1999 Performance Highlights

• Core return on equity reached 18%

• Core earnings per share rose to $1.73, a 13.8% gain

• Assets exceeded $10 billion - a new milestone

• Posted a 1.66% core return on average assets

• Net revenue grew a dynamic 8.4%

• Core operating expense declined 11.5%

Dear Shareholders:

FirstMerit consistently builds shareholder value. We begin with the recognition that the customer is the ultimate decision-maker. We listen to our customers’ ideas about how, when and where we can best serve them. We then apply this insight to hone our products and services. We deliver them exceptionally well. Our responsiveness and execution build strong, loyal customer relationships. This enables us to provide our customers with new products and services to meet new needs. We think this is exactly the right approach for a rapidly changing financial services environment. We’ll discuss each of these elements in the pages that follow.

First, the results. We established three goals for 1999: double digit earnings per share growth, a return on equity between 16% and 18%, and an efficiency ratio at or below 50%. By year-end, we achieved all three.

Core earnings per share, our basic performance measure, rose to $1.73 in 1999 from $1.52, as originally reported in 1998 - a gain of 13.8%. The 1998 as originally reported number does not include pooled Signal Corp results. Pooled 1998 results were $1.06 and include an after-tax charge of 22 cents related to residual interest on manufactured housing securities.

For the first time, our assets exceeded $10 billion at year-end. Both acquisitions and internal growth helped us to reach this milestone. Core return on average assets, another performance hallmark, was 1.66%, and core return on equity reached 18%. These results place FirstMerit among the best performing U.S. banks of our size.

Our operating efficiency ratio improved to 50.9% for the full year. In the fourth quarter, it dropped below 50%. This results both from our success at growing net revenue, which rose 8.4%, and the success of our expense control programs, which cut core operating expenses by 11.5%.