Shareholders' Equity

9 Months Ended

Sep. 30, 2013

Shareholders' Equity [Abstract]

Stockholders' Equity Note Disclosure

Shareholders' Equity

Citizens Acquisition

On April 12, 2013, the Corporation completed the acquisition of Citizens, which resulted in all of Citizens' common stock being converted into the right to receive 1.37 shares of the Corporation's Common Stock. The conversion of Citizens' common stock into the Corporation's Common Stock resulted in the Corporation issuing 55,468,283 shares of its common stock. Additionally, a warrant issued by Citizens to the U.S. Treasury to purchase up to 1,757,812.5 shares of Citizens' common stock has been converted into a warrant issued by the Corporation to the U.S. Treasury to purchase 2,408,203 shares of FirstMerit Common Stock at an exercise price of $18.69. The warrant qualifies as Tier 1 capital and is exercisable in whole or in part since the execution date of April 12, 2013. The warrant has an expiration date of December 12, 2018. Additional information about the acquisition is included in Note 2 (Business Combinations).

Preferred Stock

The Corporation has 7,000,000 shares of authorized Preferred Stock. and has designated 115,000 shares of its Preferred Stock as 5.875% Non-Cumulative Perpetual Preferred Stock, Series A. On February 4, 2013, the Corporation issued 100,000 shares of its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, which began paying cash dividends on May 4, 2013, quarterly in arrears on the 4th day of February, May, August and November.

Earnings Per Share

The Corporation calculates EPS using the two-class method. The two-class method allocates net income to each class of Common Stock and participating security according to the common dividends declared and participation rights in undistributed earnings. Participating securities consist of unvested stock-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents. The Corporation also uses the treasury stock method to calculate dilutive EPS. The treasury stock method assumes that the Corporation uses the proceeds from a hypothetical exercise of options the warrant issued to the U.S. Treasury to repurchase Common Stock at the average market price during the period. Dilutive EPS is reported using the lessor of the the two-class method or the treasury stock method.

The reconciliation between basic and diluted EPS using the two-class method and treasury stock method is presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Basic EPS:
Net income	$	40,715	$	34,953	126,510		$	95,882
Less:
Cash dividends on 5.875% non-cumulative perpetual series A, preferred stock	1,469		—		3,868		—
Income allocated to participating securities	309		156		1,098		87
Net income attributable to common shareholders	$	38,937	$	34,797	$	121,544	$	95,795
Average common shares outstanding	166,323		110,682		145,681		110,282
Less: participating shares included in average shares outstanding	1,279		1,037		1,279		809
Average common shares outstanding used in basic EPS	165,044		109,645		144,402		109,473
Basic net income per share	$	0.24	$	0.32	$	0.84	$	0.88
Diluted EPS:
Net income attributable to common shareholders	$	38,937	$	34,797	$	121,544	$	95,795
Add: Undistributed earnings allocated to unvested securities	105		176		485		342
Less: Undistributed earnings reallocated participating securities	105		176		485		342
Income used in diluted earnings per share calculation	$	38,937	$	34,797	$	121,544	$	95,795
Average common shares outstanding	166,323		110,682		145,681		110,282
Add: Common Stock equivalents:
Warrant and stock plans	3,872		—		2,939		—
Less: participating shares included in average shares outstanding	1,279		1,037		1,279		809
Average common and Common Stock equivalent shares outstanding	168,916		109,645		147,341		109,473
Diluted net income per share	$	0.23	$	0.32	$	0.82	$	0.88

Potential common shares consist of employee stock options and the Common Stock warrant. These potential common shares do not enter into the calculation of diluted EPS if the impact would be anti-dilutive, that is, increase EPS or reduce a loss per share. Antidilutive potential common shares for the three months ended September 30,2012 totaled $1.8 million and $2.4 million and $1.8 million for the nine months endedSeptember 30,2013 and 2012.