SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2006

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

COMMISSION FILE NUMBER 0-10161

FIRSTMERIT CORPORATION

(Exact name of registrant as specified in its charter)

OHIO
(State or other jurisdiction of
incorporation or organization) 34-1339938
(IRS Employer Identification
Number)

III CASCADE PLAZA, 7TH FLOOR, AKRON, OHIO
44308-1103
(Address of principal executive offices)

(330) 996-6300
(Telephone Number)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

     As of October 31, 2006, 80,083,433 shares, without par value, were outstanding.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	ITEM 1. Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 1A. RISK FACTORS
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EX-31.1
EX-31.2
EX-32.1

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands)
(Unaudited, except December 31, 2005, which is derived from the	September 30,			December 31,			September 30,
audited financial statements)	2006			2005			2005
ASSETS
Cash and due from banks	$	196,116			225,953			216,236
Investment securities (at fair value) and federal funds sold		2,372,484			2,546,496			2,679,650
Loans held for sale		55,010			42,566			54,243
Loans:
Commercial loans		3,733,734			3,519,483			3,503,276
Mortgage loans		613,332			628,581			634,914
Installment loans		1,622,355			1,524,355			1,578,883
Home equity loans		748,307			778,697			765,476
Credit card loans		140,143			145,592			140,314
Leases		59,476			70,619			72,427
Total loans		6,917,347			6,667,327			6,695,290
Less allowance for loan losses		(88,755	)		(90,661	)		(92,780	)
Net loans		6,828,592			6,576,666			6,602,510
Premises and equipment, net		121,008			120,420			115,916
Goodwill		139,245			139,245			139,245
Intangible assets		3,088			3,756			3,980
Accrued interest receivable and other assets		502,425			499,257			478,463
Total assets	$	10,217,968			10,154,359			10,290,243
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand-non-interest bearing	$	1,419,002			1,523,731			1,472,471
Demand-interest bearing		784,226			830,248			878,851
Savings and money market accounts		2,216,732			2,304,177			2,307,824
Certificates and other time deposits		2,969,673			2,575,494			2,692,880
Total deposits		7,389,633			7,233,650			7,352,026
Securities sold under agreements to repurchase		1,269,040			1,426,037			1,465,697
Wholesale borrowings		509,129			401,104			352,250
Accrued taxes, expenses, and other liabilities		146,783			155,988			147,922
Total liabilities		9,314,585			9,216,779			9,317,895
Commitments and contingencies
Shareholders’ equity:
Preferred stock, without par value:
authorized and unissued 7,000,000 shares		—			—			—
Preferred stock, Series A, without par value:
designated 800,000 shares; none outstanding		—			—			—
Convertible preferred stock, Series B, without par value:
designated 220,000 shares; none outstanding		—			—			—
Common stock, without par value:
authorized 300,000,000 shares; issued 92,026,350 at September 30, 2006, December 31, 2005 and September 30, 2005		127,937			127,937			127,937
Capital surplus		106,182			108,210			108,711
Accumulated other comprehensive loss		(38,143	)		(42,850	)		(33,923	)
Retained earnings		1,015,249			994,487			990,219
Treasury stock, at cost, 11,954,829, 9,691,424 and 8,584,782 shares at September 30, 2006, December 31, 2005 and September 30, 2005, respectively		(307,842	)		(250,204	)		(220,596	)
Total shareholders’ equity		903,383			937,580			972,348
Total liabilities and shareholders’ equity	$	10,217,968			10,154,359			10,290,243

The accompanying notes are an integral part of the consolidated financial statements.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)	Quarters ended					Nine months ended
(In thousands except per share data)	September 30,					September 30,
	2006		2005			2006			2005
Interest income:
Interest and fees on loans, including held for sale	$	129,890		111,169			371,080			317,293
Interest and dividends on investment securities and federal funds sold		25,131		26,700			75,283			82,194
Total interest income		155,021		137,869			446,363			399,487
Interest expense:
Interest on deposits:
Demand-interest bearing		2,241		1,732			7,186			3,918
Savings and money market accounts		13,188		8,700			36,015			22,592
Certificates and other time deposits		32,881		21,637			88,308			62,933
Interest on securities sold under agreements to repurchase		15,878		12,535			40,758			32,000
Interest on wholesale borrowings		5,746		5,559			17,306			16,551
Total interest expense		69,934		50,163			189,573			137,994
Net interest income		85,087		87,706			256,790			261,493
Provision for loan losses		12,612		9,974			31,877			27,560
Net interest income after provision for loan losses		72,475		77,732			224,913			233,933
Other income:
Trust department income		5,721		5,515			16,859			16,704
Service charges on deposits		19,250		18,561			53,326			51,181
Credit card fees		11,251		10,437			33,400			30,371
ATM and other service fees		3,301		3,453			9,682			9,710
Bank owned life insurance income		3,042		3,074			11,338			9,172
Investment services and insurance		2,631		2,226			7,809			7,912
Investment securities gains, net		2		40			22			1,887
Loan sales and servicing income		1,731		2,076			6,009			4,729
Other operating income		2,412		2,464			8,371			11,214
Total other income		49,341		47,846			146,816			142,880
Other expenses:
Salaries, wages, pension and employee benefits		43,248		42,149			133,000			122,893
Net occupancy expense		6,002		5,567			18,671			17,984
Equipment expense		3,097		2,962			8,969			9,149
Stationery, supplies and postage		2,423		2,559			7,279			7,504
Bankcard, loan processing and other costs		7,459		5,802			20,703			16,970
Professional services		5,470		2,632			11,971			8,625
Amortization of intangibles		222		222			667			667
Other operating expense		9,062		17,033			42,840			50,442
Total other expenses		76,983		78,926			244,100			234,234
Income before federal income tax expense		44,833		46,652			127,629			142,579
Federal income tax expense		13,629		10,058			38,800			39,752
Net income	$	31,204		36,594			88,829			102,827
Other comprehensive income (loss), net of taxes
Unrealized securities’ holding gain (loss), net of taxes		23,868		(14,541	)		5,468			(19,156	)
Unrealized hedging gain (loss), net of taxes		3		295			(747	)		851
Minimum pension liability adjustment, net of taxes		—		—			—			(183	)
Less: reclassification adjustment for securities’ gains losses realized in net income, net of taxes		1		26			14			1,227
Total other comprehensive income (loss), net of taxes		23,870		(14,272	)		4,707			(19,715	)
Comprehensive income	$	55,074		22,322			93,536			83,112
Net income applicable to common shares	$	31,204		36,594			88,829			102,827
Net income used in diluted EPS calculation	$	31,209		36,601			88,844			102,848
Weighted average number of common shares outstanding — basic		80,066		83,489			80,140			83,727
Weighted average number of common shares outstanding — diluted		80,262		83,978			80,365			84,105
Basic earnings per share	$	0.39		0.44			1.11			1.23
Diluted earnings per share	$	0.39		0.43			1.11			1.22
Dividend per share	$	0.29		0.28			0.85			0.82

The accompanying notes are an integral part of the consolidated financial statements.

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine months ended September 30,
(Unaudited)	2006			2005
	(In thousands)
Operating Activities
Net income	$	88,829			102,827
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		31,877			27,560
Provision for depreciation and amortization		10,981			10,139
Amortization of investment securities premiums, net		1,699			3,407
Accretion of income for lease financing		(2,828	)		(3,419	)
Gains on sales and calls of investment securities, net		(22	)		(1,887	)
Increase in interest receivable		(4,796	)		(1,868	)
Increase in interest payable		10,469			5,861
Increase (decrease) in employee pension liability		6,221			(11,541	)
Increase in bank owned life insurance		(7,320	)		(9,173	)
Increase (decrease) in Ohio franchise tax payable		(10,629	)		11,033
Originations of loans held for sale		(234,468	)		(303,784	)
Proceeds from sales of loans, primarily mortgage loans sold in the secondary mortgage markets		229,279			296,810
(Gains) losses on sales of loans, net		(138	)		1,124
Amortization of intangible assets		667			667
Other changes		(4,450	)		(8,877	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		115,371			118,879
Investing Activities
Dispositions of investment securities:
Available-for-sale — sales		—			87,524
Available-for-sale — maturities		642,518			381,115
Purchases of available-for-sale investment securities		(461,793	)		(316,990	)
Net increase in loans and leases, excluding sales		(288,841	)		(290,864	)
Purchases of premises and equipment		(13,651	)		(6,014	)
Sales of premises and equipment		2,082			1,157
NET CASH USED IN INVESTING ACTIVITIES		(119,685	)		(144,072	)
Financing Activities
Net increase (decrease) in demand accounts		(150,751	)		39,184
Net decrease in savings and money market accounts		(87,445	)		(76,686	)
Net increase in certificates and other time deposits		394,179			24,081
Net increase (decrease) in securities sold under agreements to repurchase		(156,997	)		129,226
Net increase in wholesale borrowings		108,025			49,868
Cash dividends — common		(68,067	)		(69,410	)
Purchase of treasury shares		(65,430	)		(30,604	)
Proceeds from exercise of stock options, conversion of debentures or conversion of preferred stock		963			6,718
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(25,523	)		72,377
Increase (decrease) in cash and cash equivalents		(29,837	)		47,184
Cash and cash equivalents at beginning of period		225,953			169,052
Cash and cash equivalents at end of period	$	196,116			216,236
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest, net of amounts capitalized	$	108,136			77,569
Federal income taxes	$	37,770			30,030

The accompanying notes are an integral part of the consolidated financial statements.

FirstMerit Corporation and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2006 (Unaudited) (Dollars in thousands except per share data)

1. Company Organization and Financial Presentation — FirstMerit Corporation (“Corporation”) is a bank holding company whose principal asset is the common stock of its wholly-owned subsidiary, FirstMerit Bank, N. A. The Corporation’s other subsidiaries include Citizens Savings Corporation of Stark County, FirstMerit Capital Trust I, FirstMerit Community Development Corporation, FMT, Inc., SF Development Corp and Realty Facility Holdings XV, L.L.C.

     The consolidated balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date. The accompanying unaudited interim financial statements reflect all adjustments (consisting only of normally recurring accruals) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the rules of the Securities and Exchange Commission (“SEC”). The consolidated financial statements of the Corporation as of September 30, 2006 and 2005 and for the nine months ended September 30, 2006 and 2005 are not necessarily indicative of the results that may be achieved for the full fiscal year or for any future period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2005.

     Certain previously reported amounts have been reclassified to conform to the current reporting presentation.

2. Recent Accounting Pronouncements -During February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Standards (“SFAS”) No. 156 “Accounting for Servicing of Financial Assets,” which amends SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value. Should a company not elect to use the fair value method for subsequent measurement, the company would continue to use the amortization method previously required by SFAS No. 140, under which the servicing asset or servicing liability is amortized and periodically evaluated for impairment. SFAS No. 156 permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. SFAS No.156 is effective for the first fiscal year that begins after September 15, 2006, but permits earlier adoption. Management has not elected to early adopt and does not anticipate that adoption will have a material impact on the Corporation’s consolidated financial condition or results of operations.

     During February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments” which amends SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that

otherwise would require bifurcation. It also clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133 and establishes a requirement to evaluate interests in securitized financial assets to identify interests that contain an embedded derivative requiring bifurcation. This statement is effective for all financial instruments acquired or issued after the beginning of the entity’s first fiscal year that begins after September 15, 2006. Management is currently evaluating the impact of SFAS No. 155 and does not anticipate that it will have a material impact on the Corporation’s consolidated financial condition or results of operations.

     On July 13, 2006, the FASB issued FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes (“FIN 48”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109 “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This interpretation is effective for fiscal years beginning after December 15, 2006. Management is currently evaluating the impact of FIN 48 and does not anticipate that it will have a material impact on the Corporation’s consolidated financial condition or results of operations.

     On July 13, 2006 the FASB also issued FASB Staff Position (“FSP”) FAS 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction.” This FSP amends SFAS No. 13 to require a lessor in a leveraged-lease transaction to recalculate the leveraged lease for the effect of a change or projected change in the timing of cash flows relating to income taxes that are generated by the leveraged lease. Management is currently evaluating the impact of FSP FAS 13-2 and does not anticipate that it will have a material impact on the Corporation’s consolidated financial condition or results of operations.

