UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File No.
September 30, 1996 1-10534
FIRST OF AMERICA BANK CORPORATION
(Exact name of Registrant as specified in its Charter)
Michigan 38-1971791
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
211 South Rose Street, Kalamazoo, Michigan 49007
(Address of principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code
616-376-9000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at
Common Stock, October 31, 1996
$10 Par Value 60,288,529<PAGE>
FIRST OF AMERICA BANK CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page
No.
Consolidated Balance Sheets (Unaudited),
September 30, 1996 and December 31, 1995 . . . 1
Consolidated Statements of Income
(Unaudited) - Three and Nine Months Ended
September 30, 1996 . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows
(Unaudited) - Nine Months Ended September 30,
1996 and 1995 . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . 4
Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION<PAGE>
<TABLE>
<CAPTION>
FIRST OF AMERICA BANK COPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30 December 31
($ In thousands) 1996 1995
------------------------------- --------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,086,904 1,207,062
Money Market Investments 189,504 269,737
Securities:
Securities available for sale, amortized cost of $4,510,323 at
September 30, 1996 and $5,020,954 at December 31, 1995 4,495,589 5,060,746
Loans, net of unearned income:
Consumer 3,901,144 4,504,255
Commercial, financial and agricultural 2,703,726 2,589,038
Commercial real estate 3,889,737 3,812,001
Residential real estate 4,698,600 5,070,369
Loans held for sale, market value of $107,629 at September 30,
1996 and $104,132 at December 31, 1995 106,095 101,279
----------- -----------
Total loans 15,299,302 16,076,942
Less: Allowance for loan losses 252,807 241,182
----------- -----------
Net loans 15,046,495 15,835,760
Premises and equipment, net 447,020 465,498
Other assets 903,112 761,292
------------------------------------------------------------------- ------------ ------------
TOTAL ASSETS $22,168,624 23,600,095
=================================================================== ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 2,970,943 2,925,679
Interest bearing 15,213,691 16,416,788
----------- -----------
Total deposits 18,184,634 19,342,467
Securities sold under repurchase agreements -- 429,483
Other short term borrowings 1,556,800 1,220,482
Long term debt 392,210 490,315
Other liabilities 279,190 289,367
----------- -----------
Total liabilities 20,412,834 21,772,114
----------- -----------
SHAREHOLDERS' EQUITY
Common stock-$10 par value 605,630 632,839
Capital surplus 183,861 283,409
Net unrealized gain/(loss) on securities available for sale, net
of tax benefit of $5,206 at September 30, 1996 and net of tax
expense of $13,853 at December 31, 1995 (9,670) 25,939
Retained earnings 975,969 885,794
----------- -----------
Total shareholders' equity 1,755,790 1,827,981
------------------------------------------------------------------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $22,168,624 23,600,095
=================================================================== ============ ===========
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
FIRST OF AMERICA BANK COPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended, Nine Months Ended
September 30, September 30,
($ in thousands except per share data) 1996 1995 1996 1995
------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees on loans $ 340,465 363,889 1,030,260 1,113,079
Securities:
Taxable income 64,626 73,347 205,490 232,258
Tax exempt income 4,242 3,045 11,335 9,870
Money Market investments 2,786 1,718 7,433 3,825
--------- --------- ---------- ----------
Total interest income 412,119 441,999 1,254,518 1,359,032
--------- --------- ---------- ----------
INTEREST EXPENSE
Deposits 162,012 185,787 489,795 544,166
Short term borrowings 16,181 19,672 60,460 80,741
Long term debt 8,370 11,970 26,984 37,041
--------- --------- ---------- ----------
Total interest expense 186,563 217,429 577,239 661,948
--------- --------- ---------- ----------
NET INTEREST INCOME 225,556 224,570 677,279 697,084
Provision for loan losses 21,966 21,368 69,797 63,878
--------- --------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION 203,590 203,202 607,482 633,206
--------- --------- ---------- ----------
NON-INTEREST INCOME
Service charges on deposit accounts 29,025 25,297 82,802 74,731
Trust and financial services income 28,113 24,365 84,545 69,399
Investment securities transactions, net (101) 457 (860) (925)
Bank card revenue 18,711 20,044 54,189 41,925
Mortgage banking revenue 7,357 8,993 20,462 24,492
Other operating income 15,924 13,040 48,013 35,726
--------- --------- ---------- ----------
Total non-interest income 99,029 92,196 289,151 245,348
--------- --------- ---------- ----------
NON-INTEREST EXPENSE
Personnel 114,134 102,698 337,246 328,853
Occupancy, net 16,639 15,794 48,792 47,164
Equipment 14,849 14,906 43,865 44,153
Outside data processing 4,628 4,524 13,819 13,998
Amortization of intangibles 5,251 5,260 15,725 15,880
Other operating expenses 72,434 50,115 177,191 166,830
--------- --------- ---------- ----------<PAGE>
Total non-interest expense 227,935 193,297 636,638 616,878
--------- --------- ---------- ----------
Income before income taxes 74,684 102,101 259,995 261,676
Income taxes 23,661 35,387 87,080 90,987
--------- --------- ---------- ----------
NET INCOME 51,023 66,714 172,915 170,689
--------- --------- ---------- ----------
EARNINGS PER SHARE
Primary 0.84 1.05 2.78 2.69
Fully Diluted 0.84 1.05 2.78 2.69
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
FIRST OF AMERICA BANK COPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended,
September 30,
---------------------
($ in thousands) 1996 1995
------------------------------- --------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 172,915 170,689
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 35,259 35,696
Provision for loan losses 69,797 63,878
Provision for deferred taxes (750) (4,365)
Amortization of intangibles 15,725 15,880
(Gain) loss on sale of securities available for sale/held for sale 859 (2,887)
(Gain) loss on sale of mortgage loans held for sale (14,139) (15,146)
(Gain) loss on sale of other assets (4,207) (3,131)
Proceeds from the sales of mortgage loans held for sale 869,091 644,751
Originations of mortgage loans held for sale, net (859,768) (744,764)
Change in assets and liabilities net of acquisitions:
(Increase) decrease in interest and other income receivable 42,884 (31,600)
(Increase) decrease in other assets (114,205) (129,847)
Increase (decrease) in accrued expenses and other liabilities 6,957 22,483
--------- ---------
Net cash provided by operating activities 220,418 21,637
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the maturities of investment securities (held to maturity) 0 296,260
Purchases of investment securities (held to maturity) 0 (126,979)
Proceeds from the sale of securities available/held for sale 913,245 776,619
Proceeds from the maturities of securities available/held for sale 829,358 369,101
Purchases of securities available/held for sale (1,233,967) (550,382)
Proceeds from the securitization of loans 0 498,588
Net other (increase) decrease in loans and leases 724,284 66,819
Premises and equipment purchased (34,955) (92,963)
Proceeds from the sale of premises and equipment 22,620 66,711
(Acquisition)sale of affiliates, net of cash acquired 944 373
---------- ---------
Net cash provided by investing activities 1,221,529 1,304,147
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITES:
Net increase (decrease) in short term deposits (32,617) (452,945)
Net increase (decrease) in time deposits (1,125,216) (280,989)
Net increase (decrease) in short term borrowings (93,165) (456,778)
Proceeds from issuance of long term debt 924 25,004
Repayments of long term debt (99,029) (213,382)
Proceeds from issuance of common stock 197 1,640
Dividends paid (82,345) (79,578)
Payments for purchase and retirement of common stock (130,854) 0
--------- ---------
Net cash provided by financing activities (1,562,105) (1,457,028)
--------- ---------
Net increase (decrease) in cash and cash equivalents (120,158) (131,244)
Cash and cash equivalents at beginning of year 1,207,062 1,060,788
--------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD $1,086,904 929,544
========= =========
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
NOTE 1: GENERAL
The accompanying interim financial statements are unaudited.
