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.
March 31, 1997 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, April 30, 1997
$10 Par Value 88,129,089<PAGE>
FIRST OF AMERICA BANK CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page
No.
Consolidated Balance Sheets (Unaudited),
March 31, 1997 and December 31, 1996 . . . 1
Consolidated Statements of Income
(Unaudited) - Three Months Ended March 31, 2
1997 and 1996. . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows
(Unaudited) - Three Months Ended March 31,
1997 and 1996 . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . 4
Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION<PAGE>
<TABLE>
<CAPTION>
FIRST OF AMERICA BANK COPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31 December 31
($ In thousands) 1997 1996
- ------------------------------- --------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $ 913,201 1,205,962
Money market investments 264,667 163,400
Securities:
Securities available for sale, amortized cost of $4,483,847 at
March 31, 1997 and $4,549,383 at December 31, 1996 4,456,606 4,562,381
Loans, net of unearned income:
Consumer 3,575,817 3,774,803
Commercial, financial and agricultural 2,776,976 2,722,676
Commercial real estate 3,924,293 3,918,248
Residential real estate 4,383,168 4,531,868
Loans held for sale, market value of $79,767 at March 31, 1997
and $109,955 at December 31, 1996 78,020 108,411
----------- -----------
Total loans 14,738,274 15,056,006
Less: Allowance for loan losses 255,776 252,846
----------- -----------
Net loans 14,482,498 14,803,160
Premises and equipment, net 427,792 433,408
Other assets 925,880 893,868
- ------------------------------------------------------------------- ------------- -----------
TOTAL ASSETS $21,470,644 22,062,179
=================================================================== ============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 2,985,091 3,009,252
Interest bearing 14,126,675 14,610,044
----------- -----------
Total deposits 17,111,766 17,619,296
Securities sold under repurchase agreements -- 493,556
Other short term borrowings 1,689,646 1,344,434
Long term debt 617,091 521,124
Other liabilities 315,660 299,571
----------- -----------
Total liabilities 19,734,163 20,277,981
----------- -----------
SHAREHOLDERS' EQUITY
Common stock-$10 par value 587,193 598,132
Capital surplus 83,836 145,950 <PAGE>
Net unrealized gain/(loss) on securities available for sale, net
of tax expense of $9,648 at March 31, 1997 and net of tax
expense of $4,561 at December 31, 1996 (17,593) 8,438
Retained earnings 1,083,045 1,031,678
----------- -----------
Total shareholders' equity 1,736,481 1,784,198
- ------------------------------------------------------------------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $21,470,644 22,062,179
=================================================================== ============ ===========
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
FIRST OF AMERICA BANK COPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended,
March 31,
($ in thousands except per share data) 1997 1996
- ------------------------------- --------- ---------
<S> <C> <C>
INTEREST INCOME
Loans and fees on loans $ 325,277 349,226
Securities:
Taxable income 64,864 72,576
Tax exempt income 5,781 3,448
Money market investments 2,604 1,786
--------- ---------
Total interest income 398,526 427,036
--------- ---------
INTEREST EXPENSE
Deposits 143,335 167,273
Short term borrowings 23,498 23,787
Long term debt 11,130 9,552
--------- ---------
Total interest expense 177,963 200,612
--------- ---------
NET INTEREST INCOME 220,563 226,424
Provision for loan losses 22,816 24,601
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 197,747 201,823
--------- ---------
NON-INTEREST REVENUE
Service charges on deposit accounts 28,397 26,137
Trust and financial services revenue 32,997 27,365
Investment securities transactions, net (581) (287)
Bank card revenue 17,071 17,157
Mortgage banking revenue 10,207 6,075
Other operating revenue 38,952 17,722
--------- ---------
Total non-interest revenue 127,043 94,169
--------- ---------
NON-INTEREST EXPENSE
Personnel 117,955 111,342
Occupancy, net 16,270 16,830
Equipment 14,381 14,727
Outside data processing 4,641 4,709
Amortization of intangibles 5,281 5,237
Other operating expenses 47,148 52,615
--------- ---------
Total non-interest expense 205,676 205,460 <PAGE>
--------- ---------
Income before income taxes 119,114 90,532
Income taxes 39,689 30,911
--------- ---------
NET INCOME 79,425 59,621
========= =========
EARNINGS PER SHARE
Primary 0.88 0.63
Fully Diluted 0.88 0.63
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
FIRST OF AMERICA BANK COPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended,
March 31,
-------------------
($ in thousands) 1997 1996
- ------------------------------- --------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 79,425 59,621
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 11,503 11,861
Provision for loan losses 22,816 24,601
Provision for deferred taxes (6,779) (2,244)
Amortization of intangibles 5,281 5,237
(Gain) loss on sale of securities available for held for sale (442) 287
(Gain) loss on sale of mortgage loans held for sale (7,999) (3,961)
(Gain) loss on sale of other assets (21,709) (4,475)
Proceeds from the sales of mortgage loans held for sale 301,679 309,389
Net other decrease (increase) in mortgage loans held for sale (263,289) (356,152)
Change in assets and liabilities net of acquisitions:
(Increase) decrease in interest and other income receivable (12,341) 52,231
(Increase) decrease in other assets (126,001) 174,604
Increase (decrease) in accrued expenses and other liabilities 37,214 928
--------- ---------
Net cash provided by operating activities 19,358 271,927
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of securities available for sale 271,933 158,403
Proceeds from the maturities of securities available for sale 241,941 227,373
Purchases of securities available for sale (438,401) (362,493)
Net other (increase) decrease in loans and leases 267,455 371,956
