EXHIBIT 99 (A) BANKBOSTON REPORTS SECOND QUARTER NET INCOME OF $212 MILLION OR $1.35 PER SHARE 17% GROWTH IN CORE EPS FROM PRIOR YEAR BOSTON, July 17, 1997 -- BankBoston Corporation (NYSE: BKB) reported today second quarter net income of $212 million, or $1.35 per common share on a fully diluted basis. This compares with $207 million, or $1.27 per share, in the first quarter of 1997 and $188 million, or $1.15 per share, in the second quarter of 1996 before special items ($214 million, or $1.32 per share, including special items). Net income for the first half of 1997 was $419 million, or $2.62 per share, compared with net income for the first half of 1996 of $374 million, or $2.28 per share, before special items ($369 million, or $2.24 per share, including special items). Operating highlights were (amounts shown for the second quarter of 1996 are before special items): . On a fully taxable equivalent basis, operating income (before credit costs) was $421 million in the second quarter, compared with $413 million in the prior quarter and $386 million in the second quarter of 1996. During the second quarter of 1997, the Corporation completed a major phase of the BayBanks integration. Costs associated with the integration, together with a modest amount of expenses related to a reconfiguration of Asian operations, were $22 million. In addition, the second quarter included approximately $20 million of gains from the sale of Argentine securities; . Return on average common equity was 19.54% in the second quarter compared with 18.02% in the prior quarter and 17.19% in the second quarter of 1996; . Return on average assets was 1.33% in the second and first quarters of 1997 and 1.29% in the second quarter of 1996; . Nonaccrual loans and OREO totaled $398 million at June 30, 1997, compared with $445 million at March 31, 1997 and $460 million at June 30, 1996. Net credit losses were $79 million in the second and first quarters of 1997 compared with $49 million in the second quarter of 1996. . During the second quarter, the Corporation continued executing its share buyback program, repurchasing 5 million shares. A total of 7.5 million shares have been repurchased during the first half of 1997. On June 23, the Corporation announced that it had entered into an agreement to sell its consumer finance subsidiary, Fidelity Acceptance Corporation. This transaction is expected to close in the second half of 1997 and had no effect on the Corporation's second quarter financial statements. NONINTEREST INCOME The components of noninterest income are as follows: First Second Quarter Quarter Six Months - ------- ------------ ------------- 1997 (in millions) 1997 1996 Change 1997 1996 Change - ------- ----- ----- ------- ----- ------ ------- $ 138 Financial service fees $ 156 $ 135 $ 21 $ 293 $ 298 $ (5) 37 Net equity and mezzanine profits 55 77 (22) 92 114 (22) 25 Mutual fund fees 27 23 4 52 44 8 34 Personal trust fees 36 33 3 70 65 5 7 Other trust and agency fees 6 6 0 13 10 3 19 Trading profits and commissions 28 25 3 47 38 9 19 Net foreign exchange trading profits 20 12 8 39 24 15 9 Securities portfolio gains, net 32 3 29 41 17 24 42 Other income 17 23 (6) 60 63 (3) ----- ----- ----- ---- ----- ----- ---- 330 Subtotal 377 337 40 707 673 34 0 Mortgage banking related items, net 0 46 (46) 0 (5) 5 ----- ----- ----- ---- ----- ----- ---- $ 330 Total $ 377 $ 383 $ (6) $ 707 $ 668 $ 39 ===== ===== ===== ==== ===== ===== ==== . Changes in financial service fees are detailed below. . Equity and mezzanine profits improved from the first quarter but declined from prior year periods as a result of the unusually high level of gains recorded during the second quarter of 1996. The Corporation continues to make new investments and the