PMG Appointment

PMG Systems, a leading provider of advanced profitability measurement and management software solutions that empower institutions worldwide with the knowledge and tools to achieve sustained profitability and growth, announced that it has appointed Robert L. Wagner as President and Chief Operating Officer.

Gregory J. Nolan, PMG Systems’ Chairman and CEO, will turn over President and COO duties to Mr. Wagner and will look to Wagner’s much-admired management abilities and financial services industry knowledge to help PMG Systems implement a global expansion plan and work to meet market demand for its industry-leading profitability measurement and management software. Currently, PMG Systems’ software solutions are being used by 30% of North America’s top 30 financial institutions.

“Bob’s extensive background in financial services will be an enormous asset to PMG Systems as we continue to build our business of providing profitability solutions to the financial services industry,” Nolan said. “In addition, Bob’s proven experience in growing businesses quickly and guiding them through tremendous growth periods will be a significant benefit to PMG Systems during its high-growth phase. I am delighted to have Bob join the senior management team at PMG Systems as we enter a new era in the history of our company.”

Wagner was previously Executive Vice President of SEI Investments, where he led the reengineering of their investment systems and services business, which achieved annual, compounded double-digit revenue and profitability growth. During his 12 years at SEI Investments, Wagner was responsible for sales, customer service, operations, product management/development, business strategy, and overall business-line profitability.

“I joined PMG Systems because of the company’s people, vision, and superior software solutions,” said Wagner. “With an excellent track record, referenceable client base, and tremendous potential for growth in both its traditional market and new market opportunities, I saw unlimited potential for future growth and success.”

Wagner has also held management positions at Bank America Corporation, American Express, and Xerox Corporation and most recently as president of the institutional markets division of Pilgrim Baxter & Associates.

About PMG Systems

Based in West Chester, Pennsylvania, PMG Systems offers leading-edge profitability measurement and activity-based costing software that enables financial institutions worldwide to better understand their business, their products, and their customers. Its principal products are the Customer Profitability Management System, Integrated Profit Management System, Cost Management Workstation, and Profitability Workstation. Leading banks licensing PMG software include First Union, PNC Bank, Canadian Imperial Bank of Commerce (CIBC), Wilmington Trust Company, Bank of Ireland, and Thomas Cook Financial in the United Kingdom. For more information, visit PMG Systems on the Web at [][1].



Mondex Venezuela

Mondex announced last week that five financial institutions in Venezuela have purchased the franchise rights for Mondex e-cash. Banco Mercantil C.A.S.A. (Banco Universal), Banco Union C.A., Consorcio Credicard C.A., Banesco Banco Universal S.A.C.A., and InterBank C.A., will have exclusive rights to commercially develop the Mondex electronic cash application on ‘MULTOS’ in Venezuela. The deal represents the 10th Mondex franchise sold in Latin America, adding another 22 million potential cardholders to the already 70 million in the region who are eligible to receive the cards. Other Latin America countries with established Mondex franchises include: El Salvador; Guatemala; Honduras; Nicaragua; Panama; Belize; Costa Rica; Uruguay; and Chile.


Home Account

Home Account, the leading developer of Internet-based financial services, announced today that it has created a Community Bank Division to extend its focus on delivering affordable, state-of-the-art web services to the nation’s community banks.

Home Account pioneered the concept of delivering sophisticated, secure, transactional web services, deployed by the nation’s largest banks to the community bank market.

“This new division will further strengthen and focus Home Account’s efforts to help community banks leverage its broad set of Internet financial service solutions,” said Randy Kahn, Executive Vice President of Home Account. “Our first community bank installation was singled out as the best Internet bank site in North America last year. This action demonstrates our renewed commitment to this vital market segment.”

(Amarillo National Bank, a mid-sized community bank using Home Account’s Canopy First Internet banking product, was recognized last December as having the “Best Internet Banking Site” by the prestigious Retail Delivery News, beating out many submissions from banks that were dozens and even hundreds of times larger.)

Last year the company introduced the revolutionary NetPrecision 30/30 product which delivered a fully functional transactional web site to banks in 30 business days. Since its introduction over a year ago, more than one bank a week across the country has signed up for the 30/30 program. Since then, many similar products have been introduced, although none have matched the growing speed, efficiency and unparalleled service delivered by Home Account.