Premises and equipment purchased (11,507) (6,419)
Proceeds from the sale of premises and equipment 27,329 2,185
(Acquisition) sale of affiliates, net of cash acquired -- 944
--------- ---------
Net cash provided by investing activities 358,750 391,949
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITES:
Net increase (decrease) in short term deposits (70,043) (269,271)
Net increase (decrease) in time deposits (437,487) (674,290)
Net increase (decrease) in short term borrowings (148,344) 109,910
Proceeds from issuance of long term debt 150,004 926
Repayments of long term debt (54,037) (13,224)
Proceeds from issuance of common stock (53) 794
Dividends paid (28,193) (27,844)
Payments for purchase and retirement of common stock (82,716) (39,286)
--------- ---------
Net cash provided by financing activities (670,869) (912,285)
--------- ---------
Net increase(decrease) in cash and cash equivalents (292,761) (248,409)
Cash and cash equivalents at beginning of period 1,205,962 1,207,062
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 913,201 958,653
========= =========
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
statement of the consolidated financial results 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>
March 31,
-------------------------
(in thousands) 1997 1996
- ----------------------------- ----------- ---------
<S> <C> <C>
Non-accrual loans $ 82,173 92,442
Restructured loans 6,304 8,204
Other real estate owned 25,230 30,621
----------- ---------
Total non-performing assets $ 113,707 131,267
============ ==========
</TABLE>
NOTE 3: ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
(in thousands) 1997 1996
- ------------------- ------- -------
<S> <C> <C>
Balance, beginning of period $252,846 241,182
Provision charged against income 22,816 24,601
Recoveries 13,475 16,443
Loans charged off (33,361) (37,019)
--------- --------
Balance, end of period $255,776 245,207
========= ========
</TABLE>
At March 31, 1997, the total loans considered to be impaired under
Statement No. 114 were $65.6 million with an average for the quarter
of approximately $67.4 million. At March 31, 1996, the total loans
considered impaired were $79.5 million with an average for the quarter
of approximately $85.7 million. At quarter-ends, the allowance for
impaired loans was $14.1 million and $19.3 million, respectively. At
March 31, 1997, the impaired allowance related to $22.4 million of
identified impaired loans, while the remaining $43.2 million of
impaired loans did not require a specific allowance for loan losses
based on the requirements of Statement No. 114.
NOTE 4: COMMON STOCK AND CALCULATION OF EARNINGS PER SHARE
At the annual meeting of shareholders held on April 16, 1997,
shareholders approved an increase in the number of authorized common
stock of the company from 100,000,000 to 200,000,000 shares.
At their April 16, 1997, meeting, the Board of Directors declared a 3-
for-2 stock split, to be effected in the form of a 50 percent stock
dividend, payable May 30, 1997, to shareholders of record May 9, 1997.
All data presented in this filing regarding the number of common
shares outstanding and amounts per share have been restated to reflect
the above two events.
At March 31 1997 and 1996, there were 88,078,905 and 93,783,941 common
shares outstanding, respectively. At the same dates, there were
200,000,000 authorized shares of $10 par value common stock. Common
and common equivalent earnings per share amounts were calculated by
dividing net income applicable to common stock by the weighted average
number of common and common equivalent shares outstanding during the
respective periods adjusted for outstanding stock options.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
------------- ----------
<S> <C> <C>
Average common and common
equivalent shares outstanding 90,158,375 95,321,852
</TABLE>
NOTE 5: MERGERS AND ACQUISITIONS
<TABLE>
<CAPTION>
Date of Total Assets Financial
($ in thousands) Acquisition Acquired Reporting Value
- --------------------------------- ---------------- ----------- --------------
<S> <C> <C> <C>
Scott, Doerschler, Messner &
Gauntlett, Inc. January 1, 1997 $ 73 5,455
Elliot & Sons Insurance Agency Inc.,/
Michigan Benefit Plans Inc. January 7, 1997 1,424 4,259
Huttenlockers Kerns Norvell, Inc. February 12, 1996 3,994 3,912
/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 months
ended March 31, 1997, compared with the corresponding
1996 period. The bracketed amounts represent decreases.
Three Months Ended
March 31,
1997 vs 1996
--------------------
($ in thousands) Change Percent
- ----------------------------- --------- ---------
<S> <C> <C>
Interest and fee income on loans $ (23,949) (6.9)%
Interest income on investments (5,379) (7.1)
Interest income on federal funds sold and
other short term investments 818 45.8
---------
Total interest income (28,510) (6.7)
---------
Interest expense on deposits (23,938) (14.3)
Interest expense on borrowed funds 1,289 3.9
---------
Total interest expense (22,649) (11.3)
---------
Net interest income (5,861) (2.6)
Provision for loan losses (1,785) (7.3)
Non-interest income 32,874 34.9
Non-interest expense 216 0.1
---------
Income before tax expense 28,582 31.6
Applicable income tax expense 8,778 28.4
---------
Net income $ 19,804 33.2 %
=========
</TABLE>
OVERVIEW
Net income for the first quarter was $79.4 million, up 33.2 percent
from the $59.6 million reported for the first quarter of 1996 and
earnings per share of $0.88 compared with $0.63, an increase of 40.4
percent. First quarter net income included, on an after-tax basis,
gains from branch sales of $13.1 million and severance charges of $2.6
million. Last year's first quarter included gains from branch sales
of $2.7 million after tax. On a core basis, excluding one-time events
from both periods, net income for the quarter would have been $69.0
million, up 21.2 percent and earnings per share would have been $0.77,
up 27.8 percent. A higher net interest margin, growing non-interest
revenue, and stabilizing non-interest expense, excluding one-time
events, were the primary reasons for the stronger core results.
