10-Q/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

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

FOR THE QUARTERLY PERIOD ENDED March 31, 2007

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	34-1339938
(State or other jurisdiction of	(IRS Employer Identification
incorporation or organization)	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 April 30, 2007, 80,465,009 shares, without par value, were outstanding.

EXPLANATORY NOTE

     This Amendment No. 1 on Form 10-Q/A (this “Amendment”) amends our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2007 as filed with the Securities and Exchange Commission on May 3, 2007 (the “Original Report”), and is being filed to revise Exhibit 32.1. The date of the quarter referenced in Exhibit 32.1 should have been March 31, 2007.

     This Amendment contains the complete text of the original report with the corrected information appearing in Exhibit 32.1.

     This Amendment to our Original Report continues to speak as of the date of our Original Report, and we have not updated the disclosures contained in the Amendment to reflect any events that occurred at a date subsequent to the filing of the Original Report.

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
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, 2006, which is derived from the	March 31,			December 31,			March 31,
audited financial statements)	2007			2006			2006
ASSETS
Cash and due from banks	$	242,470			200,204			206,912
Investment securities (at fair value) and federal funds sold		2,447,426			2,407,888			2,460,321
Loans held for sale		48,289			95,272			61,318
Loans:
Commercial loans		3,800,125			3,694,121			3,562,968
Mortgage loans		598,390			608,008			625,514
Installment loans		1,628,531			1,619,747			1,509,714
Home equity loans		709,964			731,473			772,308
Credit card loans		138,183			147,553			135,916
Leases		76,438			77,971			65,682
Total loans		6,951,631			6,878,873			6,672,102
Less allowance for loan losses		(92,045	)		(91,342	)		(87,589	)
Net loans		6,859,586			6,787,531			6,584,513
Premises and equipment, net		120,556			122,954			119,571
Goodwill		139,245			139,245			139,245
Intangible assets		2,644			2,865			3,533
Accrued interest receivable and other assets		486,905			496,613			525,304
Total assets	$	10,347,121			10,252,572			10,100,717
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand-non-interest bearing	$	1,463,039			1,455,097			1,465,168
Demand-interest bearing		779,790			799,571			923,491
Savings and money market accounts		2,333,907			2,267,686			2,320,360
Certificates and other time deposits		3,124,466			2,976,567			2,801,543
Total deposits		7,701,202			7,498,921			7,510,562
Securities sold under agreements to repurchase		1,380,591			1,261,821			1,272,362
Wholesale borrowings		208,744			464,227			285,143
Accrued taxes, expenses, and other liabilities		192,943			181,492			162,098
Total liabilities		9,483,480			9,406,461			9,230,165
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 March 31, 2007, December 31, 2006 and March 31, 2006		127,937			127,937			127,937
Capital surplus		108,073			106,916			108,958
Accumulated other comprehensive loss		(71,328	)		(79,508	)		(53,395	)
Retained earnings		1,006,207			998,079			1,002,035
Treasury stock, at cost, 11,914,435, 11,925,803 and 12,257,585 shares at March 31, 2007, December 31, 2006 and March 31, 2006, respectively		(307,248	)		(307,313	)		(314,983	)
Total shareholders’ equity		863,641			846,111			870,552
Total liabilities and shareholders’ equity	$	10,347,121			10,252,572			10,100,717

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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Quarters ended
(Unaudited)	March 31,
(In thousands except per share data)	2007		2006
Interest income:
Interest and fees on loans, including held for sale	$	130,089		117,740
Interest and dividends on investment securities and federal funds sold		26,846		25,332
Total interest income		156,935		143,072
Interest expense:
Interest on deposits:
Demand-interest bearing		1,919		2,362
Savings and money market accounts		14,006		10,748
Certificates and other time deposits		36,080		26,101
Interest on securities sold under agreements to repurchase		16,785		11,923
Interest on wholesale borrowings		6,139		5,965
Total interest expense		74,929		57,099
Net interest income		82,006		85,973
Provision for loan losses		4,210		6,106
Net interest income after provision for loan losses		77,796		79,867
Other income:
Trust department income		5,596		5,394
Service charges on deposits		16,249		16,066
Credit card fees		11,099		10,671
ATM and other service fees		3,071		3,108
Bank owned life insurance income		3,168		2,986
Investment services and insurance		2,453		2,597
Investment securities gains, net		—		16
Loan sales and servicing income		5,438		1,445
Other operating income		1,802		3,114
Total other income		48,876		45,397
Other expenses:
Salaries, wages, pension and employee benefits		42,500		43,031
Net occupancy expense		6,686		6,549
Equipment expense		3,084		2,958
Stationery, supplies and postage		2,333		2,453
Bankcard, loan processing and other costs		7,470		5,827
Professional services		4,829		2,763
Amortization of intangibles		223		223
Other operating expense		14,401		18,095
Total other expenses		81,526		81,899
Income before federal income tax expense		45,146		43,365
Federal income tax expense		13,725		13,401
Net income	$	31,421		29,964
Other comprehensive income (loss), net of taxes
Unrealized securities’ holding gain (loss), net of taxes	$	8,113		(9,748	)
Unrealized hedging gain (loss), net of taxes		67		(787	)
Less: reclassification adjustment for securities’ gains losses realized in net income, net of taxes		—		10
Total other comprehensive income (loss), net of taxes		8,180		(10,545	)
Comprehensive income	$	39,601		19,419
Net income applicable to common shares	$	31,421		29,964
Net income used in diluted EPS calculation	$	31,425		29,969
Weighted average number of common shares outstanding — basic		80,113		80,374
Weighted average number of common shares outstanding — diluted		80,298		80,648
Basic earnings per share	$	0.39		0.37
Diluted earnings per share	$	0.39		0.37
Dividend per share	$	0.29		0.28

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

FIRSTMERIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended March 31,
	2007			2006
(Unaudited)	(In thousands)
Operating Activities
Net income	$	31,421			29,964
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		4,210			6,106
Provision for depreciation and amortization		3,823			3,609
Amortization of investment securities premiums, net		218			827
Accretion of income for lease financing		(1,158	)		(990	)
Gains on sales and calls of investment securities, net		—			(16	)
Decrease in interest receivable		1,759			2,032
Increase in interest payable		9,138			6,602
Increase in prepaid assets		(5,367	)		(3,668	)
Decrease in accounts payable		(4,007	)		(4,007	)
Increase in taxes payable		7,997			8,048
Increase in other receivables		(280	)		(9,919	)
Decrease (increase) in other assets		135			(3,510	)
Originations of loans held for sale		(52,339	)		(80,924	)
Proceeds from sales of loans, primarily mortgage loans sold in the secondary mortgage markets		48,639			67,487
Losses on sales of loans, net		35			343
Amortization of intangible assets		223			223
Other changes		6,223			(10,531	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		50,670			11,676
Investing Activities
Dispositions of investment securities:
Available-for-sale — sales		—			—
Available-for-sale — maturities		177,244			101,060
Purchases of available-for-sale investment securities		(205,005	)		(2,709	)
Net decrease in federal funds sold		—			(28,000	)
Net increase in loans and leases, excluding sales		(22,137	)		(18,621	)
Purchases of premises and equipment		(1,436	)		(4,218	)
Sales of premises and equipment		11			1,458
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(51,323	)		48,970
Financing Activities
Net (decrease) increase in demand accounts		(11,839	)		34,680
Net increase in savings and money market accounts		66,221			16,183
Net increase in certificates and other time deposits		147,899			226,049
Net increase (decrease) in securities sold under agreements to repurchase		118,770			(153,675	)
Net decrease in wholesale borrowings		(255,483	)		(115,961	)
Cash dividends — common		(23,293	)		(22,416	)
Purchase of treasury shares		(134	)		(65,413	)
Proceeds from exercise of stock options, conversion of debentures or conversion of preferred stock		778			866
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		42,919			(79,687	)
Increase (decrease) in cash and cash equivalents		42,266			(19,041	)
Cash and cash equivalents at beginning of period		200,204			225,953
Cash and cash equivalents at end of period	$	242,470			206,912
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest, net of amounts capitalized	$	38,840			31,193
Federal income taxes	$	—			20

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

FirstMerit Corporation and Subsidiaries

Notes to Consolidated Financial Statements
March 31, 2007 (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, 2006 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 March 31, 2007 and 2006 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, 2006.