     During September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This standard establishes a standard definition for fair value, establishes a framework under generally accepted accounting principles for measuring fair value and expands disclosure requirements for fair value measurements. This standard is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Corporation has not yet assessed the impact of adopting SFAS No. 157.

     During September 2006, The FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R).” This standard requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur as a component of comprehensive income. The standard also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position.

     The requirement to recognize the funded status of a defined benefit postretirement plan is effective as of the end of the fiscal year ending after December 15, 2006. The Corporation will utilize the required prospective transition method of adoption. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end

statement of financial position is effective for the fiscal years ending after December 15, 2008. Although the Corporation's primary qualified pension plan is fully funded on an ERISA funding basis, the December 31, 2006 adoption of this statement is currently expected to reduce stockholders’ equity, net of tax, by approximately $45 million to $50 million due to the requirement in SFAS No. 158 that an employer recognize any previously unrecognized actuarial gains and losses and prior service costs, net of tax, in accumulated other comprehensive income, a component of stockholders’ equity.

     During September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 108 (SAB 108), “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB 108 provides guidance on the consideration of the effects of prior year unadjusted errors in quantifying current year misstatements for the purpose of materiality assessments. It is effective for the fiscal year ending May 31, 2007. Management is currently evaluating the impact of SAB 108 and does not anticipate that it will have a material impact on the Corporation’s consolidated financial condition or results of operations.

3. Investment Securities — All investment securities of the Corporation are classified as available-for-sale. The available-for-sale classification provides the Corporation with more flexibility to respond, through the portfolio, to changes in market interest rates, or to increases in loan demand or deposit withdrawals.

     The components of investment securities are as follows:

	September 30, 2006
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
U.S. Government agency obligations	$	892,116		412		16,932		875,596
Obligations of state and political subdivisions		132,159		2,117		33		134,243
Mortgage-backed securities		1,150,847		520		38,692		1,112,675
Other securities		248,382		2,967		1,379		249,970
	$	2,423,504		6,016		57,036		2,372,484

	Book Value		Fair Value
Due in one year or less	$	330,507		326,367
Due after one year through five years		1,822,233		1,773,279
Due after five years through ten years		110,046		108,649
Due after ten years		160,718		164,189
	$	2,423,504		2,372,484

	December 31, 2005
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
U.S. Government agency obligations	$	926,459		1		22,056		904,404
Obligations of state and political subdivisions		92,378		1,512		53		93,837
Mortgage-backed securities		1,338,694		819		39,964		1,299,549
Other securities		248,376		2,071		1,741		248,706
	$	2,605,907		4,403		63,814		2,546,496

			Fair
	Book Value		Value
Due in one year or less	$	150,505		149,204
Due after one year through five years		2,158,175		2,101,053
Due after five years through ten years		178,355		176,118
Due after ten years		118,872		120,121
	$	2,605,907		2,546,496

	September 30, 2005
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
U.S. Treasury securities		747		34		3		778
U.S. Government agency obligations	$	973,290		434		13,200		960,524
Obligations of state and political subdivisions		100,128		2,474		30		102,572
Mortgage-backed securities		1,526,454		2,090		20,409		1,508,135
Other securities		255,805		1,599		1,286		256,118
	$	2,856,424		6,631		34,928		2,828,127

			Fair
	Book Value		Value
Due in one year or less	$	140,094		138,877
Due after one year through five years		2,326,571		2,297,868
Due after five years through ten years		256,565		256,768
Due after ten years		133,194		134,614
	$	2,856,424		2,828,127

     Expected maturities will differ from contractual maturities based on the issuers’ rights to call or prepay obligations with or without call or prepayment penalties. Securities with remaining maturities over five years consist of mortgage and asset backed securities.

     The carrying amount of investment securities pledged to secure trust and public deposits and for purposes required or permitted by law amounted to approximately $1.9 billion at September 30, 2006, $1.9 billion at December 31, 2005, and $2.2 billion at September 30, 2005.

     At September 30, 2006, December 31, 2005 and September 30, 2005, the Corporation’s investment in Federal Reserve Bank (“FRB”) common stock was $8.6 million for each period. At September 30, 2006, December 31, 2005 and September 30, 2005, the Corporation’s investment in Federal Home Loan Bank (“FHLB”) stock amounted to $112.8 million, $108.1 million and $106.5 million, respectively and is included in other securities in the preceding table. FRB and FHLB stock are classified as a restricted investment, carried at cost, and their value is determined by the ultimate recoverability of par value.

     The following tables show the unrealized losses that have not been recognized as other-than-temporary in accordance with FASB Staff Position (“FSP) No. FAS 115-1. Management believes that due to the credit-worthiness of the issuers and the fact that the Corporation has the intent and the ability to hold the securities for the period necessary to recover the cost of the securities, the decline in the fair values is temporary in nature.

	At September 30, 2006
	Less than 12 months					12 months or longer							Total
											No.
			Unrealized					Unrealized			Securities				Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Impaired		Fair Value		Losses
U.S. Government agency obligations	$	30,033		(27	)		745,151		(16,905	)		39		775,184		(16,932	)
Obligations of states and political subdivisions		—		—			2,315		(33	)		4		2,315		(33	)
Mortgage-backed securities		38,613		(800	)		1,025,683		(37,892	)		60		1,064,296		(38,692	)
Other securities		—		—			60,915		(1,379	)		6		60,915		(1,379	)
Total temporarily impaired securities	$	68,646		(827	)		1,834,064		(56,209	)		109		1,902,710		(57,036	)

	At December 31, 2005
	Less than 12 months					12 months or longer							Total
											No.
			Unrealized					Unrealized			Securities				Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Impaired		Fair Value		Losses
U.S. Government agency obligations	$	289,001		(5,361	)		615,319		(16,695	)		33		904,320		(22,056	)
Obligations of states and political subdivisions		3,795		(11	)		1,988		(42	)		3		5,783		(53	)
Mortgage-backed securities		420,506		(7,630	)		834,827		(32,334	)		41		1,255,333		(39,964	)
Other securities		79,095		(1,232	)		14,403		(509	)		3		93,498		(1,741	)
Total temporarily impaired securities	$	792,397		(14,234	)		1,466,537		(49,580	)		80		2,258,934		(63,814	)

	At September 30, 2005
	Less than 12 months					12 months or longer							Total
											No.
			Unrealized					Unrealized			Securities				Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Impaired		Fair Value		Losses
U.S. Treasury securities	$	244		(6	)		—		—			—		244		(6	)
U.S. Government agency obligations		412,097		(5,809	)		517,478		(13,274	)		29		929,575		(19,083	)
Obligations of states and political subdivisions		4,601		(18	)		1,718		(22	)		2		6,319		(40	)
Mortgage-backed securities		673,039		(10,751	)		666,976		(23,983	)		33		1,340,015		(34,734	)
Other securities		70,744		(986	)		14,314		(597	)		3		85,058		(1,583	)
Total temporarily impaired securities	$	1,160,725		(17,570	)		1,200,486		(37,876	)		67		2,361,211		(55,446	)

     4. Allowance for loan losses (“ALL”) — The Corporation’s Credit Policy Division manages credit risk by establishing common credit policies for its subsidiary bank, participating in approval of its loans, conducting reviews of loan portfolios, providing centralized consumer underwriting, collections and loan operation services, and overseeing loan workouts. The Corporation’s objective is to minimize losses from its commercial lending activities and to maintain consumer losses at acceptable levels that are stable and consistent with growth and profitability objectives.

     The activity within the ALL for the three and nine months ended September 30, 2006 and 2005 and the full year ended December 31, 2005 is shown in the following table:

					Nine		Nine
	Quarter ended		Quarter ended		months ended		months ended		Year ended
	September 30,		September 30,		September 30,		September 30,		December 31,
	2006		2005		2006		2005		2005
Allowance for loan losses-beginning of period	$	87,727		92,808		90,661		97,296		97,296
Loans charged off:
Commercial		6,731		2,805		22,883		11,458		19,349
Mortgage		459		400		1,157		1,082		1,721
Installment		4,832		6,187		15,386		20,244		29,307
Home equity		1,112		1,918		2,878		3,241		4,340
Credit cards		2,315		2,652		6,040		7,734		11,320
Leases		4		245		61		2,610		3,068
Total charge-offs	$	15,453		14,207		48,405		46,369		69,105
Recoveries:
Commercial		566		698		2,948		2,910		4,166
Mortgage		9		70		95		177		190
Installment		2,219		2,312		8,330		7,617		9,495
Home equity		333		317		1,018		928		1,302
Credit cards		585		549		1,619		1,859		2,348
Manufactured housing		102		153		372		507		710
Leases		55		106		240		295		439
Total recoveries	$	3,869		4,205		14,622		14,293		18,650
Net charge-offs	$	11,584		10,002		33,783		32,076		50,455
Provision for loan losses		12,612		9,974		31,877		27,560		43,820
Allowance for loan losses-end of period	$	88,755		92,780		88,755		92,780		90,661

     Note 1 (Summary of Significant Accounting Policies) and Note 4 (Allowance for Loan Losses) in the 2005 Form 10-K, as amended, more fully describe the components of the allowance for loan loss model.

5. Goodwill and Intangible Assets — The following table summarizes goodwill and intangible assets:

	At September 30, 2006						At December 31, 2005						At September 30, 2005
	Gross		Accumulated		Net		Gross		Accumulated		Net		Gross		Accumulated		Net
	Amount		Amortization		Amount		Amount		Amortization		Amount		Amount		Amortization		Amount
Amortizable intangible assets:
Deposit base intangible assets	$	10,137		7,049		3,088		10,137		6,381		3,756		10,137		6,157		3,980
Unamortizable intangible assets:
Goodwill	$	139,245				139,245		139,245				139,245		139,245				139,245

     Amortization expense for intangible assets was $0.22 million for both quarters ended September 30, 2006 and 2005. The following table shows the estimated future amortization expense for deposit base intangible assets based on existing asset balances at December 31, 2005:

     For the years ended:

December 31, 2006	$	889
December 31, 2007		889
December 31, 2008		573
December 31, 2009		347
December 31, 2010		347

     During the first quarter of 2006, the Corporation conducted its annual impairment testing as required by SFAS No. 142 “Goodwill and Other Intangible Assets,” and concluded that goodwill was not impaired.

6. Earnings per share — The reconciliation between basic and diluted earnings per share (“EPS”) is calculated using the treasury stock method and presented as follows:

					Nine		Nine
	Quarter ended		Quarter ended		months ended		months ended
	September 30,		September 30,		September 30,		September 30,
	2006		2005		2006		2005
BASIC EPS:
Net income applicable to common shares	$	31,204		36,594		88,829		102,827
Average common shares outstanding		80,066		83,489		80,140		83,727
Net income per share — basic	$	0.39		0.44		1.11		1.23
DILUTED EPS:
Net income available to common shares	$	31,204		36,594		88,829		102,827
Add: interest expense on convertible bonds		5		7		15		21
		31,209		36,601		88,844		102,848
Avg common shares outstanding		80,066		83,489		80,140		83,727
Add: Equivalents from stock options and restricted stock		149		437		176		325
Add: Equivalents-convertible bonds		47		52		49		53
Average common shares and equivalents outstanding		80,262		83,978		80,365		84,105
Net income per common share — diluted	$	0.39		0.43		1.11		1.22

     For the quarters ended September 30, 2006 and 2005, options to purchase 6.7 million and 0.9 million shares, respectively, were outstanding, but not included in the computation of diluted earnings per share because they were antidilutive.

     On January 20, 2006 the Corporation entered into an accelerated share repurchase arrangement with Goldman, Sachs & Co. to repurchase 2.5 million common shares. The initial price paid per common share was $25.97. The repurchased common shares were subject to a volume weighted average share price during the repurchase period that ended on March 29, 2006. The 103,728 shares received by the Corporation as a purchase price adjustment at settlement, as well as the repurchased common shares, were reflected in treasury stock on the consolidated balance sheet to be used solely to satisfy the obligations of the Corporation under its various employee stock option, thrift savings, purchase programs or other corporate purposes.