“Because we also have many large financial institution customers, we do not want to lose our focus on the very important community bank market,” said Charles A. White, President and Chief Executive Officer of Home Account. “Establishing this new division ensures that we will continue to develop and offer high-quality, affordable Internet solutions tailored to the particular needs of community banks.”

About Home Account

Home Account delivers home banking, financial management and electronic commerce solutions to banks, brokerages and other financial institutions. Home Account’s products include: Canopy Server(, an OFX (Open Financial Exchange) financial services platform that allows distribution of services through multiple channels; Canopy Advisor(, a strategic financial planning system for use by individuals and financial professionals; Canopy FirstTM, a family of outsourced, scalable and brandable Internet products and services for financial institutions, card issuers and brokerages; Canopy Card(tm) innovative Internet account access programs for card issuers; Canopy Business(tm) Internet-based cash management services for business customers; and Canopy Clients(, a series of financial management user interfaces.

Although Home Account’s products are designed as components which can operate separately, the Home Account product suite when combined provides an integrated customer relationship management system, the Canopy Continuum(, that assists financial institutions in building profitable, long-term relationships with their customers. Using the Canopy NetSpeed(tm) process as a template, financial institutions can have fully functional, branded web sites up and running in just 30 business days.

Home Account is headquartered in Emeryville, Calif., with offices in Charleston, S.C., Omaha, Neb., Los Angeles and Atlanta.


Sears Biz One

Transamerica Distribution Finance Corp. and Sears launched Friday the ‘Sears Commercial One’ credit program. With the ‘Sears Commercial One’ account, commercial customers can purchase by phone, fax, via specialty catalogs, through their Sears account manager or at any Sears retail outlet. They can also use their account when purchasing from Sears Contract Sales, Sears Industrial Tools, Sears Hardware, Sears Auto Centers, Sears Parts and Services, The Great Indoors, Sears dealer stores, Orchard Supply and Hardware and at National Tire and Battery. Rather than receiving separate invoices for each purchase, Sears ‘Commercial One’ customers receive monthly statements with transaction detail. TDF will own the receivables and will convert over 226,000 existing Sears commercial credit accounts. TDF will manage all processing and servicing including credit underwriting, transaction processing, customer servicing, billing and collections. Sears handles about $1 billion annually in commercial sales.


DE Expansion

Associates National Bank dedicated its new headquarters in Newark, DE last week. The 80,000 square foot facility will support the bank’s existing credit card operations. The new facility will house 440 employees. Located in Pencader Corporate Center, the bank currently has two buildings, the new Credit Card Operations Center and the Card Personalization Center. Associates set up operations in Delaware in 1991. In honor of last week’s occasion, Associates donated $50,000 to the Latin American Community Center to assist in providing affordable housing for the Hispanic community in Delaware.


Netroscope Silicon Alliance

In a move to integrate market research and consulting services, Netroscope Inc., the leading Internet market research company, last week announced that it has formed a strategic partnership with Silicon Summit Technologies (SST), the leading provider of Internet development and support services.

In today’s customer-centric market, Netroscope and SST’s alliance offers organizations a one-stop source for acquiring both market intelligence and consulting services. It is designed to help organizations systematically manage their business risks with a well-defined process to follow. It also offers a competitive pricing model that spans the entire project cycle, from initial research to development and deployment.

Netroscope forecasts the U.S. market for the Internet and e-commerce research, consulting, and outsourcing services will exceed $30 billion by 2002. Netroscope and SST are working together to develop and market a family of integrated market research and consulting services that support the growing needs of customers for customized integration and outsourcing solutions.

“This agreement is an outstanding progression for both Netroscope and SST as it allows us to join forces to develop and deliver compelling outsourcing and integration solutions that will put us at the top of the Internet consulting ladder,” said Natalie Shaheen, President, Netroscope. “The addition of SST to our resources adds another exciting dimension to our firm’s capabilities and expands our research range to meet every aspect of the strategic market planning top to bottom. The strategic priorities of this partnership include leveraging and expanding existing client relationships, further identifying a competitive pricing model, and combining extensive skill sets in existing and emerging technologies.”