     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. Management has not elected to use the fair value method for subsequent measurement.

     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 155”).” This statement 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. SFAS 155 was effective for all financial instruments acquired or issued after January 1, 2007. The adoption of SFAS No. 155 did not have a material impact on the Corporation’s consolidated financial condition or results of operations.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (“SFAS 159”) which permits companies to elect to measure certain eligible items at fair value. Subsequent unrealized gains and losses on those items will be reported in earnings. Upfront costs and fees related to those items will be reported in earnings as incurred and not deferred.

     SFAS 159 is effective for fiscal years beginning after November 15, 2007. If a company elects to apply the provision of the SFAS 159 to eligible items existing at that date, the effect of the remeasurement to fair value will be reported as a cumulative effect adjustment to the opening balance of retained earnings. Retrospective application will not be permitted. The Corporation is currently assessing whether it will elect to use the fair value option for any of its eligible items.

     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. The adoption of FIN 48 did not 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 (“SFAS 157”).” 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. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Corporation is currently assessing the impact of adopting SFAS 157.

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:

	March 31, 2007
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale:
U.S. Government agency obligations	$	735,352		465		(10,891	)		724,926
Obligations of state and political subdivisions		250,288		1,740		(341	)		251,687
Mortgage-backed securities		1,250,795		939		(30,454	)		1,221,280
Other securities		245,658		4,866		(991	)		249,533
	$	2,482,093		8,010		(42,677	)		2,447,426

	Book Value		Fair Value
Due in one year or less	$	331,159		328,221
Due after one year through five years		1,566,567		1,531,164
Due after five years through ten years		306,800		305,353
Due after ten years		277,567		282,688
	$	2,482,093		2,447,426

	December 31, 2006
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale:
U.S. Government agency obligations	$	846,517		72		(14,670	)		831,919
Obligations of state and political subdivisions		195,054		1,872		(128	)		196,798
Mortgage-backed securities		1,164,205		625		(36,778	)		1,128,052
Other securities		249,261		3,282		(1,424	)		251,119
	$	2,455,037		5,851		(53,000	)		2,407,888

	Amortized		Fair
	Cost		Value
Due in one year or less	$	376,918		373,502
Due after one year through five years		1,580,074		1,534,847
Due after five years through ten years		274,173		271,978
Due after ten years		223,872		227,561
	$	2,455,037		2,407,888

	March 31, 2006
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale:
U.S. Government agency obligations	$	897,301		—		(25,723	)		871,578
Obligations of state and political subdivisions		86,087		1,306		(52	)		87,341
Mortgage-backed securities		1,276,435		534		(51,644	)		1,225,325
Other securities		246,922		3,210		(2,055	)		248,077
	$	2,506,745		5,050		(79,474	)		2,432,321

			Fair
	Book Value		Value
Due in one year or less	$	239,163		235,966
Due after one year through five years		2,053,462		1,980,443
Due after five years through ten years		102,303		101,510
Due after ten years		111,817		114,402
	$	2,506,745		2,432,321

     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 $2.0 billion at March 31, 2007, $1.8 billion at December 31, 2006 and $2.0 billion at March 31, 2006.

     At March 31, 2007, December 31, 2006 and March 31, 2006, the Corporation’s investment in Federal Reserve Bank (“FRB”) common stock was $8.7 million, $8.6 million and $8.6 million, respectively. At March 31, 2007, December 31, 2006 and March 31, 2006, the Corporation’s investment in Federal Home Loan Bank (“FHLB”) stock amounted to $114.5 million, $114.5 million and $109.6 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 March 31, 2007
	Less than 12 months					12 months or longer					Total
			Unrealized					Unrealized					Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Government agency obligations	$	—		—			654,413		(10,891	)		654,413		(10,891	)
Obligations of states and political subdivisions		75,178		(309	)		1,721		(32	)		76,899		(341	)
Mortgage-backed securities		47,960		(123	)		961,547		(30,331	)		1,009,507		(30,454	)
Other securities		9,729		(50	)		49,635		(941	)		59,364		(991	)
Total temporarily impaired securities	$	132,867		(482	)		1,667,316		(42,195	)		1,800,183		(42,677	)

	At December 31, 2006
	Less than 12 months					12 months or longer					Total
			Unrealized					Unrealized					Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Government agency obligations	$	69,934		(66	)		711,861		(14,603	)		781,795		(14,669	)
Obligations of states and political subdivisions		30,926		(96	)		1,722		(32	)		32,648		(128	)
Mortgage-backed securities		43,585		(12	)		1,015,354		(36,767	)		1,058,939		(36,779	)
Other securities		9,790		(9	)		59,918		(1,415	)		69,708		(1,424	)
Total temporarily impaired securities	$	154,235		(183	)		1,788,855		(52,817	)		1,943,090		(53,000	)

	At March 31, 2006
	Less than 12 months					12 months or longer					Total
			Unrealized					Unrealized					Unrealized
Description of Securities	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Government agency obligations		132,033		(3,760	)		739,545		(21,963	)		871,578		(25,723	)
Obligations of states and political subdivisions		1,934		(3	)		2,939		(49	)		4,873		(52	)
Mortgage-backed securities		166,710		(4,629	)		1,007,795		(47,015	)		1,174,505		(51,644	)
Other securities		57,288		(1,574	)		21,655		(481	)		78,943		(2,055	)
Total temporarily impaired securities	$	357,965		(9,966	)		1,771,934		(69,508	)		2,129,899		(79,474	)

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 months ended March 31, 2007 and 2006 and the full year ended December 31, 2006 is shown in the following table:

	Quarter ended		Year Ended			Quarter ended
	March 31,		December 31,			March 31,
	2007		2006			2006
Allowance for loan losses-beginning of period	$	91,342		90,661			90,661
Loans charged off:
Commercial		448		32,628			6,066
Mortgage		990		1,670			373
Installment		4,746		20,682			6,030
Home equity		820		3,847			620
Credit cards		2,399		8,294			1,774
Leases		21		3,607			51
Total charge-offs		9,424		70,728			14,914
Recoveries:
Commercial		2,878		3,734			1,437
Mortgage		8		142			56
Installment		2,114		10,340			3,146
Home equity		257		1,293			378
Credit cards		474		2,123			449
Manufactured housing		112		451			169
Leases		74		303			101
Total recoveries		5,917		18,386			5,736
Net charge-offs		3,507		52,342			9,178
Allowance related to loans held for sale		—		(23,089	)		—
Provision for loan losses		4,210		76,112			6,106
Allowance for loan losses-end of period	$	92,045		91,342			87,589