7. Segment Information — The Corporation provides a diversified range of banking and certain nonbanking financial services and products through its various subsidiaries. Management reports the Corporation’s results through its major segment classification, Supercommunity Banking. Included in the Parent Company and Other Subsidiaries category are certain nonbanking affiliates and portions of certain assets, capital, and support functions not specifically identifiable with Supercommunity Banking.

     The Corporation’s business is conducted solely in the United States of America. The following tables present a summary of financial results as of and for the three-month and nine-month periods ended September 30, 2006 and 2005 and the full year ended December 31, 2005:

					Parent Company and Other
	Supercommunity Banking				Subsidiaries						Eliminations						FirstMerit Consolidated
September 30, 2006	3rd Qtr		YTD		3rd Qtr			YTD			3rd Qtr			YTD			3rd Qtr		YTD
OPERATIONS (thousands) :
Net interest income	$	83,033		250,791		30,659			86,708			(28,605	)		(80,709	)		85,087		256,790
Provision for loan losses		12,611		31,924		1			(47	)		—			—			12,612		31,877
Other income		49,349		146,824		(8	)		(8	)		—			—			49,341		146,816
Other expenses		75,010		238,453		1,976			5,641			(3	)		6			76,983		244,100
Net income		30,933		88,575		32,638			93,235			(32,367	)		(92,981	)		31,204		88,829
AVERAGES (millions) :
Assets	$	10,021		9,994		1,200			1,183			(1,082	)		(1,079	)		10,139		10,098
Loans		6,842		6,754		3			4			—			—			6,845		6,758
Earning assets		9,245		9,218		1,053			1,047			(1,048	)		(1,042	)		9,250		9,223
Deposits		7,390		7,401		—			—			(34	)		(36	)		7,356		7,365
Shareholders’ equity		728		722		1,065			1,059			(904	)		(898	)		889		883

			Parent Company and Other
	Supercommunity Banking		Subsidiaries			Eliminations			FirstMerit Consolidated
December 31, 2005	YTD		YTD			YTD			YTD
OPERATIONS (thousands) :
Net interest income	$	342,089		200,687			(193,781	)		348,995
Provision for loan losses		43,853		(33	)		—			43,820
Other income		190,056		410			—			190,466
Other expenses		309,213		4,287			8			313,508
Net income		128,427		137,933			(135,877	)		130,483
AVERAGES (millions) :
Assets	$	10,177		1,253			(1,165	)		10,265
Loans		6,605		6			—			6,611
Earning assets		9,418		1,116			(1,100	)		9,434
Deposits		7,334		—			(36	)		7,298
Shareholders’ equity		800		1,151			(984	)		967

					Parent Company and Other
	Supercommunity Banking				Subsidiaries						Eliminations						FirstMerit Consolidated
September 30, 2005	3rd Qtr		YTD		3rd Qtr			YTD			3rd Qtr			YTD			3rd Qtr		YTD
OPERATIONS (thousands) :
Net interest income	$	85,946		256,498		25,250			78,279			(23,490	)		(73,284	)		87,706		261,493
Provision for loan losses		10,051		27,637		(77	)		(77	)		—			—			9,974		27,560
Other income		47,736		142,455		110			425			—			—			47,846		142,880
Other expenses		77,952		230,717		974			3,510			—			7			78,926		234,234
Net income		35,951		101,522		38,606			108,232			(37,963	)		(106,927	)		36,594		102,827
AVERAGES (millions) :
Assets	$	10,207		10,198		1,259			1,255			(1,170	)		(1,170	)		10,296		10,283
Loans		6,640		6,575		6			5			—			—			6,646		6,580
Earning assets		9,448		9,441		1,129			1,120			(1,112	)		(1,103	)		9,465		9,458
Deposits		7,275		7,345		—			—			(29	)		(38	)		7,246		7,307
Shareholders’ equity		813		804		1,159			1,155			(998	)		(988	)		974		971

8. Accounting for Derivatives — The Corporation follows the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 149, in accounting for its derivative activities.

     At September 30, 2006, the Corporation had various interest rate swaps in place that were accounted for as fair value hedges under SFAS No. 133 since their purpose is to “swap” fixed interest rate liabilities and assets to a variable interest rate basis. Substantially all of the

interest rate swaps are associated with the Corporation’s fixed-rate commercial loan swap program that was initiated during the first quarter of 2003 and the remaining interest rate swaps convert the fixed interest rate of commercial real estate construction loans and the fixed interest rate of manditorily redeemable preferred securities to a variable interest rate basis. All of the interest rate swaps associated with the fixed-rate commercial loan swap program qualify for the “shortcut method of accounting” as prescribed in SFAS No. 133. The shortcut method of accounting requires that the hedge and the hedged item meet certain qualifying criteria. If the swap qualifies for the shortcut method of accounting, no hedge ineffectiveness can be assumed, and the need to test for ongoing effectiveness is eliminated. For hedges that qualify for the shortcut method of accounting, the fair value of the swap and the fair value of the hedged item are recorded on the balance sheets. The remaining hedges do not meet all the criteria necessary to be considered for the shortcut method of accounting. Therefore, the long-haul method of accounting is utilized. The long-haul method of accounting requires periodic testing of hedge effectiveness with the portion of the hedge deemed to be ineffective reported in other operating expense.

     During 2004, the Corporation began entering into forward swap agreements which, in effect, fixed the borrowing costs of certain variable rate liabilities in the future. These transactions do not qualify for the short-cut method of accounting under SFAS No. 133, as previously discussed. The Corporation classifies these transactions as cash flow hedges, with any hedge ineffectiveness being reported in other operating expense. It is anticipated that the hedges will prove to be effective. A correlation analysis performed at quarter-end verified that the hedges were effective. The Corporation has not entered into any new forward swap agreements, and the last swap matured in August, 2006.

     Additionally, in the normal course of business, the Corporation sells originated mortgage loans into the secondary mortgage loan markets. The Corporation maintains a risk management program to protect and manage interest-rate risk and pricing associated with its mortgage commitment pipeline. The Corporation’s mortgage commitment pipeline included interest-rate lock commitments (“IRLCs”) that have been extended to borrowers who have applied for loan funding and met certain defined credit and underwriting standards. During the term of the IRLCs, the Corporation is exposed to interest-rate risk, in that the value of the IRLCs may change significantly before the loans close. To mitigate this interest-rate risk, the Corporation enters into various derivatives by selling loans forward to investors using forward commitments. In accordance with SFAS No. 133, the Corporation classifies and accounts for IRLCs as nondesignated derivatives that are recorded at fair value with changes in value recorded to current earnings. The forward sale commitments used to manage the risk on the IRLCs are also classified and accounted for as nondesignated derivatives and, therefore, recorded at fair value with changes recorded to current earnings. During 2003, the Corporation implemented a SFAS No. 133 hedging program for its mortgage loan warehouse to gain protection for the changes in fair value of the mortgage loan warehouse and the forward commitments. As such, both the mortgage loan warehouse and the forward commitments are accounted for utilizing the long-haul method of accounting and any hedge ineffectiveness is reported in other operating expense.

9. Benefit Plans — The Corporation sponsors several qualified and nonqualified pension and other postretirement benefit plans for certain of its employees. The net periodic benefit cost is based on estimated values provided by outside actuaries. The components of net periodic benefit cost are as follows:

	Pension Benefits
							Nine			Nine
	Quarter ended			Quarter ended			months ended			months ended
	September 30,			September 30,			September 30,			September 30,
	2006			2005			2006			2005
Components of Net Periodic Pension Cost
Service Cost	$	1,702			1,597			5,243			4,791
Interest Cost		2,354			2,206			6,919			6,620
Expected return on assets		(2,849	)		(2,875	)		(8,524	)		(8,626	)
Amortization of unrecognized prior service costs		45			57			135			170
Cumulative net loss		1,389			863			4,349			2,588
Net periodic pension cost	$	2,641			1,848			8,122			5,543

	Postretirement Benefits
							Nine			Nine
	Quarter ended			Quarter ended			months ended			months ended
	September 30,			September 30,			September 30,			September 30,
	2006			2005			2006			2005
Components of Net Periodic Postretirement Cost
Service Cost	$	187			201			560			604
Interest Cost		416			386			1,247			1,157
Amortization of unrecognized prior service costs		(135	)		(135	)		(406	)		(406	)
Cumulative net loss		107			24			322			72
Net periodic postretirement cost	$	575			476			1,723			1,427

     The Corporation does not anticipate making a contribution to the pension plan during 2006.

     On May 18, 2006 the Corporation’s Board of Directors approved freezing the current defined benefit pension plan for non-vested employees and closed it to new entrants after December 31, 2006. Participants vested in the current pension plan as of December 31, 2006 will remain participants in the existing pension plan. A new defined contribution plan was also approved for non-vested employees and new hires as of January 1, 2007. These plan amendments qualify as a curtailment of the defined benefit pension plan, the impact of which was a $1.4 million gain that was recognized by a direct reduction of the plan’s cumulative net loss with no impact on current period earnings.

10. Share-Based Compensation — The Corporation’s 1987, 1992, 1993, 1996, 1997, 1999, 2002 and 2006 Stock and Equity Plans (the “Plans”) provide stock options and restricted stock awards to certain key employees (and to all full-time employees in the case of the 1999, 2002 and 2006 Plans) for up to 10,512,471 common shares of the Corporation. In addition, the 2002 and 2006 Plans provide for the granting of non-qualified stock options and nonvested (restricted) shares to certain non-employee directors of the Corporation. Outstanding options under these Plans are generally not exercisable for twelve months from date of grant.

     Options under these Plans are granted with an exercise price equal to the market price of the Corporation’s stock at the date of grant; those option awards generally vest based on 3 years of continuous service and have a 10 year contractual term. Options granted as incentive stock options must be exercised within ten years and options granted as non-qualified stock options have terms established by the Compensation Committee of the Board and approved by the non-employee directors of the Board. Upon termination, options are cancelable within defined periods based upon the reason for termination of employment.

     The Corporation adopted the FASB’s SFAS No. 123 (revised 2004), “Share-Based Payment,” (SFAS No. 123(R)) on the required effective date, January 1, 2006, using the modified prospective transition method provided for under the standard. SFAS 123(R) required an entity to recognize as compensation expense the grant-date fair value of stock options and other equity-based compensation granted to employees within the income statement using a fair-value-based method, eliminating the intrinsic value method of accounting previously permissible under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25) and related interpretations. The Corporation previously elected to use APB No. 25 and adopted the disclosure requirements of SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation -— Transition and Disclosure.”

     Pro forma information regarding net income and earning per share for the three and nine months ended September 30, 2005 is presented below as if the Corporation had accounted for all stock-based compensation under the fair value method of SFAS No. 123. The financial statements for the prior interim periods and fiscal years do not reflect any compensation expense calculated under the fair-value method.

	Quarter			Nine months
	ended			ended
	September 30, 2005			September 30, 2005
Net income, as reported	$	36,594			102,827
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1,005	)		(2,731	)
Pro forma net income	$	35,589			100,096
Pro forma EPS — Basic	$	0.43			1.20
Pro forma EPS — Diluted	$	0.42			1.19
Reported EPS — Basic	$	0.44			1.23
Reported EPS — Diluted	$	0.43			1.22
Assumptions:
Dividend yield		4.12	%		4.02	%
Expected volatility		25.60	%		28.42	%
Risk free interest rate		3.97 - 4.26	%		3.77 - 4.26	%
Expected lives	4.85 Years			4.97 Years

     Certain of the Corporation’s share-based award grants contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period. As provided for under SFAS No. 123(R), the Corporation has elected to recognize compensation expense for awards with graded vesting schedule on a straight-line basis over the requisite service period for the entire award. SFAS No. 123(R) requires companies to recognize compensation expense based on the estimated number of stock options and awards for which service is to be rendered. Upon stock option exercise or stock unit conversion, it is the policy of the Corporation to issue shares from treasury stock.