portfolio balance has grown over $200 million since the beginning of 1996. . Mutual fund fees improved in all comparisons due, in part, to higher levels of fees from the Brazilian and Argentine businesses. The level of assets under management in Brazil has risen to $4.4 billion at June 30, 1997 compared with $3.3 billion at June 30, 1996. In Argentina, the Corporation has over a 20% market share with assets under management of $900 million compared with $300 million at June 30, 1996. . The increase in personal trust fees from the first quarter reflects the impact of seasonal tax preparation fees while the growth from prior year periods mainly relates to an increase in assets under management. . Trading account profits and commissions improved in all comparisons. The improvement is principally due to higher profits from Global Capital Markets, reflecting growth in the emerging markets and high yield businesses. The second quarter of 1997 marked the first full quarter in which the Corporation's Section 20 subsidiary was operational. Higher levels of profits from local Brazilian and Argentine operations also contributed to the improvement from the first six months of last year. . The growth in foreign exchange profits from the prior year periods reflected the Corporation's increased emphasis in this segment of its Global Capital Markets business coupled with higher profits from Asian operations. . The increase in securities gains from all prior periods reflects sales of Argentine securities in the second quarter of 1997, which yielded gains of approximately $20 million. . Other income declined $25 million from the prior quarter mainly due to (1) the absence of gains on the sale of Ganis loans recorded in the first quarter, (2) actuarial adjustments and start-up costs related to the Corporation's Argentine and Mexican pension management joint ventures, respectively and (3) the absence of first quarter income related to the initial public offering of the Corporation's mortgage banking joint venture. The comparison with the prior year quarter was affected by items (1) and (2) discussed above, partially offset by the absence of losses incurred in the second quarter of last year from the sale of residential mortgages. The components of financial service fees are as follows: First ----- Second Quarter Six Months Quarter ---------------------- -------------------- -------- 1997 (in millions) 1997 1996 Change 1997 1996 Change ---- ---------- ---------- ------------ --------- --------- ----------- $ 58 Deposit and ATM-related fees $ 62 $ 61 $ 1 $ 120 $ 123 $ (3) 17 Letters of credit and acceptance fees 18 16 2 34 33 1 14 Syndication and agent fees 23 13 10 38 22 16 9 Other loan-related fees 9 8 1 18 19 (1) Net mortgage servicing fees 0 (before items detailed below) 0 4 (4) 0 26 (26) 40 Other 44 33 11 83 75 8 ---- ----- ----- --- ----- ----- ---- $138 Total $ 156 $ 135 $21 $ 293 $ 298 $ (5) ==== ===== ===== === ===== ===== ==== . Deposit and ATM-related fees increased from the prior quarter due to higher domestic electronic banking fees and an increase in fees from Latin American operations. . Syndication and agent fees increased from all prior periods due to a higher volume of transactions generated by the Corporation's corporate finance business. . The decline in net mortgage servicing fees from the prior year reflected the sale of the Corporation's mortgage banking subsidiary in 1996. . The increase in other financial service fees from all prior periods is due, in part, to higher advisory fees. Underwriting fees earned by the Global Capital Markets business in 1997 and an increase in custody fees from Argentina also contributed to the improvement in the six month comparison, while higher Latin American credit