     Note 1 (Summary of Significant Accounting Policies) and Note 4 (Allowance for Loan Losses) in the 2006 Form 10-K, 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 March 31, 2007						At December 31, 2006						At March 31, 2006
	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		7,492		2,645		10,137		7,270		2,867		10,137		6,603		3,534
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 March 31, 2007 and 2006. The following table shows the estimated future amortization expense for deposit base intangible assets based on existing asset balances at March 31, 2007:

     For the years ended:

December 31, 2007	$	889
December 31, 2008		573
December 31, 2009		347
December 31, 2010		347
December 31, 2011 and beyond		489
	$	2,645

     During the fourth 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:

	Quarter ended		Quarter ended
	March 31,		March 31,
	2007		2006
BASIC EPS:
Net income applicable to common shares	$	31,421		29,964
Average common shares outstanding		80,113		80,374
Net income per share — basic	$	0.39		0.37
DILUTED EPS:
Net income available to common shares	$	31,421		29,964
Add: interest expense on convertible bonds		4		5
	$	31,425		29,969
Avg common shares outstanding		80,113		80,374
Add: Equivalents from stock options and restricted stock		139		224
Add: Equivalents-convertible bonds		46		50
Average common shares and equivalents outstanding		80,298		80,648
Net income per common share — diluted	$	0.39		0.37

     For the quarters ended March 31, 2007 and 2006, options to purchase 6.6 million and 6.1 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 — Management monitors the Corporation’s results by an internal profitability measurement system, which provides lines of business results and key performance measures. The profitability measurement system is based on internal management methodologies designed to produce consistent results and reflect the underlying economics of the businesses. The development and application of these methodologies is a dynamic process. Accordingly, these measurement tools and assumptions may be revised periodically to reflect methodological, product, and/or management organizational changes. Further, these tools measure financial results that support the strategic objectives and internal organizational structure of the Corporation. Consequently, the information presented is not necessarily comparable with similar information for other financial institutions.

     A description of each business, selected financial performance, and the methodologies used to measure financial performance are presented below.

• Commercial — The commercial line of business provides a full range of lending, depository, and related financial services to middle-market corporate, industrial, financial, small business, government and leasing clients. Commercial also includes the personal business of commercial loan clients as well as the “micro business” lines. Products and services offered include commercial loans such as term loans, revolving credit arrangements, inventory and accounts receivable financing, commercial mortgages, real estate construction lending and letters of credit.

• Retail — The retail line of business includes consumer lending and deposit gathering and residential mortgage loan origination and services. Retail offers a variety of retail financial products and services including direct and indirect installment loans, debit and credit cards, home equity loans and lines of credit, residential mortgage loans, deposit products, fixed and variable annuities and ATM network services. Consumer loans are composed of home equity lines of credit (“HELOC”), automobile, personal, marine and recreational vehicle loans. Deposit products include checking, savings, money market accounts and certificates of deposit.

• Wealth Services — The wealth services line of business offers a broad array of asset management, private banking, financial planning, estate settlement and administration, credit and deposit products and services. Trust and investment services include personal trust and planning, investment management, estate settlement and administration services. Retirement plan services focus on investment management and fiduciary activities. Brokerage and insurance delivers retail mutual funds, other securities, variable and fixed annuities, personal disability and life insurance products and brokerage services. Private banking provides credit, deposit and asset management solutions for affluent clients.

• Other — The other line of business includes activities that are not directly attributable to one of the three principal lines of business. Included in the other category are the parent company, eliminations company, community development operations, the treasury group, which includes the securities portfolio, wholesale funding and asset liability management activities, and the economic impact of certain assets, capital and support function not specifically identifiable with the three primary lines of business.

     The accounting policies of the lines of businesses are the same as those of the Corporation described in Note 1 (Summary of Significant Accounting Policies) to the 2006 Form 10-K. Funds transfer pricing is used in the determination of net interest income by assigning a

cost for funds used or credit for funds provided to assets and liabilities within each business unit. Assets and liabilities are match-funded based on their maturity, prepayment and/or repricing characteristics. As a result the three primary lines of business are generally insulated from changes in interest rates. Changes in net interest income due to changes in rates are reported in Other by the treasury group. Capital has been allocated on an economic risk basis. Loans and lines of credit have been allocated capital based upon their respective credit risk. Asset management holdings in the Wealth segment have been allocated capital based upon their respective market risk related to assets under management. Normal business operating risk has been allocated to each line of business by the level of noninterest expense. Mismatch between asset and liability cash flow as well as interest rate risk for MSRs and the origination business franchise value have been allocated capital based upon their respective asset/liability management risk. The provision for loan losses is allocated based upon the actual net charge-offs of each respective line of business, adjusted for loan growth and changes in risk profile. Noninterest income and expenses directly attributable to a line of business are assigned to that line of business. Expenses for centrally provided services are allocated to the business line by various activity based cost formulas.

     Prior to 2007, the Corporation managed its operations through the major line of business “Supercommunity Banking.” To improve revenue growth and profitability as well as enhance our relationships with customers, Management has moved to a line of business model during the first quarter of 2007. Accordingly, prior period information has been reclassified to reflect this change.

     The following table shows selected segment information.

										FirstMerit
March 31, 2007	Commerical		Retail		Wealth		Other			Consolidated
OPERATIONS (thousands) :
Net interest income	$	36,675		47,881		4,473		(7,023	)		82,006
Provision for loan losses		4,842		1,824		648		(3,104	)		4,210
Other income		13,355		24,709		8,486		2,326			48,876
Other expenses		20,917		49,136		8,997		2,476			81,526
Net income		15,778		14,059		2,154		(570	)		31,421
AVERAGES (millions) :
Assets	$	3,708,447		3,018,319		343,791		3,205,684			10,276,241
Loans		3,695,244		2,859,872		343,064		20,456			6,918,636
Earnings assets		3,765,170		2,909,330		343,332		2,419,586			9,437,418
Deposits		1,874,705		4,756,877		432,496		417,891			7,481,969
Shareholders’ equity		248,149		196,020		47,340		363,204			854,713

										FirstMerit
December 31, 2006	Commerical		Retail		Wealth		Other			Consolidated
OPERATIONS:
Net interest income	$	148,486		202,203		18,151		(28,467	)		340,373
Provision for loan losses		50,535		19,266		2,143		4,168			76,112
Other income		37,370		109,393		33,503		14,882			195,148
Other expenses		80,739		201,830		36,717		8,801			328,087
Net income		35,478		58,826		8,317		(7,675	)		94,946
AVERAGES:
Assets	$	3,546,402		3,020,874		337,529		3,225,310			10,130,115
Loans		3,568,265		2,860,371		335,170		34,531			6,798,337
Earnings assets		3,600,199		2,911,837		335,180		2,414,076			9,261,292
Deposits		2,022,503		4,702,581		389,937		269,125			7,384,146
Shareholders’ equity		250,145		216,464		47,838		375,482			889,929

											FirstMerit
March 31, 2006	Commerical		Retail		Wealth			Other			Consolidated
OPERATIONS:
Net interest income	$	36,051		50,567		4,344			(4,989	)		85,973
Provision for loan losses		5,614		1,443		(139	)		(812	)		6,106
Other income		8,562		25,198		8,230			3,407			45,397
Other expenses		19,657		50,760		8,934			2,548			81,899
Net income		12,572		15,315		2,456			(379	)		29,964
AVERAGE:
Assets	$	3,451,259		3,005,255		336,688			3,318,710			10,111,912
Loans		3,474,279		2,846,190		329,657			47,596			6,697,722
Earnings assets		3,506,828		2,899,080		329,690			2,510,285			9,245,883
Deposits		2,070,828		4,699,076		358,302			185,302			7,313,508
Economic Capital		241,573		213,209		48,628			385,408			888,818

     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 periods ended March 31, 2007 and 2006 and the full year ended December 31, 2006:

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 March 31, 2007 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 the first quarter of 2007, the Corporation entered 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.