     The Black-Scholes option pricing model was used to estimate the fair market value of the options at the date of grant. This model was originally developed for use in estimating the fair value of traded options which have different characteristics from the Corporation’s employee stock options. The model is also sensitive to changes in subjective assumptions, which can materially affect fair value estimates. Expected volatilities are based on implied volatilities from historical volatility of the Corporation’s stock, and other factors. The Corporation uses historical data to estimate option exercise and employee termination with the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Nine Months Ended			Year Ended
	September 30, 2006			December 31, 2005
Assumptions:
Dividend yield		4.24	%		4.02	%
Expected volatility		23.51	%		28.39	%
Risk free interest rate		4.87	%		3.77 - 4.38	%
Expected lives	4.92 years				5 years

     On December 27, 2005, with the approval of the Compensation Committee of the Board of Directors, the Corporation accelerated the vesting of unvested out-of-the-money stock options (“Options”) outstanding under the Amended and Restated 2002 Stock Plan.

     The decision to accelerate these Options was made primarily to reduce non-cash compensation expense that would have been recorded in the Corporation’s income statement in future periods upon the adoption of SFAS No. 123(R). The Compensation Committee of the Board of Directors of the Corporation is authorized under the 2002 Plan to prescribe the time of the exercise of stock options and to accelerate the time at which stock options become exercisable. As a result of this decision, the Corporation reduced the after-tax stock option expense it would have been required to record by approximately $2.3 million in 2006 and $1.5 million in 2007.

     As a result of this vesting acceleration, options to purchase approximately 1.7 million shares became exercisable immediately. These Options would have vested through February 2008. Based upon the Corporation’s closing price of $26.32, on December 27, 2005, all of the Options accelerated were out-of-the-money, that is, the Options’ exercise price was greater than the current market value of the Corporation’s stock. The number of shares, exercise prices and terms of the Options, subject to acceleration, remain the same.

     A summary of stock option activity under the Plans as of September 30, 2006, and changes during the nine months then ended is as follows:

						Weighted-Average
				Weighted-Average		Remaining		Aggregate Intrinsic
Options	Shares (000’s)			Exercise Price		Contractual Term		Value (000’s)
Outstanding at January 1, 2006		7,495		$	25.66
Granted		510			24.15
Exercised		(58	)		16.46
Forfeited		(38	)		25.20
Expired		(332	)		26.67
Outstanding at September 30, 2006		7,577			25.58		5.52	$	3,698
Exercisable at September 30, 2006		6,793		$	25.70		5.21	$	3,425

     The weighted average grant-date fair value of options granted during the nine months ended September 30, 2006 was $4.20. The total intrinsic value of options exercised during the

nine months ended September 30, 2006 was $0.5 million. Cash received from options exercised under all share-based payment arrangement for the nine months ended September 30, 2006 was $1.0 million. The actual tax benefit realized for the tax deduction from option exercise of the share-based payment arrangements totaled $0.2 million.

     The Corporation has a policy of repurchasing shares on the open market to satisfy share option exercises. During the first quarter of 2006 the Corporation repurchased 2.6 million common shares which Management estimates will be adequate to cover option exercises for the full year.

     At September 30, 2006, there was $1.9 million of unrecognized compensation cost related to stock options granted under the Plans which will be recognized over a weighted-average period of 1.14 years.

     A summary of the status of the Corporation’s nonvested shares as of December 31, 2005, and changes during the nine months ended September 30, 2006, is as follows:

				Weighted-Average
				Grant-Date
Nonvested (restricted) Shares	Shares (000’s)			Fair Value
Nonvested at January 1, 2006		68		$	24.52
Granted		295			24.00
Vested		(32	)		24.05
Forfeited or expired		(11	)		24.27
Nonvested at September 30, 2006		320		$	24.09

     As of September 30, 2006, there was $4.6 million of total unrecognized compensation cost related to nonvested (restricted) share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.7 years. The total fair value of shares vested during the nine months ended September 30, 2006 was $0.8 million.

     In accordance with the Corporation’s stock option and nonvested (restricted) shares plans, employee participants that are 55 or older and have 15 years of service are eligible to retire. At retirement, all unvested awards immediately vest. As required by SFAS 123(R), the Corporation began accelerating the recognition of compensation costs for share-based awards granted to retirement-eligible employees and employees who become retirement-eligible prior to full vesting of the awards. Compensation cost for awards granted or modified after the adoption of SFAS 123(R) will be recognized over a period to the date an employee first becomes eligible for retirement. In accordance with this change in policy, share-based compensation for the nine months ending September 30, 2006 included expense of $3.2 million for share-based compensation that was granted to retirement-eligible employee participants.

     The total share-based compensation expense recognized during the nine months ended September 30, 2006 was $5.1 million and the related tax benefit thereto was $1.5 million.

11. Contingencies — The nature of the Corporation’s business results in a certain amount of litigation. Accordingly, the Corporation and its subsidiaries are subject to various pending and threatened lawsuits in which claims for monetary damages are asserted. Management, after consultation with legal counsel, is of the opinion that the ultimate liability of such pending matters will not have a material effect on the Corporation’s financial condition and results of operations.

12. Shareholder Rights Plan - On July 18, 2006, the Shareholder Rights Agreement dated October 21, 1993, between the Corporation and FirstMerit Bank, N.A., as amended and restated on May 20, 1998 (the “Rights Agreement”), expired by its terms. The Rights Agreement had been filed as Exhibit 4 to the Form 8-A/A filed by the Corporation on June 22, 1998. The Rights Agreement is more fully described in Note 21 in the 2005 Form 10-K, as amended.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited)
Fully-tax Equivalent Interest Rates and Interest Differential

FIRSTMERIT CORPORATION AND SUBSIDIARIES	Three months ended								Year ended								Three months ended
(Dollars in thousands)	September 30, 2006								December 31, 2005								September 30, 2005
	Average					Average			Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Cash and due from banks	$	185,628								194,485								197,412
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government agency obligations (taxable)		1,993,447			20,012		3.98	%		2,416,360			91,814		3.80	%		2,408,219			22,621		3.73	%
Obligations of states and political subdivisions (tax exempt)		114,805			1,925		6.65	%		99,487			6,707		6.74	%		99,273			1,638		6.55	%
Other securities and federal funds sold		252,242			3,924		6.17	%		255,568			12,291		4.81	%		257,232			3,056		4.71	%
Total investment securities and federal funds sold		2,360,494			25,861		4.35	%		2,771,415			110,812		4.00	%		2,764,724			27,315		3.92	%
Loans held for sale		44,682			812		7.21	%		52,740			2,854		5.41	%		54,452			660		4.81	%
Loans		6,844,593			129,111		7.48	%		6,610,509			430,402		6.51	%		6,646,112			110,535		6.60	%
Total earning assets		9,249,769			155,784		6.68	%		9,434,664			544,068		5.77	%		9,465,288			138,510		5.81	%
Allowance for loan losses		(87,127	)							(94,118	)							(91,852	)
Other assets		790,586								729,398								724,979
Total assets	$	10,138,856								10,264,429								10,295,827
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing	$	1,407,653			—		—			1,466,106			—		—			1,457,487			—		—
Demand — interest bearing		794,886			2,241		1.12	%		827,829			5,871		0.71	%		838,549			1,732		0.82	%
Savings and money market accounts		2,246,386			13,188		2.33	%		2,356,813			32,944		1.40	%		2,333,331			8,700		1.48	%
Certificates and other time deposits		2,906,952			32,881		4.49	%		2,647,908			86,764		3.28	%		2,616,195			21,637		3.28	%
Total deposits		7,355,877			48,310		2.61	%		7,298,656			125,579		1.72	%		7,245,562			32,069		1.76	%
Securities sold under agreements to repurchase		1,357,746			15,878		4.64	%		1,409,135			45,423		3.22	%		1,478,857			12,535		3.36	%
Wholesale borrowings		367,640			5,746		6.20	%		431,787			21,449		4.97	%		442,035			5,559		4.99	%
Total interest bearing liabilities		7,673,610			69,934		3.62	%		7,673,472			192,451		2.51	%		7,708,967			50,163		2.58	%
Other liabilities		168,752								158,125								155,226
Shareholders’ equity		888,841								966,726								974,147
Total liabilities and shareholders’ equity	$	10,138,856								10,264,429								10,295,827
Net yield on earning assets	$	9,249,769			85,850		3.68	%		9,434,664			351,617		3.73	%		9,465,288			88,347		3.70	%
Interest rate spread							3.06	%							3.26	%							3.22	%

Notes:	Interest income on tax-exempt securities and loans have been adjusted to a fully-taxable equivalent basis.
	Nonaccrual loans have been included in the average balances.

FIRSTMERIT CORPORATION AND SUBSIDIARIES	Nine months ended								Nine months ended
(Dollars in thousands)	September 30, 2006								September 30, 2005
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Cash and due from banks	$	189,498								195,259
Investment securities:
U.S. Treasury securities and U.S. Government agency obligations (taxable)		2,069,081			60,962		3.94	%		2,466,768			70,161		3.80	%
Obligations of states and political subdivisions (tax exempt)		97,946			4,942		6.75	%		100,192			5,074		6.77	%
Other securities		250,036			11,276		6.03	%		256,348			8,856		4.62	%
Total investment securities and federal funds sold		2,417,063			77,180		4.27	%		2,823,308			84,091		3.98	%
Loans held for sale		48,014			2,409		6.71	%		54,036			2,092		5.18	%
Loans		6,758,157			368,772		7.30	%		6,580,351			315,276		6.41	%
Total earning assets		9,223,234			448,361		6.50	%		9,457,695			401,459		5.68	%
Allowance for loan losses		(87,968	)							(94,860	)
Other assets		772,828								725,220
Total assets	$	10,097,592								10,283,314
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing	$	1,441,568			—		—			1,458,499			—		—
Demand — interest bearing		836,024			7,186		1.15	%		831,475			3,918		0.63	%
Savings and money market accounts		2,273,132			36,015		2.12	%		2,364,997			22,592		1.28	%
Certificates and other time deposits		2,814,488			88,308		4.19	%		2,652,000			62,933		3.17	%
Total deposits		7,365,212			131,509		2.39	%		7,306,971			89,443		1.64	%
Securities sold under agreements to repurchase		1,288,694			40,758		4.23	%		1,397,472			32,000		3.06	%
Wholesale borrowings		390,495			17,306		5.93	%		450,870			16,551		4.91	%
Total interest bearing liabilities		7,602,833			189,573		3.33	%		7,696,814			137,994		2.40	%
Other liabilities		170,479								156,553
Shareholders’ equity		882,712								971,448
Total liabilities and shareholders’ equity	$	10,097,592								10,283,314
Net yield on earning assets	$	9,223,234			258,788		3.75	%		9,457,695			263,465		3.72	%
Interest rate spread							3.17	%							3.28	%

Note:	Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis.
	Nonaccrual loans have been included in the average balances.

SUMMARY

     FirstMerit Corporation reported third quarter 2006 net income of $31.2 million, or $0.39 per diluted share. This compares with $36.6 million, or $0.44 per diluted share, for the third quarter 2005. Returns on average common equity (“ROE”) and average assets (“ROA”) for the third quarter 2006 were 13.93% and 1.22%, respectively, compared with 14.90% and 1.41% for the third quarter 2005.

     For the first nine months of 2006, the Company reported net income of $88.8 million, or $1.11 per diluted share, compared with $102.8 million, or $1.22 per diluted share, for the first nine months of 2005.

     Total revenue, defined as net interest income on a fully tax-equivalent (“FTE”) basis plus noninterest income net of securities transactions, totaled $135.2 million for the third quarter 2006, compared with $136.2 million reported in the third quarter 2005. FTE net interest income was $85.9 million for the third quarter 2006, a decline of $2.5 million, or 2.83%, compared with the year-ago quarter. During the quarter the net interest margin contracted 2 basis points to 3.68%, compared with the third quarter 2005.

