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BankBoston

BankBoston Corporation reported yesterday second quarter net income of $250 million, or $.83 per common share on a diluted basis. This compares with $223 million, or $.75 per share, in the first quarter of 1999 and $242 million, or $.80 per share, in the second quarter of 1998.

Net income for the first half of 1999 was $473 million, or $1.58 per share, compared with net income for the first half of 1998 of $480 million, or $1.58 per share.

Highlights were as follows (current quarter amounts shown for total revenues and operating income exclude business sale gains and valuation writedowns related to the transfer of commercial loans into an accelerated disposition portfolio):

–Revenues, on a fully taxable equivalent basis, were $1,371 million, compared with $1,234 million in the prior quarter and $1,102 million in the second quarter of 1998. The growth from prior periods reflected increases from several businesses, including a record quarter from Robertson Stephens;

–Operating income (pre-tax income before provision for credit losses), on a fully taxable equivalent basis, was $472 million in the second quarter, compared with $428 million in the prior quarter and $455 million in the second quarter of 1998;

–The Corporation’s Brazilian and Argentine operations continued their strong performance despite a difficult economic environment and together they reported an increase of approximately 50% in net income this year compared with the first half of 1998;

–Return on average common equity was 19.92% in the second quarter, compared with 18.54% in the prior quarter and 20.70% in the second quarter of 1998;

–Return on average assets was 1.25% in the second quarter, compared with 1.19% in the prior quarter and 1.36% in the second quarter of 1998;

–Nonaccrual loans and OREO totaled $386 million at June 30, 1999, compared with $382 million at March 31, 1999 and June 30, 1998;

–The provision for credit losses was $95 million in the second quarter, compared with $70 million in the prior quarter and $60 million in the second quarter of 1998. Net credit losses were $61 million in the current quarter, which represented a $5 million decline from the first quarter. This decline included: (a) higher recoveries of $45 million, which mainly resulted from a partial insurance recovery related to international private banking loans that had been charged off in the first quarter of 1998, and (b) higher chargeoffs of $40 million, which included the transfer of commercial loans into an accelerated disposition portfolio. Net credit losses in the second quarter of 1998 were $51 million. The reserve for credit losses grew to 1.89% of outstanding loans and leases at June 30, 1999, compared with 1.77% at March 31, 1999 and 1.70% at June 30, 1998;

–The second quarter included a gain of $50 million from the sale of the Corporation’s minority interest in Partners First (a credit card company) and valuation writedowns to noninterest income of $25 million resulting from the aforementioned transfer of commercial loans into an accelerated disposition portfolio.

Chad Gifford, Chairman & Chief Executive Officer said, “This was simply a terrific quarter for us, which continued the excellent momentum established in the first quarter. Revenue strength is the driver of this growth as we capitalize on commanding positions in our target markets, as well as on recent investments and initiatives.”

Gifford added, “Our major businesses continue to perform well. The regional consumer franchise is benefiting from efforts to improve customer profitability and operating efficiency. Our wholesale business is generating strong profits as a full service provider to the growth sector. The addition of Robertson Stephens last year is proving very beneficial as it continues to produce record volumes and expands our reach into the newer growth and internet-related industries. Our Latin American business continues to produce very healthy earnings, despite a recessionary environment, due to the selectivity of our customer base, attractive products, brand strength and management experience.”

Gifford concluded, “Coupled with Fleet Financial’s strong second quarter results, we are bringing together two companies with great individual momentum that are expected to enjoy significant synergies on both the revenue and cost sides. Our integration efforts are very much on track, our original expectations have been reinforced, and our enthusiasm for the potential of this alliance grows as we approach the closing.”

