ITEM 5. OTHER EVENTS.
On February 12, 1999, FirstMerit Corporation ("FirstMerit") completed
its acquisition of Signal Corp ("Signal") whereby Signal was merged with and
into FirstMerit. FirstMerit is the surviving entity. The merger was completed
pursuant to the Agreement of Affiliation and Plan of Merger between Signal Corp,
dated August 10, 1998. The merger was structured as a tax-free exchange for
Signal shareholders who received FirstMerit common or preferred stock, and was
accounted for as a pooling-of-interest transaction.
On April 15, 1999, FirstMerit announced first quarter 1999 earnings.
These results reflect the restatement of both quarters financial information to
account for the acquisition of Signal Corp on February 12, 1999 on a
pooling-of-interests basis.
The terms of the merger are more fully described in the FirstMerit and
Signal Joint Proxy Statement/Prospectus dated October 27, 1998, included in
FirstMerit's Form S-4 Registration No.333-63797.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
2(a) Agreement of Affiliation and Plan of Merger dated August
10, 1998 by and between FirstMerit Corporation and Signal
Corp (Incorporated by reference from Exhibit 2(a) of Form
8-K filed by the registrant on August 18, 1998)
2(b) Signal Corp Stock Purchase Option dated August 11, 1998
(Incorporated by reference from Exhibit 2(b) of Form 8-K
filed by the registrant on August 18, 1998)
99 Text of FirstMerit Corporation Press Release dated
April 15, 1999
SIGNATURE
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 hereunto duly authorized.
FIRSTMERIT CORPORATION
Dated: April 19, 1999 By: /s/ Terry E. Patton
------------------------------
Terry E. Patton, Secretary
2
<PAGE> 3
FIRSTMERIT CORPORATION
CURRENT REPORT ON FORM 8-K
INDEX OF EXHIBITS
EXHIBIT
2(a) Agreement of Affiliation and Plan of Merger dated August
10, 1998 by and between FirstMerit Corporation and Signal
Corp. (Incorporated by reference from Exhibit 2(a) of
Form 8-K filed by the registrant on August 18, 1998)
2(b) Signal Corp Stock Purchase Option dated August 11, 1998
(Incorporated by reference from Exhibit 2(b) of Form 8-K
filed by the registrant on August 18, 1998)
99 Text of FirstMerit Corporation Press Release dated
April 15, 1999
3
<PAGE> 1
Exhibit 99
Firstmerit Announces 18 Percent Increase in First Quarter 1999 Per Share
Earnings
AKRON, Ohio, April 15 -- FirstMerit Corporation (Nasdaq: FMER) today announced
first quarter 1999 earnings of $37.6 million before merger-related and
extraordinary charges, a 28% increase over the $29.4 million earned in the first
quarter of 1998. Diluted earnings per share before these charges were $0.41 for
the first quarter of 1999, a 17.6% increase over the $0.35 per share earned one
year ago.
During the first quarter, charges consisted of $32.3 million related to the
Signal Corp acquisition and a $5.8 million extraordinary charge for the early
extinguishment of Signal debt. First quarter 1999 net income, as reported after
the merger-related charges and before the extraordinary charge, was $5.3
million, or $0.06 per share. The Corporation reported a first quarter net loss
of $0.5 million after the extraordinary charge. These results reflect the
restatement of both quarters financial information to account for the
acquisition of Signal Corp on February 12, 1999 on a pooling-of-interests basis.
Additionally, the 1999 results include the earnings of CoBancorp, which merged
with FirstMerit on May 22, 1998.
Adjusted to exclude merger-related and extraordinary charges, ROE for the first
quarter was 16.7% compared with 15.9% the prior year first quarter. ROA, on an
adjusted basis, was 1.68% compared with 1.52% the prior year.
John R. Cochran, Chairman and Chief Executive Officer, said, "We are pleased
with our results this quarter, which showed solid increases in earning assets
and revenues and continued improvement in the efficiency ratio. The Signal
merger has been completed and we look forward to a smooth integration and to
provide our new customers with the same high level of service and wide range of
product choices that have become a hallmark of FirstMerit.
"FirstMerit is off to a good start in 1999. We are committed to develop
additional strategies to enhance relationship banking in our local communities,
to continue our strong momentum of earnings growth and to provide superior value
to our shareholders," Mr. Cochran concluded.