Additionally, as part of the ongoing efforts to manage capital for the
benefit of the shareholders, 2.0 million shares of First of America
Common Stock were repurchased this year increasing earnings per share
$0.01. Also during the first quarter, we privately placed $150
million of fixed rate trust preferred securities. These securities
reduced our cost of capital and improved our risk based capital
ratios. However, the net impact of the share repurchase program and
the issuance of the capital securities reduced the net interest margin
by three basis points for the quarter. The net interest margin
including the impact of the new capital securities was 4.66 percent
compared with 4.40 percent for the same quarter a year ago.
At March 31, 1997, total assets were $21.5 billion, down 5.5 percent
from $22.7 billion a year ago, mainly as a result of the continued
restructuring of the balance sheet to yield a more profitable earning
asset and deposit mix. Loan growth strategies for 1997 are targeted
toward increasing the commercial, commercial mortgage, and home equity
loan portfolios. Commercial loan and commercial mortgage balances for
the first quarter of 1997 increased 3.3 percent to $6.6 billion from a<PAGE>
year ago. Home equity loans grew 22.4 percent from a year ago.
Residential mortgage and indirect consumer loans, combined, decreased
$1.3 billion, or 18.9 percent, from the same period a year ago.
Growth in consumer and small business deposits continue to be
emphasized for 1997. Core deposits were $1.4 billion lower than a
year ago as a result of branch sales completed in 1996 and 1997 and
the run off experienced within certain savings and CD products.
Excluding sold deposits, transaction deposits increased 3.1 percent
and time deposits decreased 17.2 percent from the same period in 1996.
The return on average assets for the first quarter was 1.50 percent
compared with 1.05 percent a year ago and return on average equity was
18.03 percent and 12.97 percent, respectively. Excluding one-time
events, return on average assets would have been 1.30 percent for the
quarter, compared with 1.00 percent in 1996, and return on equity
would have been 15.66 percent compared with 12.38 percent a year ago.
At the end of 1996, we announced a restructuring effort that would
eliminate geographic boundaries in favor of a structure that focuses
on specific lines of business. Organizationally, as of April 1, 1997,
we began functioning as one operating unit, even though we will
continue a legal charter in Illinois in addition to our Michigan
charter. The Illinois charter will be retained to facilitate banking
relationships with governmental entities throughout Illinois.
CONSOLIDATED INCOME ANALYSIS
Net interest income for the first quarter, on a fully taxable
equivalent basis, decreased 2.0 percent to $225.9 million from $230.5
a year ago. Earning assets decreased 7.0 percent to $19.5 billion
from the year ago quarter due in part to the planned runoff within the
indirect installment and mortgage portfolios which was only partially
offset through new originations.
The net interest margin was up 26 basis points to 4.66 percent from
4.40 percent a year ago. The net interest margin for the fourth
quarter of 1996 was 4.64 percent. The improvement is 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.
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 that earning assets will decline slightly
during 1997, although commercial loans are expected to increase.
Deposits are also expected to decrease slightly, primarily in the CD
category, while other deposit types should remain stable. The net
interest margin is expected to increase by approximately 2 to 3 basis
points during 1997 and return on equity should be between 15 percent
and 16 percent for 1997 and between 16 and 17 percent for 1998. 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 the
potential sale of additional bank branches and changes in loan demand
and the interest rate environment.
The allowance for loan losses was $256 million at March 31, 1997,
compared with $245 million a year ago and $253 million at December 31,
1996. Although net charge-offs in the credit card portfolio were up
marginally, net charge-offs in the consumer installment loan portfolio
were lower. The allowance for loan losses to total loans ratio at
March 31, 1997, was 1.74 percent, up from 1.56 percent a year ago and
1.68 percent at year end 1996. Charge-offs and recoveries by
portfolio type are detailed in Table 3.
Total non-interest revenue for the quarter increased $32.9 million
from a year ago due in part to $21.7 million of branch sale gains
recorded this year compared with the $4.5 million recorded during the<PAGE>
same period last year. Excluding the impact of branch sale gains from
both periods, non-interest revenue increased 17.5 percent for the
first quarter of 1997 over the same quarter of 1996. Service charges
on deposit accounts were up 8.6 percent, with other bank service fees
up 31.2 percent.
Trust and financial services revenue was higher by 20.6 percent with
assets under management up 14.2 percent over last year. Revenues from
the Trust and Financial Services Division continued to benefit from
expanding insurance business and the higher market values of managed
assets upon which fees are assessed. At quarter-end, total assets
under management were $20.3 billion compared with $18.3 billion a year
ago. Traditional trust fees were $18.8 million for the quarter, an
increase of $1.5 million from last year. Other financial services
revenue, generated by cash management, investment management,
brokerage and insurance services, was $14.1 million for the quarter
compared with $10.0 million a year ago, benefiting from the sales and
services strategies implemented in partnership with the branch
employees. Insurance revenue for the same periods was $3.2 million
and $1.1 million, respectively, reflecting the Registrant's original
and continuing commitment to this product line.
