Ahead of the Bell: FirstMerit Bancorp upgraded

FirstMerit Bancorp upgraded on potential for FDIC-assisted bank buys boosting shares

• On 9:27 am EDT, Friday October 9, 2009

NEW YORK (AP) -- An Oppenheimer analyst on Friday boosted his rating on regional bank FirstMerit Bancorp, saying shares could rise if the company purchases a failed bank with its excess capital.

FirstMerit, which paid the government back its bailout TARP funds in April and in May repurchased the warrants for its stock from the Treasury Department, is well-capitalized, said analyst Terry McEvoy in a note to investors.

"The burning question on everyone's mind is what FirstMerit will do with its excess capital," he wrote. "Management appears very interested in doing an FDIC-assisted deal."

The Federal Deposit Insurance Corp. has shut down 98 U.S. banks this year, often selling the deposits and some assets to other financial companies with an accompanying agreement to share future losses on loans.

In a July conference call, the company said it was looking for deals, and could, with the FDIC, "accomplish a transaction that would be of up to $5 billion."

McEvoy upgraded FirstMerit to "Perform" from "Underperform."

Shares closed at $19.82 on Thursday.