     The net interest margin in the third quarter 2006 contracted 10 basis points, to 3.68%, compared with the second quarter 2006, pressured by shifting customer preference for higher yielding core deposit products as well as reversals in non-accrual interest that reduced the net interest margin by two basis points. The average loan portfolio increased $114.1 million, or 1.69%, compared with the prior quarter and $198.5 million, or 2.99%, compared with the third quarter 2005. During the third quarter 2006 average commercial loan growth of $71.9 million, or 2.00%, and average installment loan growth of $66.8 million, or 4.38%, were the main drivers of portfolio growth over the prior quarter, while average commercial loan growth of $233.8 million, or 6.79%, drove the increase in year-over-year quarterly loan balances.

     Average deposits were $7.36 billion during the 2006 third quarter, up $110.3 million, or 1.52%, from the same period last year. Average certificates of deposit (“CDs”) increased $290.8 million or 11.11%, compared to the prior year quarter, as part of a mix shift in liability funding largely due to customer preferences for higher yielding deposit accounts. With this shift in customer preference, average demand deposit account and average money market account balances declined a respective $93.5 million, or 4.07%, and $86.9 million, or 3.73%, compared with the third quarter 2005. Average investment securities decreased $404.2 million, or 14.62%, in the third quarter 2006 compared with the third quarter 2005. Cash flow from the maturing investment portfolio funded loan growth and was used to pay down wholesale borrowings, stabilizing the balance sheet during a period of eight target rate increases to federal funds by the Federal Open Market Committee. Average wholesale borrowings and securities sold under agreements to repurchase decreased $195.5 million, or 10.18%, in the third quarter 2006, compared with the third quarter 2005.

     Noninterest income excluding securities transactions totaled $49.3 million for the third quarter 2006, compared with $47.8 million for the third quarter 2005, an increase of $1.5 million, or 3.12%. The primary drivers of this increase were in credit card fees, up $.8 million, or 7.80%, and service charges on deposits, up $0.7 million, or 3.71%, due in part to new fee strategies. Investment services and insurance fees increased $0.4 million, or 18.19%, and trust department income increased $0.2 million, or 3.74%, offsetting a $0.3 million, or 16.62%, decline in loan sales and servicing income. Other income, net of securities gains, as a percentage of net revenue for the third quarter was 36.50% compared with 35.11% for the same quarter one

year ago. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.

     Other (non-interest) expenses totaled $77.0 million for the third quarter 2006 compared with $78.9 million for the third quarter 2005, a decrease of $1.9 million, or 2.46%. For the three months ended September 30, 2006, increases in operating costs compared to the third quarter 2005 occurred as follows: salaries, wages, pension and employee benefits rose $1.1 million, or 2.61%, primarily due to a $0.9 million increase in share-based compensation expense, as well as $0.7 million additional expense associated with organizational restructurings offset by a $0.5 million reduction in incentive compensation; bankcard, loan processing and other costs increased $1.7 million primarily attributable to volume increases in loans outstanding and higher credit card activity; professional services increased $2.8 million due in part to the one time buy-out of a consulting contract at a discounted rate as part of the Company’s expense reduction initiative; other operating expense decreased $8.0 million primarily attributable to $9.5 million of settlements of non-income tax examinations; offset by the funding of $3.0 million to a charitable trust with the formation of FirstMerit Foundation. The efficiency ratio for the third quarter 2006 was 56.78%, compared with 57.81% for the third quarter 2005.

     Net charge-offs totaled $11.6 million in the third quarter 2006, compared with $10.0 million for the third quarter 2005, or 0.67% and 0.60% of average loans, respectively. Compared with the second quarter 2006, net charge-offs improved by $1.4 million, from 0.78%. As of September 30, 2006, nonperforming assets were $72.5 million, or 1.05%, of period-end loans plus other real estate, compared with $72.3 million, or 1.08%, at September 30, 2005. Nonperforming assets increased $13.7 million from June 30, 2006. Included in the nonperforming portfolio was a $7.1 million loan which was placed on nonaccrual during the quarter and reclassified as held for sale. This loan was sold on October 16, 2006.

     The Company recorded $12.6 million of loan loss provision in the third quarter 2006, compared with loan loss provision of $10.0 million in the third quarter 2005.

     At September 30, 2006, the allowance for loan losses was 1.28% of period end loans, compared with 1.36% at December 31, 2005 and 1.39% at September 30, 2005. The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments. For comparative purposes the allowance for credit losses was 1.37% at September 30, 2006, compared with 1.45% at December 31, 2005 and 1.48% at September 30, 2005.

     Assets at September 30, 2006, totaled $10.2 billion, down 0.70% from $10.3 billion at September 30, 2005. Period-end loan growth of $222.1 million, or 3.32%, was driven by growth in the commercial lending portfolio which increased $230.5 million, or 6.58%. Deposits totaled $7.4 billion at September 30, 2006, an increase of $37.6 million, or 0.51% from September 30, 2005. Growth in CDs, up $276.8 million, or 10.28%, offset declines in all other core deposit account balances over that time period.

     Shareholders’ equity was $903.4 million at September 30, 2006. The Company’s capital position remains strong as tangible equity to assets was 7.55% at quarter-end. The common dividend per share paid in the third quarter 2006 was $0.29, a $0.01 increase from the third quarter 2005.

RESULTS OF OPERATION

Net Interest Income

     Net interest income, the Corporation’s principal source of earnings, is the difference between interest income generated by earning assets (primarily loans and investment securities) and interest paid on interest-bearing funds (namely customer deposits, securities sold under agreements to repurchase and wholesale borrowings). Net interest income for the quarter ended September 30, 2006 was $85.1 million compared to $87.7 million for the three months ended September 30, 2005. Net interest income for the nine months ended September 30, 2006 was $256.8 million compared to $261.5 million for the nine months ended September 30, 2005. For the purpose of this remaining discussion, net interest income is presented on an FTE basis, to provide a comparison among all types of interest earning assets. That is, interest on tax-free securities and tax-exempt loans has been restated as if such interest were taxed at the statutory Federal income tax rate of 35%, adjusted for the non-deductible portion of interest expense incurred to acquire the tax-free assets. Net interest income presented on an FTE basis is a non-GAAP financial measure widely used by financial services organizations. The FTE adjustment was $0.8 million and $0.6 million for the quarters ending September 30, 2006 and 2005, respectively.

     FTE net interest income for the quarter ended September, 2006 was $85.9 million compared to $88.3 million for the three months ended September, 2005. The $2.5 million decrease in FTE net interest income occurred because the $19.8 million increase in interest expense, compared to the same quarter last year, was more than the $17.3 million increase in interest income during the same period.

     FTE net interest income for the nine months ended September, 2006 was $258.8 million compared to $263.5 million for the nine months ended September, 2005. The $4.7 million decrease in FTE net interest income occurred because the $51.6 million increase in interest expense, compared to the same period last year, was more than the $46.9 million increase in interest income during the same period.

     As illustrated in the following rate/volume analysis table, interest income and interest expense both increased due to the rising interest rate environment.

	Quarters ended September 30, 2006 and 2005									Nine months ended September 30, 2006 and 2005
RATE/VOLUME ANALYSIS	Increases (Decreases)									Increases (Decreases)
(Dollars in thousands)	Volume			Rate			Total			Volume			Rate			Total
INTEREST INCOME — FTE
Investment securities	$	(4,067	)		2,531			(1,536	)		(12,466	)		5,445			(7,021	)
Loans held for sale		(135	)		287			152			(252	)		569			317
Loans		3,382			15,193			18,575			8,712			44,784			53,496
Federal funds sold		—			82			82			48			62			110
Total interest income — FTE	$	(820	)		18,093			17,273			(3,958	)		50,860			46,902
INTEREST EXPENSE
Demand deposits-interest bearing	$	(94	)		603			509			21			3,247			3,268
Savings and money market accounts		(335	)		4,823			4,488			(909	)		14,332			13,423
Certificates of deposits and other time deposits		2,610			8,634			11,244			4,054			21,321			25,375
Securities sold under agreements to repurchase		(1,095	)		4,438			3,343			(2,651	)		11,409			8,758
Wholesale borrowings		(1,029	)		1,215			186			(2,397	)		3,152			755
Total interest expense	$	57			19,713			19,770			(1,882	)		53,461			51,579
Net interest income — FTE	$	(877	)		(1,620	)		(2,497	)		(2,076	)		(2,601	)		(4,677	)

     As illustrated in the preceding table, the increased amount of interest income recorded in the 2006 third quarter compared to the same 2005 period was primarily rate driven as higher yields on loans increased interest income by $15.2 million during those periods. The table also depicts a similar three-month increase in interest expense, again caused by the continued rise in interest rates from 2005 through the third quarter of 2006. The higher rates paid on customer deposits and securities sold under agreements to repurchase in the 2006 quarter compared to the same 2005 period increased interest expense by $18.5 million. The nine-month changes were also primarily rate driven as the higher yield on loans increased interest income by $44.8 million while the increase in rates paid on deposits and securities sold under agreements to repurchase increased interest expense by $50.3 million.

Net Interest Margin

     The following table provides 2006 FTE net interest income and net interest margin totals as well as 2005 comparative amounts:

	Quarters ended						Nine months ended
	September 30,						September 30,
(Dollars in thousands)	2006			2005			2006			2005
Net interest income	$	85,087			87,706			256,790			261,493
Tax equivalent adjustment		763			641			2,000			1,972
Net interest income — FTE	$	85,850			88,347			258,790			263,465
Average earning assets	$	9,249,769			9,465,288			9,223,234			9,457,695
Net interest margin — FTE		3.68	%		3.70	%		3.75	%		3.72	%

     Average loans outstanding for the current year and prior year third quarters totaled $6.8 billion and $6.6 billion, respectively. Increases in average loan balances from third quarter 2005 to the third quarter this year occurred in commercial and home equity loans while mortgage loans, installment loans, credit card loans, and leases declined. Efforts to grow loans outstanding continue to be tempered by the less than robust economy that currently exists in the Corporation’s primary lending areas.

     Specific changes in average loans outstanding, compared to the third quarter 2005, were as follows: commercial loans were up $233.8 million or 6.79%; home equity loans, as a result of targeted marketing, rose $0.6 million or 0.07%; credit card loans were down $1.8 million or 1.25%; installment loans, both direct and indirect, were down $1.9 million or 0.12%; mortgage loans were down $22.0 million or 3.43%; and leases were down $10.2 million, or 13.93%. The majority of fixed-rate mortgage loan originations are sold to investors through the secondary mortgage loan market. Average outstanding loans for the 2006 and 2005 third quarters equaled 74.00% and 70.22% of average earning assets, respectively.

     Average deposits were $7.36 billion during the 2006 third quarter, up $110.3 million, or 1.52%, from the same period last year. For the quarter ended September 30, 2006, average core deposits (which are defined as checking accounts, savings accounts and money market savings products) decreased $180.4 million, or 3.9%, and represented 60.48% of total average deposits, compared to 63.89% for the 2005 third quarter. Average certificates of deposit (“CDs”) increased $290.8 million, or 11.11%, compared to the prior year quarter due to marketing promotion during the 2006 third quarter. Average wholesale borrowings decreased $74.4 million and as a percentage of total interest-bearing funds equaled 4.79% for the 2006 third quarter and 5.73% for the same quarter one year ago. Securities sold under agreements to repurchase decreased $121.1 million and as a percentage of total interest bearing funds equaled 17.69% for the 2006 third quarter and 19.18% for the 2005 third quarter. Average interest-bearing liabilities funded 82.96% of average earning assets in the current year quarter and 81.44% during the quarter ended September 30, 2005.

Other Income

     Other (non-interest) income for the quarter totaled $49.3 million, an increase of $1.5 million from the $47.8 million earned during the same period one year ago.

     Other income, net of securities gains, as a percentage of net revenue for the third quarter was 36.50%, compared to 35.11% for the same quarter one year ago. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.

     The primary changes in other income for the 2006 third quarter as compared to the third quarter of 2005, were as follows: trust department income was $5.7 million, up 3.74%; service charges on deposit accounts totaled $19.3 million, up 3.71% due in part to new fee strategies; credit card fees increased $0.8 million or 7.80%; investment services and insurance fees increased $0.4 million, or 18.19%; loan sales and servicing income was $1.7 million, a decrease of $0.3 million or 16.62%; there were no significant sales of investment securities during the third quarter of 2006 or 2005; and other operating income was virtually unchanged from the 2005 third quarter.