In the opinion of management, all adjustments necessary for a
fair presentation of the consolidated financial statements
have been included and all such adjustments are of a normal
recurring nature. Certain amounts included in the prior
period financial statements have been reclassified to conform
with the current financial statement presentation.
NOTE 2: NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
September 30,
-------------------------
(in thousands) 1996 1995
----------------------------- ----------- ---------
<S> <C> <C>
Non-accrual loans $ 94,016 102,112
Restructured loans 7,052 7,782
Other real estate owned 28,026 31,691
----------- ---------
Total non-performing assets $ 129,094 141,585
============ ==========
</TABLE>
NOTE 3: ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Three Months Ended, Nine Months Ended
September 30, September 30,
(in thousands) 1996 1995 1996 1995
--------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance, beginning of period $ 249,388 235,939 241,182 228,115
Provision charged against income 21,966 21,368 69,797 63,878
Recoveries 15,635 15,209 47,473 42,115
Loans charged off (34,182) (33,568) (105,645) (95,160)
--------- --------- --------- ---------
Balance, end of period $ 252,807 238,948 252,807 238,948
========= ========= ========= =========
</TABLE>
At September 30, 1996, the total loans considered to be
impaired under Statement No. 114 were $80.7 million with an
average during the quarter of approximately $81.5 million. At
September 30, 1995, the total loans considered impaired were
$81.8 million with a quarterly average of approximately $81.4
million. At quarter-ends, the allowance for impaired loans
was $17.6 million and $15.6 million, respectively. At
September 30, 1996, the impaired allowance related to $37.7
million of the impaired loans, while the remaining $43.0
million of impaired loans did not require a specific allowance
for loan losses according to Statement No.114.
NOTE 4: COMMON STOCK AND CALCULATION OF EARNINGS PER SHARE
At September 30, 1996 and 1995, there were 60,562,970 and
63,274,924 common shares outstanding, respectively. At the
same dates, there were 100,000,000 authorized shares of $10
par value common stock. Common and common equivalent earnings
per share amounts were calculated by dividing net income
applicable to common stock by the weighted average number of
common and common equivalent shares outstanding during the
respective periods adjusted for outstanding stock options.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Average common and common
equivalent shares outstanding 61,141,016 63,586,615 62,171,467 63,445,753
</TABLE>
NOTE 5: MERGERS AND ACQUISITIONS
<TABLE>
<CAPTION>
Date of Total Assets Financial
($ in thousands) Acquisition Acquired Reporting Value
--------------------------------- ---------------- ----------- --------------
<S> <C> <C> <C>
Huttenlockers Kerns Norvell, Inc. February 12, 1996 $ 3,994 3,912
West Suburban Financial Corp. August 4, 1995 12 --
Underwriting Consultants, Inc. February 1, 1995 1,255 1
New England Trust Company January 1, 1995 1,576 1,092
/TABLE
<PAGE>
Item 2. Managements' Discussion and Analysis of Financial Condition
and Results of Operations
<TABLE>
<CAPTION>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary: The following table sets forth the period to period
changes in the principal items included in the
consolidated statement of income for the three and nine
months ended September 30, 1996, compared with the
corresponding 1995 periods. The bracketed amounts
represent decreases.
Three Months Ended Nine Months Ended
September 30, September 30,
1996 vs 1995 1996 vs 1995
-------------------- ---------------------
($ in thousands) Change Percent Change Percent
----------------------------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Interest and fee income on loans $ (23,424) (6.4)% $ (82,819) (7.4)%
Interest income on investments (7,524) (9.8) (25,303) (10.5)
Interest income on money market
investments 1,068 62.2 3,608 94.3
--------- --------- ---------- ---------
Total interest income (29,880) (6.8) (104,514) (7.7)
--------- --------- ---------- ---------
Interest expense on deposits (23,775) (12.8) (54,371) (10.0)
Interest expense on borrowed funds (7,091) (22.4) (30,338) (25.8)
--------- --------- ---------- ---------
Total interest expense (30,866) (14.2) (84,709) (12.8)
--------- --------- ---------- ---------
Net interest income 986 0.4 (19,805) (2.8)
Provision for loan losses 598 2.8 5,919 9.3
Non-interest income 6,833 7.4 43,803 17.9
Non-interest expense 34,638 17.9 19,760 3.2
--------- --------- ---------- ---------
Income before income taxes (27,417) (26.9) (1,681) (0.6)
Income taxes (11,726) (33.1) (3,907) (4.3)
--------- --------- ---------- ---------
Net income $ (15,691) (23.5)% $ 2,226 1.3 %
========= ========= ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
OVERVIEW
Net income for the third quarter was $51.0 million, or $0.84
per share, compared with $66.7 million, or $1.05 per share,
last year. For the year-to-date period, net income was $172.9
million, up 1.3 percent, and earnings per share were $2.78, up
3.3 percent from 1995. Affecting net income for 1996 was a
charge of $14.8 million (net of tax), or $0.24 per share, for
First of America's portion of the FDIC's one-time charge to
recapitalize the SAIF insurance fund. Excluding the SAIF
assessment, earnings per share for the quarter and year to
date periods would have been $1.08 and $3.02. A higher net
interest margin, growing non-interest revenue, and stabilizing
non-interest expense, excluding one-time charges, were the
primary reasons for the stronger core results.