card fees contributed to the increase in both quarterly comparisons. Mortgage banking-related special items included in noninterest income for 1996 are composed of the following: Second Quarter Six Months -------------- ---------- 1996 1996 ---- ---- (in millions) Mortgage banking-related gains/losses: Sale of mortgage subsidiary $ 46 $ 106 Contracts used to manage prepayment risk, net 0 (111) ---- ----- Total $ 46 $ (5) ==== ===== During the first quarter of 1996, the Corporation recorded a net pre-tax loss of $51 million from mortgage banking-related items. As a result of the first quarter's rising rate environment, a loss of $111 million (net of decreased servicing amortization) was recorded from the change in market value of contracts used to manage prepayment risk in the mortgage servicing portfolio which, in turn, protected the economic value of the Corporation's mortgage banking subsidiary pending the completion of its sale to HomeSide, Inc. The completion of this transaction resulted in the recognition of gains totaling $106 million, of which $60 million was recorded in the first quarter and $46 million was recorded in the second quarter. The Corporation now owns a 26% interest in HomeSide, Inc., which ranks among the country's largest mortgage banking companies. NET INTEREST REVENUE Net interest revenue, on a fully taxable equivalent basis, was $620 million for the second quarter of 1997, compared with $625 million in the prior quarter and $576 million in the second quarter of 1996. Net interest margin was 4.38% for the second quarter of 1997 and 4.47% in the first quarter of 1997, compared with 4.40% in the second quarter of last year. For the first half of 1997, net interest revenue on a fully taxable equivalent basis, was $1,245 million, compared with $1,147 million in the first half of 1996. Net interest margin was 4.43% for the first half of 1997, compared with 4.40% for the first half of 1996. The $5 million decrease in net interest revenue and the 9 basis point decline in margin from the prior quarter mainly reflected the absence of high first quarter levels of dividends from U.K. and Argentine equity investments as well as narrower spreads. These declines were partially offset by higher levels of loan fees and gains from sales of lease residuals. In addition, an increase in average earning assets and one more day in the second quarter helped to offset the decline in net interest revenue. Compared with prior year periods net interest revenue improved $44 million in the quarter and $98 million from the first six months. These increases were mainly driven by higher levels of average earning assets, primarily domestic commercial loans, Latin American loans, and securities, which in the aggregate increased by over $4 billion in each comparison. Net interest margin was fairly flat in both prior year comparisons. NONINTEREST EXPENSE The components of noninterest expense are as follows: First - ------- Second Quarter Quarter Six Months - ------- ------------ -------------- 1997 (in millions) 1997 1996 Change 1997 1996 Change - ------- ----- ----- ------- ------ ------ ------- $ 311 Employee costs $ 312 $ 289 $23 $ 622 $ 582 $40 87 Occupancy & equipment 88 84 4 174 169 5 12 Professional fees 12 14 (2) 24 27 (3) 22 Advertising and public relations 27 31 (4) 49 58 (9) 26 Communications 28 25 3 54 50 4 7 Goodwill amortization 7 5 2 15 11 4 77 Other 102 79 23 181 155 26 ----- ----- ----- --- ------ ------ --- 542 Subtotal before special item and OREO costs 576 527 49 1,119 1,052 67 Special item: 0 Accelerated vesting of restricted stock 0 4 (4) 0 4 (4) 2 OREO costs 2 1 1 3 3 0 ----- ----- ----- --- ------ ------ --- $ 544 Total $ 578 $ 532 $46 $1,122 $1,059 $63 ===== ===== ===== === ====== ====== === Noninterest