Segment Information

9 Months Ended

Sep. 30, 2013

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 financial management practices 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, core business banking, 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, treasury management, government banking, international banking, merchant card and other depository products and services.

• 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 functions 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) to the 2012 Form 10-K. 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 three and nine months endedSeptember 30, 2013 and September 30, 2012:

																						FirstMerit
	Commercial					Retail				Wealth						Other						Consolidated
September 30, 2013	QTD			YTD		QTD		YTD		QTD			YTD			QTD			YTD			QTD		YTD
OPERATIONS:
Net interest income (loss)	$	106,443		$	277,468	$	99,548	$	239,922	$	3,613		$	11,162		$	(6,264	)	$	(15,835	)	$	203,340	$	512,717
Provision for loan losses	(27		)	6,866		905		7,071		(736		)	(570		)	6,237			10,267			6,379		23,634
Other income	21,364			60,980		30,723		88,916		13,216			34,347			5,787			13,680			71,090		197,923
Other expenses	57,033			151,587		96,153		235,518		14,650			38,698			43,542			82,140			211,378		507,943
Net income (loss)	46,021			116,997		21,589		56,061		1,894			4,796			(28,789		)	(51,344		)	40,715		126,510
AVERAGES:
Assets	8,685,333			8,020,824		5,659,553		4,646,817		266,028			255,538			9,402,680			7,709,479			24,013,594		20,632,658

																					FirstMerit
	Commercial				Retail				Wealth						Other						Consolidated
September 30, 2012	QTD		YTD		QTD		YTD		QTD			YTD			QTD			YTD			QTD		YTD
OPERATIONS:
Net interest income (loss)	$	65,446	$	193,776	$	51,181	$	158,745	$	4,223		$	13,412		$	(2,960	)	$	(10,333	)	$	117,890	$	355,600
Provision for loan losses	10,401		22,970		1,194		5,459		(519		)	(318		)	5,103			14,325			16,179		42,436
Other income	15,247		47,603		26,783		76,226		8,528			24,987			4,367			13,136			54,925		161,952
Other expenses	39,595		123,074		53,788		169,618		9,711			29,718			5,493			19,022			108,587		341,432
Net income (loss)	19,954		61,967		14,939		38,931		2,313			5,849			(2,253		)	(10,865		)	34,953		95,882
AVERAGES:
Assets	6,466,355		6,386,617		2,960,336		2,929,911		242,539			238,899			5,064,786			5,041,099			14,734,016		14,596,526