Noninterest income

The components of noninterest income are as follows:
First
Quarter Second Quarter Six Months
1999 (in millions) 1999 1998 Change 1999 1998 Change

Financial service fees
$334 and commissions $456 $195 $261 $789 $360 $429
Net equity and
34 mezzanine profits 26 84 (58) 59 136 (77)
33 Mutual fund fees 35 32 3 67 62 5
39 Personal trust fees 41 41 0 81 82 (1)
Other trust and
7 agency fees 6 9 (3) 13 17 (4)
Trading profits
39 and commissions 41 (4) 45 80 30 50
Net foreign exchange
45 profits 37 32 5 82 61 21
Securities gains/
(2) (losses), net (3) 11 (14) (5) 36 (41)
66 Other income 48 57 (9) 116 97 19
595 Subtotal 687 457 230 1,282 881 401
Gain on sale
0 of businesses 50 0 50 50 165 (115)
Valuation writedowns:
commercial loans transferred
into an accelerated
0 disposition portfolio (25) 0 (25) (25) 0 (25)

$595 Total $712 $457 $255 $1,307 $1,046 $261
*T
-0-
–The significant growth in financial service fees and
commissions is detailed below.

–Equity and mezzanine profits declined in all comparisons mainly
due to a lower level of sales activity. At June 30, 1999, the Private
Equity portfolio had a carrying value of $1.5 billion compared with
$1.2 billion at June 30, 1998.

–Mutual fund fees improved in all comparisons due to a higher
level of fees from Brazil, Argentina and international private
banking. The Corporation remains among the top mutual fund providers
in Brazil and Argentina at June 30, 1999, ranking fifth in Brazil with
assets under management of $4.6 billion and first in Argentina with
assets under management of $1.7 billion.

–The improvement in trading profits and commissions from all
prior periods was due, in part, to an increase in profits from
Robertson Stephens, which was acquired by the Corporation during the
third quarter of 1998. Also contributing to the improvement in the
prior year comparisons were profits earned during 1999 by the Boston-
based emerging markets trading unit compared with losses incurred
during 1998.

–Foreign exchange profits were up in both prior year comparisons
as the Corporation’s Boston-based business benefited from a greater
volume of customer transactions due, in part, to volatile market
conditions in 1999. Higher profits from the foreign exchange
businesses in Chile and Mexico also contributed to the increases.
Lower market volatility during the second quarter of 1999 resulted in
a decline in profits from the high levels posted in the first quarter
by the Boston-based business and Argentina.

–Net securities losses were recorded in the current year periods
while net gains, which were due to stronger domestic and international
markets, were recorded in 1998.

–The change in other income in the first quarter and six month
comparisons was affected by gains that arose in the first quarter of
1999 from currency positions maintained in Brazil, as the Brazilian
government devalued its currency by allowing it to float freely
against the U.S. dollar. All comparisons of other income were affected
by higher levels of earnings from minority owned subsidiaries;
increased revenue from investments in bank owned life insurance
policies (largely offset by the funding cost for the investment that
was included in net interest revenue); and the recognition of
translation losses in the second quarter of 1999, which had previously
been included in the translation component of equity. In addition, the
prior year comparisons reflected the impact of a gain from the second
quarter of 1998 sale of the Corporation’s minority interest in a
Mexican pension company.

–During the second quarter of 1999, the Corporation recorded a
$50 million gain in connection with the sale of its minority interest
in Partners First (a credit card company) and also recorded valuation
writedowns of $25 million from the transfer of commercial loans into
an accelerated disposition portfolio. During the first quarter of
1998, the Corporation recorded a gain of $165 million related to the
sale of its 26% ownership interest in HomeSide Inc., a mortgage
banking company.
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*T
The components of financial service fees and commissions are as
follows:
First
Quarter Second Quarter Six Months
1999 (in millions) 1999 1998 Change 1999 1998 Change
Deposit and electronic
$80 banking fees $94 $76 $18 $174 $146 $28
Letters of credit
20 and acceptance fees 19 19 0 39 38 1
Other loan-related
18 fees 19 17 2 37 31 6
21 Credit card fees 23 12 11 44 22 22
Syndication and
28 agent fees 26 20 6 54 35 19
60 Underwriting fees 89 10 79 149 16 133
Brokerage fees and
55 commissions 74 3 71 129 6 123
20 Advisory fees 72 11 61 91 16 75
32 Other 40 27 13 72 50 22
$334 Total $456 $195 $261 $789 $360 $429
*T
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–Deposit and electronic banking fees improved in all comparisons
due mainly to an increase in domestic electronic banking fees, as well
as higher fees from Argentina and Brazil.