At September 30, 1996, total assets were $22.2 billion, down
5.3 percent from $23.4 billion a year ago, mainly as a result
of the planned restructuring of the balance sheet. Higher
priced deposits and selected loan portfolios with narrower net
interest spreads were reduced and greater emphasis was placed
on loans and deposits meeting specific target returns.
The average consumer installment loan portfolio for the third
quarter was down 20.7 percent from a year ago, and the average
residential mortgage loan portfolio was down 9.8 percent,
while average commercial loans and commercial mortgage loans
were up, in aggregate, 5.9 percent. Time deposits excluding
negotiated CDs declined 16.3 percent. Non-interest bearing
deposits, however, were up 3.4 percent from last year. This
shift in mix within loans and deposits positively affected the
net interest margin.
The return on average assets for the third quarter was 0.93
percent compared with 1.13 percent a year ago. Excluding the
SAIF assessment, return on average assets would have been 1.20
percent for the quarter. Year-to-date, the return on average
assets was 1.03 percent (1.12 percent excluding the SAIF
assessment) compared with 0.95 percent. Return on average
equity was 11.64 percent and 15.17 percent for the respective
quarters and 12.91 percent and 13.62 percent for the
year-to-date periods. Excluding the SAIF assessment, the
return on equity for the quarter would have been 15.00 percent
and year to date, 14.00 percent.
CONSOLIDATED INCOME ANALYSIS
Net interest income for the third quarter was up 0.4 percent
from the 1995 third quarter. For the year-to-date period, it
was down 2.8 percent. However, if 1995 net interest income
was restated for the impact of the securitization of credit
card receivables, 1996's net interest income would have been
level with last year's as the higher net interest margin
offset the lower level of earning assets.
For both the quarter and year-to-date periods, the net
interest margin showed improvement over 1995 as a result of
the balance sheet restructuring and the pricing discipline
exercised with new loans and deposits particularly in consumer
indirect installment loans and residential mortgage loans.
For the nine month periods, the net interest margin was 4.49
percent in 1996 and 4.27 percent in 1995. Table 1 provides
detail on the average yields on earning assets and the average
rates paid on interest-bearing liabilities for the last six
quarters.
Management currently expects the net interest margin to
increase by approximately 3 to 5 basis points in the fourth
quarter of 1996. At the same time, the impact of the balance
sheet restructuring is expected to lessen so that earning
assets in the fourth quarter should remain basically
unchanged. Management also expects that gains on the sale of
branches in the fourth quarter of 1996 will contribute about
$0.20 - $0.25 to earnings per share. The preceding statements
in this paragraph are forward-looking, and First of America's
actual results may differ from those currently expected.
Such differences could result from a variety of factors
including changes in loan demand and the interest rate
environment.
The provision for loan losses was up 2.8 percent over 1995's
third quarter, but decreased slightly from the second quarter
of 1996 as a result of lower net charge-offs, improved credit
quality of new loan originations and stronger collection
efforts. As a percent of average loans, net charge-offs were
0.48 percent for the quarter compared with 0.45 percent last
year. Net charge-offs in consumer installment loans and the
managed credit card portfolio appear to have stabilized. The
provision expense for the 1996 third quarter covered net
charge-offs by 118 percent. Charge-offs and recoveries by
portfolio type are detailed in Table 3.
Total non-interest revenue for the quarter was up 7.4 percent
from a year ago and for the year-to-date period was up 17.9
percent largely due to strong growth in trust and financial
services revenue. The 1996 total also included servicing
fees from the credit card securitization and $4.4 million in
branch sale gains during the first quarter. Service charges
on deposit accounts were up 14.7 percent for the quarter,
benefiting from the increase in non-interest bearing
transaction accounts.
Trust and financial services revenue grew 15.4 percent for the
quarter and 21.8 percent for the year-to-date period over last
year. Traditional trust fees, totalling $52.7 million year-
to-date, were up 7.2 percent as assets under management
increased 26.3 percent. At quarter-end, total assets under
management were $19.4 billion compared with $15.4 billion a
year ago. Other financial services revenue, generated by
cash management, investment management, brokerage and
insurance services, was $31.8 million for the nine month
period compared with $19.5 million a year ago, benefiting from
the sales and services strategies implemented in partnership
with the branch employees. Mutual funds sales revenue for the
year-to-date period was $5.8 million versus $3.2 million last
year, and annuities sales revenue was $4.8 million versus $3.8
million. Insurance revenue for the same periods was $3.6
million and $1.2 million, respectively, reflecting the
Registrant's continuing commitment to this product line.
Mortgage banking revenue decreased 18.2 percent for the
quarter due to lower servicing income and reduced loan sale
gains. Contributing to the lower servicing revenue was a
decrease in the total servicing portfolio to $7.4 billion from
$7.8 billion a year ago. For the year-to-date period
comparison, excluding the $4.1 million gain from the sale of
servicing rights in 1995, mortgage banking revenue would have
increased slightly. Bank card fee revenue decreased 6.7
percent for the quarter as a result of higher charge-offs,
which reduced securitization servicing revenue. For the
year-to-date periods, when adjusted for the 1995 credit card
securitization, bank card fee revenue decreased 8.7 percent,
as a result of lower interchange revenue.
