Aided by gains in fee income, lower expenses and double-digit commercial loan growth, FirstMerit in Akron, Ohio, reported a profit of $59.5 million in the second quarter, up nearly 23% from the same period in last year.
Earnings per share rose nearly 21% year over year, to 35 cents, but fell a penny shy of estimates of analysts polled by Bloomberg.
The $24.6 billion-asset company said in a news release that net interest income fell 1% year over year, to $199.7 million, and that its net interest margin compressed by 37 basis points, to 3.75%. It attributed those declines to shrinking loan yields and a reduction in the size of the loan portfolio it inherited from Citizens Republic Bancorp of Flint, Mich. It bought Citizens Republic in April 2013.
Overall, however, net loans increased nearly 6% year over year, to $14.8 billion, thanks largely to a 22% gain in commercial loans.
Noninterest income rose 4.5% year over year, to $72.5 million, even as the company spent roughly $4 million closing and consolidating branches. It attributed the increase primarily to gains in automated teller machine fees as well as fees from investment services and insurance.
Noninterest expenses decreased 11.4%, to $167.4 million, as salary and benefits costs fell 15%, to $89.5 million, and fees it paid to professional services firms declined 72%, to $4.7 million.
FirstMerit's shares were trading at $18.84 midday Tuesday, up 0.9% from Monday's close.