A tight rein on expenses lifted FirstMerit (FMER) in the third quarter.
Earnings at the $14.6 billion-asset Akron, Ohio, bank rose 10%, to $34.9 million, compared with a year earlier, it reported Tuesday. Noninterest expense fell 6.4%, to $108.5 million, over the same period.
The company reported earnings of 32 cents per common share, roughly in line with analysts’ estimates.
Net interest income was $117.8 million, down 1.4% from the third quarter of 2011. Noninterest income fell 3.5%, to $54.4 million. Net interest margin fell nine basis points, to 3.66%, primarily as a result of lower yields.
Both commercial and residential lending increased during the quarter. Commercial lending grew 10%, to $5.5 billion, from a year ago. Residential mortgage lending rose 10.5%, to $439 million.
The company recorded an efficiency ratio of 61.75%, compared with 64.78% in the third quarter of 2011.
"Our strong results in the third quarter reflect our continued focus on banking fundamentals in the face of ongoing industry challenges including a low-interest environment and slow economic recovery,” Paul Greig, FirstMerit’s chief executive, said in a news release. “Additionally, progress on our efficiency initiative is reflected in our lower operating expense levels and improved efficiency ratio compared against both prior and year ago quarterly periods.”
FirstMerit said it expects its pending deal for Citizens Republic Bancorp (CRBC) in Michigan to close in the second quarter of 2013. In September, FirstMerit announced it would buy Citizens for $912 million in stock. FirstMerit recorded a one-time charge of $1.1 million in the third quarter for professional and legal fees associated with the deal, which would double the company’s number of branches and extend its footprint into Michigan and Wisconsin.
Shares of FirstMerit were down 3%, to $13.80, in trading Tuesday afternoon.