     The change in other income, net of security gains, for the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005 was an increase of $4.8 million. The principal components were: trust department income was $16.9 million, up 0.93%; service charges on deposit accounts totaled $53.3 million, up 4.19% due in part to new fee strategies initiated in the third quarter of 2005; credit card fees increased $3.3 million or 9.97%; loan sales and servicing income was $6.0 million an increase of $1.3 million or 27.07% primarily from the gain on the sale of nonperforming assets that occurred in the second quarter of 2006; income from bank owned life insurance increased $2.2 million or 23.62% due to death benefit proceeds in the second quarter of 2006; investment services and insurance fees decreased $0.1 million or 1.30% primarily due to the sale of the credit life portfolio in the fourth quarter of 2005; investment security gains were down $1.9 million since there were no significant sales of investments securities in the nine months ended September 30, 2006; and other operating income decreased $2.8 million or 25.35% primarily due to a one time settlement of manufactured housing contractual obligations of $2.5 million in the second quarter of 2005.

     A significant component of loan sales and servicing income is the income derived from mortgage servicing activities. The following is a summary of changes in capitalized mortgage servicing rights (“MSRs”), net of accumulated amortization and valuation allowance, included in the unaudited consolidated balance sheets:

	Quarter ended			Quarter ended			Quarter ended			Quarter ended			Quarter ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2006			2006			2006			2005			2005
Balance at beginning of period	$	20,025			19,945			19,971			19,523			18,635
Addition of mortgage servicing rights		524			814			723			1,230			1,657
Amortization		(772	)		(734	)		(773	)		(786	)		(825	)
Changes in valuation allowance		—			—			24			4			56
Balance at end of period	$	19,777			20,025			19,945			19,971			19,523

     On a quarterly basis, the Corporation assesses its MSRs for impairment based on their current fair value. As permitted, the Corporation disaggregates its MSRs portfolio based on loan type and interest rate which are the predominant risk characteristics of the underlying loans. If any impairment results after current market assumptions are applied, the value of the servicing rights is reduced through the use of a valuation allowance, the balance of which is $0, $24 thousand and $30 thousand at September 30, 2006, December 31, 2005 and September 30, 2005, respectively. The MSRs are amortized over the period of and in proportion to the estimated net servicing revenues.

     These balances represent the rights to service approximately $2.0 billion, $2.1 billion and $2.0 billion of mortgage loans at September 30, 2006, December 31, 2005, and September 30, 2005, respectively. The portfolio primarily consists of conventional mortgages.

     The Corporation continues to focus upon non-interest income (fee income) as a means by which to diversify revenue.

Other Expenses

     Other (non-interest) expenses totaled $77.0 million for the third quarter 2006 compared to $78.9 million for the same 2005 quarter, a decrease of $1.9 million, or 2.46%.

     For the three months ended September 30, 2006, increases in operating costs compared to the second quarter 2005 occurred as follows: salaries, wages, pension and employee benefits rose $1.1 million, primarily due to the $0.9 million increase in share-based compensation expense, as well as $0.8 million additional expense associated with severance expenses of organizational restructurings offset by a $1.2 million reduction in incentive compensation; bankcard, loan processing and other costs increased $1.7 million, primarily attributable to the increase in loans outstanding and higher credit card activity; professional services increased $2.8 million due in part to the one time buy-out of a consulting contract of $1.4 million; other operating expense decreased $8.0 million primarily attributable to reserve reversals of $9.5 million relating to favorable settlements of non-income state tax examinations; offset by the funding of $3.0 million to a charitable trust with the formation of FirstMerit Foundation.

     For the nine months ended September 30, 2006, other (non-interest) expenses totaled $244.1 million compared to $234.2 million for the same 2005 quarter, an increase of $9.9 million or 4.21%. Increases in operating costs compared to the nine months ended September 30, 2005 occurred as follows: salaries, wages, pension and employee benefits rose $10.1 million, primarily due to increased pension benefits expense of $2.8 million, as well as $4.5 million of share-based compensation expense and $2.1 million additional expense associated with severance expenses of organizational restructurings; bankcard, loan processing and other costs increased $3.7 million primarily attributable to the increase in loans outstanding and higher credit card activity; professional services increased $3.3 million due to the buy-out of a consulting contract; other operating expense decreased $7.6 million primarily attributable reserve reversals of $9.5 million relating to favorable settlements of non-income state tax examinations, offset by the funding of $3.0 million to a charitable trust with the formation of FirstMerit Foundation; while other categories of expense remain relatively consistent.

     The efficiency ratio of 56.78% for third quarter 2006 improved 103 basis points over the efficiency ratio of 57.81% recorded for the third quarter, 2005. The efficiency ratio for the three months ended September 30, 2006 indicates 56.78 cents of operating costs were spent in order to generate each dollar of net revenue.

Federal Income Taxes

     Federal income tax expense was $13.6 million and $10.06 million for the quarters ended September 30, 2006 and 2005, respectively. The effective federal income tax rate for the third quarter 2006 was 30.4%, compared to 21.56% for the same quarter 2005. During the third quarter of 2005, tax reserves, which had been established for tax years no longer subject to review because the tax statute expired, were released. For the nine months ended September 30, 2006 and 2005, respectively, the effective tax rate was 30.40% and 27.88%. Additional federal income tax information is contained in Note 11 (Federal Income Taxes) in the 2005 Form 10-K, as amended.

FINANCIAL CONDITION

Investment Securities

     The September 30, 2006 amortized cost and market value of investment securities, including mortgage-backed securities, by average remaining term, are included in Note 4 (Investment Securities) to the unaudited consolidated financial statements included in this report.

     These securities are purchased within an overall strategy to maximize future earnings, taking into account an acceptable level of interest rate risk. While the maturities of the mortgage and asset-backed securities are beyond five years, these instruments provide periodic principal payments and include securities with adjustable interest rates, reducing the interest rate risk associated with longer-term investments.

Allowance for Credit Losses

     The allowance for credit losses is the sum of the allowance for loan losses and the reserve for unfunded lending commitments.

	Quarter ended			Year Ended			Quarter ended
Allowance for Loan Losses	September 30,			December 31,			September 30,
(In thousands)	2006			2005			2005
Allowance for loan losses-beginning of period	$	87,727			97,296			92,808
Provision for loan losses		12,612			43,820			9,974
Loans charged off		(15,453	)		(69,105	)		(14,207	)
Recoveries on loans previously charged off		3,869			18,650			4,205
Allowance for loan losses-end of period	$	88,755			90,661			92,780
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	5,716			5,774			5,785
Provision for credit losses		591			298			72
Balance at end of period	$	6,307			6,072			5,857
Allowance for Credit Losses	$	95,062			96,733			98,637
Annualized net charge-offs as a % of average loans		0.67	%		0.76	%		0.60	%
Allowance for loan losses:
As a percentage of loans outstanding		1.28	%		1.36	%		1.39	%
As a percentage of nonperforming loans		143.73	%		145.61	%		221.46	%
As a multiple of annualized net charge offs		1.93	X		1.80	X		2.34	X
Allowance for credit losses:
As a percentage of loans outstanding		1.37	%		1.45	%		1.48	%
As a percentage of nonperforming loans		153.94	%		155.36	%		235.44	%
As a multiple of annualized net charge offs		2.07	X		1.92	X		2.49	X

     The allowance for credit losses decreased $1.7 million from December 31, 2005 to September 30, 2006, and decreased $3.6 million from September 30, 2005 to September 30,

2006. The decrease for both periods was attributable to an overall improvement in risk factors in the commercial loan and installment loan portfolios, partially offset by the deterioration of risk factors in the commercial real estate loan and residential mortgage loan portfolios. The following tables show this overall trend in increased credit quality for consumer loans and decreased credit quality for commercial loans by specific asset and risk categories.

	At September 30, 2006
	Loan Type
	Commercial		Commercial R/E				Installment		Home Equity		Credit Card		Res Mortgage
Allowance for Loan Losses Components:	Loans		Loans		Leases		Loans		Loans		Loans		Loans		Total
(In thousands)
Individually Impaired Loan Component:
Loan balance	$	20,321		24,287		—		—		—		—		—		44,608
Allowance		5,510		4,394		—		—		—		—		—		9,904
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		18,761		2,592		—										21,353
Grade 1 allowance		64		2		—										66
Grade 2 loan balance		153,377		100,147		9,487										263,011
Grade 2 allowance		833		397		59										1,289
Grade 3 loan balance		363,783		398,463		16,159										778,405
Grade 3 allowance		2,374		2,182		120										4,676
Grade 4 loan balance		878,161		1,533,606		27,829										2,439,596
Grade 4 allowance		12,950		13,720		738										27,408
Grade 5 (Special Mention) loan balance		57,041		87,810		501										145,352
Grade 5 allowance		2,731		2,723		27										5,481
Grade 6 (Substandard) loan balance		54,020		40,748		2,509										97,277
Grade 6 allowance		5,598		2,775		297										8,670
Grade 7 (Doubtful) loan balance		347		270		—										617
Grade 7 allowance		120		35		—										155
Consumer loans based on payment status:
Current loan balances						2,715		1,604,263		745,426		135,628		581,486		3,069,518
Current loans allowance						11		15,037		2,051		3,346		2,628		23,073
30 days past due loan balance						181		12,466		1,673		1,711		13,727		29,758
30 days past due allowance						2		1,099		144		602		359		2,206
60 days past due loan balance						62		3,690		602		1,090		4,625		10,069
60 days past due allowance						2		942		135		622		413		2,114
90+ days past due loan balance						33		1,936		606		1,714		13,494		17,783
90+ days past due allowance						3		885		233		1,458		1,134		3,713
Total loans	$	1,545,811		2,187,923		59,476		1,622,355		748,307		140,143		613,332		6,917,347
Total Allowance for Loan Losses	$	30,180		26,228		1,259		17,963		2,563		6,028		4,534		88,755

	At December 31, 2005
	Loan Type
	Commercial		Commercial R/E				Installment		Home Equity		Credit Card		Res Mortgage
Allowance for Loan Losses Components:	Loans		Loans		Leases		Loans		Loans		Loans		Loans		Total
(In thousands)
Individually Impaired Loan Component:
Loan balance	$	27,515		18,254		—		—		—		—		—		45,769
Allowance		4,534		2,851		—		—		—		—		—		7,385
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		16,353		2,233		—										18,586
Grade 1 allowance		64		3		—										67
Grade 2 loan balance		159,785		99,392		3,643										262,820
Grade 2 allowance		1,297		341		33										1,671
Grade 3 loan balance		244,116		355,950		25,245										625,311
Grade 3 allowance		2,008		1,583		231										3,822
Grade 4 loan balance		851,968		1,514,990		31,428										2,398,386
Grade 4 allowance		15,600		11,387		1,018										28,005
Grade 5 (Special Mention) loan balance		58,878		46,657		127										105,662
Grade 5 allowance		3,463		1,110		8										4,581
Grade 6 (Substandard) loan balance		69,358		53,333		3,111										125,802
Grade 6 allowance		8,265		3,089		413										11,767
Grade 7 (Doubtful) loan balance		324		377		—										701
Grade 7 allowance		117		40		—										157
Consumer loans based on payment status:
Current loan balances						6,687		1,500,694		775,912		141,888		597,705		3,022,886
Current loans allowance						95		18,962		1,918		4,014		969		25,958
30 days past due loan balance						250		15,574		1,764		1,453		14,461		33,502
30 days past due allowance						8		1,456		108		545		133		2,250
60 days past due loan balance						75		5,296		511		1,154		4,569		11,605
60 days past due allowance						9		1,401		87		699		133		2,329
90+ days past due loan balance						53		2,791		510		1,097		11,846		16,297
90+ days past due allowance						16		1,377		155		975		146		2,669
Total loans	$	1,428,297		2,091,186		70,619		1,524,355		778,697		145,592		628,581		6,667,327
Total Allowance for Loan Losses	$	35,348		20,404		1,831		23,196		2,268		6,233		1,381		90,661