Mortgage banking revenue increased $4.1 million to $10.2 million for
the quarter. The main reason for the increase was a $4.0 million
increase in total gains on mortgage loan sales, which included a $3.1
million gain on an $89 million portfolio sale. Bank card fee revenue
decreased 0.5 percent for the quarter due to lower merchant sales and
lower securitization fees from the securitized portfolio.
Total non-interest expense for the quarter was level with last year's
quarter; however, total expense for 1997 includes $4.1 million of
severance charges. If this one-time charge is excluded from the
comparison, non-interest expense for the first quarter would have been
1.9 percent lower than in 1996. Total personnel costs, excluding
severance charges, increased 2.2 percent for the quarter compared to a
year ago, primarily due to higher sales incentives.
The burden ratio was 1.49 percent for the quarter versus 1.96 percent
for the comparative quarter. The efficiency ratio was 58.27 for the
first quarter. Excluding one-time events from both periods, it would
have been 60.83 percent compared with 64.17 a year ago. The
efficiency ratio is expected to be, on an annualized basis, at or
slightly below 60 percent by the end of 1997. The preceding is a
forward-looking statement, and First of America's actual results may
differ from what has been stated.
LINE OF BUSINESS RESULTS
Net income for each of the lines of business for the first quarter of
1997 was higher than last year except for Bank Card which was lower
due to decreases in merchant sales and securitization servicing fees.
Community Banking's net income was up for the first quarter of 1997
over the same period of 1996 as a result of a 14.0 percent growth in
non-interest revenue and lower non-interest expenses, down 6.6
percent. Mortgage Lending's revenue included $3.1 million in gains
from a portfolio sale as well as higher gains on loans sold in the
secondary market. Trust and Financial Services' results were
positively affected by increased annuity sales and insurance revenue
as well as a higher level of assets under management upon which fees
are accessed.
For the first quarter, Community Banking contributed $43.8 million, or
59.4 percent, to the Corporation's income. Mortgage Lending
contributed $9.0 million, or 12.2 percent, Bank Card $7.6 million, or
10.0 percent and Trust and Financial Services $5.6 million, or 7.6
percent. Corporate Investments and Funding, which includes activities
that are not directly attributable to any one of the Corporation's
lines of business added $7.9 million or 10.8 percent.
<TABLE>
<CAPTION>
TABLE 1
LINE OF BUSINESS FINANCIAL PERFORMANCE
For quarter ended March 31, 1997 Trust & Corporate
Community Bank Mortgage Financial Investments Consolidated
INCOME STATEMENT Banking Card Banking Services & Funding Results
--------- --------- --------- --------- --------- ---------
- - - ($ in thousands) - - -
<S> <C> <C> <C> <C> <C> <C>
Net interest income (FTE) $ 181,047 20,884 15,732 1,763 6,500 225,926
Provision for loan losses 11,580 11,178 58 -- -- 22,816
Non-interest income 42,134 17,704 10,515 31,841 3,181 105,375
Non-interest expense 137,054 15,254 11,654 23,749 8,551 196,262
Corporate support 6,243 695 531 1,082 (8,551) --
Income tax expense (FTE) 24,530 4,116 5,029 3,151 1,752 38,578
--------- --------- --------- --------- --------- ---------
Income before one-time gains and charges $ 43,774 7,345 8,975 5,622 7,929 73,645
---------
Gains from branch sales, severance and
other one time charges (net of tax) 10,450
Goodwill (net of tax) 4,670
=========
Net Income $ 79,425
=========
Contribution to consolidated results 59.4% 10.0 12.2 7.6 10.8 100.0
1997 1996 1995
--------- ------------------------------------------------- -------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
QUARTER RESULTS Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31
--------- --------- --------- --------- --------- -------------
COMMUNITY BANKING
Net income $ 43,774 49,420 49,551 43,033 38,704 47,013
Return on equity 14.86 % 16.07 15.83 14.04 12.42 14.69
Efficiency ratio 64.21 62.30 63.63 64.72 67.34 63.16
BANK CARD
Net income $ 7,345 10,867 6,312 7,992 7,733 4,721
Return on equity 24.83 % 36.60 21.65 27.60 26.97 16.44
Efficiency ratio 41.33 36.35 39.12 40.60 39.01 39.71
MORTGAGE BANKING
Net income $ 8,975 7,065 6,926 7,487 6,673 6,136
Return on equity 18.44 % 13.91 13.29 14.18 12.17 10.00
Efficiency ratio 46.42 54.50 52.96 51.49 55.32 57.54
TRUST & FINANCIAL SERVICES
Net income $ 5,622 5,325 6,004 6,347 5,313 5,661
Return on equity 30.57 % 30.20 34.18 36.49 30.64 33.76
Efficiency ratio 73.89 74.88 68.94 67.37 70.60 66.62
CORPORATE INVESTMENT & FUNDING
Net income $ 7,929 5,732 2,985 2,859 3,055 (1,257)
Return on equity -- -- -- -- -- --
Efficiency ratio -- -- -- -- -- --
/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,
effectively reducing credit risk exposure.
Also reducing credit risk are First of America's conservative lending
policies and loan review process. At March 31, 1997, the loan
portfolio was comprised of residential mortgages (30.3 percent),
consumer loans (24.3 percent), commercial mortgages (26.6 percent)
and commercial loans (18.8 percent).
