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FIRST OF AMERICA BANK CORP. REPORTS STRONG 1992 OPERATING EARNINGS; IMPLEMENTS FAS 106 AND FAS 109; AND REDUCES UNAMORTIZED INTANGIBLES

 KALAMAZOO, Mich., Jan. 20 /PRNewswire/ -- The following was released by First of America Bank Corporation (NYSE: FOA):
 FOURTH QUARTER RESULTS
 First of America Bank Corporation today reported 1992 fourth quarter net income of $36.3 million compared with $39.0 million reported for the same 1991 quarter. Earnings per share, fully diluted, for the fourth quarter were $.61 versus $.66 a year ago. The 1992 quarter's results included a $25.9 million writedown of intangible assets acquired during a higher interest rate environment. Excluding this noncash charge, net income on an ongoing operating basis for the fourth quarter was $62.2 million, up 59.5 percent from 1991's fourth quarter, and fully diluted earnings per share increased 57.6 percent to $1.04.
 "We are very pleased with our company's fourth quarter performance," commented Daniel R. Smith, chairman and chief executive officer, First of America Bank Corporation. "Our earnings from operations were in line with our expectations, the net interest margin exceeded 5.00 percent and fee income rose 25.6 percent. The quarter's results point to a 1993 that will be another year of earnings growth."
 Return on average assets for the 1992 quarter, based on ongoing operating earnings, was 1.25 percent compared with 0.91 percent for the 1991 quarter, and return on average equity was 17.94 percent versus 12.39 percent a year ago. These results exceeded First of America's long term goals, established over five years ago, of 1.20 percent for return on average assets and 17-18 percent for return on average equity.
 FULL YEAR 1992 RESULTS
 For the full year 1992, net income was $147.5 million compared with $159.5 million in 1991, and fully diluted earnings per share were $2.46 versus $2.69 a year ago. However, First of America's reported results were reduced by three items which were unique to 1992. Financial Accounting Statement 106 (FAS 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions," and Financial Accounting Statement 109 (FAS 109), "Accounting for Income Taxes," were both adopted. FAS 106 resulted in a noncash, one-time charge of $22.0 million, or $.37 per share, applied retroactively to 1992's first quarter. FAS 109 required several balance sheet and income statement reclassifications but had no earnings impact.
 As had been previously reported during second quarter, First of America incurred $24 million, or $.40 per share, of one-time charges for the costs associated with the May 1 merger and assimilation of Security Bancorp, Inc., and during the fourth quarter, intangible assets were reduced, resulting in a noncash writedown of $25.9 million, or $.43 per share.
 "It is important to examine our results excluding these nonrecurring charges," concluded Smith, "in order to clearly understand the earning capacity of our company. On an ongoing operating basis, net income for 1992 was $219.3 million, an increase of 37.5 percent, and fully diluted earnings per share for 1992 were $3.68, up 36.8 percent compared with $2.69 for 1991.
 "Our ongoing operating results also begin to reflect the benefits we are realizing from our recent acquisitions," said Smith. "Champion Federal added $.12 to 1992 earnings per share, exceeding our initial projections, and we expect it will make an even larger contribution in 1993. Security's substantial market presence in Southeast Michigan and its credit card portfolio provided a base for continued income growth. At the time of the Security acquisition, we projected that earnings per share would be slightly less than $3.00 per share including the one-time costs of the Security merger. In fact, earnings per share, on an ongoing operating basis but including the $.40 per share impact of the merger costs, were $3.28 per share. This success was due to the earnings power of all our affiliates including Security and Champion."
 "Another important indication of our company's earnings capacity," continued Smith, "is the comparison of 1992 operating earnings per share with the results of 1991 as originally reported. Operating earnings per share increased 13.6 percent on this basis to $3.68 in 1992 from $3.24 in 1991. Our ability to achieve an increase while issuing common shares for the Security acquisition exceeded the expectations of most analysts, and the size of the increase achieved even exceeded our own projections."
 Return on average assets, based on ongoing operating earnings, was 1.12 percent for 1992 compared with 0.95 percent for 1991. On the same basis, return on average equity was 16.42 percent for 1992 versus 13.07 percent a year ago. Both ratios exceeded the goals set for 1992 upon the announcement of the Security acquisition.
 ASSET QUALITY/NET INTEREST MARGIN
 "Our banks experienced a resumption of growth in loan demand, particularly in residential mortgages and consumer loans," commented Richard F. Chormann, president and chief operating officer, First of America Bank Corporation, "while businesses are still somewhat reluctant to borrow for expansion. Loan growth during 1992 was 4.0 percent with total loans reaching $13.8 billion. Residential mortgages rose 3.0 percent and consumer loans 5.6 percent."