expense, before special items and OREO costs, in the second quarter was marked by integration-related costs and spending in key growth businesses. . During the second quarter, the Corporation completed a major phase of the BayBanks integration. Costs associated with the integration totaled $19 million in the second quarter and the bulk of the costs are contained in the "other" category in the table shown above. These costs included temporary help for systems work, branch banking and telebanking; training staff on new products and systems; creating and mailing brochures to consumer and corporate customers; and converting to the new BankBoston brand name. . Latin American expenses increased $7 million as the Corporation continues to invest in Argentina and Brazil. The growth in expenses is due, in part, to the opening of new branches, the expansion of capital markets activities and increased advertising costs. . During the second quarter, the Corporation recorded a restructuring charge of $3 million related to its Asian operations. This charge primarily relates to the cost of centralizing regional support and processing functions. . Other items of note included an increase in incentive compensation related to the Global Capital Markets businesses and higher advertising expenses in the New England region to promote certain products and the new BankBoston brand name. Compared with prior year periods, noninterest expense, before special items and OREO costs, grew $49 million from the second quarter and $67 million from the first half of 1996. The major drivers of these increases were the BayBanks integration expenses discussed above; investment spending in Latin America, primarily Argentina and Brazil; the evolution of the Corporation's Global Capital Markets businesses, including the launching of a Section 20 subsidiary, the formation of a high yield desk, and higher incentive compensation in line with the growth in revenues; higher expenses from domestic commercial banking, primarily increased incentive compensation; and expenses incurred in connection with the Corporation's Millennium ("Year 2000") project. The growth in expenses from these areas more than offset incremental expense savings achieved from the consolidation of BayBanks into the Corporation. CREDIT PROFILE Loan and Lease Portfolio The segments of the lending portfolio are as follows: (in millions) 6-30-97 3-31-97 12-31-96 9-30-96 6-30-96 -------- -------- --------- -------- -------- United States Operations: Commercial, industrial and financial $ 14,527 $ 14,203 $ 13,162 $ 13,828 $ 12,915 Commercial real estate Construction 314 265 284 323 410 Other commercial real estate 3,398 3,129 3,240 3,228 3,326 Consumer-related loans: Residential mortgages 3,016 3,067 3,184 4,156 4,133 Home equity loans 2,924 2,908 2,878 2,842 2,775 Credit card 1,488 1,404 1,395 1,320 1,223 Other 4,739 4,708 5,503 5,349 5,218 Lease financing 1,780 1,766 1,816 1,778 1,627 Unearned income (277) (275) (287) (272) (245) -------- -------- --------- -------- -------- 31,909 31,175 31,175 32,552 31,382 -------- -------- --------- -------- -------- International Operations: Loans and lease financing, net of 10,404 9,844 9,886 9,501 9,271 unearned income -------- -------- --------- -------- -------- Total loans and lease financing $ 42,313 $ 41,019 $ 41,061 $ 42,053 $ 40,653 ======== ======== ========= ======== ======== Loans and leases were $42.3 billion at June 30, 1997, compared with $41.0 billion at March 31, 1997. The increase in domestic loans reflected growth from the nationally-based specialized industries, asset based finance and real estate portfolios, while the increase in international loans was mainly attributable to Argentina and