–The increase in credit card fees from the first quarter is
mainly due to higher fees from Argentina and Brazil. Compared with
prior year periods, the growth was mainly due to higher fees from
Brazil and Uruguay. The latter was affected by the acquisition of OCA
(a credit card and consumer finance company in Uruguay) during 1998.

–Syndication and agent fees increased in the prior year
comparisons due to a higher level of activity.

–The significant increase in underwriting, brokerage and
advisory fees in all comparisons relates to growth from Robertson
Stephens, an investment banking company acquired by the Corporation
during the third quarter of 1998. Business volumes have been very
strong during the first half of 1999, particularly in the second
quarter.

–Other financial service fees improved in all comparisons due,
in part, to a higher level of fees from Argentina and Brazil.

Net interest revenue

Net interest revenue, on a fully taxable equivalent basis, was
$684 million for the second quarter of 1999, compared with $639

million in the prior quarter and $645 million in the second quarter of
1998. Net interest margin was 4.03% for the second and first quarters
of 1999, compared with 4.17% in the second quarter of last year. For
the first half of 1999, net interest revenue on a fully taxable
equivalent basis was $1,324 million, compared with $1,252 million in
the first half of 1998. Net interest margin was 4.03% for the first
half of 1999, compared with 4.12% for the first half of 1998.
The $45 million increase in net interest revenue from the prior
quarter was due to (a) an increase from the Private Equity business
due to a higher level of dividends, (b) an increase from Brazil due,
in part, to wider spreads and the absence of a first quarter charge
related to fiscal reforms that were passed by the Brazilian
government, including certain tax measures and (c) wider spreads from
Argentina. All of these factors also had a positive impact on net
interest margin. In addition, one more day in the second quarter
accrual period contributed to the improvement in net interest revenue.
Overall, net interest margin was flat with the first quarter as the
improvements discussed above were offset by the impact of a $2.5
billion increase in the average balance of liquid, lower-yielding
assets in the Corporation’s Section 20 subsidiary, needed to support a
much higher level of activity in Robertson Stephens.
Compared with prior year periods, net interest revenue improved
while net interest margin declined. The increase in net interest
revenue was mainly driven by Argentina, which benefited from wider
spreads and an increase in average earning assets of approximately $1
billion. The latter reflected expansion activities, including the
acquisition of Deutsche Bank Argentina and the opening of new
branches. In addition, the net interest revenue comparisons also
benefited from last year’s acquisition of OCA and higher domestic loan
fees. Partially offsetting the improvement in the six month comparison
and contributing to the decline in net interest margin was the absence
of net interest revenue from the national credit card business, which
was contributed into a joint venture during the first quarter of 1998,
and the impact of funding costs associated with an investment in bank
owned life insurance policies. The major factor behind the decline in
net interest margin in both comparisons was a higher level of liquid,
lower-yielding assets in the Corporation’s Section 20 subsidiary to
support the investment banking activities of Robertson Stephens, which
was acquired by the Corporation during the third quarter of 1998.
Average earning assets from the Section 20 subsidiary grew
approximately $6.5 billion in the quarterly comparison and $5.5
billion in the six month comparison. This more than offset net
interest margin improvements posted by Argentina and Brazil, as well
as increases attributable to the OCA acquisition and higher domestic
loan fees.
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*T
Noninterest expense
The components of noninterest expense are as follows:
First
Quarter Second Quarter Six Months
1999 (in millions) 1999 1998 Change 1999 1998 Change
$473 Employee costs $547 $368 $179 $1,021 $722 $299
109 Occupancy & equipment 113 96 17 221 190 31
27 Professional fees 25 22 3 52 46 6
Advertising and
25 public relations 32 32 0 56 54 2
35 Communications 37 31 6 72 61 11
13 Goodwill amortization 13 8 5 25 16 9
124 Other 132 90 42 258 219 39
$806 Total $899 $647 $252 $1,705 $1,308 $397

