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FIRST OF AMERICA BANK CORPORATION REPORTS SECOND-QUARTER EPS BEFORE ONE-TIME CHARGES UP 19 PERCENT TO 86 CENTS

 FIRST OF AMERICA BANK CORPORATION REPORTS SECOND-QUARTER EPS
 BEFORE ONE-TIME CHARGES UP 19 PERCENT TO 86 CENTS
 KALAMAZOO, Mich., July 14 /PRNewswire/ -- First of America Bank Corporation (NYSE: FOA) today reported second-quarter net income of $28.4 million compared with $42.4 million for the same quarter last year and fully diluted earnings per share of $.46 vs. $.72. Adjusting for the $23.4 million of one-time charges related to its acquisition of Security Bancorp Inc., net income was $51.7 million for the 1992 quarter, a 22.0-percent increase over last year and fully diluted earnings per share were $.86, up 19.4 percent.
 Annualized return on assets for the quarter was 0.59 percent, compared with 1.02 percent a year ago and return on total equity, for the same periods, was 8.76 percent and 14.06 percent, respectively. After adjusting for the one-time merger-related costs, second-quarter return on assets was 1.07 percent and return on total equity 15.77 percent.
 Total assets at period end were $19.5 billion, up 15.7 percent from the $16.8 billion reported at June 30, 1991, mainly due to the acquisition of the $2.1 billion in assets Champion Federal Savings and Loan Association on Dec. 31, 1991. Total loans were up 19.4 percent, reaching $13.4 billion and deposits were up 15.8 percent to $17.5 billion.
 Daniel R. Smith, chairman and chief executive officer, First of America Bank Corporation, commented, "Bolstered by slow but positive trends in the Midwest economy, our operating results for the second quarter demonstrated the potential of our retail banking franchise. A revived growth in loan demand and the addition of the Security and Champion companies were important factors to this quarter's success. Excluding acquisitions, loans grew 6.5 percent and Security's contribution to our net interest margin more than offset Champion's lower margin. Champion's net interest margin, however, continues to improve


from traditional thrift levels and for the second quarter of 1992, was 3.12 percent compared to their pre-acquisition margin of approximately 2 percent."
 Smith added, "The 16.7-percent growth in fee income for the quarter continues to set a rapid pace for expansion. Our Trust and Financial Services Division continued its strong revenue contribution and Champion's mortgage banking business is positively affecting our results."
 Smith also noted, "We are right on target with our goals for assimilating Security and Champion into our operations. Excluding the effect of the one-time charges, this quarter's return on assets of 1.07 percent and return on equity of 15.77 percent were among the highest we have reported."
 In concluding his remarks, Smith said, "First of America has traditionally expanded its banking franchise through acquisitions. The additions made in the last six months have added considerably to our Michigan and Illinois market base. We are pleased that our quality service, product diversification and performance enhancement strategies are reflected in these profitability improvements."
 REVIEW OF RESULTS
 Net Interest Income
 Net interest income for the quarter and six-month periods was up 16.7 percent and 17.2 percent, respectively, as the average volume of earning assets was increased as a result of the addition of Champion Federal. Additionally, the yields on earning assets decreased at a slower pace than did the rates paid on interest bearing liabilities, widening the margins at the bank level.
 Richard F. Chormann, president and chief operating officer, First of America Bank Corporation, pointed out, "Excluding Champion Federal's impact, our year-to-date net interest margin was 5.27 percent, higher than last year's 4.99 percent, as the majority of our banks had net interest margins above 5.00 percent. We knew that Security's healthy credit card portfolio would add to our margin, and we have also experienced increases at our other banking affiliates, reflecting our emphasis on asset/liability management company-wide. First of America's long-term goal, for all of its affiliates, is to maintain a net interest margin of 5.00 percent or better."
 Non-Interest Income
 Non-interest income for the quarter increased 16.7 percent to $61.7 million from $52.8 million a year ago. The main reason for the increase was the 15.7 percent growth in trust and financial services revenue, which increased to $17.5 million from $15.1 million.
 Chormann remarked, "Our merger with Security tripled the size of our credit card portfolio and opened opportunities for us in this market that reach beyond our current banking franchise. Our expanded Visa Gold card promotion, concentrating on potential customers who meet our credit standards, will further diversify our credit risks."
 Chormann added, "Mortgage banking is a very profitable line of business. Before adding Champion in December of 1991, we had a small but growing mortgage company. With Champion, we have doubled our mortgage originations and increased our servicing portfolio by approximately 50,000 loans."
 Non-Interest Expense
 Excluding the one-time charges associated with the Security merger, non-interest expense as a percent of average assets declined to 3.82 percent from 3.93 percent. This combined with higher levels of non-interest income reduced the year-to-date burden ratio 16 basis points below last year. On a year-to-date basis the burden ratio decreased to 2.54 percent from 2.70 percent in 1991.
 Chormann commented, "Looking at the efficiency ratio as well as the burden ratio is necessary in order to measure the impact that the cost of revenue generation has on a company." Excluding one-time charges, the efficiency ratio was 65.41 percent on a year-to-date basis compared with 67.69 percent for the same period a year ago.
 One-Time Charges
 As anticipated and previously announced, the merger of Security Bancorp on