“Our customers want tightly integrated and complete project life-cycle services and a strategic alliance with Netroscope allows SST to deliver just that,” said Larry Gusto, President, Silicon Summit Technologies. “Netroscope has quickly become recognized as a premier Internet market research firm and perfectly complements SST’s existing development and support organizations. By combining and leveraging the strengths of both companies the big winner here will be the customer.”

Among the industries that would benefit from the Netroscope and SST alliance are financial services and securities industries. Commenting on the alliance, John Valente, Senior Vice President in charge of the Information Application Development Division for Visa International, said, “As we implement the Internet into our strategic business processes, deploying comprehensive and cost-effective e-commerce solutions and infrastructure become critical issues. By linking market intelligence with consulting know-how, Netroscope and SST are well equipped to better serve the industry’s outsourcing needs. They can help organizations take a more efficient approach for rapid deployment and development of eBusiness solutions.”

“With the financial services industry operating more and more on Internet time, the SST-Netroscope alliance will be invaluable in helping ePIT offer trading on a level playing field to the Internet community,” said Steven Smith, Vice President of Business Development at ePIT, Inc. “This alliance will give ePIT a leg up as we work closely with existing financial institutions to bring their customers the experience and benefits of trading shoulder to shoulder with other traders over the Internet.”

About SST

Silicon Summit Technologies, Inc. () develops, implements and supports technically progressive systems for the world’s largest companies in the Securities Brokerage, Card Payment Systems, Banking and Legal Services industries.

Headquartered in San Francisco, Silicon Summit Technologies’ expertise lies in keeping abreast of the latest technology and utilizing this technology to the benefit of their clients. Since 1988 SST has specialized in the development of leading-edge applications for the securities industry. The majority of current products are written in Java and provide valuable business solutions based on the Financial Information Exchange (FIX) communications protocol.

About Netroscope

Netroscope, Inc. () is the leading Internet market research and consulting company focused on evaluation and assessment of leading-edge technologies and market trends, with the objective of supporting strategic business requirements of the industry. Netroscope’s services include syndicated and customized research, marketing and sales support services, assessment of corporate and vendor trends, “thinking council” advisory services, monthly newsletters, and daily alerts.


DGS Upgraded

Deluxe Government Services (DGS), a business unit of Deluxe Corporation, today announced an upgrade to its electronic benefits transfer (EBT) services by moving forward with the latest NonStop Himalaya systems from the Tandem Division of Compaq Computer Corporation.

“This upgrade will ensure that DGS services remain reliable and cost effective and will give our customers confidence that their EBT programs will handle their transaction volumes with increased processing speed,” said Chuck Feltz, DGS president. DGS provides EBT transaction authorization, funds movement and settlement, and management of recipient information to 34 state governments either as a prime contractor or subcontractor. In 1998, DGS processed more than 400 million EBT transactions for more than 30 million benefit recipients nationwide. The systems upgrade will improve the EBT services that states, retailers and financial institutions deliver to consumers.

“The Deluxe commitment in upgrading its EBT product has been substantial and noticeable over the last year,” said Al Fuoroli of the Massachusetts Department of Transitional Assistance. And according to Robert Waits of the Alabama Department of Human Resources, “The Deluxe decision to move to new Compaq NonStop Himalaya hardware demonstrates a commitment to their customers and to EBT in general.”

“We’re pleased DGS is moving forward with its NonStop Himalaya-based solutions,” said Bill Heil, vice president and general manager of Compaq’s Tandem Division. “The S-Series delivers dramatically higher levels of availability, scalability and performance, and Deluxe has shown over the years that it knows how to leverage the advantages of NonStop Himalaya technology. Compaq will continue to cooperate with Deluxe to provide customers with the world’s most reliable, high-volume transactions solutions.”

Migration of the individual state databases to the new platform began in early May and will be complete by the end of this summer. DGS notifies its customers as their databases are scheduled to be moved. Full migration will be complete by the end of 1999.

