“Our growth strategies are working - assets

           rose over 12% in 1999 to top $10.1 billion.”

- Terrence E. Bichsel, Executive Vice President & Chief Financial Officer

rganized under a single national charter with nine regional affiliates, FirstMerit operates in 22 counties in Ohio and western Pennsylvania, and is the third largest banking organization in Northeast Ohio - our thriving core market. This area is the 14th largest metro area in the U.S. and the fourth largest U.S. manufacturing center.

FirstMerit’s location strategy concentrates on communities with a strong and growing base of target customers who represent significant multiple-account relationship opportunities. Within these communities, personalized response, easy accessibility and product scope truly set FirstMerit apart.

This highly focused approach - combining asset growth with profitability - results in double-digit earnings growth year after year, with core earnings-per-share of $1.73 for 1999, 13.8% above 1998 results. The 1998 as 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. At year-end, FirstMerit’s market capitalization was $2.0 billion, with a core return on equity of 18%, a core return on assets of 1.66%, and a core efficiency ratio that declined to 50.9% for the year and under 50% for the fourth quarter.

From a management perspective, FirstMerit’s performance momentum is driven by two key sources: a diversified portfolio of businesses and a balanced mix of interest income and fees. Together, they kept our revenue stream growing throughout 1999.

Our primary banking businesses - retail, commercial, mortgage banking and wealth services - contributed some 85% of 1999 revenues, while a group of businesses including indirect auto lending, manufactured housing financing and treasury provided the remaining 15%.

Our loan portfolio posted extremely strong growth during 1999, with net interest income growing 8% for the year. Excluding securities gains, fee income grew 10%, with steady gains in every component. As we standardize pricing for our newly acquired banks, our near-term goal to generate 30% of net revenues from fee income is well within reach. Combined with outstanding customer service, annual reviews of our service pricing keep FirstMerit competitive, and help us maintain excellent retention of the multi-service households that position us for continuing revenue growth. This proven management process contributed over $12 million in additional fee income for 1999.