     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
	Quarter ended			Quarter ended
	March 31,			March 31,
	2007			2006
Components of Net Periodic Pension Cost
Service Cost	$	1,866			1,771
Interest Cost		2,414			2,282
Expected return on assets		(2,796	)		(2,837	)
Amortization of unrecognized prior service costs		41			45
Cumulative net loss		1,337			1,479
Net periodic pension cost	$	2,862			2,740

	Postretirement Benefits
	Quarter ended			Quarter ended
	March 31,			March 31,
	2007			2006
Components of Net Periodic Postretirement Cost
Service Cost	$	222			187
Interest Cost		434			415
Amortization of unrecognized prior service costs		(135	)		(135	)
Cumulative net loss		102			107
Net periodic postretirement cost	$	623			574

     The Corporation is not required and does not anticipate making a contribution to the defined benefit pension plan during 2007.

     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 qualified 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 2006 year end earnings. During the quarter ended March 31, 2007, $0.3 million was expensed relating to the new defined contribution plan.

     10. 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.

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
	March 31, 2007								December 31, 2006								March 31, 2006
	Average					Average			Average					Average			Average					Average
(Dollars in thousands)	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Cash and due from banks	$	179,566								186,029								194,042
Investment securities and federal funds sold:
U.S. Treasury securities and U.S. Government agency obligations (taxable)		1,955,704			20,222		4.19	%		2,050,736			81,207		3.96	%		2,161,306			20,850		3.91	%
Obligations of states and political subdivisions (tax exempt)		222,381			3,382		6.17	%		114,548			7,390		6.45	%		90,622			1,527		6.83	%
Other securities and federal funds sold		251,454			4,421		7.13	%		250,221			15,264		6.10	%		248,093			3,526		5.76	%
Total investment securities and federal funds sold		2,429,539			28,025		4.68	%		2,415,505			103,861		4.30	%		2,500,021			25,903		4.20	%
Loans held for sale		89,243			763		3.47	%		47,449			3,153		6.65	%		48,129			762		6.42	%
Loans		6,918,636			129,359		7.58	%		6,798,338			499,746		7.35	%		6,697,732			116,997		7.08	%
Total earning assets		9,437,418			158,147		6.80	%		9,261,292			606,760		6.55	%		9,245,882			143,662		6.30	%
Allowance for loan losses		(91,256	)							(88,020	)							(90,229	)
Other assets		750,513								770,714								761,858
Total assets	$	10,276,241								10,130,015								10,111,553
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing	$	1,389,455			—		—			1,434,539			—		—			1,462,671			—		—
Demand — interest bearing		756,678			1,919		1.03	%		818,735			9,217		1.13	%		848,209			2,362		1.13	%
Savings and money market accounts		2,284,549			14,006		2.49	%		2,271,654			50,083		2.20	%		2,292,865			10,748		1.90	%
Certificates and other time deposits		3,051,287			36,080		4.80	%		2,859,218			123,877		4.33	%		2,709,764			26,101		3.91	%
Total deposits		7,481,969			52,005		2.82	%		7,384,146			183,177		2.48	%		7,313,509			39,211		2.17	%
Securities sold under agreements to repurchase		1,352,961			16,785		5.03	%		1,283,951			56,151		4.37	%		1,295,178			11,923		3.73	%
Wholesale borrowings		399,638			6,139		6.23	%		404,723			24,140		5.96	%		433,257			5,965		5.58	%
Total interest bearing liabilities		7,845,113			74,929		3.87	%		7,638,281			263,468		3.45	%		7,579,273			57,099		3.06	%
Other liabilities		186,960								167,266								180,791
Shareholders’ equity		854,713								889,929								888,818
Total liabilities and shareholders’ equity	$	10,276,241								10,130,015								10,111,553
Net yield on earning assets	$	9,437,418			83,218		3.58	%		9,261,292			343,292		3.71	%		9,245,882			86,563		3.80	%
Interest rate spread							2.93	%							3.10	%							3.25	%

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

     The Corporation recorded first quarter 2007 net income of $31.4 million, or $0.39 per diluted share. This compares with $30.0 million, or $0.37 per diluted share, for the prior-year quarter.

     Return on average common equity (“ROE”) and average assets (“ROA”) for the first quarter 2007 were 14.91% and 1.24%, respectively, compared with 13.67% and 1.20% for the prior-year quarter.

     Net interest margin was 3.58% for the first quarter of 2007 compared with 3.58% for the fourth quarter of 2006 and 3.80% for the first quarter of 2006. The Corporation maintained a stable net interest margin during the first quarter of 2007, compared with the fourth quarter of 2006, by reinvesting maturing investment portfolio securities at higher yields and managing the costs of core deposits. The decrease in net interest margin compared with the first quarter of 2006 reflects both a shift in consumer preference for higher-yielding deposit products as well as increased deposit costs from a higher interest rate environment.

     Net interest income on a fully tax-equivalent (“FTE”) basis was $83.2 million in the first quarter of 2007 compared with $84.5 million in the fourth quarter of 2006 and $86.6 million in the first quarter of 2006. The decrease in FTE net interest income compared with the fourth quarter 2006 resulted from fewer days in the quarter while average earning assets grew $63.2 million, or 0.67%, along with a stable net interest margin. The increase in earning assets was primarily driven by growth in the investment portfolio. The decrease in FTE net interest income compared with the first quarter of 2006 resulted from lower net interest margin, partly offset by an increase in average earning assets. Compared with the first quarter of 2006, average loans increased 3.30% and average investments decreased 2.82%.

     Noninterest income net of securities transactions for the first quarter of 2007 was $48.9 million, an increase of $0.5 million or 1.13% from the fourth quarter of 2006 and an increase of $3.5 million or 7.70% from the first quarter of 2006. In the first quarter of 2007, the Corporation completed a previously announced asset sale that contributed $4.1 million to loan sales and servicing income offset by a $0.5 million loss on the sale of other real estate recorded in operating income for the quarter. Other income, net of securities gains, as a percentage of net revenue for the first quarter of 2007 was 37.00% compared with 36.39% for fourth quarter of 2006 and 34.39% for the first quarter of 2006. Net revenue is defined as net interest income, on a FTE basis, plus other income, less gains from securities sales.

     Noninterest expense for the first quarter of 2007 was $81.5 million, a decrease of $2.5 million, or 2.93%, from the fourth quarter of 2006 and a decrease of $0.4 million, or 0.46%, from the first quarter of 2006.

     Net charge-offs totaled $3.5 million, or 0.21%, of average portfolio loans in the first quarter of 2007 compared with $9.2 million, or 0.56%, of average portfolio loans in the first quarter of 2006.