About Deluxe

Deluxe Corporation is a holding company composed of four business units: Deluxe Government Services, eFunds, Deluxe Paper Payment Systems, and iDLX Technology Partners. Deluxe Government Services provides electronic benefits transfer (EBT) services to 34 state governments across the country, either as a prime contractor or as a subcontractor. Services include transaction authorization, funds movement and settlement, and management of recipient entitlement information. The company serves approximately 30 million benefit recipients nationwide. Deluxe Government Services is Year 2000 compliant.


Asta Sales

NJ-based Asta Funding, Inc. confirmed Friday it sold approximately $117 million of charged-off VISA/MasterCard to several purchasers during the second quarter. Asta says it realized approximately $6.9 million from these sales. The company projects that by its fiscal year end of September 30, 1999, it will have sold approximately $700 million of the $1.36 billion of charged-off MasterCard and Visa credit card accounts that it purchased in March 1999.


GlobalNet Co-CEO

GlobalNet, Inc., a leading provider of online financial news and information services both domestically and internationally through and, today announced that Ronald S. Posner has been appointed as co-chief executive officer.

“I am delighted to welcome Ron Posner as co-CEO of GlobalNet,” said Hollander, who is president and co-chief executive officer for the company. “His expertise brings over 26 years of leadership in the technology industry to GlobalNet. Dubbed the ‘net shepherd of the Internet’ by the San Francisco Business Journal, Ron is a tremendous asset to GlobalNet’s management team and our future as a leading provider of international online financial information services.”

Hollander added, “A visionary leader in the high technology industry, Ron has spearheaded some of the most innovative software deals in history, and is now providing guidance to public and private Internet companies to strengthen their growth and market valuations. He has executed transactions which have significantly enhanced shareholder value for leading companies such as Peter Norton Computing, Symantec, SoftKey, The Learning Company, WordStar, ANSA (Paradox), Borland and CyberMedia, among others.

Posner has most recently been the founder and chairman of the board of PS Capital, an international “angel” venture capital firm, based in San Francisco, New York and London, that is focused on investments and advisory services in the Internet, software and technology markets. PS Capital has also facilitated the entry of United States Internet companies into Europe.

Posner serves on the board of directors of software superstore, Asymetrix Learning Systems, Inc., a leading provider of Internet-based learning solutions and Smallworld, a company that markets new-era GIS applications to the energy industry. He also is an investor and advisor to;;, which merged with Jam;, now part of America Online;;; Novatel Wireless; and in Germany. He is also an investor in the Kleiner Perkins Zaibatsu Fund; the New Enterprise Associates President’s Fund; and the H&Q Access Technology Fund. He also invested in, which was sold to Cendant and then to Ticketmaster Online-CitySearch, Inc., and in Net Angels, which was subsequently sold to Firefly and then to Microsoft.

“The online financial information and services market is quite dynamic and offers tremendous opportunity for continued growth,” said Posner. “I am looking forward to providing strategic assistance to GlobalNet as the company implements its goal to become the worldwide leader in financial news and services to online investors. GlobalNet’s leadership in the European markets and their unique strategic partnerships with Telescan, NexTrade, Freeserve Limited, First Marathon Inc., The De Agostini Holding Group, Banca Commerciale Italiana and Investitori Associati, set them apart from the other companies in this sector.”

Posner began his career in the early 1970s with sales and marketing positions at Xerox Data Systems, Tratec and The Coca-Cola Company. He later founded National Training Systems, a multimedia computer education provider. In 1983, he joined Ashton-Tate as a board member and executive vice president of worldwide sales and marketing. At Ashton-Tate, Posner was instrumental in expanding revenues from $10 million to over $200 million. He then went on to become the chief executive officer of ANSA, which was sold to Borland; Peter Norton Computing, which was sold to Symantec; and WordStar, which merged with SoftKey/The Learning Company and was sold to Mattel. Posner, 57, received his BS degree in mathematics from Rensselaer Polytechnic Institute and an MBA from Harvard Business School.

About GlobalNet, Inc.