Total non-interest expense increased 17.9 percent for the
quarter and 3.2 percent for the year-to-date period. If one
time charges are excluded from both periods ($23.3 million
FDIC assessment and $3.6 million in severance costs for 1996
and $12.6 million of restructuring costs in 1995) non-interest
expense would have been up by only 0.9 percent for 1996
compared with 1995. Excluding the one-time SAIF assessment,
compared with the second quarter of 1996, non-interest expense
for the third quarter was down $2.6 million.
Total personnel costs, excluding one-time severance charges,
increased 9.0 percent for the quarter and 5.5 percent for the
year-to-date period. Personnel cost for the third quarter
increased 11.1 percent from the linked 1996 quarter due to the
$2.2 million in severance charges noted above and to seasonal
staffing requirements.
Excluding the SAIF assessment, the burden ratio was 1.92
percent versus 1.72 percent for the comparative quarter and
1.94 percent versus 2.07 percent for the nine month periods.
On the same basis and for the same periods, the efficiency
ratio was 62.19 percent compared with 60.29 percent and 62.65
percent compared with 64.64 percent for the nine months ended
September 30.
LINE OF BUSINESS RESULTS
Line of business reporting requires certain assumptions and
allocations. Equity is allocated on the basis of required
regulatory levels, inherent operational risk or market-
determined factors as evidenced by similar independent single
business line companies. Centrally provided support services
are allocated on a per-unit cost basis or in proportion to the
balances of assets and liabilities associated with a
particular business line. Funds transfer pricing, based on
market-determined indices, is used to allocate a cost of funds
used or a credit for funds provided. Because of these
assumptions and allocations, the financial results of the
individual business lines might vary from the actual results
if those lines were in fact separate operating entities.
For the 1996 year-to-date period, Community Banking accounted
for 73.1 percent of the consolidated net income, Bank Card
12.8 percent, Mortgage Banking 11.9 percent and Trust and
Financial Services 10.1 percent. Branch sale gains accounted
for 1.5 percent and the SAIF assessment and other one-time
charges negatively impacted net income by 9.4 percent. Table
1 presents summarized income statements for the third quarter
of 1996 and selected quarterly information for the past six
quarters for the business lines.
Community Banking -- Community Banking includes deposit
management and commercial, home equity and installment
lending, as well as other general and international banking
services. This business line reported net income of $47.9
million for the third quarter of 1996, compared with $40.8
million for the second quarter of 1996 and $44.8 million for
the third quarter of 1995. Return on equity was 13.72 percent
compared with 12.96 percent in 1995.
Community Banking's fee revenue for the quarter was up 17.5
percent to $42.8 million, reflecting the updating of fee
structures, and non-interest expense increased 3.7 percent.
Net interest income (FTE) decreased 0.2 percent as
improvements in loan and deposit spreads largely offset the
lower volume of earning assets. The business line's provision
for loan losses was decreased to $7.8 million from $10.5
million a year ago, as a result of lower levels of net
charge-offs in the installment loan portfolio.
Bank Card -- The Bank Card line of business is responsible for
managing and servicing First of America's $1.4 billion
managed portfolio of credit card and other revolving loans, as
well as the merchant services operation. Bank Card's net
income for the third quarter was down approximately $2.0
million from a year ago, primarily the result of higher
credit losses in the managed portfolio. The flow of fee
revenue from the securitization was reduced by the net
charge-offs occurring in the securitized portfolio. Net
charge-offs in the managed portfolio were $13.2 million
compared with $10.3 million a year ago.
Due to the net income decrease, Bank Card's return on equity
for the third quarter was 24.12 percent compared with 33.39
percent last year, and the efficiency ratio was 39.00
percent versus 38.92 percent.
Mortgage Banking -- Mortgage Banking originates all
residential mortgages across First of America's four core
states and in separate origination offices in Arizona and
North Carolina. Also, the business line services a $7.3
billion mortgage loan portfolio for both First of America
affiliates and external investors. The interest income and
related funds transfer charge of First of America's portfolio
are included in Mortgage Banking's results.
Mortgage Banking's net income for the quarter was $6.9 million
basically level with the $7.0 million reported a year ago.
Net interest income was up 10.3 percent to $15.3 million
due to lower funding costs. Even though more mortgage
originators were compensated on a commission basis, this
business line's non-interest expense was down 4.2 percent from
a year ago due to efficiencies implemented during the
company's 1995 restructuring.
Trust and Financial Services -- This business line provides
traditional trust services, as well as investment management,
cash management, brokerage and insurance services. Trust and
Financial Services' net income for the quarter grew 11.6
percent to $6.0 million, primarily from increased customer
investment activity and the higher market value of the managed
assets upon which fees are assessed. At quarter-end, total
managed assets were $19.4 billion compared with $15.4 billion
a year ago.
