irstMerit is committed to being a value-added acquirer. We expect every acquisition to be consistent with our overall strategy of growth from relationship banking.

In addition, an acquisition must become accretive on an earnings-per-share basis within the first year, and provide a cash-on-cash internal return on investment of 16% or better. Signal Corp, acquired during 1999, is doing just that as it helps build the momentum established with our 1998 acquisitions of CoBancorp and Security First.

With $1.9 billion in assets, Signal expanded our penetration and core customer base in community markets with concentrated populations of retail and business customers who are prime candidates for the strong mix of products and services we see driving our double-digit EPS growth.

Following our unique organizational structure - which standardizes integration processes including organizational structure and product lines - very talented employees in acquired branches started creating value and developing relationships from day one. FirstMerit’s sophisticated referral system and scope of retail banking, private banking, commercial lending, trust, investments, insurance and mortgage products helped community-based teams grow the number of households using three or more services in these branches from 16% to 37% within the first eight months. Signal was accretive for 1999, and merger-related cost savings projected at $17 million are already being realized.

The addition of Signal Corp also brought us a very successful community banking franchise in New Castle, Pennsylvania. We’ve grown that franchise very nicely in a short period of time by introducing the concept of one-stop shopping for financial services and relationship banking to its customers.

Mobile Consultants, Inc. (MCi), a manufactured housing lender that came to us with Signal, diversifies FirstMerit’s revenue growth. Manufactured homes represented nearly 23% of all new home starts in 1999. Sales price per unit has risen by nearly 8% annually over the past five years - with overall dollar volume growing at a 17% annual pace including land costs. Our market share in this business is relatively modest, however, our focused network of over 3,000 dealers originating high-quality loans in 42 states, adds balance to our loan portfolio and growth to our bottom line. MCi contributed over $1 million to our 1999 net income.

“Brethren Care Village has been providing the highest quality care to Ashland County seniors for over 28 years. In 1998, we decided it was time to add a residential tower and wellness/ community center. FirstMerit developed a financial package that let us meet these goals.” - Greg D. Gault, COO, Brethren Care Village, Ashland, Ohio

(l-r) Jeffrey E. Meek, President & CEO; John R. Macso, Chairman; Robert L. Workman, Chief Operations Officer - Mobile Consultants, Inc.