Brazil. Nonaccrual Loans and OREO Nonaccrual loans and OREO amounted to $398 million at June 30, 1997, compared with $445 million at March 31, 1997, and $460 million at June 30, 1996. Nonaccrual loans and OREO represented .9% of related assets at June 30, 1997, compared with 1.1% at March 31, 1997 and June 30, 1996. The components of consolidated nonaccrual loans and OREO are as follows: (in millions) 6-30-97 3-31-97 12-31-96 9-30-96 6-30-96 -------- -------- --------- -------- -------- Domestic nonaccrual loans: Commercial, industrial and financial $ 39 $ 72 $ 82 $ 114 $ 140 Commercial real estate Construction 3 4 6 9 10 Other commercial real estate 48 47 67 84 86 Consumer-related loans Residential mortgages 56 65 57 60 45 Home equity loans 26 25 23 22 20 Credit card 22 23 17 5 2 Other 44 41 44 44 38 -------- -------- --------- -------- -------- 238 277 296 338 341 -------- -------- --------- -------- -------- International nonaccrual loans 113 119 106 106 57 -------- -------- --------- -------- -------- Total nonaccrual loans 351 396 402 444 398 OREO 47 49 50 52 62 -------- -------- --------- -------- -------- Total $ 398 $ 445 $ 452 $ 496 $ 460 ======== ======== ========= ======== ======== Provision and Reserve for Credit Losses The reserve for credit losses at June 30, 1997 was $845 million, or 2.00% of outstanding loans and leases, compared with $864 million, or 2.11% at March 31, 1997, and $894 million, or 2.20% at June 30, 1996. The reserve for credit losses was 240% of nonaccrual loans at June 30, 1997, 218% at March 31, 1997, and 225% at June 30, 1996. The provision for credit losses was $60 million in the second and first quarters of 1997, compared with $57 million in the second quarter of 1996. Net credit losses were $79 million in the second and first quarters of 1997, compared with $49 million in the second quarter of 1996. Net credit losses from Fidelity Acceptance Corporation (FAC), the Corporation's sub-prime automobile finance company, were $21 million in the second quarter and $44 million in the first half of 1997. The sale of FAC, which was announced in late June, is expected to close in the third quarter. Net credit losses as a percent of average loans and leases on an annualized basis were .76% in the second quarter of 1997, compared with .77% for the first quarter of 1997 and .49% for the second quarter of 1996. Net credit losses were as follows: First - ------- Second Quarter Quarter Six Months - ------- ------------- ------------- 1997 (in millions) 1997 1996 1997 1996 - ------- ------ ----- ------ ----- Domestic $ 18 Commercial, industrial and financial $ 5 $ 2 $ 23 $ 5 0 Commercial real estate (3) 3 (3) 14 Consumer-related loans: 1 Residential mortgages 0 3 1 7 19 Credit card 24 4 43 7 2 Home equity loans 1 2 3 4 35 Other 34 25 69 48 ----- ----- ----- ----- ----- 75 61 39 136 85 4 International 18 10 22 15 ----- ----- ----- ----- ----- $ 79 Total $ 79 $ 49 $ 158 $ 100 ===== ===== ===== ===== ===== THE CORPORATION BankBoston, with assets of $66.1 billion, was founded in 1784. BankBoston is engaged in: consumer banking in southern New England; financing to selected corporations regionally, nationally and internationally; and full-service banking in key Latin American markets. The Corporation and its subsidiaries operate through a network of offices in the U.S. and through more than 100 offices in 23 countries in Latin America, Europe and Asia, the third largest overseas network of any U.S. bank. The Corporation's common and preferred stocks are listed on the New York and Boston stock exchanges. CONSOLIDATED BALANCE SHEET (dollars in millions) March 31 June 30 - ------------ ------------------ 1997 1997 1996 - ------------ -------- -------- Assets Securities: $ 692 Held to maturity $ 636 $ 686 9,082 Available for sale 8,969 8,459 41,019 Loans and lease financing 42,313 40,653 (864) Reserve for credit losses (845) (894) ------- ------- ------- 40,155 Net loans and lease financing 41,468 39,759 5,754 Other earning assets 5,758 5,462 9,097 Cash and other nonearning assets 9,307 8,021 ------- ------- ------- $64,780 Total Assets $66,138 $62,387 ======= ======= ======= Liabilities and Stockholders' Equity $42,307 Deposits $42,978 $43,494 11,839 Funds borrowed 12,377 9,215 2,708 Notes payable 2,693 2,632 2,565 Other liabilities 2,666 2,084 Guaranteed preferred beneficial interests in corporation's 500 junior subordinated debentures 750 0 ------- ------- ------- 59,919 Total Liabilities 61,464 57,425 ------- ------- ------- Stockholders' Equity 508 Preferred equity 508 508 4,353 Common equity 4,166 4,454 ------- ------- ------- 4,861 Total Stockholders' Equity 4,674 4,962 ------- ------- ------- Total Liabilities and Stockholders' $64,780 Equity $66,138 $62,387 ======= ======= ======= SELECTED AVERAGE BALANCES Quarter Ended Quarters Ended Six Months Ended - ------------- -------------- ---------------- March 31 June 30 June 30 -------- -------------- ---------------- 1997 1997 1996 1997 1996 ------- ------- -------------- ------- ---------------- Assets $41,732 Loans and lease financing $42,112 $40,114 $41,923 $39,646 9,261 Securities 9,488 8,065 9,375 8,105 56,641 Total earning assets 56,834 52,717 56,738 52,444 63,224 Total assets 63,946 58,381 63,580 58,485 Liabilities and Stockholders' Equity 34,349 Interest bearing deposits 34,391 34,233 34,370 33,889 7,550 Noninterest bearing deposits 7,855 6,885 7,703 6,986 ------- ------- ------- ------- ------- 41,899 Total deposits 42,246 41,118 42,073 40,875 3,316 Notes payable 3,351 2,584 3,333 2,502 48,531 Total interest bearing liabilities 49,208 45,099 48,871 45,064 4,444 Common stockholders' equity 4,159 4,180 4,294 4,190 4,952 Total stockholders' equity 4,667 4,688 4,802 4,698 NUMBER OF EMPLOYEES June 30 Mar 31 June 30 1997 1997 1996 --------- ------- -------- Full time equivalent employees 22,000 22,000 22,700 CONSOLIDATED STATEMENT OF INCOME (dollars in millions, except per share amounts) Quarter Ended Quarters Ended Six Months Ended March 31 June 30 June 30 ------------ ------------------ ------------------ 1997 1997 1996 1997 1996 ------------ -------- -------- -------- -------- $1,275.0 Interest income $1,280.7 $1,202.5 $2,555.7 $2,442.8 655.0 Interest expense 664.8 631.0 1,319.8 1,305.8 - -------- -------- -------- -------- -------- 620.0 Net interest revenue 615.9 571.5 1,235.9 1,137.0 60.0 Provision for credit losses 60.0 57.1 120.0 114.0 - -------- -------- -------- -------- -------- Net interest revenue after 560.0 provision for credit losses 555.9 514.4 1,115.9 1,023.0 - -------- -------- -------- -------- -------- Noninterest income: 137.5 Financial service fees 155.7 135.3 293.2 186.9 66.0 Trust and agency fees 69.4 61.9 135.4 119.3 19.3 Trading profits and commissions 27.9 25.0 47.2 37.9 8.8 Securities portfolio gains, net 31.9 3.4 40.8 16.9 98.1 Other income 91.9 157.3 190.0 307.1 - -------- -------- -------- -------- -------- 329.7 Total noninterest income 376.8 382.9 706.6 668.1 - -------- -------- -------- -------- -------- Noninterest expense: 257.7 Salaries 260.2 243.9 517.9 484.7 52.7 Employee benefits 51.3 49.0 103.9 101.2 50.8 Occupancy expense 52.1 49.7 102.9 100.8 35.6 Equipment expense 35.8 33.9 71.5 68.2 145.9 Other expense 176.8 154.6 322.7 301.6 - -------- -------- -------- -------- -------- 542.7 Subtotal 576.2 531.1 1,118.9 1,056.5 1.5 OREO costs 1.7 1.1 3.2 2.6 - -------- -------- -------- -------- -------- 544.2 Total noninterest expense 577.9 532.2 1,122.1 1,059.1 - -------- ------- -------- -------- -------- 