     Nonperforming assets totaled $32.7 million at March 31, 2007, a decrease of $31.5 million, or 49.1%, compared with December 31, 2006 and a decrease of $40.2 million, or

55.22%, compared with March 31, 2006. The asset sale completed during the first quarter of 2007 included $31.0 million of nonperforming assets. Nonperforming assets at March 31, 2007 represented 0.47% of period-end loans plus other real estate compared with 0.93% at December 31, 2006 and 1.09% at March 31, 2006.

     The provision for loan losses decreased to $4.2 million in the first quarter of 2007 compared with $44.2 million in the fourth quarter of 2006 and $6.1 million in the first quarter of 2006. In the fourth quarter of 2006, the Corporation’s higher provision for loan losses was impacted by its decision to sell $73.7 million of commercial loans included in the asset sales completed during the first quarter of 2007.

     The allowance for loan losses totaled $92.0 million at March 31, 2007, an increase of $0.7 million and $4.5 million from December 31, 2006 and March 31, 2006, respectively. At March 31, 2007, the allowance for loan losses was 1.32% of period-end loans compared with 1.33% at December 31, 2006 and 1.31% at March 31, 2006. 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 as a percentage of period end loans was 1.42% at March 31, 2007 compared with 1.42% at December 31, 2006 and 1.40% at March 31, 2006. The allowance for credit losses to nonperforming loans increased to 356.26% at March 31, 2007 compared with 179.60% on December 31, 2006 and 145.32% on March 31, 2006.

     The Corporation’s total assets at March 31, 2007 were $10.3 billion, an increase of $94.5 million, or 0.92%, compared with December 31, 2006 and an increase of $246.4 million, or 2.44%, compared with March 31, 2006. The increase from December 31, 2006 was due to continued growth in the commercial loan portfolio, which increased $106.0 million, or 2.87%, and offset decreases in the consumer portfolio. Commercial loan growth of $237.1 million, or 6.66%, drove a majority of the asset growth from March 31, 2006.

     Total deposits were $7.7 billion at March 31, 2007, an increase of $202.3 million, or 2.70% from December 31, 2006, and an increase of $190.6 million, or 2.54%, from March 31, 2006. Core deposits, which exclude all time deposits, totaled $4.6 billion at March 31, 2007, an increase of $54.4 million or 1.20% from December 31, 2006 and a decrease of $132.3 million, or 2.81% from March 31, 2006.

     Shareholders’ equity was $863.6 million at March 31, 2007 and the Corporation’s capital position remains strong as tangible equity to assets was 7.07%. The common dividend per share paid in the first quarter 2007 was $0.29.

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 March 31, 2007 was $82.0 million compared to $86.0 million for the three months ended March 31, 2006. 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 $1.2 million and $0.6 million for the quarters ending March 31, 2007 and 2006, respectively.

     FTE net interest income for the quarter ended March 31, 2007 was $83.3 million compared to $86.6 million for the three months ended March 31, 2006. The $3.3 million decrease in FTE net interest income occurred because the $17.8 million increase in interest expense, compared to the same quarter last year, was more than the $14.5 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 March 31, 2007 and 2006
	Increases (Decreases)
RATE/VOLUME ANALYSIS	Volume			Rate			Total
(Dollars in thousands)
INTEREST INCOME — FTE
Investment securities	$	(158	)		2,231			2,073
Loans held for sale		457			(456	)		1
Loans		3,946			8,416			12,362
Federal funds sold		41			8			49
Total interest income — FTE	$	4,286			10,199			14,485
INTEREST EXPENSE
Demand deposits-interest bearing	$	(242	)		(201	)		(443	)
Savings and money market accounts		(39	)		3,297			3,258
Certificates of deposits and other time deposits		3,556			6,423			9,979
Securities sold under agreements to repurchase		553			4,309			4,862
Wholesale borrowings		(484	)		658			174
Total interest expense	$	3,344			14,486			17,830
Net interest income — FTE	$	942			(4,287	)		(3,345	)

     As illustrated in the preceding table, the increased amount of interest income recorded in the 2007 first quarter compared to the same 2006 period was primarily rate driven as higher yields on loans increased interest income by $8.4 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 2006 through the first quarter of 2007. The higher rates paid on customer deposits and securities sold under agreements to repurchase in the 2007 quarter compared to the same 2006 period increased interest expense by $13.8 million.

Net Interest Margin

     The following table provides 2007 FTE net interest income and net interest margin totals as well as 2006 comparative amounts:

	Quarters ended
	March 31,
(Dollars in thousands)	2007			2006
Net interest income	$	82,006			85,973
Tax equivalent adjustment		1,212			590
Net interest income — FTE	$	83,218			86,563
Average earning assets	$	9,437,418			9,245,882
Net interest margin — FTE		3.58	%		3.80	%

     Average loans outstanding for the current year and prior year first quarters totaled $6.9 billion and $6.7 billion, respectively. Increases in average loan balances from first quarter 2006 to the first quarter of 2007 occurred in commercial, installment loans, credit card loans and leases while mortgage loans and home equity loans 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 first quarter 2006, were as follows: commercial loans were up $181.8 million or 5.10%; installment loans, both direct and indirect rose $108.4 million or 7.16%; credit card loans rose $2.0 million or 1.43%; leases increased $9.7 million or 14.21%; mortgage loans were down $23.1million or 3.66%; and home equity loans were down $57.9 million, or 7.47%. The majority of fixed-rate mortgage loan originations are sold to investors through the secondary mortgage loan market. Average outstanding loans for the 2007 and 2006 first quarters equaled 73.31% and 72.44% of average earning assets, respectively.

     Average deposits were $7.5 billion during the 2007 first quarter, up $168.5 million, or 2.30%, from the same period last year. For the quarter ended March 31, 2007, average core deposits (which are defined as checking accounts, savings accounts and money market savings products) decreased $173.1million, or 3.76%, and represented 59.22% of total average deposits, compared to 62.95% for the 2006 first quarter. Average certificates of deposit (“CDs”) increased $341.5 million, or 12.60%, compared to the prior year quarter due to marketing promotions

during the 2007 first quarter. Average wholesale borrowings decreased $33.6 million and as a percentage of total interest-bearing funds equaled 5.09% for the 2007 first quarter and 5.72% for the same quarter one year ago. Securities sold under agreements to repurchase increased $57.8 million, and as a percentage of total interest bearing funds equaled 17.25% for the 2007 first quarter and 17.09% for the 2006 first quarter. Average interest-bearing liabilities funded 83.13% of average earning assets in the current year quarter and 81.97% during the quarter ended March 31, 2006.

Other Income

     Other (non-interest) income for the quarter totaled $48.9 million, an increase of $3.5 million from the $45.4 million earned during the same period one year ago.

     Other income, net of securities gains, as a percentage of net revenue for the first quarter was 37.00%, compared to 34.39% 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 2007 first quarter as compared to the first quarter of 2006, were as follows: trust department income was $5.6 million, up 3.74%; service charges on deposit accounts totaled $16.2 million, up 1.14% due in part to new fee strategies; credit card fees increased $0.4 million, or 4.01%; loan sales and servicing income was $5.4, an increase of $4.0 million, primarily attributable to the $4.1 million gain on sale from the loan sale which occurred during the first quarter 2007; investment services and insurance fees decreased $0.1 million, or 5.54%; there were no significant sales of investment securities during the first quarter of 2007 or 2006; and other operating income was down $1.3 million, or 42.13% primarily due to losses that were incurred on the sale of other real estate during the first quarter of 2007 and gains on venture capital and the sale of other real estate that occurred in the first quarter 2006.