Below is an analysis of the changes in noninterest expense from
the first quarter (dollars in millions):

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*T

Noninterest expense: first quarter 1999 $806

–Increase in direct expenses from wholesale

banking, mainly Robertson Stephens 88

–Other factors, net (mainly advertising) 5

Noninterest expense: second quarter 1999 $899

*T
-0-

Noninterest expense increased $93 million from the first quarter
of 1999 due mainly to higher expenses in the Wholesale Bank. This
reflects an increase in incentive compensation which corresponds to a
significantly higher level of revenue, principally from investment
banking activities in Robertson Stephens.

Below is an analysis of the changes in noninterest expense from
prior year periods (dollars in millions):

-0-
*T
Q2 6 mos.

Noninterest expense: 1998 period $647 $1,308

–Increase in direct expenses from wholesale
banking, mainly Robertson Stephens 206 338

–Increase in direct expenses from Brazil and
Southern Cone (Argentina, Uruguay, Chile) 32 80

–Absence of Q1’98 charges related to the
Regional Bank, as well as the realignments of
the European and the private banking businesses 0 (48)

–Other factors, net 14 27

Noninterest expense: 1999 period $899 $1,705

*T
-0-

As noted above, the vast majority of the increase in noninterest
expense from the 1998 periods mainly reflects expansion activities by
the Corporation including the acquisition of Robertson Stephens in the
third quarter of 1998, branch expansion in Argentina and Brazil, and
the acquisition of OCA. In addition, higher levels of incentive
compensation associated with the growth in revenue also contributed to
the increase.

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*T

Credit Profile
Loan and Lease Portfolio

The segments of the lending portfolio are as follows:

(in millions) 6-30-99 3-31-99 12-31-98 9-30-98 6-30-98

United States Operations:
Commercial, industrial
and financial $16,603 $17,028 $16,294 $18,218 $16,275
Commercial real estate:
Construction 353 228 215 209 219
Other commercial real
estate 3,323 3,531 3,871 4,089 3,876
Consumer-related loans:
Residential mortgages 1,729 1,840 2,035 2,111 2,229
Home equity 2,051 2,325 2,294 2,672 2,871
Credit card 375 379 404 393 412
Other 2,357 2,433 2,532 2,693 2,753
Lease financing 1,810 1,768 1,801 1,607 1,609
Unearned income (282) (291) (275) (231) (232)
28,319 29,241 29,171 31,761 30,012
International Operations:
Commercial 10,170 10,308 10,356 10,636 10,218
Consumer-related loans:
Residential mortgages 1,281 1,249 1,251 1,383 1,318
Credit card 351 327 362 339 248
Other 1,166 1,162 1,192 1,164 1,087
Lease financing 677 705 725 652 519
Unearned income (175) (217) (251) (188) (148)
13,470 13,534 13,635 13,986 13,242
Total loans and lease
financing $41,789 $42,775 $42,806 $45,747 $43,254

*T
-0-

Loans and leases were $41.8 billion at June 30, 1999 compared
with $42.8 billion at March 31, 1999. The domestic portfolio declined
approximately $900 million from March 31 mainly due to lower levels of
commercial and home equity loans due, in part, to syndication and
securitization activity, respectively. The international portfolio
decreased slightly from March 31 as an increase in trade-related
Brazilian loans was offset by declines related to syndication

activities.