345.5 Income before income taxes 354.8 365.1 700.4 632.0 138.7 Provision for income taxes 142.8 151.3 281.6 263.3 - -------- -------- -------- -------- -------- $206.8 NET INCOME $ 212.0 $ 213.8 $ 418.8 $ 368.7 ======== ======== ======== ======== ======== NET INCOME PER COMMON SHARE: $1.29 Primary $ 1.37 $ 1.33 $ 2.66 $ 2.27 $1.27 Fully diluted $ 1.35 $ 1.32 $ 2.62 $ 2.24 $.44 DIVIDENDS PAID PER COMMON SHARE $ .51 $ .44 $ .95 $ .81 Average number of common shares, in thousands: 153,421 Primary 147,910 153,650 150,650 154,318 155,592 Fully diluted 149,787 155,183 152,691 156,018 $9.3 Preferred dividends $ 9.3 $ 9.3 $ 18.6 $ 18.6 OTHER DATA (dollars in millions, except per share amounts) Quarter Ended Quarters Ended Six Months Ended - --------------- --------------- ----------------- March 31 June 30 June 30 -------- --------------- ----------------- 1997 1997 1996 1997 1996 ---- ------- --------------- --------- ----------------- EARNINGS PER SHARE BEFORE SPECIAL ITEMS*: $1.29 Primary $ 1.37 $ 1.16 $ 2.66 $ 2.30 $1.27 Fully diluted $ 1.35 $ 1.15 $ 2.62 $ 2.28 RETURN ON AVERAGE TOTAL ASSETS (ANNUALIZED): 1.33% Net income 1.33% 1.47% 1.33% 1.27% 1.33% Net income before special items* 1.33% 1.29% 1.33% 1.29% RETURN ON AVERAGE COMMON EQUITY (ANNUALIZED): 18.02% Net income 19.54% 19.68% 18.79% 16.80% 18.02% Net income before special items* 19.54% 17.19% 18.79% 17.07% * Based on net income of $212 million in the second quarter of 1997, $207 million in the first quarter of 1997, and $188 million in the second quarter of 1996. CONSOLIDATED NET INTEREST REVENUE AND MARGIN: Net interest revenue, fully taxable $625.0 equivalent basis $620.4 $576.2 $1,245.4 $1,147.1 4.47% Net interest margin 4.38% 4.40% 4.43% 4.40% 4.54% DOMESTIC NET INTEREST MARGIN (ESTIMATED) 4.58% 4.47% 4.56% 4.50% 4.30% INTERNATIONAL NET INTEREST MARGIN (ESTIMATED) 3.83% 4.18% 4.06% 4.09% March 31 June 30 - -------- -------------------- 1997 1997 1996 ---- --------- -------- COMMON STOCKHOLDERS' EQUITY: $4,353 Common stockholders' equity $ 4,166 $ 4,454 151,807 Common shares outstanding, in thousands 147,111 156,681 Per common share: $28.67 Book value $ 28.32 $ 28.42 67.00 Market value 72.38 49.50 CAPITAL RATIOS/REGULATORY CAPITAL: 6.13% Tangible Common Equity ratio 5.78% 6.52% Risk-based capital ratios: Estimate 9.0% Tier 1 capital ratio (minimum required 4.00%) 8.7% 8.6% 13.0% Total capital ratio (minimum required 8.00%) 12.7% 12.7% 7.8% Leverage ratio 7.8% 7.8% $4,838 Tier 1 capital $ 4,920 $ 4,505 7,044 Total capital 7,170 6,649 54,034 Total risk-adjusted assets 56,404 52,417 RESERVE FOR CREDIT LOSSES (dollars in millions) Quarter Ended Quarters Ended Six Months Ended March 31 June 30 June 30 - -------------- ----------------- ------------------ 1997 1997 1996 1997 1996 - -------------- -------- ------- -------- -------- $883.3 Beginning balance $ 864.0 $884.1 $ 883.3 $ 889.2 60.0 Provision for credit losses 60.0 57.1 120.0 114.0 0.0 Reserve of acquired companies 0.0 2.1 0.0 2.1 0.0 Reserves of companies sold 0.0 0.0 0.0 (10.9) (96.7) Credit losses (106.5) (66.6) (203.2) (138.5) 17.4 Recoveries 27.2 17.8 44.6 38.6 - ----- ------- ------ ------- ------- (79.3) Net credit losses (79.3) (48.8) (158.6) (99.9) - ----- ------- ------ ------- ------- $864.0 Ending balance $ 844.7 $894.5 $ 844.7 $ 894.5 ======= ======= ====== ======= ======= Reserve as a % of loans 2.11% and leases 2.00% 2.20% 2.00% 2.20% ======= ======= ====== ======= ======= Reserve as a 218% % of nonaccrual loans 240% 225% 240% 225% ======= ======= ====== ======= ======= RENEGOTIATED LOANS (in millions) 1996 1997 Second Third Fourth First Second Qtr Qtr Qtr Qtr Qtr ------- ---- ----- ----- ------ Renegotiated loans $13 $11 $ 8 $0 $ 0 ====== ===== ===== ===== =====