FirstMerit Corp. said Monday that its 1999 earnings will not be hurt by an unexpected loss posted by Signal Corp., a rival Ohio bank it bought last month.

FirstMerit bought Signal for about $420 million, in a deal that closed Feb. 12, to expand its specialty financing business. FirstMerit said Signal had a loss of $25.7 million in 1998. It had a $17.45 million profit the previous year.

Signal of Wooster, Ohio, took $39.5 million of pretax charges to write down the value of asset-backed securities from its manufactured-housing lending business and to increase its allowance for possible loan losses.

FirstMerit said it is realizing higher-than-expected cost savings from the merger. As a result of the charges taken by Signal, FirstMerit expects its restructuring charge to be lower than expected for the first quarter.

"We continue to be on track with our original expectations for this transaction" to be 1% accretive this year and 3% accretive in 2000, John Cochran, chairman and chief executive of FirstMerit, said in a statement. "In fact, we hope to exceed these expectations, based on the success in achieving cost savings and unanticipated fee income opportunities we are seeing from the combination of FirstMerit and Signal."

FirstMerit's stock fell 9 cents, to $26.91, in afternoon trading. FirstMerit has $9.1 billion of assets and branches in Ohio and in Lawrence County, Pa.

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