Nonaccrual Loans and OREO

Nonaccrual loans and OREO amounted to $386 million at June 30,
1999, compared with $382 million at March 31, 1999, and June 30, 1998.
The growth in the international commercial portfolio from March 31
reflects the recessionary environment in Latin America and includes
the placement of one large loan on nonaccrual. Nonaccrual loans and
OREO represented .9% of related assets at June 30, 1999, March 31,
1999 and June 30, 1998.
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*T

The components of consolidated nonaccrual loans and OREO are as
follows:

(in millions) 6-30-99 3-31-99 12-31-98 9-30-98 6-30-98
Domestic nonaccrual loans:
Commercial, industrial
and financial $54 $81 $86 $71 $63
Commercial real estate:
Construction 0 2 2 2 2
Other commercial
real estate 9 17 19 30 33
Consumer-related loans:
Residential mortgages 29 30 36 36 42
Home equity 15 16 17 18 15
Credit card 5 6 6 6 6
Other 14 16 20 21 18
126 168 186 184 179

International nonaccrual loans:
Commercial 126 77 86 103 107
Consumer-related loans:
Residential mortgages 58 56 50 39 36
Credit card 6 8 6 7 6
Other 48 49 47 33 26
238 190 189 182 175

Total nonaccrual loans 364 358 375 366 354
OREO 22 24 27 29 28
Total $386 $382 $402 $395 $382

*T
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Provision and Reserve for Credit Losses

The reserve for credit losses at June 30, 1999 was $792 million,
or 1.89% of outstanding loans and leases, compared with $758 million,
or 1.77% at March 31, 1999 and $734 million, or 1.70% at June 30,
1998. The reserve for credit losses was 218% of nonaccrual loans at
June 30, 1999, compared with 212% at March 31, 1999 and 207% at June
30, 1998.
The provision for credit losses was $95 million in the second
quarter of 1999, compared with $70 million in the first quarter of
1999 and $60 million in the second quarter of 1998.
Net credit losses were $61 million in the second quarter of 1999,
compared with $66 million in the first quarter of 1999 and $51 million
in the second quarter of 1998. The $5 million decline in net credit
losses from the first quarter was due to higher recoveries of $45
million, which mainly resulted from a partial insurance recovery
related to international private banking loans that had been charged
off in the first quarter of 1998, and higher chargeoffs of $40
million, which included the transfer of commercial loans into an
accelerated disposition portfolio. The carrying value of this
portfolio was approximately $100 million at June 30, 1999.
Net credit losses as a percent of average loans and leases on an
annualized basis were .57% in the second quarter of 1999, compared
with .63% for the first quarter of 1999 and .46% in the second quarter
of 1998.

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*T

Net credit losses were as follows:
First
Quarter Second Quarter Six Months
1999 (in millions) 1999 1998 1999 1998
Domestic
Commercial, industrial
$21 and financial $49 $5 $70 $18
(3) Commercial real estate 0 (1) (3) (2)
Consumer-related loans:
0 Residential mortgages 0 1 0 3
4 Credit card 4 6 8 26
1 Home equity 1 1 2 3

13 Other 9 11 22 30
36 63 23 99 78
International
8 Commercial (25) 13 (17) 89
Consumer-related loans:
4 Credit card 5 2 9 4
18 Other 18 13 36 21
30 (2) 28 28 114
$66 Total $61 $51 $127 $192
*T
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The Corporation

BankBoston, with assets of $77.6 billion and some 25,000
employees, is the nation’s oldest commercial bank and New England’s
only global bank. BankBoston is engaged in consumer, small business
and corporate banking in New England; delivering sophisticated
financial solutions to corporations and governments nationally and
internationally; and full service banking in leading Latin American
markets. The Corporation’s common stock is listed on the New York and
Boston stock exchanges.
On March 14, 1999, the Corporation entered into an agreement and
plan of merger with Fleet Financial Group, Inc. The merger, which will
be accounted for as a pooling of interests, is subject to shareholder
and regulatory approvals, and is expected to be completed late in the
third quarter or early in the fourth quarter of 1999. A special
meeting of the Corporation’s stockholders to consider and vote on the
planned merger with Fleet Financial Group, Inc. has been scheduled for
August 11, 1999.