     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:

Mortgage Servicing Rights

	Quarter ended			Quarter ended			Quarter ended			Quarter ended			Quarter ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2007			2006			2006			2006			2006
Balance at beginning of period	$	19,575			19,777			20,025			19,945			19,971
Addition of mortgage servicing rights		477			593			524			814			723
Amortization		(686	)		(795	)		(772	)		(734	)		(773	)
Changes in valuation allowance		—			—			—			—			24
Balance at end of period	$	19,366			19,575			19,777			20,025			19,945

     On a quarterly basis, the Corporation assesses its MSRs for impairment based on their current fair value. As required, 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. There was no valuation allowance at March 31, 2007, December 31, 2006 and March 31, 2006. The MSRs are amortized over the period of and in proportion to the estimated net servicing revenues.

     These MSR balances represent the rights to service approximately $2.0 billion of mortgage loans for all periods at March 31, 2007, December 31, 2006, and March 31, 2006. 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 $81.5 million for the first quarter 2007 compared to $81.9 million for the same 2006 quarter, a decrease of $0.4 million, or 0.46%.

     For the three months ended March 31, 2007, decreases in operating costs compared to the first quarter 2006 occurred as follows: salaries, wages, pension and employee benefits fell $0.5 million, primarily due to the reduction of staff from the branch restructurings; bankcard, loan processing and other costs decreased $1.6 million, primarily attributable to the corresponding decrease in loan sales and servicing income due the drop mortgage loan originations; professional services increased $2.1 million due in part to the consulting services necessary to remediate bank secrecy act issues; other operating expense decreased $3.7 million primarily attributable to a $1.3 million reduction in marketing expense and various other expense reductions due to the cost reduction strategy initiated during the fourth quarter of 2006.

     The efficiency ratio of 61.55% for first quarter 2007 declined 78 basis points over the efficiency ratio of 60.77% recorded for the first quarter, 2006. The efficiency ratio for the three months ended March 31, 2007 indicates 61.55 cents of operating costs were spent in order to generate each dollar of net revenue.

Federal Income Taxes

     Federal income tax expense was $13.7 million and $13.4 million for the quarters ended March 31, 2007 and 2006, respectively. The effective federal income tax rate for the first quarter 2007 was 30.4%, compared to 30.90% for the same quarter 2006. Additional federal income tax information is contained in Note 11 (Federal Income Taxes) in the 2006 Form 10-K.

     The Corporation adopted FIN 48 “Accounting for Uncertainty in Income Taxes” on January 1, 2007. Under FIN 48 a liability was created for any unrecognized tax benefits. This liability would have been included in the contractual obligations table in December 31, 2006 Form 10-K MD&A. Current liabilities related to FIN 48 for March 31, 2007 are $2.0 million.

FINANCIAL CONDITION

Investment Securities

     The March 31, 2007 amortized cost and market value of investment securities, including mortgage-backed securities, by average remaining term, are included in Note 3 (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	March 31,			December 31,			March 31,
(In thousands)	2007			2006			2006
Allowance for loan losses-beginning of period	$	91,342			90,661			90,661
Provision for loan losses		4,210			76,112			6,106
Net charge-offs		(3,507	)		(52,342	)		(14,914	)
Allowance related to loans held for sale/sold		—			(23,089	)		5,736
Allowance for loan losses-end of period	$	92,045			91,342			87,589
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	6,294			6,072			6,072
Provision for credit losses		452			222			(219	)
Balance at end of period	$	6,746			6,294			5,853
Allowance for Credit Losses	$	98,791			97,636			93,442
Annualized net charge-offs and allowance related to loans held for sale/sold as a % of average loans		0.21	%		1.11	%		0.56	%
Annualized net charge-offs as a % of average loans		0.21	%		0.77	%		0.56	%
Allowance for loan losses:
As a percentage of loans outstanding		1.32	%		1.33	%		1.31	%
As a percentage of nonperforming loans		331.93	%		168.03	%		136.22	%
As a multiple of annualized net charge offs		6.47	X		1.75	X		2.35	X
Allowance for credit losses:
As a percentage of loans outstanding		1.42	%		1.42	%		1.40	%
As a percentage of nonperforming loans		356.26	%		179.60	%		145.32	%
As a multiple of annualized net charge offs and allowance related to loans held for sale		6.95	X		1.21	X		2.51	X

     The allowance for credit losses increased $1.2 million from December 31, 2006 to March 31, 2007, and increased $5.3 million from March 31, 2007 to March 31, 2006. The increase for both periods was attributable to additional reserves that were established to address identified risks associated with the slow down in the housing markets and the decline in residential and commercial real estate values. The following tables show the overall trend in increased credit quality for consumer loans and decreased credit quality for commercial loans by specific asset and risk categories.

	At March 31, 2007
	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	$	2,570		9,386		—		—		—		—		—		11,956
Allowance		916		581		—		—		—		—		—		1,497
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		29,110		2,771		3,549										35,430
Grade 1 allowance		75		2		11										88
Grade 2 loan balance		181,706		117,614		8,412										307,732
Grade 2 allowance		958		456		52										1,466
Grade 3 loan balance		411,436		358,167		33,958										803,561
Grade 3 allowance		2,210		1,993		214										4,417
Grade 4 loan balance		931,535		1,522,062		27,285										2,480,882
Grade 4 allowance		16,940		17,699		604										35,243
Grade 5 (Special Mention) loan balance		74,121		93,310		57										167,488
Grade 5 allowance		4,592		4,072		3										8,667
Grade 6 (Substandard) loan balance		39,337		26,522		1,752										67,611
Grade 6 allowance		5,422		2,761		217										8,400
Grade 7 (Doubtful) loan balance		384		94		—										478
Grade 7 allowance		127		13		—										140
Consumer loans based on payment status:
Current loan balances						1,279		1,612,565		706,657		133,580		575,502		3,029,583
Current loans allowance						5		13,880		2,962		3,222		4,195		24,264
30 days past due loan balance						76		10,764		2,509		1,799		7,260		22,408
30 days past due allowance						1		997		365		654		329		2,346
60 days past due loan balance						61		3,005		686		1,013		1,508		6,273
60 days past due allowance						2		809		248		588		214		1,861
90+ days past due loan balance						9		2,197		112		1,791		14,120		18,229
90+ days past due allowance						1		1,068		66		1,527		994		3,656
Total loans	$	1,670,199		2,129,926		76,438		1,628,531		709,964		138,183		598,390		6,951,631
Total Allowance for Loan Losses	$	31,240		27,577		1,110		16,754		3,641		5,991		5,732		92,045