	At September 30, 2005
	Loan Type
	Commercial		Commercial R/E				Installment		Home Equity		Credit Card		Res Mortgage
Allowance for Loan Losses Components:	Loans		Loans		Leases		Loans		Loans		Loans		Loans		Total
(In thousands)
Individually Impaired Loan Component:
Loan balance	$	10,679		14,326		—		—		—		—		—		25,005
Allowance		2,215		1,564		—		—		—		—		—		3,779
Collective Loan Impairment Components:
Credit risk-graded loans Grade 1 loan balance		23,910		1,187		—										25,097
Grade 1 allowance		94		2		—										96
Grade 2 loan balance		160,350		93,782		13,408										267,540
Grade 2 allowance		1,351		324		124										1,799
Grade 3 loan balance		252,093		344,193		18,330										614,616
Grade 3 allowance		2,161		1,493		169										3,823
Grade 4 loan balance		896,478		1,475,406		28,100										2,399,984
Grade 4 allowance		17,972		10,967		1,045										29,984
Grade 5 (Special Mention) loan balance		44,859		41,338		1,185										87,382
Grade 5 allowance		2,904		978		84										3,966
Grade 6 (Substandard) loan balance		85,840		57,958		2,063										145,861
Grade 6 allowance		10,993		3,340		288										14,621
Grade 7 (Doubtful) loan balance		532		345		—										877
Grade 7 allowance		205		44		—										249
Consumer loans based on payment status:
Current loan balances						8,956		1,556,167		762,067		136,077		607,586		3,070,853
Current loans allowance						140		19,874		2,157		3,671		1,070		26,912
30 days past due loan balance						288		14,365		2,132		1,505		11,994		30,284
30 days past due allowance						9		1,278		136		533		125		2,081
60 days past due loan balance						68		4,953		708		1,223		2,733		9,685
60 days past due allowance						8		1,267		135		689		90		2,189
90+ days past due loan balance						29		3,398		569		1,509		12,601		18,106
90+ days past due allowance						8		1,625		194		1,229		225		3,281
Total loans	$	1,474,741		2,028,535		72,427		1,578,883		765,476		140,314		634,914		6,695,290
Total Allowance for Loan Losses	$	37,895		18,712		1,875		24,044		2,622		6,122		1,510		92,780

     Total charge-offs were $15.5 million for the quarter ended September 30, 2006 up $1.2 million, or 8.77%, from the year ago quarter and $2.0 million or 4.39% for the nine months ended September 30, 2006 from the nine months ended September 30, 2005. Criticized commercial assets (“individually impaired,” “special mention,” “substandard” and “doubtful”) increased $28.7 million and accounted for 7.54% of total commercial loans for the 2006 third quarter compared with criticized commercial asset levels of 7.18% at September 30, 2005. The Corporation’s long-term trend of improving charge-off levels was interrupted by a loan that was charged down and reclassified as held-for-sale.

     Installment, home equity and credit card charge-offs were down $2.5 million from the prior year quarter reflecting the minimal negative residual impact from the October 2005 bankruptcy legislative change. Loans past due 90 days or more accruing interest were down $1.2 million or 7.11% from the linked quarter ended June 30, 2006 and down $6.4 million or 28.62% from year ago quarter ended September 30, 2006 reflecting the favorable trends in the retail portfolio.

Loans

     Total loans outstanding at September 30, 2006 were $6.9 million compared to $6.7 billion at December 31, 2005 and $6.7 billion at September 30, 2005.

     The commercial loan portfolio for the 2006 third quarter increased by 6.58% over the prior year third quarter, but continues to be impacted by lower demand for credit in our region. While the Corporation originated $81.5 million of mortgage loans in the third quarter 2006, compared to $160.7 million in same quarter of 2005, and $509.9 million for the full year ended December 31, 2005, the majority of these loans were fixed rate mortgages which were sold with servicing rights retained. Further discussion of the Corporation’s loan mix strategy as well as changes in average balances for the quarter ended September 30, 2006 compared to the quarter ended September 30, 2005 can be found under the Net Interest Income sub-caption in this report.

	As of		As of		As of
	September 30,		December 31,		September 30,
(Dollars in thousands)	2006		2005		2005
Commercial loans	$	3,733,734		3,519,483		3,503,276
Mortgage loans		613,332		628,581		634,914
Installment loans		1,622,355		1,524,355		1,578,883
Home equity loans		748,307		778,697		765,476
Credit card loans		140,143		145,592		140,314
Leases		59,476		70,619		72,427
Total Loans	$	6,917,347		6,667,327		6,695,290

          Expected cash flow and interest rate information for commercial loans is presented in the following table:

	As of
	September 30, 2006
	(Dollars in thousands)
Due in one year or less	$	1,589,076
Due after one year but within five years		1,744,029
Due after five years		400,629
Totals	$	3,733,734
Due after one year with a predetermined fixed interest rate	$	1,031,339
Due after one year with a floating interest rate		1,113,319
Totals	$	2,144,658

          The Corporation has interest rate hedge strategy in place that swaps fixed interest rate commercial real estate loans to a variable interest rate basis. At September 30, 2006, $474.5 million of fixed rate commercial real estate loans were hedged. This strategy is more fully described in Footnote 8, Accounting for Derivatives, in these consolidated financial statements.

     The following table summarizes the Corporation’s nonperforming assets:

	September 30,			December 31,			September 30,
	2006			2005			2005
				(Dollars in thousands)
Nonperforming commercial loans	$	52,621			54,176			34,144
Other nonaccrual loans:		9,132			8,086			7,751
Total nonperforming loans		61,753			62,262			41,895
Other real estate (“ORE”)		10,711			9,995			9,503
Total nonperforming assets	$	72,464			72,257			51,398
Loans past due 90 day or more accruing interest	$	15,311			17,931			21,451
Total nonperforming assets as a percentage of total loans and ORE		1.05	%		1.08	%		0.77	%

     The allowance for credit losses covers nonperforming loans by 153.94% at September 30, 2006 compared to 235.44% at the end of the prior year quarter. This increase is primarily attributable to the increase in nonperforming commercial loans. See Note 1 (Summary of Significant Accounting Policies) of the 2005 Form 10-K, as amended for a summary of the Corporation’s nonaccrual and charge-off policies.

     The following table is a nonaccrual commercial loan flow analysis:

	Period End
(Dollars in thousands)	3Q06			2Q06			1Q06			4Q05			3Q05
Nonaccrual commercial loans beginning of period	$	41,927			56,258			54,176			34,144			38,124
Credit Actions:
New		31,619			6,652			10,259			29,778			4,848
Loan and lease losses		(4,006	)		(1,927	)		(3,385	)		(3,005	)		(2,722	)
Charged down		(2,725	)		(5,079	)		(2,681	)		(5,285	)		(253	)
Return to accruing status		(773	)		(2,260	)		(368	)		(1,179	)		(228	)
Payments and tranfers to ORE		(13,421	)		(2,864	)		(1,743	)		(277	)		(5,625	)
Sales		—			(8,853	)		—			—			—
Nonaccrual commercial loans end of period	$	52,621			41,927			56,258			54,176			34,144

     Nonaccrual commercial loans have decreased $3.6 million from the first quarter of 2006 but increased $10.7 million over the second quarter of 2006. As reflected above, $8.9 million of nonaccrual loans were sold in April 2006. The majority of the short-term increase at September 30, 2006 was caused by a single $7.1 million loan which was placed on nonaccrual at quarter-end and reclassified as held-for-sale. This loan was sold on October 18, 2006.

Deposits

     The following schedule illustrates the change in composition of the average balances of deposits and average rates paid for the noted periods:

	Quarter Ended					Year Ended					Quarter Ended
	September 30, 2006					December 31, 2005					September 30, 2005
	Average		Average			Average		Average			Average		Average
	Balance		Rate			Balance		Rate			Balance		Rate
						(Dollars in thousands)
Non-interest DDA	$	1,407,653		—			1,466,106		—			1,457,487		—
Interest-bearing DDA		794,886		1.12	%		827,829		0.71	%		838,549		0.82	%
Savings and money market accounts		2,246,386		2.33	%		2,356,813		1.40	%		2,333,331		1.48	%
CDs and other time deposits		2,906,952		4.49	%		2,647,908		3.28	%		2,616,195		3.28	%
Total customer deposits	$	7,355,877		2.61	%		7,298,656		1.72	%		7,245,562		1.76	%
Securities sold under agreements to repurchase		1,357,746		4.64	%		1,409,135		3.22	%		1,478,857		3.36	%
Wholesale borrowings		367,640		6.20	%		431,787		4.97	%		442,035		4.99	%
Total funds	$	9,081,263					9,139,578					9,166,454

     Interest-bearing and non-interest-bearing demand deposits, on a combined basis, averaged $2.2 billion during the 2006 third quarter, down $93.5 million, or 4.07%, from the third quarter 2005. Savings deposits, including money market savings accounts, averaged $2.2 billion, $86.9 million or 3.73% lower than the year ago quarter. The sum of demand and savings accounts, often referred to as “core deposits,” dropped $180.4 million, or 3.90%, and represented 60.48% of total average deposits for the third quarter 2006, compared to 63.89% last year. The drop was attributable to intense competition for core deposits within the Corporation’s regional banking areas.

     The weighted-average yield paid on interest-bearing core deposits during the quarter at 2.03% was 71 basis points more than last year’s average core deposits rate. Average CDs, still the largest individual component of deposits, totaled $2.9 billion for the third quarter, up 11.11% from the same quarter last year. Average rates paid on CDs rose 121 basis points from 3.28% in the 2005 quarter to 4.49% this year. On a percentage basis, average CDs were 37.88% and 33.94%, respectively, of total interest-bearing funds for the September 30, 2006 and 2005 quarters.

     Securities sold under agreements to repurchase decreased to 17.69% of interest-bearing funds during the three months ended September 30, 2006 from 19.18% for the September 30, 2005 quarter. Interest-bearing liabilities funded 82.96% of average earning assets during the quarter ended September 30, 2006 and 81.44% during the quarter ended September 30, 2005. Wholesale funds decreased to 4.79% of interest-bearing funds during the third quarter 2006 from 5.73% in the year ago quarter. In summary, the decrease in average core deposits during the

quarter compared to the same period in 2005 was partially offset by the decrease in higher rate wholesale borrowings. The funding mix from higher priced wholesale borrowings towards less expensive CDs has helped to mitigate the effect of the flat yield curve and support the net interest margin.

     The following table summarizes scheduled maturities of CDs of $100 thousand or more (“Jumbo CDs”) that were outstanding as of September 30, 2006:

Maturing in:	Amount
	(In thousands)
Under 3 months	$	512,662
3 to 6 months		232,126
6 to 12 months		361,740
Over 1 year through 3 years		77,522
Over 3 years		42,926
	$	1,226,976

Market Risk

     Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility. The Corporation is primarily exposed to interest rate risk as a result of offering a wide array of financial products to its customers.

     Changes in market interest rates may result in changes in the fair market value of the Corporation’s financial instruments, cash flows, and net interest income. The Corporation seeks to achieve consistent growth in net interest income and capital while managing volatility arising from shifts in market interest rates. The Asset and Liability Committee (“ALCO”) oversees market risk management, establishing risk measures, limits, and policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. According to these policies, responsibility for measuring and the management of interest rate risk resides in the Corporate Treasury function.

     Interest rate risk on the Corporation’s consolidated balance sheets consists of reprice, option, and basis risks. Reprice risk results from differences in the maturity, or repricing, of asset and liability portfolios. Option risk arises from “embedded options” present in many financial instruments such as loan prepayment options, deposit early withdrawal options and interest rate options. These options allow customers opportunities to benefit when market interest rates change, which typically results in higher net revenue for the Corporation. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in a narrowing of profit spread on an earning asset or liability. Basis risk is also present in administered rate liabilities, such as interest-bearing checking accounts, savings accounts and money market accounts where historical pricing relationships to market rates may change due to the level or directional change in market interest rates.