First quarter 1999 net interest income on a fully tax-equivalent basis was $95.6
million compared to $84.0 million for the prior year period, an increase of
13.8%. This increase is primarily the result of a higher level of earning
assets, much of which can be attributed to the inclusion of CoBancorp for the
1999 quarter. Average earning assets increased 13.1% quarter-over-quarter, while
the net interest margin rose slightly, from 4.62% in the first quarter of 1998
to 4.65% for the 1999 first quarter.
Adjusted net revenue for the first quarter of 1999 was $128.1 million, an 11.4%
gain above the first quarter 1998 level of $115.0 million. A portion of the fee
increase is attributable to the contribution of CoBancorp in the 1999 quarter.
Excluding gains from the sale of securities, non-interest income was $32.5
million in 1999 compared with $31.0 million for the prior year quarter, an
increase of 4.8%. Income from manufactured housing and from loan sales and
servicing were less than 1998's first quarter but were more than offset by the
improvement in trust, credit card and other service fees. Fees as a percentage
of net revenues were 25.4% in the first quarter of 1999 and 27.0% for the 1998
period.
Excluding the $33.6 million charge relating to the Signal Corp merger,
non-interest expense totaled $71.8 million for the 1999 quarter compared with
$66.8 million for the 1998 first quarter period, an increase of 7.4%. As
mentioned previously, a portion of the increase is attributable to the inclusion
of CoBancorp in the first quarter of 1999. On an adjusted basis, first quarter
efficiency ratios were 53.9% in 1999 and 58.1% in 1998.
<PAGE> 2
Quarter-end assets for 1999 were $9.2 billion, an increase of 15.0% above the
$8.0 billion reported for the 1998 quarter. Earning assets at March 31, 1999
were $8.4 billion compared with $7.5 billion for the 1998 quarter, a gain of
12.7%. At period end, total loans, net of unearned interest, were $6.6 billion,
up 15.5% from March 31, 1998. Commercial loans continue to outpace overall
portfolio growth, up 27.0 % above the prior year, while mortgage loans, down 9.6
% from year earlier levels, continue to be securitized and sold as gains are
recognized and proceeds reinvested in higher-yielding commercial and installment
loans.
The provision for loan losses of $16.4 million in the first quarter of 1999
includes a merger-related increase of $10.2 million, compared with $6.2 million
in the first quarter of 1998. Net charge-offs as a percentage of average loans
outstanding were 0.72% for first quarter 1999 and the allowance as a percentage
of outstanding loans was 1.54% compared with 1.23% at the end of the prior year
quarter.
Total deposits grew 11.4%, ending the period at $6.7 billion compared to $6.0
billion for the prior year quarter. Certificates and other time deposits
declined 6.2%, but were strongly offset by 33.7% growth in aggregate demand
deposits and savings accounts. Deposits as a funding source remained unchanged
at approximately 80% of earning assets for both periods.
Shareholders' equity ended the quarter at $886.2 million, an increase of 20.9%,
or $153.1 million, above the prior year level of $733.1 million. Of this $153
million increase, $128 million was derived from the reissuance of treasury stock
and $49 million from proceeds of a secondary offering, both in connection with
the acquisitions of CoBancorp, Security First and Signal Corp. Dividends paid
were $16.5 million in the quarter and common shares outstanding totaled 91
million at March 31, 1999.
FirstMerit Corporation (Nasdaq: FMER) is a financial services company
headquartered in Akron, Ohio with assets of $9.1 billion as of March 31, 1999.
FirstMerit provides a complete range of banking and other financial services to
consumers and businesses through its core operations. Principal wholly-owned
subsidiaries include FirstMerit Bank, N.A., FirstMerit Mortgage Corporation,
FirstMerit Credit Life Insurance Company and FirstMerit Community Development
Corporation. With 177 banking offices in 22 Ohio and Western Pennsylvania
counties, FirstMerit has had three consecutive years of record earnings and
growth.