The allowance for loan losses was 1.74 percent of total loans compared
with 1.56 percent a year ago. The allowance coverage of
non-performing loans was 289.09 percent compared with 243.63 percent a
year ago. Non-performing loans and loans 90 days past due are
detailed by portfolio in Table 6.
The asset quality in the commercial loan and residential mortgage
portfolios, almost three-quarters of total loans, remains strong.
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 its installment loan and
credit card portfolios from the favorable levels previously
experienced.
To reverse this trend, First of America intensified its collection
efforts and tightened credit controls. As a result, the consumer
installment loan portfolio's net charge-offs began to stabilize in
1996 and decreased during the first quarter of 1997. The consumer
installment net charge-offs to average loans for the first quarter was
1.17 percent compared with 1.22 percent for the same quarter of 1996.
For the managed credit card portfolio, net charge-offs to average
loans was 4.81 percent and 4.07 percent, respectively.
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 March 31, 1997, core deposits equalled 95.7 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 ten 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.
Each quarter an interest rate sensitivity analysis is completed for
each affiliate, as well as the corporation as a whole, using an
asset/liability model. Additional analysis is completed and reviewed
each month related to the interest rate sensitivity of the
corporation. The Asset and Liability Committees, which exist within
each line of business and at the corporate level, review the analysis
and as necessary, take appropriate action to ensure compliance with
policy and strategic objectives relating to prudent rate risk
management.
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.
TABLE 2
INTEREST RATE SWAPS
<TABLE>
<CAPTION>
($ in thousands) Net Interest Income
Impact for the
Weighted Average Average Three Months Ended
Notional Fair Market Average Rate Received Rate Paid March 31,
Hedged Asset/Liability Amount Value Maturity (Mos.) Variable/Fixed Variable/Fixed 1997 1996
- ------------------------ --------- ------------ -------------- --------------- --------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Market Rate CDs * -- -- -- -- -- -- (47)
FirstRate Fund deposits -- -- -- -- -- -- (15)
Bank notes 30,000 130 4.4 5.80%/fixed 5.22/variable 28 (14)
Long term debt 50,000 (483) 10.0 5.60%/fixed 5.61/variable 2 (6)
- ------------------------ --------- ------------ -------------- --------------- --------------- --------- ----------
Total $ 80,000 (353) 7.9 $ 30 $ (82)
========================= ========== ============= ============== ========= ==========
* 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 arnings.
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 March 31,
1997.
First of America had outstanding interest rate swaps with a notional
value of $80.0 million which included $50.0 million as a hedge against
parent company debt and $30.0 million as a hedge against subsidiary
bank debt. The outstanding swaps had a negative market value of $353
thousand. At March 31, 1996, outstanding swaps totalled $73.4 million
in notional amounts with a negative market value of $417 thousand.
At times First of America also utilizes interest rate caps to manage
its interest rate risk. Interest rate caps are contracts that protect
the holder from a rise, beyond a certain point, in interest rates or
some other underlying index. The contract is based on a notional
amount and a premium is paid for the right to exercise the option.
First of America had no outstanding interest rate caps at March 31,
1997 or 1996.
First of America had no securities classified as held to maturity at
March 31, 1997 or 1996. 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 March 31, 1997.
Amortized book value was also $4.5 billion at quarter-end. The $27.2
million net unrealized loss in securities available for sale resulted
in a corresponding, after-tax negative market value adjustment to
equity of $17.6 million. At December 31, 1996, the positive market
value adjustments to securities and equity from the securities
available for sale portfolio were $13.0 million and $8.4 million,
respectively.
CAPITAL STRENGTH
First of America began its share repurchase program during March
1996, continuing its capital management strategy. By March 31, 1997,
7.4 million shares of First of America Common Stock were repurchased
at a total cost of $258 million. The repurchase of a remaining 1.1
million shares is currently authorized. Any shares repurchased to
date and any additional repurchases under the current authorization
will be used for general corporate purposes and may be available for
reissuance in connection with the company's stock based compensation
plans, dividend reinvestment plan and employee savings plan.
In January 1997, First of America privately placed $150 million of
fixed rate capital securities through the First of America Capital
Trust I, a newly formed Delaware business trust, controlled by the
corporation. The 8.12% Capital Securities of First of America Capital
Trust I were priced at par. Cash distributions are payable semi-
annually on January 31 and July 31, beginning July 31, 1997. The
proceeds from the issuance were used for general corporate purposes
and will further enhance the corporation's strong capital position,
while reducing its cost of capital.
Total shareholders' equity of $1.7 billion at March 31, 1997,
decreased slightly from the $1.8 billion reported at March 31, 1996.
The share repurchase program and the negative change in the market
value adjustment to equity for available for sale securities since
March 31, 1996, offset the impact of net earnings retention. For the
first quarter of 1997, the change in the adjustment in the market
value of such securities reduced total equity by $26.0 million. Book
value per share rose to $19.71 from the $19.23 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 March 31, 1997, was
13.81 percent, the tier I ratio was 10.4 percent and the tier I
leverage ratio was 7.96 percent.
UPDATE
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share." This Statement supersedes
APB Opinion No. 15, "Earnings Per Share" and simplifies the
computation of earnings per share (EPS) by replacing primary EPS and
fully diluted EPS with basic EPS and diluted EPS. Basic EPS includes
no dilution and is computed by dividing income available to common
shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential
dilution of securities that could share in the earnings of an entity,
similar to the present fully diluted EPS. Both basic and diluted EPS
must be presented for entities with complex capital structures.