     The interest rate risk position is measured and monitored using risk management tools, including earnings simulation modeling and economic value of equity sensitivity analysis, which capture both near-term and long-term interest rate risk exposures. Combining the results from these separate risk measurement processes allows a reasonably comprehensive view of short-term and long-term interest rate risk in the Corporation.

     Earnings simulation involves forecasting net interest earnings under a variety of scenarios, including changes in the level of interest rates, the shape of the yield curve, and spreads between market interest rates. The sensitivity of net interest income to changes in interest rates is measured using numerous interest rate scenarios, including shocks, gradual ramps, curve flattening, curve steepening and forecasts of likely interest rate scenarios. Presented below is the Corporation’s interest rate risk profile as of September 30, 2006 and 2005:

     Immediate Change in Rates and Resulting Percentage Increase/(Decrease) in Net Interest Income:

	-100 basis points			+100 basis points			+200 basis points
September 30, 2006		(0.94	%)		0.21	%		0.02	%
September 30, 2005		(1.54	%)		(0.16	%)		(0.77	%)

     Modeling the sensitivity of net interest earnings to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling process. To the extent that actual performance is different than what was assumed, actual net interest earnings sensitivity may be different than projected. The assumptions used in the models are management’s best estimate based on studies conducted by ALCO. ALCO uses a data-warehouse to study interest rate risk at a transactional level and uses various ad-hoc reports to refine assumptions continuously. Assumptions and methodologies regarding administered rate liabilities (e.g., savings, money market and interest-bearing checking accounts), balance trends, and repricing relationships reflect management’s best estimate of expected behavior, and these assumptions are reviewed regularly.

     The Corporation also has longer-term interest rate risk exposure, which may not be appropriately measured by earnings sensitivity analysis. ALCO uses economic value of equity, or EVE, sensitivity analysis to study the impact of long-term cash flows on earnings and capital. Economic value of equity involves discounting present values of all cash flows on the balance sheet and off balance sheet items under different interest rate scenarios. The discounted present value of all cash flows represents the Corporation’s economic value of equity. The analysis requires modifying the expected cash flows in each interest rate scenario, which will impact the discounted present value. The amount of base-case measurement and its sensitivity to shifts in the yield curve allow management to measure longer-term repricing and option risk in the balance sheet. Presented below is the Corporation’s EVE profile as of September 30, 2006 and 2005:

     Immediate Change in Rates and Resulting Percentage Increase/(Decrease) in EVE:

	-100 basis points			+100 basis points			+200 basis points
September 30, 2006		(3.61	%)		1.28	%		1.03	%
September 30, 2005		(2.99	%)		0.41	%		(0.66	%)

Capital Resources

     Shareholders’ equity at September 30, 2006 totaled $903.4 million compared to $937.6 million at December 31, 2005 and $972.35 million at September 30, 2005.

     The following table reflects the various measures of capital:

	September 30,				December 31,				September 30,
	2006				2005				2005
					(Dollars in thousands)
Consolidated
Total equity	$	903,383	8.84	%		937,580	9.23	%		972,348	9.45	%
Common equity		903,383	8.84	%		937,580	9.23	%		972,348	9.45	%
Tangible common equity (a)		761,050	7.55	%		794,579	7.93	%		829,125	8.17	%
Tier 1 capital (b)		820,643	10.13	%		858,879	10.60	%		883,300	10.95	%
Total risk-based capital (c)		1,006,659	12.43	%		1,075,987	13.28	%		1,101,967	13.67	%
Leverage (d)		820,643	8.15	%		858,879	8.48	%		883,300	8.67	%
Bank Only
Total equity	$	738,306	7.23	%		712,378	7.02	%		804,382	7.83	%
Common equity		738,306	7.23	%		712,378	7.02	%		804,382	7.83	%
Tangible common equity (a)		595,973	5.92	%		569,377	5.69	%		661,159	6.53	%
Tier 1 capital (b)		742,438	9.18	%		722,814	8.94	%		807,028	10.00	%
Total risk-based capital (c)		925,588	11.45	%		937,233	11.59	%		1,025,685	12.69	%
Leverage (d)	$	742,438	7.38	%		722,814	7.15	%		807,028	7.92	%

(a)	Common equity less all intangibles; computed as a ratio to total assets less intangible assets.
(b)	Shareholders’ equity minus net unrealized holding gains on equity securities, plus or minus net unrealized holding losses or gains on available-for-sale debt securities, less goodwill; computed as a ratio to risk-adjusted assets, as defined in the 1992 risk-based capital guidelines.
(c)	Tier 1 capital plus qualifying loan loss allowance, computed as a ratio to risk-adjusted assets, as defined in the 1992 risk-based capital guidelines.
(d)	Tier 1 capital; computed as a ratio to the latest quarter’s average assets less goodwill.

     The risk-based capital guidelines issued by the Federal Reserve Bank in 1988 require banks to maintain adequate capital equal to 8% of risk-adjusted assets effective December 31, 1993. At September 30, 2006, the Corporation’s risk-based capital equaled 12.43% of risk-adjusted assets, exceeding minimum guidelines.

     The cash dividend of $0.29 per share paid in the third quarter has an indicated annual rate of $1.16 per share.

Liquidity Risk Management

     Liquidity risk is the possibility of the Corporation being unable to meet current and future financial obligations in a timely manner. Liquidity is managed to ensure stable, reliable and cost-effective sources of funds to satisfy demand for credit, deposit withdrawals and investment opportunities. The Corporation considers core earnings, strong capital ratios and credit quality essential for maintaining high credit ratings, which allow the Corporation cost-effective access to market-based liquidity. The Corporation relies on a large, stable core deposit base and a diversified base of wholesale funding sources to manage liquidity risk.

     The Treasury Group is responsible for identifying, measuring and monitoring the Corporation’s liquidity profile. The position is evaluated daily, weekly and monthly by analyzing the composition of all funding sources, reviewing projected liquidity commitments by future month and identifying sources and uses of funds. The Treasury Group also prepares a contingency funding plan that details the potential erosion of funds in the event of a systemic financial market crisis or institutional-specific stress. In addition, the overall management of the Corporation’s liquidity position is integrated into retail deposit pricing policies to ensure a stable core deposit base.

     The Corporation’s primary source of liquidity is its core deposit base, raised through its retail branch system, along with unencumbered, or unpledged, investment securities. The Corporation also has available unused wholesale sources of liquidity, including advances from the Federal Home Loan Bank of Cincinnati, issuance through dealers in the capital markets and access to certificates of deposit issued through brokers. Liquidity is also provided by unencumbered, or unpledged, investment securities that totaled $525.8 million at September 30, 2006.

     Funding Trends for the Quarter — During the three months ended September 30, 2006, total average deposits decreased $70.1 million from the previous quarter and $3.7 million of higher rate wholesale borrowings were repaid.

     Parent Company Liquidity — The Corporation manages its liquidity principally through dividends from the bank subsidiary. During the second quarter ended September 30, 2006, FirstMerit Bank paid FirstMerit Corporation $24.0 million in dividends. As of September 30, 2006, FirstMerit Bank had an additional $16.6 million available to pay dividends without regulatory approval.

Critical Accounting Policies

     The accounting and reporting policies of the Corporation are in accordance with accounting principles generally accepted within the United States of America and conform to general practices within the banking industry. Accounting and reporting policies for the allowance for loan losses, income taxes, mortgage servicing rights, derivative instruments and hedging activities, and pension and postretirement benefits are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by management could result in material changes in the Corporation’s financial position or results of operations. Note 1 (Summary of Significant Accounting Policies) and Note 4 (Allowance for Loan Losses), as described in the 2005 Form 10-K, as amended, provide detail with regard to the Corporation’s methodology and reporting of the allowance for loan losses. Additional information for income tax accounting is contained within Note 1, as well as in Note 11 (Federal Income Taxes) as described in the 2005 Form 10-K, as amended. Accounting for mortgage servicing rights was also discussed in the 2005 Form 10-K, as amended, in Note 1 and Note 6 (Mortgage Servicing Rights and Mortgage Servicing Activity). Derivative instruments and hedging activities are described more fully in Note 9 (Accounting for Derivatives) in these consolidated financial statements, as well as Note 1, Note 16 (Fair Value Disclosure of Financial Instruments), and Note 17 (Financial Instruments with Off-Balance-Sheet Risk) of the 2005 Form 10-K, as amended. A description of the plans and the assumptions used to estimate the liabilities for pension and postretirement benefits is described in Note 12 (Benefit Plans) to the 2005 Form 10-K, as amended as well as Note 10 (Benefit Plans) in the consolidated financial statements included in this report.

Off-Balance Sheet Arrangements

     A detailed discussion of the Corporation’s off-balance sheet arrangements, including swaps, hedges, forward swap agreements, IRLCs, TBA securities, options and swaptions is included in Note 8 (Accounting for Derivatives) to the consolidated financial statements included in this report and in Note 17 to the 2005 Form 10-K, as amended. There have been no significant changes since December 31, 2005.

Forward-looking Safe-harbor Statement

     The Corporation cautions that any forward-looking statements contained in this report, in a report incorporated by reference to this report or made by management of the Corporation, involve risks and uncertainties and are subject to change based upon various factors. Actual results could differ materially from those expressed or implied. Reference is made to the section titled “Forward-looking Statements” in the Corporation’s 2005 Form 10-K, as amended.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See Market Risk Section in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 4. CONTROLS AND PROCEDURES

     Management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, has made an evaluation of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15.

     During the period covered by the report, there was no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

     Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this report, that the Corporation’s disclosure controls and procedures are effective.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     In the normal course of business, the Corporation is at all times subject to pending and threatened legal actions, some for which the relief or damages sought are substantial. Although the Corporation is not able to predict the outcome of such actions, after reviewing pending and threatened actions with counsel, management believes that the outcome of any or all such actions will not have a material adverse effect on the results of operations or shareholders’ equity of the Corporation.

ITEM 1A. RISK FACTORS

     There have been no material changes in our risk factors from those disclosed in our 2005 Annual Report on Form 10-K as amended.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

     The following table provides information with respect to purchases the Corporation made of its common shares during the third quarter of the 2006 fiscal year:

					Total Number of		Maximum
					Shares Purchased		Number of Shares
					as Part of Publicly		that May Yet be
	Total Number of		Average Price		Announced Plans		Purchased Under
	Shares Purchased		Paid per Share		or Programs (1)		Plans or Programs
Balance as of June 30, 2006:								396,272
July 1, 2006 - July 31, 2006		—		—		—		396,272
August 1, 2006 - August 31, 2006			$			—		396,272
September 1, 2006 - September 30, 2006		—		—		—		396,272
Balance as of September 30, 2006:		0	$			0		396,272

(1) On January 19, 2006, the Board of Directors authorized the repurchase of up to 3 million shares (the “New Repurchase Plan”). The New Repurchase Plan superseded all other repurchase programs, including that authorized by the Board of Directors on July 15, 2004 (the “Prior Repurchase Plan”). The Corporation had purchased all of the shares it was authorized to acquire under the Prior Repurchase Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number
3.1	Amended and Restated Articles of Incorporation of FirstMerit Corporation, as amended (incorporated by reference from Exhibit 3.1 to the Form 10-K/A filed by the Registrant on April 29, 1999.)
3.2	Amended and Restated Code of Regulations of FirstMerit Corporation (incorporated by reference from Exhibit 3(b) to the Form 8-K filed by the registrant on April 9, 1998)
31.1	Rule 13a-14(a)/Section 302 Certification of Paul G. Greig, Chief Executive Officer of FirstMerit Corporation
31.2	Rule 13a-14(a)/Section 302 Certification of Terrence E. Bichsel, Executive Vice President and Chief Financial Officer of FirstMerit Corporation
32.1	Rule 13a-14(b)/Section 906 Certifications of Paul G. Greig, Chief Executive Officer of FirstMerit Corporation, and Terrence E. Bichsel, Executive Vice President and Chief Financial Officer of FirstMerit Corporation

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FIRSTMERIT CORPORATION
By:	/s/  TERRENCE E. BICHSEL
	Terrence E. Bichsel, Executive Vice President
	and Chief Financial Officer (duly authorized officer of registrant and principal financial officer)

Date: November 8, 2006