GlobalNet has achieved rapid acceptance and growth in its quest to become a leading provider of international online financial news and information services designed to combine unique financial content and educational programs, investment and analytical tools, and on-line trading and other transaction executions. GlobalNet’s subsidiary,, focuses on companies with a market capitalization of under $500 million and is a leading source for information on the microcap sector featuring original daily articles and a real-time index. Through GlobalNet’s alliance with Freeserve Limited, the United Kingdom’s largest Internet service provider (ISP), is the exclusive provider of investment information within Freeserve’s Money channel, featuring interviews and commentary with leading investment managers and analysts about stocks, funds and market trends.

On July 12, 1999, GlobalNet announced a joint venture agreement with First Marathon Inc., a leading Canadian investment firm, to jointly develop an online trading business for Canada and a premiere financial website,, in Canada. In conjunction with the joint venture, First Marathon has made a $2.5 million strategic equity investment in GlobalNet Financial. The investment by First Marathon follows strategic investments by Freeserve Limited, which made a $15.0 million strategic investment in GlobalNet on May 13, 1999 and a $5.0 million strategic investment on May 25, 1999 from an Italian Consortium consisting of The De Agostini Holding Group, Banca Commerciale Italiana and Investitori Associati. GlobalNet’s is under development. GlobalNet is continuing its worldwide expansion of international investor oriented financial sites.

GlobalNet has also attracted a variety of noteworthy strategic technology partners such as Telescan, an industry leader in providing Internet services and innovative solutions for online technology and data retrieval tools. GlobalNet’s licensing agreement with NexTrade provides the company with royalty free, worldwide rights to NexTrade’s proprietary, modular Electronic Direct Access Trading System (E-DAT) for real-time online trading.

GlobalNet, Inc. is headquartered at 2425 Olympic Boulevard, Suite 660E, Santa Monica, California, 90404; telephone: 310.828.8838; fax: 310.828.7218. The company’s European headquarters are at Clarendon House, 6th floor, 11-12 Clifford Street, London, W1X 1RB, United Kingdom; telephone: +44.171.514.0500; fax: +44.171.517.0505. For U.S. investor relations, call Michael Jacobs, CFO, at 1.800.371.4921, For U.K. media relations, call James Mellville Ross, Square Mile Communications, Ltd. at 44.171.601.1001.


2Q/99 Update

Since the first of this year sub-prime specialist First Consumers has added more than 60,000 accounts and $40 million in receivables according to data gathered by CardData for 2Q/99. BB&T is down about 70,000 accounts this year, Regions realized a slight contraction in its portfolio while Provident showed a 26,000 account gain since Jan. 1. The data are from CardData’s ‘2Q/99 Portfolio Survey’ ([][1]).

Frst Consumers $481,891,366 $443,593,891 863,926 412,983 94,743
BB&T $416,470,000 $446,159,000 490,127 219,842 568,113
Regions $249,476,605 NR 283,253 249,886 370,762
Provident $199,616,752 $196,424,962 157,016 87,997 171,415

Source: CardData (



Providian Responds

Providian said Friday that NextCard’s lawsuit over the use of an Internet banner is totally without merit and that Providian will defend itself vigorously. NextCard filed a lawsuit July 14, against Providian Financial Corp., for copyright infringement, trademark infringement, false advertising and unfair business practices. NextCard claims that Providian deliberately copied one of NextCard’s banner advertisements in an attempt to mislead Internet users into clicking onto Providian’s Web site rather than NextCard’s Web site. Providian says NextCard’s lawsuit centers around the use of the image of a thermometer. Providian says it has no reason to believe that consumers associate thermometers uniquely with any company or product. Furthermore Providian claims the banner in question was tested for a one week period in July and then discontinued. As one of over 20 different banners tested by Providian’s credit card site, Providian says it resulted in less than 3% of the web sites total visits. NextCard, which went public in May, was founded by former Providian executives.



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:
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
–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.
The components of financial service fees and commissions are as
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
–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

–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.
Noninterest expense
The components of noninterest expense are as follows:
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):


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


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):

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


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.


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


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


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.

The components of consolidated nonaccrual loans and OREO are as

(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

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.


Net credit losses were as follows:
Quarter Second Quarter Six Months
1999 (in millions) 1999 1998 1999 1998
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
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
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.
Consolidated Balance Sheet
(dollars in millions)

March 31 June 30
1999 1999 1998
$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
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%