As a result, Trust and Financial Services' non-interest
revenue for the quarter was up 7.4 percent over a year ago,
and its return on equity was 54.36 percent compared with 55.29
percent. The business line's efficiency ratio increased to
68.96 percent from 65.90 percent. Revenue growth in 1996 has
largely been in lower profit margin products such as brokerage
services and mutual fund sales while the increase in
non-interest expense was primarily due to higher incentive
compensation and the costs added by insurance agency
acquisitions.<PAGE>
<TABLE>
<CAPTION>
TABLE 1
LINE OF BUSINESS FINANCIAL PERFORMANCE
For quarter ended September 30, 1996 Trust &
Community Bank Mortgage Financial Consolidated
INCOME STATEMENT Banking Card Banking Services Results
--------- --------- --------- --------- ---------
- - - ($ in thousands) - - -
<S> <C> <C> <C> <C> <C>
Net interest income (FTE) $ 193,416 20,032 15,268 1,241 229,957
Provision for loan losses 7,831 14,075 60 -- 21,966
Non-interest income 42,815 19,496 7,688 29,030 99,029
Non-interest expense 153,928 15,414 12,198 20,876 202,416
Income tax expense (FTE) 26,608 3,587 3,822 3,356 37,373
--------- --------- --------- --------- ---------
Income before one-time gains
and charges $ 47,864 6,452 6,876 6,039 67,231
---------
SAIF assessment (net of tax) (14,787)
Severance charges (net of tax) (1,421)
---------
Net income 51,023
=========
Contribution to consolidated results 71.2 % 9.6 10.2 9.0 100.0
1996 1995
-------------------------------------- ---------------------------------------
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
QUARTER RESULTS Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30
--------- --------- ----------- --------- --------- ----------
COMMUNITY BANKING
Net income $ 47,864 40,826 37,699 40,208 44,847 40,546
Return on equity 13.72 % 11.59 10.31 11.31 12.96 12.27
Efficiency ratio 65.16 66.47 68.43 65.88 64.49 67.62
BANK CARD
Net income $ 6,452 7,922 7,700 6,227 8,477 7,855
Return on equity 24.12 % 29.87 28.05 23.54 33.39 32.56
Efficiency ratio 39.00 40.73 38.87 39.59 38.92 37.00
MORTGAGE BANKING
Net income $ 6,876 7,359 6,378 5,877 7,051 7,218
Return on equity 13.34 % 14.11 11.52 9.95 12.03 12.96
Efficiency ratio 53.14 51.63 56.13 58.48 53.36 55.46
TRUST & FINANCIAL SERVICES
Net income $ 6,039 6,164 5,228 5,368 5,410 4,560
Return on equity 54.36 % 56.22 46.64 53.20 55.29 49.04
Efficiency ratio 68.96 67.96 70.72 67.40 65.90 69.79
/TABLE
<PAGE>
ASSET QUALITY AND CREDIT RISK PROFILE
First of America's loan portfolio has no significant
concentrations of credit to any specific borrower or within
any geographic region, thereby reducing credit risk exposure.
Also reducing credit risk are First of America's conservative
lending policies and loan review process. At September 30,
1996, the loan portfolio was comprised of residential
mortgages (31.4 percent), consumer loans (25.5 percent),
commercial mortgages (25.4 percent) and commercial loans (17.7
percent).
The allowance for loan losses was 1.65 percent of total loans
compared with 1.46 percent a year ago. The allowance coverage
of non-performing loans was 250.13 percent compared with
217.43 percent a year ago. Non-performing loans and loans 90
days past due are detailed by portfolio in Table 4.
First of America's asset quality continues to improve. The
asset quality in the commercial loan and residential mortgage
portfolios, almost three-quarters of total loans, remained
excellent. Over the last two years, these portfolios have
experienced minimal net charge-offs.
Across the banking industry there has been a deterioration of
consumer loan quality, and since mid-1995, First of America
also experienced a rise in both delinquencies and net losses
in the installment loan and credit card portfolios from the
favorable levels previously experienced.
To reverse this trend, First of America has intensified its
collection efforts and tightened credit controls. After their
increase in 1995, the consumer installment loan portfolio's
net charge-offs appear to have leveled off. The consumer
installment net charge-offs to average loans for the third
quarter was 1.05 percent compared with 0.86 percent for the
second quarter of 1996 and 1.22 percent for the first quarter.
For the managed credit card portfolio, the net charge-offs to
average loans ratio also improved to 4.21 percent from 4.35
percent in the second quarter. This ratio was 4.07 percent in
the first quarter.
FUNDING, LIQUIDITY AND INTEREST RATE RISK
First of America continues to monitor interest rate risk,
provide liquidity and moderate changes in the market value of
the investment securities portfolio through a centralized
funds management division.
Liquidity is measured by a financial institution's ability to
raise funds through deposits, borrowed funds, capital or the
sale of assets. First of America relies primarily upon core
deposits for its liquidity. At September 30, 1996, core
deposits equalled 95.6 percent of total deposits. First of
America does not issue negotiated CD's in the national money
markets, and limits its level of purchased funds through
corporate policy to less than 10 percent of assets. The
majority of negotiated CD's and purchased funds originate
from the core deposit customer base, including downstream
correspondents.
First of America's interest rate risk policy is to minimize
the effect on net income resulting from a change in interest
rates through asset/liability management at all levels in the
company. An interest rate risk analysis is completed monthly
for each banking affiliate using an asset/liability model
which incorporates individual affiliate forecasts. A
consolidated analysis is then developed by combining affiliate
and corporate data.
The difference between rate sensitive assets and liabilities,
including the impact of off-balance sheet interest rate swaps,
is presented in Table 7. The GAP reports' reliability in
measuring the risk to income from a change in interest rates
is tested through the use of simulation models. The most
recent simulation models, using various interest rate shock
scenarios, show that less than 4.0 percent of First of
America's annual net income is at risk if interest rates were
to move up or down an immediate one percent. Management has
determined that these simulation models provide a more
accurate measurement of the company's interest rate risk
position than the GAP tables. <PAGE>
TABLE 2
INTEREST RATE SWAPS
<TABLE>
<CAPTION>
($ in thousands) Net Interest Income
Impact for the
Weighted Average Average Nine Months Ended
Notional Fair Market Average Rate Received Rate Paid September 30,
Hedged Asset/Liability Amount Value Maturity (Mos.) Variable/Fixed Variable/Fixed 1996 1995
------------------------ --------- ------------ -------------- --------------- --------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Rising Rate CDs -- -- -- -- -- -- (1,158)
Market Rate CDs * -- -- -- -- -- (3) (739)
FHLB Advance -- -- -- -- -- -- 25
FirstRate Fund deposits -- -- -- 5.50%/variable 6.03/fixed (8) (3)
Bank notes 30,000 (119) 10.4 5.72%/variable 5.64/fixed (1) 33
Long term debt 50,000 (551) 16.4 5.60%/fixed 5.62/variable (21) (738)
------------------------ --------- ------------ ----------------------------- --------------- ---------------------
Total $ 80,000 (670) 14.2 (33) $(2,580)
========================= ========== ============= ============== =====================
* This represents a basis swap.
</TABLE>
To manage interest rate sensitivity First of America and its
subsidiaries have entered into interest rate swaps as a hedge
against certain debt. The contracts represent an exchange of
interest payments, and the underlying principal balances of
the assets or liabilities are not affected. Net settlement
amounts are reported as adjustments to interest income or
interest expense. Gains or losses on the termination of
interest rate swaps are deferred and amortized over the
remaining life of the designated balance sheet liability.