This press release contains forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from estimates. These risks and uncertainties
include, among other things, (1) significant changes in world
financial markets, particularly in Latin America and Asia; (2) the
ability of various countries in Asia and Latin America, particularly
in Brazil, to institute timely and effective economic policies; (3)
developments in general economic conditions, both domestic and
international, including interest rate and currency fluctuations,
market fluctuations and perceptions, and inflation; (4) legislative or
regulatory developments, including changes in laws concerning taxes,
banking, securities, insurance and other aspects of the financial
services industry; (5) changes in the competitive environment for
financial services organizations and the Corporation’s ability to
manage those changes; and (6) the Corporation’s ability and resources,
in both its domestic and international operations, to effectively
execute its articulated business strategies and manage risks
associated with the Year 2000 issue. In addition to these factors, the
forward-looking statements in this press release relating to the
Corporation’s pending merger with Fleet Financial Group, Inc. are
subject to a number of risks and uncertainties including, among other
things, (1) the ability of the combined entity to fully realize
expected cost savings from the merger or to realize those savings
within the expected timeframe; (2) the level of revenues following the
merger; (3) the level of costs related to the integration of the
businesses of the Corporation and Fleet.
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*T
Consolidated Balance Sheet
(dollars in millions)

March 31 June 30
1999 1999 1998
Assets
Securities:
$13,516 Available for sale $13,427 $11,218
410 Held to maturity 397 528

42,775 Loans and lease financing 41,789 43,254
(758) Reserve for credit losses (792) (734)
42,017 Net loans and lease financing 40,997 42,520

6,939 Other earning assets 10,128 5,704
12,826 Cash and other assets 12,615 10,529

$75,708 Total Assets $77,564 $70,499

Liabilities and Stockholders’ Equity
$48,468 Deposits $49,036 $45,196
13,878 Funds borrowed 14,989 13,654
4,616 Notes payable 4,599 3,682
2,788 Other liabilities 2,871 1,992
Guaranteed preferred
beneficial interests in
Corporation’s junior
995 subordinated debentures 995 995
70,745 Total Liabilities 72,490 65,519

Stockholders’ Equity
0 Preferred equity 0 278
4,963 Common equity 5,074 4,702
4,963 Total Stockholders’ Equity 5,074 4,980
Total Liabilities and
$75,708 Stockholders’ Equity $77,564 $70,499

Selected Average Balances

Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1999 1999 1998 1999 1998
Assets
Loans and
$42,536 lease financing $42,538 $44,196 $42,537 $43,952
13,247 Securities 13,898 11,188 13,574 10,898
64,280 Total earning assets 68,146 61,961 66,223 61,228
76,110 Total assets 80,544 71,236 78,338 70,476
Liabilities and
Stockholders’ Equity
Interest bearing
40,378 deposits 40,676 37,195 40,528 37,176
Noninterest bearing
7,038 deposits 7,424 8,209 7,232 8,411
47,416 Total deposits 48,100 45,404 47,760 45,587
5,526 Notes payable(1) 5,586 4,392 5,556 4,073
Total interest
59,280 bearing liabilities 63,212 54,641 61,257 53,932
Common stockholders’
4,877 equity 5,039 4,600 4,957 4,525
Total stockholders’
4,877 equity 5,039 4,878 4,957 4,803

(1) Amounts include guaranteed preferred beneficial interests in
the Corporation’s junior subordinated debentures.

Consolidated Statement of Income

(dollars in millions, except per share amounts)

Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1999 1999 1998 1999 1998
$1,371.7 Interest income $1,447.7 $1,390.2 $2,819.4 $2,727.6
736.9 Interest expense 769.5 750.7 1,506.4 1,484.8
634.8 Net interest revenue 678.2 639.5 1,313.0 1,242.8
Provision for credit
70.0 losses 95.0 60.0 165.0 200.0
Net interest revenue
after provision
564.8 for credit losses 583.2 579.5 1,148.0 1,042.8
Noninterest income:
Financial service fees
333.5 and commissions 455.7 194.6 789.2 359.7
Trust and investment
79.1 management fees 81.6 82.1 160.8 161.4
Trading profits and
39.0 commissions 40.9 (3.7) 79.9 30.4
Securities gains/
(2.0) (losses), net (2.7) 11.4 (4.6) 36.2
145.1 Other income 136.2 173.0 281.2 458.8
Total noninterest
594.7 income 711.7 457.4 1,306.5 1,046.5
Noninterest expense:
401.9 Salaries 482.5 305.1 884.5 597.8
71.5 Employee benefits 65.1 63.3 136.6 124.2

