Segment Information

12 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

Segment Information

Segment Information

Management monitors the Corporation’s results by an internal performance measurement system, which provides lines of business results and key performance measures. The profitability measurement system is based on internal management methodologies designed to produce consistent results and reflect the underlying economics of the businesses. The development and application of these methodologies is a dynamic process. Accordingly, these measurement tools and assumptions may be revised periodically to reflect methodological, product, and/or management organizational changes. Further, these tools measure financial results that support the strategic objectives and internal organizational structure of the Corporation. Consequently, the information presented is not necessarily comparable with similar information for other financial institutions.

A description of each business, selected financial performance, and the methodologies used to measure financial performance are presented below.

• Commercial – The commercial line of business provides a full range of lending, depository, and related financial services to middle-market corporate, industrial, financial, business banking (formerly known as small business), public entities, and leasing clients. Commercial also includes personal business from commercial loan clients in coordination with the Wealth Management segment. Products and services offered include commercial term loans, revolving credit arrangements, asset-based lending, leasing, commercial mortgages, real estate construction lending, letters of credit, cash management services and other depository products.

• Retail – The retail line of business includes consumer lending and deposit gathering, residential mortgage loan origination and servicing, and branch-based small business banking (formerly known as the “micro business” line). Retail offers a variety of retail financial products and services including consumer direct and indirect installment loans, debit and credit cards, debit gift cards, residential mortgage loans, home equity loans and lines of credit, deposit products, fixed and variable annuities and ATM network services. Deposit products include checking, savings, money market accounts and certificates of deposit.

• Wealth – The wealth line of business offers a broad array of asset management, private banking, financial planning, estate settlement and administration, credit and deposit products and services. Trust and investment services include personal trust and planning, investment management, estate settlement and administration services. Retirement plan services focus on investment management and fiduciary activities. Brokerage and insurance delivers retail mutual funds, other securities, variable and fixed annuities, personal disability and life insurance products and brokerage services. Private banking provides credit, deposit and asset management solutions for affluent clients.

• Other – The other line of business includes activities that are not directly attributable to one of the three principal lines of business. Included in the Other category are the parent company, eliminations companies, community development operations, the treasury group, which includes the securities portfolio, wholesale funding and asset liability management activities, and the economic impact of certain assets, capital and support function not specifically identifiable with the three primary lines of business.

The accounting policies of the lines of businesses are the same as those of the Corporation described in Note 1 (Summary of Significant Accounting Policies). Funds transfer pricing is used in the determination of net interest income by assigning a cost for funds used or credit for funds provided to assets and liabilities within each business unit. Assets and liabilities are match-funded based on their maturity, prepayment and/or repricing characteristics. As a result the three primary lines of business are generally insulated from changes in interest rates. Changes in net interest income due to changes in rates are reported in Other by the Treasury Group. Capital has been allocated on an economic risk basis. Loans and lines of credit have been allocated capital based upon their respective credit risk. Asset management holdings in the Wealth segment have been allocated capital based upon their respective market risk related to assets under management. Normal business operating risk has been allocated to each line of business by the level of noninterest expense. Mismatch between asset and liability cash flow as well as interest rate risk for mortgage servicing rights and the origination business franchise value have been allocated capital based upon their respective asset/liability management risk. The provision for loan loss is allocated based upon the actual net charge-offs of each respective line of business, adjusted for loan growth and changes in risk profile. Noninterest income and expenses directly attributable to a line of business are assigned to that line of business. Expenses for centrally provided services are allocated to the business line by various activity based cost formulas.

The Corporation’s business is conducted solely in the United States of America. The following tables present a summary of financial results as of and for the years ended December 31, 2011, 2010, and 2009:

						FirstMerit
December 31, 2011	Commercial	Retail	Wealth	Other		Consolidated
OPERATIONS:
Net interest income	265,196	225,580	18,764	(29,913	)	479,627
Provision for loan losses	38,830	21,672	3,479	10,407		74,388
Other income	57,940	103,248	31,684	31,885		224,757
Other expenses	148,338	235,339	40,004	40,664		464,345
Net income	134,746	62,048	7,122	(84,358	)	119,558
AVERAGES :
Assets	6,203,526	2,935,699	240,952	5,115,153		14,495,330
Loans	6,201,990	2,661,910	227,710	64,363		9,155,973
Earnings assets	6,281,589	2,712,133	228,191	3,506,811		12,728,724
Deposits	3,027,329	7,500,213	644,879	240,080		11,412,501
Economic Capital	368,434	223,772	50,871	905,276		1,548,353

						FirstMerit
December 31, 2010	Commercial	Retail	Wealth	Other		Consolidated
OPERATIONS:
Net interest income	250,597	214,118	19,548	(25,744	)	458,519
Provision for loan losses	54,065	36,249	2,668	(4,767	)	88,215
Other income	46,876	114,497	32,596	18,587		212,556
Other expenses	110,261	224,334	39,604	68,661		442,860
Net income	86,545	44,220	6,416	(34,272	)	102,909
AVERAGES :
Assets	5,404,883	2,983,395	278,143	4,857,930		13,524,351
Loans	5,394,135	2,698,502	266,522	170,144		8,529,303
Earnings assets	5,456,316	2,742,696	266,835	3,291,138		11,756,985
Deposits	2,516,201	7,015,468	578,876	339,886		10,450,431
Economic Capital	308,547	223,304	36,881	746,889		1,315,621

						FirstMerit
December 31, 2009	Commercial	Retail	Wealth	Other		Consolidated
OPERATIONS:
Net interest income	154,504	188,491	17,846	(12,077	)	348,764
Provision for loan losses	24,110	60,780	8,085	5,458		98,433
Other income	41,344	104,212	32,342	32,403		210,301
Other expenses	92,470	194,848	37,838	27,661		352,817
Net income	51,524	24,098	2,771	3,777		82,170
AVERAGES :
Assets	4,071,785	2,864,636	306,690	3,550,383		10,793,494
Loans	4,101,451	2,685,133	297,589	72,810		7,156,983
Earnings assets	4,135,791	2,712,068	297,589	2,779,786		9,925,234
Deposits	1,934,036	4,708,554	533,039	333,959		7,509,588
Economic Capital	258,925	188,586	42,796	559,618		1,049,925