When the swap becomes uncovered during the swap agreement
period, the swap is immediately marked-to-market with a
corresponding charge to current earnings.
Although the notional amounts are often used to express the
volume of these transactions, the amounts potentially subject
to credit risk are much smaller. The company minimizes this
risk by performing normal credit reviews of its counterparties
and collateralizing its exposure when it exceeds a
predetermined limit. Table 2 outlines First of America's
outstanding interest rate swaps at September 30, 1996.
First of America had outstanding interest rate swaps with a
notional value of $80.0 million which included $50 million as
a hedge against parent company debt and $30 million as a hedge
against subsidiary bank debt. The outstanding swaps had a
negative market value of $670 thousand. At September 30,
1995, outstanding swaps totalled $119 million in notional
amounts with a positive market value of $827 thousand.
At times First of America also utilizes interest rate caps to
manage its interest rate risk. Interest rate caps are
agreements to make/receive payments for interest rate
differentials between an index rate and a specified maximum
rate, computed on notional amounts. At September 30, 1996,
First of America had no outstanding interest rate caps
compared with $125 million in interest rate cap agreements at
September 30, 1995.
At September 30, 1996, First of America had no securities
classified as held to maturity. At September 30, 1995,
securities held to maturity totalled $2.9 billion, with a net
unrealized loss of $15.6 million. In accordance with
Financial Accounting Standards Board Statement No. 115
"Accounting for Certain Investments in Debt and Equity
Securities," securities available for sale are carried at
market value which totalled $4.5 billion at September 30,
1996. Amortized book value was also $4.5 billion. The $14.9
million net unrealized loss in securities available for sale
resulted in a corresponding, after-tax negative market value
adjustment to equity of $9.7 million. At December 31, 1995,
the market value adjustments to securities and equity from the
securities available for sale portfolio were $40.0 million and
$25.9 million, respectively.
CAPITAL STRENGTH
First of America began its share repurchase program during
March 1996, continuing its capital management strategy. By
September 30, 1996, 2,850,000 shares of First of America
Common Stock were repurchased at a total cost of $130.8
million. The repurchase of a remaining 780 thousand shares is
currently authorized.
Total shareholders' equity at September 30, 1996, remained
level with a year ago at $1.7 billion. The share repurchase
program and the negative change in the market value adjustment
to equity for available for sale securities since September
30, 1995, offset the impact of net earnings retention. Since
year-end 1995, the change in the adjustment in the market
value of such securities reduced total equity by $35.6
million. Book value per share rose to $28.99 from the $27.89
reported a year ago.
First of America continues to maintain, both on a consolidated
level and an affiliate basis, capital levels within the
parameters of "well capitalized" as defined by regulatory
guidelines. The consolidated total capital to risk adjusted
assets ratio at September 30, 1996 was 12.92 percent, the tier
I ratio was 9.52 percent and the tier I leverage ratio was
7.01 percent.
UPDATE
Management's statements of expectations for certain financial
results for the remainder of 1996, as included in this report,
are forward-looking statements. First of America's actual
performance and financial results may differ from these
projections as a result of a variety of factors, including but
not limited to changes in the economy, competition and the
implementation of internal business plans.<PAGE>
<TABLE>
<CAPTION>
TABLE 3
CONSOLIDATED YIELD ANALYSIS (a)
1996 1995
---------------------------- -----------------------------
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Prime Rate (b) 8.3 % 8.3 8.3 8.7 8.8 9.0
EARNING ASSETS
Money Market Investments 5.83 % 5.75 7.30 4.46 6.74 5.96
U.S. Government and agencies 6.18 6.13 6.12 5.89 5.89 5.90
securities
State and municipal securities 8.22 8.32 8.35 8.32 8.55 8.94
Other securities 6.32 6.24 6.28 6.16 6.36 6.33
--------- -------- --------- -------- -------- --------
Total securities 6.38 6.28 6.18 6.06 6.07 6.06
--------- -------- --------- -------- -------- --------
Consumer installment loans 8.76 8.85 8.46 8.45 8.41 8.25
Comsumer revolving loans 14.16 13.96 14.38 14.40 14.43 14.67
Commercial loans 8.66 8.69 8.87 9.16 9.17 9.33
Commercial real estate loans 9.12 9.16 9.18 9.35 9.30 9.40
Residential real estate loans 7.97 7.97 7.96 7.96 7.95 7.95
--------- -------- --------- -------- -------- --------
Total loans 8.89 8.85 8.90 8.96 8.92 9.06
--------- -------- --------- -------- -------- --------
Total earning assets 8.31 % 8.23 8.24 8.24 8.24 8.32
========= ======== ========= ======== ======== ========
INTEREST-BEARING LIABILITIES
Time deposits:
CD's - less than 12 months 5.10 % 4.98 5.12 5.34 5.45 5.19
CD's - 12 months or more 5.73 5.75 5.75 5.76 5.68 5.55
CD's - $100,000 or more 5.31 5.27 5.50 5.73 5.80 6.10
Other time deposits 5.65 5.58 5.59 5.70 5.67 5.71
Other core deposits:
Savings deposits and NOW 1.61 1.70 1.72 1.73 1.74 1.71
Money market savings and checking 3.74 3.68 3.71 3.80 3.91 3.98
--------- -------- --------- -------- -------- --------
Total deposits 4.17 4.15 4.23 4.35 4.40 4.35
--------- -------- --------- -------- -------- --------
Short term borrowings 5.45 5.46 5.66 6.09 6.38 6.09
Long term debt 7.94 7.83 7.83 7.80 7.36 7.53
--------- -------- --------- -------- -------- --------
Total borrowed funds 6.11 6.02 6.15 6.56 6.72 6.44
--------- -------- --------- -------- -------- --------
Total interest-bearing liabilities 4.35 % 4.36 4.46 4.57 4.64 4.65
========= ======== ========= ======== ======== ========
NET INTEREST MARGIN
Interest income to average earning 8.31 % 8.23 8.24 8.24 8.24 8.32
assets
Interest expense to average earning 3.72 3.74 3.84 3.92 4.01 4.06
assets
Net interest margin 4.59 4.49 4.40 4.32 4.23 4.26
(a) Fully taxable equivalent, based on a marginal federal income tax rate of 35%.