May 1, 1992, included costs to effect the transaction and the assimilation of Security into First of America. During the second quarter of 1992, one-time charges of $23.4 million were accrued. These one-time charges reduced fully diluted earnings per share by $.40.
 The following table summarizes the major categories of these costs. The provision expense adjustment represents the cost of implementing a change in Security's credit card charge-off policy to match First of America's policy. Total personnel cost include the severance costs associated with staff reductions, employment contract expenses and early retirements actually accomplished as well as those which will occur by year-end. Other operating expenses were adjusted for the write-off of certain buildings, write-downs on equipment, professional fees, and a prepayment penalty on Security's pre-existing debt, which was paid in full.
 1992 ONE-TIME CHARGES
 ($ in thousands) 2nd QTR
 1992
 Provision for loan losses $3,000
 Non-interest income 150
 Non-interest expense:
 Total personnel cost 11,993
 Other expense 16,713
 Tax effect (8,187)
 Net income impact ($23,369)
 Asset Quality
 First of America's asset quality remains strong. Net charge-offs as a percent of average loans for the year-to-date period was 0.55 percent compared with 0.56 for the same period last year. Total non-performing assets were less than 1 percent of total assets, and the allowance coverage of non-performing loans was 123 percent.
 "The merger of Security had minimal impact on First of America's asset quality," commented Chormann. "Security's credit quality standards were largely comparable with First of America's, and as a result, the asset quality ratios at June 30, 1992, were virtually unchanged from March 31, 1992, before restatement for the Security merger."
 Conclusion
 With the acquisitions of Champion and Security, First of America's assets grew 38 percent from last year (unrestated). Total loans have increased $3.9 billion to $13.4 billion over the last year, while total deposits grew $4.9 billion to $17.5 billion.
 "First of America's recent acquisitions enhanced the performance of our company," noted Thomas W. Lambert, executive vice president, chief financial officer, and treasurer, First of America Bank Corporation. "Our solid second-quarter earnings, excluding one-time charges, demonstrated that we are benefiting from the growth and that we are integrating Security and Champion into our franchise as planned. The strategic opportunities created by our larger franchise will continue to add to shareholder value."
 First of America Bank Corporation, headquartered in Kalamazoo, is one of the largest bank holding companies in the Midwest with assets exceeding $19 billion. First of America has 566 offices in Michigan, Indiana and Illinois that serve over 300 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- 7/14/92
 /CONTACT: Thomas W. Lambert, 616-376-7002, or Jennifer D. Cox, 616-376-7115, both of First of America; or Heather Wietzel of The Financial Relations Board, 312-266-7800, for First of America/
 (FOA) CO: First of America Bank Corporation ST: Michigan IN: FIN SU: ERN


ML -- DE010 -- 9027 07/14/92 10:39 EDT
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