64.0 Occupancy expense 67.9 55.8 131.9 110.1
44.6 Equipment expense 44.8 39.6 89.4 79.8
223.5 Other expense 239.1 183.6 462.6 396.6
Total noninterest
805.5 expense 899.4 647.4 1,705.0 1,308.5

Income before income
354.0 taxes 395.5 389.5 749.5 780.8
Provision for income
131.0 taxes 145.3 147.6 276.3 300.7
$223.0 NET INCOME $250.2 $241.9 $473.2 $480.1
Net Income Per
Common Share:
$.75 Basic $.84 $.81 $1.60 $1.61
$.75 Diluted $.83 $.80 $1.58 $1.58
Dividends Paid Per
$.32 Common Share $.32 $.29 $.64 $.58

Average number of
common shares,
in thousands:
295,935 Basic 296,832 293,769 296,386 293,159
298,477 Diluted 301,662 298,275 300,095 297,579

$0 Preferred dividends $0 $4.4 $0 $8.8

Number of Employees
June 30 Mar. 31 June 30
1999 1999 1998
Full time equivalent employees 24,800 24,700 22,900

Other Data

(dollars in millions, except per share amounts)

Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1999 1999 1998 1999 1998

Return on average
total assets
1.19% (annualized) 1.25% 1.36% 1.22% 1.37%
Return on average
common equity
18.54% (annualized) 19.92% 20.70% 19.25% 21.01%

Net interest revenue,
fully taxable
$639.0 equivalent basis $684.6 $644.9 $1,323.7 $1,251.9
Consolidated net
4.03% interest margin 4.03% 4.17% 4.03% 4.12%
Domestic net interest
3.55% margin (estimated) 3.52% 4.12% 3.53% 4.13%
International net
interest margin
5.23% (estimated) 5.29% 4.29% 5.26% 4.11%

March 31 June 30
1999 1999 1998
Common stockholders’ equity:
$4,963 Common stockholders’ equity $5,074 $4,702
296,626 Common shares outstanding, in thousands 297,041 294,126
Per common share:
$16.73 Book value $17.08 $15.99
43.31 Market value 51.13 55.63

Capital Ratios/Regulatory capital:
5.57%Tangible Common Equity ratio 5.59% 6.09%
Risk-based capital ratios: Estimate
Tier 1 capital ratio
7.2% (minimum required 4.00%) 7.5% 8.4%
Total capital ratio
11.5% (minimum required 8.00%) 11.9% 13.0%
6.9%Leverage ratio 6.8% 7.8%
$5,186 Tier 1 capital $5,383 $5,491
8,335 Total capital 8,566 8,524
72,200 Total risk-adjusted assets 72,086 65,351

Reserve for Credit Losses

(dollars in millions)
Quarter Ended Quarters Ended Six Months Ended
March 31 June 30 June 30
1999 1999 1998 1999 1998
$753.5 Beginning balance $757.4 $725.1 $753.5 $711.6

Provision for

70.0 credit losses 95.0 60.0 165.0 200.0
Reserve of acquired
0.0 companies 0.0 0.0 0.0 14.0

(83.6) Credit losses (122.7) (73.4) (206.2) (229.6)
17.5 Recoveries 62.1 22.2 79.5 37.9
(66.1) Net credit losses (60.6) (51.2) (126.7) (191.7)

$757.4 Ending balance $791.8 $733.9 $791.8 $733.9

Reserve as a % of
1.77% loans and leases 1.89% 1.70% 1.89% 1.70%

Reserve as a % of
212% nonaccrual loans 218% 207% 218% 207%