(b) The First National Bank of Chicago Corporate Base Rate.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
TABLE 4
ANALYSIS OF NET INTEREST INCOME
Third Quarter 1996 Versus Third Quarter 1996 Versus
($ in thousands) Third Quarter 1995 Second Quarter 1996
------------------------------ -------------------------------- --------------------------------
CHANGES IN RATE AND VOLUME Total Change Due To Total Change Due To
INCREASE (DECREASE): Change Volume Rate Change Volume Rate
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans (FTE) $ (23,424) (21,993) (1,431) (2,183) (4,424) 2,241
Taxable securities (8,721) (11,746) 3,025 (3,975) (4,791) 816
Tax exempt securities (FTE) 1,197 1,463 (266) (1,132 835 (1,967)
Money market investments 1,068 1,293 (225) (75) (144) 69
------- ------- ------- ------- ------- -------
Total Interest Income (29,880) (30,983) (1,103) (7,365) (8,524) 1,159
------- ------- ------- ------- ------- -------
INTEREST EXPENSE
Interest-bearing deposits (23,775) (13,715) (10,060) 1,502) (896) 2,398
Short term borrowings (3,491) (823) (2,668) (4,311) (4,515) 204
Long term borrowings (3,600) (4,376) 776 (692) (826) 134
------- ------- ------- ------- ------- -------
Total Interest Expense (30,866) (18,915) (11,951) (3,051) (6,238) 2,737
------- ------- ------- ------- ------- -------
Change in net interest income (FTE) $ 986 (12,068) 13,054 (3,864) (2,286) (1,578)
======= ======= ======= ======= ======= =======
NOTE: The change in income attributable to volume is calculated by multiplying the change in volume times
the prior year's rate. The change in income attributable to rate is calculated by multiplying the change in rate
times the prior year's volume. Any variance attributable jointly to volume and rate changes is allocated to
volume and rate in proportion to the relationship of the absolute dollar amount of the change in each. Fully
taxable equivalent income on certain tax exempt loans and securities is calculated using a 35% tax rate.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
TABLE 5 SUMMARY OF LOAN LOSS EXPERIENCE
($ in thousands) 1996 1995
----------------------------- ------------------------------- --------------------------------
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30
ALLOWANCE FOR LOAN LOSSES --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, at beginning of period $ 249,388 245,207 241,182 238,948 235,939 230,524
Provision charged against income 21,966 23,230 24,601 27,610 21,368 22,000
Recoveries:
Consumer installment 10,954 10,839 12,508 10,604 10,510 10,043
Consumer revolving 2,043 2,084 1,820 1,745 1,853 2,183
Commercial 1,411 1,632 1,012 831 1,925 1,375
Commercial mortgage 1,194 789 1,060 1,583 911 456
Residential mortgage 33 51 43 60 10 19
--------- -------- --------- --------- --------- ---------
Total recoveries 15,635 15,395 16,443 14,823 15,209 14,076
--------- -------- --------- --------- --------- ---------
Charge-offs:
Consumer installment 19,149 17,781 22,785 23,178 20,386 15,133
Consumer revolving 11,628 11,824 11,534 10,228 10,085 12,058
Commercial 1,531 2,868 988 2,919 1,792 1,177
Commerical mortgage 1,415 1,635 1,590 3,863 1,067 2,220
Residential mortgage 459 336 122 11 238 73
--------- -------- --------- --------- ---------- ---------
Total charge-offs 34,182 34,444 37,019 40,199 33,568 30,661
--------- -------- --------- --------- ---------- ---------
Net charge-offs 18,547 19,049 20,576 25,376 18,359 16,585
--------- --------- --------- --------- ---------- ---------
Balance, at end of period $ 252,807 249,388 245,207 241,182 238,948 235,939
========= ========= ========= ========= ========== =========
Average loans outstanding (net of
unearned income) $ 15,346,731 15,546,597 15,854,148 16,099,202 16,337,833 16,848,514
========= ========= ========= ========= ========== =========
NET CHARGE-OFFS BY PORTFOLIO
AS % OF LOANS OUTSTANDING
Consumer installment 1.05 % 0.86 1.22 1.37 1.00 0.05
Consumer revolving 4.18 4.30 4.13 3.56 3.50 2.96
Commercial 0.02 0.19 -- 0.33 (0.02) (0.03)
Commerical mortgage 0.02 0.09 0.06 0.24 0.02 0.20
Residential mortgage 0.04 0.02 0.01 -- 0.02 --
MANAGED BANKCARD NET CHARGE-OFFS
On balance sheet $ 8,431 8,740 8,711 8,480 7,495 9,249
Securitized 4,739 4,811 4,313 4,241 2,789 --
---------- -------- -------- -------- --------- ---------
Total managed bankcard net
charge-offs 13,170 13,551 13,024 12,721 10,284 9,249
========== ========= ========= ========= ========= =========
Net charge-offs as % of managed
loans 4.21 % 4.35 4.07 3.92 3.21 2.94
CHARGE-OFFS AND RECOVERIES RATIOS
Net charge-offs to average loans (a) 0.48 % 0.49 0.52 0.63 0.45 0.39
Earnings coverage of net charge-offs 5.21 x 6.20 5.60 5.09 6.73 6.57
Recoveries to total charge-offs 45.74 % 44.70 44.42 36.87 45.31 45.91
Provision to average loans (a) 0.57 0.60 0.62 0.68 0.52 0.52
Allowance to total period end loans 1.65 1.61 1.56 1.50 1.46 1.43
(a) Annualized
/TABLE
<PAGE>
<TABLE>
<CAPTION>
TABLE 6
MEASUREMENT OF ASSET QUALITY
($ in thousands) 1996 1995
----------------------------- -------------------------------- --------------------------------
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans:
Commercial $ 37,739 36,454 30,636 28,943 26,231 21,880
Commercial mortgage 36,610 40,398 41,391 48,190 48,658 55,339
Residential mortgage 19,198 18,251 19,800 23,191 23,595 25,155
Revolving mortgage 469 602 615 606 622 426
