FirstMerit in Akron, Ohio, reported lower second-quarter profit on shrinking interest and fee income, despite successful cost-cutting measures.
The $25.3 billion-asset company's net income dropped 5.1% to $54.6 million, from a year earlier. Earnings of 33 cents per share was a penny short of the average estimate of analysts polled by Bloomberg.
Net interest income fell 5.3% to $185.1 million. Total loans rose 4.9% to $15.7 billion. However, interest income from loans fell 6.2% to $161.9 million. The net interest margin, on a tax-equivalent basis, tightened to 3.39%.
Noninterest income fell 8.2% to $66.6 million, on lower income from deposit service charges, loan sales and servicing income and other operating income. FirstMerit's noninterest income was reduced by $1.8 million from costs to close branches.
Noninterest expense fell 3.4% to $161.7 million. FirstMerit "achieved operating expense levels within our longer term cost-reduction goals," Paul Greig, chairman and chief executive, said in a news release. The drop came mostly from reductions in salaries and other operating expenses. The efficiency ratio worsened to 62.37%.