Segment Information

6 Months Ended

Jun. 30, 2016

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 2015 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. Mismatches between asset and liability cash flows as well as interest rate risk for mortgage servicing rights and mortgage origination business 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 six months ended June 30, 2016 and June 30, 2015:

																					FirstMerit
(In thousands)	Commercial				Retail				Wealth						Other						Consolidated
June 30, 2016	QTD		YTD		QTD		YTD		QTD			YTD			QTD			YTD			QTD		YTD
OPERATIONS:
Net interest income/(loss)	$	101,313	$	203,932	$	94,369	$	189,096	$	6,314		$	12,867		$	(15,918	)	$	(34,661	)	$	186,078	$	371,234
Provision/ (recapture) for loan losses	1,070		6,842		5,123		9,169		(20		)	(175		)	218			(1,636		)	6,391		14,200
Noninterest income	20,782		41,961		22,079		45,673		15,129			29,437			7,125			15,438			65,115		132,509
Noninterest expense	57,201		118,221		84,880		173,575		13,883			27,236			4,356			8,251			160,320		327,283
Net income/(loss)	41,486		78,539		17,189		33,816		4,927			9,908			(5,293		)	(9,818		)	58,309		112,445
AVERAGES:
Assets	$	9,600,103	$	9,596,152	$	6,370,350	$	6,301,303	$	314,752		$	310,159		$	9,638,361		$	9,639,033		$	25,923,566	$	25,846,647
Loans	9,721,866		9,715,827		6,173,352		6,097,054		306,028			301,586			41,656			46,706			16,242,902		16,161,173
Earning assets	10,081,198		10,077,716		6,178,619		6,103,154		306,028			301,586			6,555,458			6,523,236			23,121,303		23,005,692
Deposits	7,269,121		7,373,805		11,003,769		11,014,512		1,284,516			1,302,113			1,410,044			1,111,129			20,967,450		20,801,559
Economic capital	1,251,845		1,252,069		867,958		870,360		121,824			126,706			770,591			742,055			3,012,218		2,991,190

																					FirstMerit
(In thousands)	Commercial				Retail				Wealth						Other						Consolidated
June 30, 2015	QTD		YTD		QTD		YTD		QTD			YTD			QTD			YTD			QTD		YTD
OPERATIONS:
Net interest income/(loss)	$	101,342	$	202,830	$	92,501	$	184,527	$	5,452		$	10,932		$	(14,177	)	$	(27,548	)	$	185,118	$	370,741
Provision/ (recapture) for loan losses	2,285		1,759		8,447		15,981		(1		)	(171		)	(1,765		)	(355		)	8,966		17,214
Noninterest income	21,918		44,408		23,964		45,701		14,816			28,792			5,884			13,528			66,582		132,429
Noninterest expense	61,032		122,685		87,799		176,070		13,461			27,181			(618		)	(3,610		)	161,674		322,326
Net income/(loss)	38,963		79,816		13,142		24,815		4,425			8,264			54			828			56,584		113,723
AVERAGES:
Assets	$	9,437,824	$	9,445,975	$	5,951,665	$	5,898,835	$	290,798		$	296,461		$	9,449,572		$	9,374,463		$	25,129,859	$	25,015,734
Loans	9,533,843		9,520,262		5,702,015		5,636,666		281,013			286,484			60,490			59,274			15,577,361		15,502,686
Earning assets	9,828,867		9,811,770		5,707,400		5,645,469		281,013			286,484			6,535,441			6,483,544			22,352,721		22,227,267
Deposits	6,777,434		6,831,887		11,105,954		11,115,005		1,188,563			1,214,617			610,711			573,990			19,682,662		19,735,499
Economic capital	1,355,049		1,349,289		767,803		763,446		111,770			109,969			657,810			656,765			2,892,432		2,879,469