Segment Information

9 Months Ended

Sep. 30, 2015

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. Retail offers a variety of retail financial products and services including consumer direct and indirect installment loans, debit and credit 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, eliminating 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 2014 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. In the first quarter of 2014, Management changed the estimate regarding the funds transfer pricing crediting rate provided on non-maturity deposits.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.

Substantially all of the Corporation’s business is conducted in the United States of America. The following tables present a summary of financial results as of and for the three and nine months ended September 30, 2015 and September 30, 2014:

																					FirstMerit
(In thousands)	Commercial				Retail				Wealth						Other						Consolidated
September 30, 2015	QTD		YTD		QTD		YTD		QTD			YTD			QTD			YTD			QTD		YTD
OPERATIONS:
Net interest income/(loss)	$	101,800	$	304,630	$	93,089	$	277,616	$	5,595		$	16,527		$	(15,161	)	$	(42,709	)	$	185,323	$	556,064
Provision/ (recapture) for loan losses	611		2,370		6,470		22,451		(10		)	(181		)	7,204			6,849			14,275		31,489
Noninterest income	24,525		68,933		25,634		71,335		15,072			43,864			6,195			19,723			71,426		203,855
Noninterest expense	59,394		182,078		87,748		263,818		13,795			40,975			(195		)	(3,803		)	160,742		483,068
Net income/(loss)	43,108		122,924		15,928		40,743		4,474			12,737			(4,498		)	(3,669		)	59,012		172,735
AVERAGES:
Assets	$	9,457,387	$	9,449,821	$	6,101,141	$	5,967,011	$	299,049		$	297,333		$	9,360,279		$	9,369,444		$	25,217,856	$	25,083,609
Loans	9,558,281		9,533,074		5,856,383		5,710,709		290,054			287,687			55,409			57,974			15,760,127		15,589,444
Earning assets	9,880,128		9,834,806		5,863,020		5,718,783		290,054			287,687			6,515,775			6,494,407			22,548,977		22,335,683
Deposits	7,315,350		6,994,812		10,936,682		11,054,911		1,186,530			1,205,152			519,024			555,466			19,957,586		19,810,341
Economic capital	1,272,961		1,323,567		841,818		789,857		122,082			114,051			672,799			662,169			2,909,660		2,889,644

																					FirstMerit
(In thousands)	Commercial						Retail				Wealth				Other						Consolidated
September 30, 2014	QTD			YTD			QTD		YTD		QTD		YTD		QTD			YTD			QTD		YTD
OPERATIONS:
Net interest income/(loss)	$	104,177		$	314,600		$	96,833	$	287,287	$	5,246	$	14,963	$	(12,678	)	$	(33,793	)	$	193,578	$	583,057
Provision/ (recapture) for loan losses	(4,988		)	(628		)	9,791		30,573		362		713		4,028			8,324			9,192		38,982
Noninterest income	21,096			69,083			28,382		80,923		14,108		41,624		6,147			17,933			69,733		209,564
Noninterest expense	59,984			187,391			87,379		273,470		13,571		40,266		2,211			(1,249		)	163,145		499,878
Net income/(loss)	46,477			130,362			18,229		41,709		3,524		10,145		(4,333		)	(5,344		)	63,898		176,872
AVERAGES:
Assets	$	9,407,684		$	9,225,407		$	5,709,775	$	5,573,598	$	289,549	$	263,513	$	9,176,768		$	9,275,135		$	24,583,776	$	24,337,653
Loans	9,409,391			9,217,146			5,394,284		5,226,262		278,930		252,694		65,495			60,892			15,148,100		14,756,994
Earning assets	9,715,918			9,497,907			5,421,861		5,248,016		278,930		252,694		6,387,534			6,363,215			21,804,243		21,361,832
Deposits	6,777,220			6,656,638			11,335,468		11,601,531		1,139,703		1,066,981		279,409			229,499			19,531,800		19,554,649
Economic capital	1,339,923			1,313,571			757,722		735,499		102,989		100,127		607,252			620,897			2,807,886		2,770,095