Statement No. 128 is effective for interim and annual financial
statements issued for fiscal years ending after December 15, 1997.
Earlier application is not permitted. After adoption, all prior
period EPS data presented will be restated to conform with Statement
No. 128.
Adoption of this Statement will not materially affect the manner in
which First of America calculates EPS because First of America has a
simple capital structure, as defined by this Statement. However,
common equivalents for outstanding stock options would no longer be
part of First of America's EPS computation. Excluding common
equivalents, EPS for the first quarter of 1997 would have been $0.89
per share rather than the $0.88 reported.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 129, "Disclosure of Information about Capital
Structure." The Statement is effective for financial statements
issued for fiscal years ending after December 15, 1997. Statement No.
129 was issued to consolidate existing disclosure requirements and
contains no change in disclosure requirements for companies that were
subject to the prior requirements, such as the Registrant. Statement
No. 129 primarily affects nonpublic companies. <PAGE>
Management's statements of expectations for certain financial results
for the remainder of 1997 and into 1998, 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, assumed rates of revenue growth, expense reductions,
competition and the implementation of internal business plans.<PAGE>
<TABLE>
<CAPTION>
TABLE 3
CONSOLIDATED YIELD ANALYSIS (a)
1997 1996 1995
-------- ---------------------------------------- --------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Average Prime Rate (b) 8.3 % 8.3 8.3 8.3 8.3 8.7
EARNING ASSETS
Money Market Investments 5.12 % 6.03 5.83 5.75 7.30 4.46
U.S. Government and agencies 6.41 6.33 6.18 6.13 6.12 5.89
securities
State and municipal securities 8.12 8.13 8.22 8.32 8.35 8.32
Other securities 6.51 6.39 6.32 6.24 6.28 6.16
-------- -------- -------- -------- -------- --------
Total securities 6.57 6.47 6.38 6.28 6.18 6.06
-------- -------- -------- -------- -------- --------
Consumer installment loans 8.67 8.59 8.76 8.53 8.46 8.45
Commercial revolving loans 14.08 14.28 14.16 13.96 14.38 14.40
Commercial loans 8.68 8.74 8.66 8.69 8.87 9.16
Commercial mortgage loans 9.11 9.13 9.12 9.16 9.18 9.35
Residential real estate loans 7.99 7.99 7.97 7.97 7.96 7.96
-------- -------- -------- -------- -------- --------
Total loans 8.92 8.91 8.89 8.85 8.90 8.96
-------- -------- -------- -------- -------- --------
Total earning assets 8.34 % 8.33 8.31 8.23 8.24 8.24
======== ======== ======== ======== ======== ========
INTEREST-BEARING LIABILITIES
Checking 2.13 % 2.11 2.07 2.17 2.11 2.05
Savings 3.35 3.23 3.24 3.17 3.19 3.23
CD's 5.36 5.48 5.50 5.44 5.48 5.59
-------- -------- -------- -------- -------- --------
Core deposits 4.00 4.07 4.11 4.09 4.16 4.28
Negatiated CD's 5.35 5.37 5.31 5.27 5.50 5.73
Short term borrowings 5.44 5.43 5.45 5.46 5.66 6.09
Long term debt 7.68 7.98 7.94 7.83 7.83 7.80
-------- -------- -------- -------- -------- --------
Total borrowed funds 5.99 6.00 6.11 6.02 6.15 6.56
-------- -------- -------- -------- -------- --------
Total interest-bearing liabilities 4.34 % 4.34 4.35 4.36 4.46 4.57
======== ======== ======== ======== ======== ========
NET INTEREST MARGIN
Interest income to average earning 8.34 % 8.33 8.31 8.23 8.24 8.24
assets
Interest expense to average earning 3.68 3.69 3.72 3.74 3.84 3.92
assets
Net interest margin 4.66 4.64 4.59 4.49 4.40 4.32
(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 FIRST OF AMERICA BANK CORPORATION
Analysis of Net Interest Income
First Quarter 1997 Versus First Quarter 1997 Versus
($ in thousands) First Quarter 1996 Fourth 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) $ (23,783) (22,536) (1,247) (10,514) (6,157) (4,357)
Taxable securities (7,803) (11,637) 3,834 (320) (1,108) 788
Tax exempt securities (FTE) 3,571 3,712 (141) 1,079 1,092 (13)
Money market investments 818 1,496 (678) (353) 172 (525)
------- ------- ------- ------- ------- -------
Total Interest Income 27,197 (28,964) 1,767 (10,108) (6,001) (4,107)
------- ------- ------- ------- ------- -------
INTEREST EXPENSE
Interest-bearing deposits (23,938) (16,288) (7,650) (12,865) (7,571) (5,294)
Short term borrowings (289) 485 (774) 3,970 4,328 (358)
Long term borrowings 1,578) (479) 2,057 3,031 1,325 1,706
------- ------- ------- ------- ------- -------
Total Interest Expense (22,649) (16,281) (6,368) (5,864) (1,918) (3,946)
------- ------- ------- ------- ------- -------
Change in net interest income (FTE) $ (4,548) (12,683) 8,135 (4,244) (4,083) (161)
======= ======= ======= ======= ======= =======
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) 1997 1996 1995