	At December 31, 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	$	19,394		41,889		—		—		—		—		—		61,283
Allowance		973		515		—		—		—		—		—		1,488
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		28,350		2,789		3,526										34,665
Grade 1 allowance		82		2		12										96
Grade 2 loan balance		144,084		109,238		8,927										262,249
Grade 2 allowance		757		412		55										1,224
Grade 3 loan balance		377,713		366,903		33,115										777,731
Grade 3 allowance		2,235		1,902		229										4,366
Grade 4 loan balance		859,458		1,512,529		28,072										2,400,059
Grade 4 allowance		16,555		17,124		643										34,322
Grade 5 (Special Mention) loan balance		57,281		100,657		96										158,034
Grade 5 allowance		3,351		4,163		5										7,519
Grade 6 (Substandard) loan balance		42,771		30,604		2,196										75,571
Grade 6 allowance		5,598		3,118		257										8,973
Grade 7 (Doubtful) loan balance		442		19		—										461
Grade 7 allowance		150		3		—										153
Consumer loans based on payment status:
Current loan balances						1,802		1,600,560		728,302		142,598		576,927		3,050,189
Current loans allowance						6		15,058		2,499		3,578		3,201		24,342
30 days past due loan balance						171		13,165		2,084		1,977		11,813		29,210
30 days past due allowance						2		1,245		236		725		399		2,607
60 days past due loan balance						30		4,340		523		1,122		4,840		10,855
60 days past due allowance						1		1,180		150		660		524		2,515
90+ days past due loan balance						36		1,682		564		1,856		14,428		18,566
90+ days past due allowance						4		823		266		1,628		1,016		3,737
Total loans	$	1,529,493		2,164,628		77,971		1,619,747		731,473		147,553		608,008		6,878,873
Total Allowance for Loan Losses	$	29,701		27,239		1,214		18,306		3,151		6,591		5,140		91,342

	At March 31, 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	$	23,822		22,742				—		—		—		—		46,564
Allowance		8,338		2,194				—		—		—		—		10,532
Collective Loan Impairment Components:
Credit risk-graded loans
Grade 1 loan balance		18,654		1,525		—										20,179
Grade 1 allowance		76		2		—										78
Grade 2 loan balance		127,550		93,836		3,373										224,759
Grade 2 allowance		1,020		314		30										1,364
Grade 3 loan balance		292,279		325,591		8,198										626,068
Grade 3 allowance		2,008		1,449		209										3,666
Grade 4 loan balance		894,716		1,535,663		45,717										2,476,096
Grade 4 allowance		15,399		11,089		878										27,366
Grade 5 (Special Mention) loan balance		63,877		52,743		168										116,788
Grade 5 allowance		3,315		1,162		10										4,487
Grade 6 (Substandard) loan balance		56,843		52,220		2,901										111,964
Grade 6 allowance		6,335		2,833		360										9,528
Grade 7 (Doubtful) loan balance		582		325		—										907
Grade 7 allowance		183		31		—										214
Consumer loans based on payment status:
Current loan balances						5,015		1,492,098		768,903		131,267		599,300		2,996,583
Current loans allowance						66		16,820		2,283		3,663		947		23,779
30 days past due loan balance						261		12,218		1,992		2,143		10,661		27,275
30 days past due allowance						8		1,076		159		823		91		2,157
60 days past due loan balance						44		3,590		1,152		1,153		2,223		8,162
60 days past due allowance						5		928		254		717		60		1,964
90+ days past due loan balance						5		1,808		261		1,353		13,330		16,757
90+ days past due allowance						1		861		99		1,252		241		2,454
Total loans	$	1,478,323		2,084,645		65,682		1,509,714		772,308		135,916		625,514		6,672,102
Total Allowance for Loan Losses	$	36,674		19,074		1,567		19,685		2,795		6,455		1,339		87,589

     Total charge-offs were $9.4 million for the quarter ended March 31, 2007 down $5.5 million, or 36.81%, from the year ago quarter. Criticized commercial assets (“individually impaired,” “special mention,” “substandard” and “doubtful”) decreased $28.7 million and accounted for 6.30% of total commercial loans for the 2007 first quarter compared with criticized commercial asset levels of 7.47% at March 31, 2006.

     Installment charge-offs were down $1.3 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 $1.7 million or 9.79% from the linked quarter ended December 31, 2006 and down $3.4 million or 18.41% from year ago quarter ended March 31, 2006 reflecting the favorable trends in the retail portfolio.

Loans

     Total loans outstanding at March 31, 2007 were $7.0 billion compared to $6.9 billion at December 31, 2006 and $6.7 billion at March 31, 2006.

     The commercial loan portfolio for the 2007 first quarter increased by 6.66% over the prior year first quarter, but continues to be impacted by lower demand for credit in the Corporation’s regions. While the Corporation originated $58.6 million of mortgage loans in the first quarter 2007, compared to $94.4 million in same quarter of 2006, and $380.8 million for the full year ended December 31, 2006, 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 March 31, 2007 compared to the quarter ended March 31, 2006 can be found under the Net Interest Income sub-caption in this report.

	As of		As of		As of
	March 31,		December 31,		March 31,
(Dollars in thousands)	2007		2006		2006
Commercial loans	$	3,800,125		3,694,121		3,562,968
Mortgage loans		598,390		608,008		625,514
Installment loans		1,628,531		1,619,747		1,509,714
Home equity loans		709,964		731,473		772,308
Credit card loans		138,183		147,553		135,916
Leases		76,438		77,971		65,682
Total Loans	$	6,951,631		6,878,873		6,672,102

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

	As of
	March 31, 2007
	(Dollars in thousands)
Due in one year or less	$	1,692,099
Due after one year but within five years		1,745,403
Due after five years		362,623
Totals	$	3,800,125
Due after one year with a predetermined fixed interest rate	$	978,813
Due after one year with a floating interest rate		1,129,213
Totals	$	2,108,026

     The Corporation has an interest rate hedge strategy in place that swaps fixed interest rate commercial real estate loans to a variable interest rate basis. At March 31, 2007, $534.3 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:

	March 31,			December 31,			March 31,
	2007			2006			2006
	(Dollars in thousands)
Nonperforming commercial loans	$	17,049			45,045			56,258
Other nonaccrual loans:		10,681			9,317			8,044
Total nonperforming loans		27,730			54,362			64,302
Other real estate (“ORE”)		4,934			9,815			8,639
Total nonperforming assets	$	32,664			64,177			72,941
Loans past due 90 day or more accruing interest	$	15,209			16,860			18,640
Total nonperforming assets as a percentage of total loans and ORE		0.47	%		0.93	%		1.09	%

     The allowance for credit losses covers nonperforming loans by 356.26% at March 31, 2007 compared to 145.32% at the end of the prior year quarter. This increase is primarily attributable to the decrease in nonperforming commercial loans. See Note 1 (Summary of Significant Accounting Policies) of the 2006 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)	1Q07			4Q06			3Q06			2Q06			1Q06
Nonaccrual commercial loans beginning of period	$	45,045			52,621			41,927			56,258			54,176
Credit Actions:
New		5,983			27,087			31,619			6,652			10,259
Loan and lease losses		—			(24,592	)		(4,006	)		(1,927	)		(3,385	)
Charged down		(448	)		(3,616	)		(2,725	)		(5,079	)		(2,681	)
Return to accruing status		—			(3,985	)		(773	)		(2,260	)		(368	)
Payments and tranfers to ORE		(7,199	)		(2,470	)		(13,421	)		(2,864	)		(1,743	)
Sales		(26,332	)		—			—			(8,853	)		—
Nonaccrual commercial loans end of period	$	17,049			45,045			52,621			41,927			56,258

     Nonaccrual commercial loans have decreased $39.2 million from the first quarter of 2006 and decreased $28.0 million from the fourth quarter of 2006. As reflected above, $26.3 million of nonaccrual loans were sold in March 2007.