Consumer installment -- -- -- 3,244 3,006 1,477
Consumer revolving -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total non-accrual loans $ 94,016 95,705 92,442 104,174 102,112 104,277
--------- --------- --------- --------- --------- ---------
Renegotiated loans:
Commercial $ 3,881 6,895 6,521 10,481 6643 3,306
Commercial mortgage 2,438 1,895 934 943 219 503
Residential mortgage 733 741 749 903 920 917
Revolving mortgage -- -- -- -- -- --
Consumer installment -- -- -- -- -- --
Consumer revolving -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total renegotiated loans $ 7,052 9,531 8,204 12,327 7,782 4,726
--------- --------- --------- --------- --------- ---------
Total non-performing loans $ 101,068 105,236 100,646 116,501 109,894 109,003
--------- --------- --------- --------- --------- ---------
Other real estate owned $ 28,026 30,933 30,621 31,103 31691 33,376
--------- --------- --------- --------- --------- ---------
Total non-performing assets $ 129,094 136,169 131,267 147,604 141,585 142,379
========= ========= ========= ========= ========= =========
Loans past due 90 days or more:
Commercial $ 2,960 1,479 1,387 1,406 1,589 1,360
Commercial mortgage 5,044 2,853 3,235 1,766 1,884 1,297
Residential mortgage 2,839 3,010 1,637 2,019 3,879 3,001
Revolving mortgage 1,534 1,411 1,123 940 610 390
Consumer installment 13,700 12,347 12,833 14,967 10,244 7,661
Consumer revolving 7,716 7,000 7,385 7,026 4,713 6,136
--------- --------- --------- --------- --------- ---------
Total loans past due 90 days or
more $ 33,793 28,100 27,600 28,124 22,919 19,845
========= ========= ========= ========= ========= =========
ASSET QUALITY RATIOS
Non-performing assets as a % of
total assets 0.58 % 0.61 0.58 0.63 0.60 0.60
Non-performing assets as a % of
total loans + OREO 0.84 0.88 0.83 0.92 0.87 0.86
Allowance coverage of non-performing
loans 250.13 236.98 243.63 207.02 217.43 216.45
Allowance coverage of non-performing
assets 195.83 183.15 186.80 163.40 168.76 165.71
/TABLE
<PAGE>
<TABLE>
<CAPTION>
TABLE 7
INTEREST RATE SENSITIVITY
September 30, 1996
0 to 0 to 0 to 0 to 0 to
($ in millions) 30 Days 60 Days 90 Days 180 Days 365 Days
----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Other earning assets $ 199 199 199 199 199
Investment securities (1) 177 290 392 678 1,186
Loans, net of unearned income (2) 4,955 5,450 6,286 7,328 9,135
--------- --------- --------- --------- ---------
Total rate sensitive assets (RSA) $ 5,331 5,940 6,877 8,206 10,520
========= ========= ========= ========= =========
LIABILITIES (3)
Money market type deposits $ 4,041 4,041 4,041 4,041 4,041
Other core savings and time deposits 1,038 1,918 2,806 4,129 5,385
Negotiated deposits 377 497 597 691 742
Borrowings 949 1,151 1,277 1,531 1,587
Interest rate swap agreements -- 50 50 50 25
--------- --------- --------- --------- ---------
Total rate sensitive liabilities (RSL) $ 6,405 7,657 8,770 10,442 11,780
========= ========= ========= ========= =========
GAP (RSA - RSL) $ (1,074) (1,717) (1,894) (2,236) (1,260)
========= ========= ========= ========= =========
RSA divided by RSL 83.23 % 77.57 78.41 78.59 89.30
GAP divided by total assets (4.85) (7.75) (8.54) (10.08) (5.68)
Assumptions:
(1) Maturities of rate sensitive securities are based on contractual maturities and estimated prepayments.
(2) Maturities of rate sensitive loans are based on contractual maturities, estimated prepayments and
estimated repricing impact.
(3) Maturities of rate sensitive liabilities, interest rate swaps and interest rate caps are based on contractual
maturities and estimated repricing.
/TABLE
<PAGE>
II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement regarding computation of per
share earnings.
The computation of common and common
equivalents per share is described in Note
4 to the Consolidated Financial Statements
of this report.
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Registrant during the three months ended
September 30, 1996.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, First of America has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
FIRST OF AMERICA BANK CORPORATION
REGISTRANT
Date: November 12, 1996 /s/ Thomas W. Lambert
Thomas W. Lambert
Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting
Officer)<PAGE>
EXHIBIT INDEX
(27) Financial Data Schedule<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,086,904
<INT-BEARING-DEPOSITS> 148,822
<FED-FUNDS-SOLD> 40,682
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 15,299,302
<ALLOWANCE> 252,807
<TOTAL-ASSETS> 22,168,624
<DEPOSITS> 18,184,634
<SHORT-TERM> 1,556,800
<LIABILITIES-OTHER> 279,190
<LONG-TERM> 392,210
0
0
<COMMON> 605,630
<OTHER-SE> 1,150,160
<TOTAL-LIABILITIES-AND-EQUITY> 22,168,624
<INTEREST-LOAN> 1,030,260
<INTEREST-INVEST> 216,825
<INTEREST-OTHER> 7,433
<INTEREST-TOTAL> 1,254,518
<INTEREST-DEPOSIT> 489,795
<INTEREST-EXPENSE> 87,444
<INTEREST-INCOME-NET> 677,279
<LOAN-LOSSES> 69,797
<SECURITIES-GAINS> (860)
<EXPENSE-OTHER> 636,638
<INCOME-PRETAX> 259,995
<INCOME-PRE-EXTRAORDINARY> 172,915
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 172,915
<EPS-PRIMARY> 2.78
<EPS-DILUTED> 2.78
<YIELD-ACTUAL> 4.49
<LOANS-NON> 94,016
<LOANS-PAST> 33,793
<LOANS-TROUBLED> 7,052
<LOANS-PROBLEM> 32,275
<ALLOWANCE-OPEN> 241,182
<CHARGE-OFFS> 105,645
<RECOVERIES> 47,473
<ALLOWANCE-CLOSE> 252,707
<ALLOWANCE-DOMESTIC> 252,807
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