<PAGE> 3
Unaudited
FIRSTMERIT CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
================================================================================
<TABLE>
<CAPTION>
Merger & Adjusted Merger & Adjusted
1999 Conforming 1999 1998 Year-end Conforming Year-end
1st Qtr Expenses 1st Qtr 1st Qtr 1998 Expenses 1998
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
=======================================
Net interest income (fully tax-equivalent) $95,621 95,621 83,997 359,673 359,673
Provision for loan losses 16,398 (10,200) 6,198 6,164 40,921 40,921
Other income 38,049 32,581 140,148 140,148
Other expenses 105,416 (33,622) 71,794 66,849 345,029 345,029
Fully tax-equivalent adjustment 1,174 1,174 717 3,492 3,492
Income before extraordinary charge 5,343 (32,264) 37,607 29,373
Extraordinary charge, net of tax (5,847) (5,847)
Net income (loss) (504) (32,264) 31,760 29,373 72,517 21,297 93,814
Income before extraord. charge per share $0.06 (0.35) 0.41 0.35
Extraordinary charge per share (0.06) 0.00 (0.06) 0.00
Net income per share - diluted $0.00 (0.35) 0.35 0.35 0.82 0.24 1.06
PERFORMANCE RATIOS
=======================================
Return on average assets *** 0.24% -1.44% 1.68% 1.52% 0.85% 0.25% 1.10%
Return on average equity *** 2.37% -14.33% 16.70% 15.90% 8.61% 2.53% 11.14%
Net interest margin - fully tax-equivalent 4.65% 4.65% 4.62% 4.56% 4.56%
Efficiency ratio * 80.16% -26.24% 53.92% 57.03% 68.17% -4.62% 63.55%
Full time equivalent employees ** 3,468 2,665
MARKET DATA
=======================================
Book value per common share $9.72 (0.35) 10.08 8.05 9.97 (0.24) 10.21
Market value per common share 25.75 25.75 33.56 26.88
Market as a percentage of book 265% 256% 417% 270%
Cash dividends per common share $0.18 0.18 0.16 0.66 0.66
Common stock dividend payout ratio -- 51.43% 45.71% 80.62% 62.22%
Average basic common shares outstanding 91,007 91,007 91,007 83,383 86,377 86,377
Average diluted common shares outstanding 92,597 92,597 92,597 85,209 87,984 87,984 87,984
Period end common shares outstanding 91,081 91,081 91,081 79,185 89,995 89,995 89,995
Common stock market capitalization 2,345,324 2,657,461 2,418,609
ASSET QUALITY ****
=======================================
Gross charge-offs $15,090 6,017 32,934
Net charge-offs 11,501 3,272 20,723
Allowance for loan losses 102,359 61,228 96,149
Nonperforming assets (NPA) 17,969 20,188 23,213
Net charge-off ratio 0.72% 0.30% 0.34%
Allowance/loans 1.54% 1.23% 1.50%
NPA to loans + other real estate 0.28% 0.45% 0.36%
Allowance to nonperforming assets 569.64% 303.29% 414.20%
CAPITAL & LIQUIDITY
=======================================
Average equity to assets 10.08% 10.43% 9.55% 9.88%
Average equity to loans 14.02% 14.52% 13.05% 13.73%
Average loans to deposits 96.99% 96.99% 95.68% 94.99%
Primary capital to assets 10.77% 10.01% 9.96% 11.11%
AVERAGE BALANCES
=======================================
Assets $9,064,297 9,064,297 7,847,176 8,520,575
Deposits 6,715,679 6,715,679 5,998,937 6,455,209
Loans 6,513,576 6,513,576 5,739,783 6,131,665
Earning assets 8,337,976 8,337,976 7,374,258 7,892,086
Shareholders' equity 913,448 (32,264) 945,712 749,206 841,865
ENDING BALANCES
=======================================
Assets $9,175,178 9,175,178 7,977,108 9,026,024
Deposits 6,718,556 6,718,556 6,028,327 6,845,978
Loans 6,646,038 6,646,038 5,755,934 6,398,445
Intangible assets 166,529 166,529 49,170
Earning assets 8,435,542 8,435,542 7,485,377 8,308,450
Shareholders' equity 886,230 (32,264) 918,494 733,113 906,656 (21,297) 927,953
</TABLE>
Note: The merger and conforming expenses shown for 1998 ($21.3 million) also
include an $8.4 million loss from the sale of a former Signal subsidiary.
* - Excludes unusual charges.
** - 1st Qtr 1999 number includes full-time equivalent employees (FTEs) after
the 1998 and 1999 mergers of CoBancorp, Security First and Signal.
FTEs shown at year-end 1998 exclude Signal employees hired by FMER and
year-end 1997 FTEs exclude FTEs hired through merger activity.
*** - Ratios shown are based on income before the extraordinary charge.
**** - 1st Qtr 1998 asset quality information does not include Signal results.