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
	March 31, 2007					December 31, 2006					March 31, 2006
	Average		Average			Average		Average			Average		Average
	Balance		Rate			Balance		Rate			Balance		Rate
	(Dollars in thousands)
Non-interest DDA	$	1,389,455		—			1,434,539		—			1,462,671		—
Interest-bearing DDA		756,678		1.03	%		818,735		1.13	%		848,209		1.13	%
Savings and money market accounts		2,284,549		2.49	%		2,271,654		2.20	%		2,292,865		1.90	%
CDs and other time deposits		3,051,287		4.80	%		2,859,218		4.33	%		2,709,764		3.91	%
Total customer deposits		7,481,969		2.82	%		7,384,146		2.48	%		7,313,509		2.17	%
Securities sold under agreements to repurchase		1,352,961		5.03	%		1,283,951		4.37	%		1,295,178		3.73	%
Wholesale borrowings		399,638		6.23	%		404,723		5.96	%		433,257		5.58	%
Total funds	$	9,234,568					9,072,820					9,041,944

     Interest-bearing and non-interest-bearing demand deposits, on a combined basis, averaged $2.1 billion during the 2007 first quarter, down $164.7 million, or 7.13%, from the first quarter 2006. Savings deposits, including money market savings accounts, averaged $2.3 billion, $8.3 million or 0.36% lower than the year ago quarter. The sum of demand and savings accounts, often referred to as “core deposits,” dropped $173.1 million, or 3.76%, and represented 59.22% of total average deposits for the first quarter 2007, compared to 62.95% last year. The drop was attributable to intense competition for core deposits within the Corporation’s regional banking areas.

     During the 2007 first quarter, the weighted-average yield paid on interest-bearing core deposits at 2.09% was 42 basis points more than last year’s average core deposits rate. Average CDs, still the largest individual component of deposits, totaled $3.1 billion for the first quarter, up 12.60% from the same quarter last year. Average rates paid on CDs rose 47 basis points from 4.33% in the 2006 quarter to 4.80% this year. On a percentage basis, average CDs were 38.89% and 35.75%, respectively, of total interest-bearing funds for the March 31, 2007 and 2006 quarters.

     Securities sold under agreements to repurchase increased to 17.25% of interest-bearing funds during the three months ended March 31, 2007 from 17.09% for the March 31, 2006 quarter. Interest-bearing liabilities funded 83.13% of average earning assets during the quarter ended March 31, 2007 and 81.97% during the quarter ended March 31, 2006. Wholesale funds decreased to 5.09% of interest-bearing funds during the first quarter 2007 from 5.72% in the year ago quarter. In summary, the decrease in average core deposits during the quarter compared to the same period in 2006 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 March 31, 2007:

	Amount
Maturing in:	(In thousands)
Under 3 months	$	652,562
3 to 6 months		324,573
6 to 12 months		213,563
Over 1 year through 3 years		121,080
Over 3 years		20,778
	$	1,332,556

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 March 31, 2007 and 2006:

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

	-200 basis points			-100 basis points			+100 basis points			+200 basis points
March 31, 2007		(2.77	%)		(0.94	%)		0.04	%		(0.15	%)
March 31, 2006		(4.08	%)		(1.14	%)		(0.36	%)		(1.00	%)

     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 March 31, 2007 and 2006:

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

	-200 basis points			-100 basis points			+100 basis points			+200 basis points
March 31, 2007		(10.58	%)		(3.48	%)		(0.03	%)		(1.34	%)
March 31, 2006		(7.08	%)		(1.22	%)		0.22	%		(0.70	%)

Capital Resources

     Shareholders’ equity at March 31, 2007 totaled $863.6 million compared to $846.1 million at December 31, 2006 and $870.6 million at March 31, 2006.

     The following table reflects the various measures of capital:

	March 31,				December 31,				March 31,
	2007				2006				2006
	(Dollars in thousands)
Consolidated
Total equity	$	863,641	8.35	%		846,111	8.25	%		870,552	8.62	%
Common equity		863,641	8.35	%		846,111	8.25	%		870,552	8.62	%
Tangible common equity (a)		721,752	7.07	%		704,001	6.96	%		727,774	7.31	%
Tier 1 capital (b)		814,530	10.25	%		804,959	10.07	%		802,619	9.89	%
Total risk-based capital (c)		975,098	12.27	%		993,716	12.44	%		1,017,051	12.53	%
Leverage (d)		814,530	8.00	%		804,959	7.95	%		802,619	8.00	%
Bank Only
Total equity	$	724,564	7.01	%		704,047	6.87	%		707,544	7.01	%
Common equity		724,564	7.01	%		704,047	6.87	%		707,544	7.01	%
Tangible common equity (a)		582,675	5.72	%		561,937	5.56	%		564,766	5.68	%
Tier 1 capital (b)		765,795	9.65	%		750,912	9.41	%		728,795	9.00	%
Total risk-based capital (c)		923,391	11.64	%		936,720	11.74	%		940,498	11.61	%
Leverage (d)	$	765,795	7.53	%		750,912	7.42	%		728,795	7.28	%

(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 March 31, 2007, the Corporation’s risk-based capital equaled 12.27% of risk-adjusted assets, exceeding minimum guidelines.

     The cash dividend of $0.29 per share paid in the first 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 $439.4 million at March 31, 2007.

     Funding Trends for the Quarter - During the three months ended March 31, 2007, total average deposits increased $41.6 million from the previous quarter and $47.3 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 quarter ended March 31, 2007, FirstMerit Bank paid $20.0 million in dividends to FirstMerit Corporation. As of March 31, 2007, FirstMerit Bank had an additional $34.6 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 2006 Form 10-K, 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 2006 Form 10-K. Accounting for mortgage servicing rights was also discussed in the 2006 Form 10-K 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 2006 Form 10-K. 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 2006 Form 10-K 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 2006 Form 10-K. There have been no significant changes since December 31, 2006.

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 2006 Form 10-K.

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 2006 Annual Report on Form 10-K.

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 first quarter of the 2007 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 December 31, 2006:								396,272
January 1, 2007 - January 31, 2007		130	$	24.14		—		396,272
February 1, 2007 - February 28, 2007		207		22.52		—		396,272
March 1, 2007 - March 31, 2007		26,674		24.32		—		396,272
Balance as of March 31, 2007:		27,011	$	24.30		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.
(2)	27,011 of these common shares were either: (1) delivered by the option holder with respect to the exercise of stock options; (2) in the case of restricted shares of common stock, shares were withheld to pay income taxes or other tax liabilities with respect to the vesting of restricted shares; or (3) shares were returned upon the resignation of the restricted shareholder.

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

(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)
10.1	Retirement Agreement with Robert P. Brecht (incorporated by reference from Exhibit 10.39 to the Form 10-K filed by the Registrant on February 28, 2007).
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: May 3, 2007

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Paul G. Greig, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of FirstMerit Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a — 15(f) and 15d -15(f) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the

audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2007	By:	/s/ Paul G. Greig
		President and
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Terrence E. Bichsel, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of FirstMerit Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under his supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2007	By:	/s/ Terrence E. Bichsel
		Executive Vice President and
		Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATIONS

Pursuant to 18 U.S.C. Section 1350, each of the undersigned officers of FirstMerit Corporation (the “Corporation”), hereby certifies that the Corporation’s Form 10-Q to which this certificate is attached (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

Date: May 3, 2007	By:	/s/ Paul G. Greig
			President and
			Chief Executive Officer
		By:	/s/ Terrence E. Bichsel
			Executive Vice President
			and Chief Financial Officer

A signed original of this written statement has been provided to FirstMerit Corporation and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.