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FIRST OF AMERICA BANK CORP. REPORTS 1ST QUARTER NET INCOME; EARNS RETURN ON ASSETS OF 1.19 PERCENT AND RETURN ON EQUITY OF 17.54 PERCENT

 KALAMAZOO, Mich., April 14 /PRNewswire/ -- First of America Bank Corporation (NYSE: FOA) today reported first quarter 1993 net income of $58.6 million, or $.98 per fully diluted share, compared with $26.0 million, or $.41 per fully diluted share a year ago, when income was reduced by the implementation of FAS 106. First quarter 1993's net income when compared with 1992's income from ongoing operations, excluding the one-time charge for retiree health care, increased 20.9 percent, and fully diluted earnings per share increased 19.5 percent.
 "Our earnings for the first quarter reflected the new level of profitability reached last year on an ongoing operating basis, and we are achieving returns on assets and equity in line with our long term goals," commented Daniel R. Smith, chairman and chief executive officer, First of America Bank Corporation. "Our return on average assets for the first quarter of 1993 was 1.19 percent compared with 1992's ongoing operating return on assets of 1.01 percent, and on the same comparable basis, our return on total equity for 1993 was 17.54 percent versus 15.11 percent a year ago."
 "The acquisitions of Security Bancorp and Champion Federal, combined with the implementation of operating efficiencies and ongoing cost management, resulted in our stronger earnings level," continued Smith. "We are very pleased that first quarter non-interest expense was actually less than a year ago and that non-interest income continued its growth. Contributing to the successful quarter was our ability to maintain our net interest margin during this time of slow loan demand and continued interest rate pressure."
 Total assets were $20.2 billion at March 31, 1993, compared with $19.5 billion last year. Total loans increased 1.4 percent to $13.6 billion and total deposits grew 2.8 percent to $17.9 billion.
 On a trailing twelve month basis, net income of $229.4 million was 32.6 percent higher than the $173.1 million of ongoing operating earnings reported for the comparable twelve months ended March 31, 1992. Ongoing operating income excludes the one-time charges incurred during 1992 for FAS 106, Security Bancorp's merger and assimilation costs and an intangible asset write-down. On the same basis, fully diluted earnings per share for the same periods were $3.84 and $2.93, respectively. Return on assets was 1.16 percent compared with 0.99 percent, while return on total equity was 17.08 percent versus 13.91 percent.
 Net Interest Income and Earning Asset Growth
 Net interest income increased 4.6 percent to $220.5 million for the first quarter of 1993, compared with $210.8 million for the same period of 1992. The increase was primarily the result of the lower rates paid on interest bearing liabilities. Earning assets grew 4.8 percent over a year ago, and the net interest margin was 4.92 percent for the first quarters of both 1993 and 1992.
 "Our loan growth was mixed this quarter," said Richard F. Chormann, president and chief operating officer, First of America Bank Corporation. "Consumer loans, particularly our credit card outstandings, were our fastest growing segments. Total credit card outstandings increased 24.0 percent over a year ago, and indirect consumer loans increased 6.1 percent, while residential mortgage loans decreased 2.6 percent. Residential mortgages decreased primarily because of the sale of mortgages to the secondary market, over $300 million during the first quarter of 1993."
 "Commercial loan growth was a modest 2.7 percent from a year ago," continued Chormann. "Our Smart Business Loan campaign is stimulating interest in loans to small businesses, and as the economy continues to grow in the coming months, should add to our total commercial loans."
 Provision for Loan Losses and Asset Quality
 The provision for loan losses was increased to $23.8 million in 1993 versus $18.0 million in 1992, in response to the higher level of net charge-offs experienced in the first quarter. Net charge-offs were $23.1 million compared with $17.2 million in 1992 and, as a percent of average loans, 0.69 percent versus 0.52 percent. The increases in net charge-offs were largest in the company's southeastern Michigan banks and were primarily related to commercial real estate. Non-performing loans at March 31, 1993, were lower at $132.0 million versus $141.8 million a year ago, in part because of the higher charge-offs during 1993's first quarter.
 "Overall our asset quality continues to be strong," stated Chormann. "With the provision increase and decrease in non-performing loans, the allowance as a percent of period-end loans remained unchanged at 1.31 percent compared with a year ago and allowance coverage of non- performing loans increased to 134 percent from 124 percent last year."
 Non-interest Income
 Total non-interest income increased to $71.8 million in 1993, up 15.7 percent from 1992. Trust and financial services revenue was up 9.5 percent over a year ago. Service charges on deposit accounts grew 4.9 percent, and revolving loan fees were $8.5 million, up 4.4 percent. Mortgage banking activities resulted in $1.9 million in servicing income versus $0.8 million last year and $6.4 million in gains on mortgage loan sales versus $2.5 million a year ago. Gains on the sale of securities were $7.2 million, or $.08 per fully diluted share, compared with $3.7 million, or $.04 per share, in the first quarter of 1992.
 "Our non-interest income from financial services, mortgage banking and credit card operations is continuing to grow," stated Thomas W. Lambert, senior vice president, chief financial officer and treasurer, First of America Bank Corporation. "While we do not expect our investment security gains to continue at the first quarter's pace, we do expect that the remainder of the year will see rising consumer demand resulting in increased revenue production from our other sources of non- interest income."
 Non-interest Expense
 Total non-interest expense for the first quarter of 1993 was lower than last year at $185.4 million versus $186.0 million. A major component of expense, personnel cost including benefits, at $98.7 million was down 1.7 percent from last year. As a result, the burden ratio in 1993 improved to 2.32 percent from 2.57 percent in 1992, and the efficiency ratio improved to 62.32 percent from 66.50 percent. When compared to 1992's ongoing operating results, the burden ratio improved to 2.32 percent from 2.55 percent, and the efficiency ratio improved to 62.32 percent from 66.21 percent.
 "We are very pleased that the efficiencies generated from our consolidation and standardization efforts are being evidenced in real expense savings," said Lambert, "and that the final steps of Security Bancorp's assimilation are behind us. During March, its two remaining banks were merged into one, First of America Bank - Security, and its servicing center was absorbed by our services division, allowing the targeted reduction of 500 jobs to be met."
 1993 Prospects
 "We are pleased that our basic strategies for earnings growth -- core community banking business and the expansion of our non-interest sources of income -- are resulting in a solid performance," concluded Lambert. "Our expectations for 1993's economy are optimistic. We believe that the economy for the remainder of this year will grow more rapidly than last year, and with it, consumer and commercial loan demand will accelerate."
 First of America Bank Corporation, headquartered in Kalamazoo, is one of the largest bank holding companies in the Midwest with assets of $20 billion. First of America has 555 offices in Michigan, Indiana and Illinois that serve over 300 midwestern communities. The banks engage in commercial banking, retail banking and mortgage banking, and provide trust, financial data processing and other financial services. Based on net income, profitability and size of franchise, First of America is ranked among the top 35 banking companies in the United States.
 -0- 4/14/93
 /CONTACT: Samuel G. Stone, vice president-director of corporate planning, 616-376-7008, Jennifer D. Cox, financial reporting manager, 616-376-7115, or Tony Thompson, public relations manager, 616-376-7266, all of First of America Bank Corporation; or Heather Wietzel, vice president, The Financial Relations Board, 312-266-7800, for First of America Bank Corporation/
 (FOA)


CO: First of America Bank Corporation ST: Michigan IN: FIN SU: ERN

ML -- DE007 -- 5573 04/14/93 09:42 EDT
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Date:Apr 14, 1993
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