- ----------------------------- --------- ---------------------------------------------- ---------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31
ALLOWANCE FOR LOAN LOSSES --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, at beginning of period $ 252,846 252,807 249,388 245,207 241,182 238,948
Provision charged against income 22,816 23,659 21,966 23,230 24,601 27,610
Recoveries:
Consumer installment 9,964 10,933 10,954 10,839 12,508 10,604
Consumer revolving 1,837 1,815 2,043 2,084 1,820 1,745
Commercial 986 1,032 1,411 1,632 1,012 831
Commercial mortgage 611 962 1,194 789 1,060 1,583
Residential mortgage 77 34 33 51 43 60
--------- --------- --------- --------- --------- ---------
Total recoveries 13,475 14,776 15,635 15,395 16,443 14,823
--------- --------- --------- --------- --------- ---------
Charge-offs:
Consumer installment 17,659 20,737 19,149 17,781 22,785 23,178
Consumer revolving 13,043 12,391 11,628 11,824 11,534 10,228
Commercial 1,377 3,577 1,531 2,868 988 2,919
Commercial mortgage 811 1,416 1,415 1,635 1,590 3,863
Residential mortgage 471 275 459 336 122 11
--------- --------- --------- --------- --------- ---------
Total charge-offs 33,361 38,396 34,182 34,444 37,019 40,199
--------- --------- --------- --------- --------- ---------
Net charge-offs 19,886 23,620 18,547 19,049 20,576 25,376
--------- --------- --------- --------- --------- ---------
Balance, at end of period $ 255,776 252,846 252,807 249,388 245,207 241,182
========= ========= ========= ========= ========= =========
Average loans outstanding (net of
unearned income) $14,833,677 15,111,023 15,346,731 15,546,597 15,854,148 16,099,202
========== ========== ========== ========== ========== ==========
NET CHARGE-OFFS BY PORTFOLIO
AS % OF LOANS OUTSTANDING (A)
Consumer installment 1.17 % 1.37 1.05 0.86 1.22 1.37
Consumer revolving 4.62 4.47 4.18 4.30 4.13 3.56
Commercial 0.06 0.38 0.02 0.19 -- 0.33
Commercial mortgage 0.02 0.05 0.02 0.09 0.06 0.24
Residential mortgage 0.04 0.02 0.04 0.02 0.01 --
MANAGED BANKCARD NET CHARGE-OFFS
On balance sheet $ 10,068 9,482 8,431 8,740 8,711 8,480
Securitized 5,475 5,197 4,739 4,811 4,313 4,241
-------- -------- -------- -------- -------- --------
Total managed bankcard net
charge-offs $ 15,543 14,679 13,170 13,551 13,024 12,721
======== ======== ======== ======== ======== ========
Net charge-offs as % of managed
loans (s) 4.81 % 4.60 4.21 4.35 4.07 3.92
CHARGE-OFFS AS RECOVERIES RATIOS
Net charge-offs to average
loans (a) 0.54 % 0.62 0.48 0.49 0.52 0.63
Earnings coverage of net
charge-offs 7.14 x 0.62 5.21 6.20 5.60 5.09
Recoveries to total charge-offs 40.39 % 38.48 45.74 44.70 44.42 36.87
Provision to average loans 0.62 0.62 0.57 0.60 0.62 0.68
Allowance to total period
end loans 1.74 1.68 1.65 1.61 1.56 1.50
(a) Annualized
/TABLE
<PAGE>
<TABLE>
<CAPTION>
TABLE 6
MEASUREMENT OF ASSET QUALITY
($ in thousands) 1997 1996 1995
- ----------------------------- --------- ------------------------------------------- ---------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31
NON-PERFORMING ASSETS --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans:
Commercial $ 22,383 27,973 37,739 36,454 30,636 28,943
Commercial mortgage 37,568 34,959 36,610 40,398 41,391 48,190
Residential mortgage 20,958 20,684 19,198 18,251 19,800 23,191
Revolving mortgage 1,264 569 469 602 615 606
Consumer installment -- -- -- -- -- 3,244
Consumer revolving -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total non-accrual loans $ 82,173 84,185 94,016 95,705 92,442 104,174
--------- --------- --------- --------- --------- ---------
Renegotiated loans:
Commercial $ 3,449 3,492 3,881 6,895 6,521 10,481
Commercial mortgage 2,242 2,249 2,438 1,895 934 943
Residential mortgage 613 673 733 741 749 903
Revolving mortgage -- -- -- -- -- --
Consumer installment -- -- -- -- -- --
Consumer revolving -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total renegotiated loans $ 6,304 6,414 7,052 9,531 8,204 12,327
--------- --------- --------- --------- --------- ---------
Total non-performing loans $ 88,477 90,599 101,068 105,236 100,646 116,501
--------- --------- --------- --------- --------- ---------
Other real estate owned $ 25,230 24,190 28,026 30,933 30,621 31,103
--------- --------- --------- --------- --------- ---------
Total non-performing assets $ 113,707 114,789 129,094 136,169 131,267 147,604
========= ========= ========= ========= ========= =========
Loans past due 90 days or more:
Commercial $ 1,542 1,464 2,960 1,479 1,387 1,406
Commercial mortgage 549 704 5,044 2,853 3,235 1,766
Residential mortgage 1,793 1,214 2,839 3,010 1,637 2,019
Revolving mortgage 1,745 1,746 1,534 1,411 1,123 940
Consumer installment 9,216 12,612 13,700 12,347 12,833 14,967
Consumer revolving 9,729 8,986 7,716 7,000 7,385 7,026
