Mr. Terry E. Patton
Senior Vice President and Secretary
FirstMerit Corporation
III Cascade Plaza
Akron, Ohio 44308-1103

Dear Mr. Patton:

This is in response to your letter dated May 12, 1998, on behalf of FirstMerit Corporation ("FirstMerit") and its principal operating subsidiary, FirstMerit Bank, N.A. ("FirstMerit Bank"), both in Akron, Ohio, in which you request an interpretation of an exemption (the "Exemption Order") from section 106 of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. � 1972) that was granted on May 23, 1996, to Huntington Bancshares, Incorporated, Columbus, Ohio ("Huntington"), and to National City Corporation, Cleveland, Ohio ("National City"). The Exemption Order permits Huntington's and National City's subsidiary banks and nonbank subsidiaries to offer a "floorplan" loan at a reduced rate to an automobile dealership based on the amount of retail paper financing sold by the dealership to the subsidiary or an affiliate, or originated by the dealership on behalf of the subsidiary or an affiliate. See Huntington Bancshares, Incorporated and National City Corporation, 82 Federal Reserve Bulletin 688 (1996).¹

You seek confirmation that the Exemption Order and the Interpretive Letter would permit FirstMerit Bank to offer reduced-rate loans to automobile dealerships based on the amount of retail paper financing sold to FirstMerit Bank or an affiliate or originated by the dealership on behalf of FirstMerit Bank or an affiliate. You have committed that FirstMerit Bank will engage in only those automobile dealership retail paper financing activities that are expressly permitted by the Exemption Order and the Interpretive Letter. You also request confirmation that FirstMerit Bank may offer reduced-rate loans to marine craft and recreational vehicle dealerships, in addition to automobile dealerships, based on the amount of retail paper financing sold to FirstMerit Bank or an affiliate or originated by the dealership on behalf of FirstMerit Bank or an affiliate.

Based on the facts presented in your letter and a review of the Exemption Order and the Interpretive Letter, the modifications detailed in your letter do not raise any additional anticompetitive concerns under section 106. The Board's analysis contained in the Exemption Order and the Interpretive Letter applies equally to FirstMerit Bank. Moreover, the Board's analysis is not altered because FirstMerit Bank seeks to offer loans to marine craft and recreational vehicle dealerships in addition to automobile dealerships. Accordingly, it would be consistent with the Exemption Order and the Interpretive Letter for FirstMerit Bank to offer a reduced rate on any loan to an automobile, marine craft, or recreational vehicle dealership based on the amount of retail paper financing sold to FirstMerit Bank or an affiliate or originated by the dealership on behalf of FirstMerit Bank or an affiliate. If you have any questions regarding this matter, please call Pat Robinson (202/452-3005) or Mark Van Der Weide (202/452-2263) of my staff.

Sincerely,

(Signed) J. Virgil Mattingly

J. Virgil Mattingly

cc: Federal Reserve Bank of Cleveland

1. By letter dated September 10, 1996 (the "Interpretive Letter"), the Board's general counsel confirmed for National City that the Exemption Order would permit National City to offer a reduced rate on loans other than "floorplan" loans and that the term "retail paper financing" includes automobile leases sold to, or originated on behalf of, National City in addition to traditional automobile loans. Return to text