 Asset quality remained strong. While non-performing assets increased from $168.4 million at year end 1991 to $196.0 million at year end 1992, they remained less than 1 percent of total assets. The allowance for loan losses increased from $174.9 million to $176.8 million, and the allowance coverage of non-performing loans was 120 percent compared with 131 percent a year ago. First of America's asset quality continues to rank very favorably with its industry peers.
 The net interest margin was 4.98 percent for the full year versus 5.07 percent for 1991. The asset/liability management process enhanced the net interest margin at the banking affiliates. Security banks' margin with the large revolving loan portfolio helped to compensate for the reduction caused by Champion Federal's lower net interest margin. During the year, Champion Federal's margin was increased from 2.84 percent in the first quarter to 3.56 percent in the fourth quarter.
 FEE INCOME
 Fee income continued to respond to strategic marketing efforts, rising 25.6 percent to $69.9 million for the fourth quarter of 1992 compared with $55.6 million a year ago. For 1992, fee income was $261.3 million, up 24.5 percent from $209.9 million in 1991. Excluding gains on the sale of investment securities of $15.0 million in 1992 and $1.1 million in 1991, the increase in fee income was 18.0 percent for the year.
 Trust and financial services revenue continued to expand with a 13.0 percent increase to $68.9 million from $60.9 million in 1991. "First of America's extensive branch network provides an excellent distribution system for our trust and financial services, particularly our financial investment products such as the Parkstone Mutual Funds," stated Chormann.
 The credit card loan portfolio added $36.2 million in fees, up 11.4 percent from 1991's $32.5 million, primarily from interchange and merchant fees. Supplemented by Champion's mortgage origination operations, gains on sales of residential mortgage loans were $15.2 million compared with $5.2 million in 1991.
 OPERATING EFFICIENCIES
 The benefits of planned operating efficiencies continued to be realized. On an ongoing operating basis, non-interest expense was $184.4 million for 1992's fourth quarter, up 7.1 percent from 1991's last quarter. For full year 1992 on the same basis, non-interest expense rose 11.3 percent to $740.9 million compared with $665.7 million in 1991. A substantial portion, $55.4 million, of 1992's non-interest expense was added by Champion Federal. Excluding Champion Federal, non- interest expense on an ongoing operations basis increased only 3.0 percent for 1992.
 The burden ratio, on an ongoing operating basis, was 2.29 percent for the fourth quarter compared with 2.72 percent for the last quarter of 1991. For full year 1992, the burden ratio improved to 2.45 percent versus 2.71 percent a year ago. Similarly, based on ongoing operating results, the efficiency ratio improved to 60.91 percent for the 1992 last quarter from 66.57 percent for the same quarter of 1991. For the year, it improved to 63.80 percent compared with 67.25 percent in 1991.
 "Our efforts at cost containment through the restructuring of operating units has continued to accrue benefits," commented Chormann, "There are always further efficiencies to pursue and our goal continues to be an annual burden ratio of 2.35 percent or lower."
 "We are pleased with the pace of the integration of Champion and Security," continued Chormann. "At Security, three of the original banks have been merged into our Southeast Michigan affiliate and their systems converted. Additionally, the functional merger of Security's credit card operations with First of America's Revolving Credit Services Division was successfully completed. Helping to reach our cost savings goals as originally planned, two branches were closed and 300 of the expected 500 jobs were eliminated, largely from attrition and early retirement. We are on target to reach our planned synergies and cost savings goals for 1993. In regard to Champion, the plans and systems are in place to complete its assimilation into our Illinois affiliates during the second quarter of 1993."
 STRATEGIC OUTLOOK
 "1992 has been a good year for First of America," said Thomas W. Lambert, executive vice president, chief financial officer and treasurer, First of America Bank Corporation. "With our increasing earnings capability, we were able to put some necessary steps behind us, such as the adoption of FAS 106, FAS 109, the intangible writedown and the assimilation costs of Security Bancorp. As a result, we are in an excellent position to accelerate earnings growth going into 1993."
 "While the pace of economic recovery was slower than expected for much of 1992, the recent upswing in consumer confidence is definitely encouraging," continued Lambert. "Domestic production continues to expand, final sales and exports are growing, and with the continued low interest rate levels, the stage is set for stronger economic performance in 1993. First of America is similarly well positioned to accelerate its earnings growth."
 First of America Bank Corporation, headquartered in Kalamazoo, is one of the largest bank holding companies in the Midwest with assets exceeding $20 billion. First of America has 551 offices in Michigan, Indiana and Illinois that serve 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- 1/20/93
 /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 -- DE006 -- 6760 01/20/93 09:35 EST
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Date:Jan 20, 1993
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