--------- --------- --------- --------- --------- ---------
Total loans past due 90 days or
more $ 24,574 26,726 33,793 28,100 27,600 28,124
========= ========= ========= ========= ========= =========
ASSET QUALITY RATIOS
Non-performing assets as a % of total 0.53 % 0.52 0.58 0.61 0.58 0.63
assets
Non-performing assets as a % of
total loans + OREO 0.77 0.76 0.84 0.88 0.83 0.92
Allowance coverage of non-performing
loans 289.09 279.09 250.13 236.98 243.63 207.02
Allowance coverage of non-performing
assets 224.94 220.27 195.83 183.15 186.80 163.40
NONPERFORMING ASSET SUMMARY
At December 31, 1996 1995 1994 1993 1992 1991
- ------------------------------ --------- --------- --------- --------- --------- ---------
Non-accrual loans $ 84,185 104,174 96,814 121,186 126,619 116,995
Renegotiated loans 6,414 12,327 4,852 10,879 20,669 16,837
Other real estate owned 24,190 31,103 38,662 50,595 48,699 34,601
--------- --------- --------- --------- --------- ---------
Total non-performing assets $ 114,789 147,604 140,328 182,660 195,987 168,433
========= ========= ========= ========= ========= =========
Loans past due 90 days or more $ 26,726 28,124 18,208 23,462 20,887 32,499
/TABLE><PAGE>
</TABLE>
<TABLE>
<CAPTION>
TABLE 7
INTEREST RATE SENSITIVITY
March 31, 1997
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 $ 318 318 318 318 318
Investment securities 190 302 377 574 964
Loans, net of unearned discount 4,393 4,821 5,589 6,588 8,122
--------- --------- --------- --------- ---------
Total rate sensitive assets (RSA) $ 4,901 5,441 6,284 7,480 9,404
========= ========= ========= ========= =========
LIABILITIES
Money market type deposits $ 4,488 4,487 4,487 4,488 4,488
Other core savings and time deposits 884 1,578 2,260 3,119 4,088
Negotiated deposits 356 472 563 634 733
Borrowings 767 1,027 1,212 1,551 1,644
Interest rate swap agreements 30 80 80 25 25
--------- --------- --------- --------- ---------
Total rate sensitive liabilities (RSL) $ 6,525 7,644 8,602 9,817 10,978
========= ========= ========= ========= =========
GAP (RSA - RSL) $ (1,624) (2,203) (2,318) (2,337) (1,574)
========= ========= ========= ========= =========
RSA divided by RSL 75.11 % 71.18% 73.05% 76.20% 85.66%
GAP divided by total assets -7.56 -10.26 -10.80 -10.88 -7.33
Assumptions:
(1) Maturities of rate sensitive securities are based on contractual maturities and estimated prepayments.
(2) Maturities of rate sensitive loans are based contractual maturities, esitmated 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
(10) Material Contracts.
A copy of the amended and restated First
of America Bank Corporation Director Stock
Compensation Plan, effective February 19,
1997, is filed herewith as an Exhibit.
(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
The Registrant filed a Current Report on Form
8-K dated January 15, 1997, regarding a news
release announcing its earnings and related
financial information for the fourth quarter
and full year 1996.
The Registrant filed a Current Report on Form
8-K dated January 30, 1997, regarding a news
release announcing the placement of $150
million of fixed rate capital securities
through First of America Capital Trust I, a
newly formed Delaware business trust,
controlled by First of America Bank
Corporation.<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: May 12, 1997 /s/ Richard F. Chormann
Richard F. Chormann
Chairman, President and
and Chief Executive Officer<PAGE>
EXHIBIT INDEX
(10) A copy of the amended and restated First
of America Bank Corporation Director Stock
Compensation Plan, effective February 19,
1997, is filed herewith as an Exhibit.
(27) Financial Data Schedule<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 913,201
<INT-BEARING-DEPOSITS> 244,398
<FED-FUNDS-SOLD> 20,269
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 14,738,274
<ALLOWANCE> 255,776
<TOTAL-ASSETS> 21,470,644
<DEPOSITS> 17,111,766
<SHORT-TERM> 1,689,646
<LIABILITIES-OTHER> 315,660
<LONG-TERM> 617,091
0
0
<COMMON> 587,193
<OTHER-SE> 1,149,288
<TOTAL-LIABILITIES-AND-EQUITY> 21,470,644
<INTEREST-LOAN> 325,277
<INTEREST-INVEST> 70,645
<INTEREST-OTHER> 2,604
<INTEREST-TOTAL> 398,526
<INTEREST-DEPOSIT> 143,335
<INTEREST-EXPENSE> 34,628
<INTEREST-INCOME-NET> 200,563
<LOAN-LOSSES> 22,816
<SECURITIES-GAINS> (581)
<EXPENSE-OTHER> 205,676
<INCOME-PRETAX> 119,114
<INCOME-PRE-EXTRAORDINARY> 79,425
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,425
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
<YIELD-ACTUAL> 4.66
<LOANS-NON> 82,173
<LOANS-PAST> 24,574
<LOANS-TROUBLED> 6,304
<LOANS-PROBLEM> 40,322
<ALLOWANCE-OPEN> 252,846
<CHARGE-OFFS> 33,361
<RECOVERIES> 13,475
<ALLOWANCE-CLOSE> 255,776
<ALLOWANCE-DOMESTIC> 255,776
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
