BankBoston Reports Third Quarter Core Net Income of $195 Million or $.66 Per Share; Excludes Acquisition-Related and Business Realignment Costs.

BOSTON--(BUSINESS WIRE)--Oct. 15, 1998--BankBoston Corporation (NYSE:BKB) reported today third quarter core net income of $195 million, or $.66 per common share on a diluted basis. This compares with $242 million, or $.80 per share, in the second quarter of 1998 and $226 million, or $.73 per share, in the third quarter of 1997.

Actual net income for the third quarter was $105 million, or $.35 per share and included $80 million ($50 million after-tax) of costs associated with the August 31 acquisition of Robertson Stephens and $65 million of charges ($40 million after-tax) related to the realignment of other businesses.

Core net income for the first nine months of 1998 was $675 million, or $2.25 per share, compared with net income for the first nine months of 1997 of $645 million, or $2.04 per share. Actual net income for the first nine months of 1998, which includes the items referred to above, was $585 million, or $1.94 per share.

Operating highlights were as follows (amounts shown for the third quarter of 1998 are before acquisition-related and business realignment costs):

-- On a fully taxable equivalent basis, revenues were $1,035 million in the current quarter compared with core revenues of $968 million in the third quarter of 1997. Revenues for the third quarter of 1998 included $52 million of trading account losses compared with $20 million of profits in the third quarter of last year. This $72 million decline in trading account profits resulted in a $.15 decline in earnings per share and was the principal factor in the reduction of operating income (pre-tax income before provision for credit losses) to $374 million from $423 million a year ago;

-- Compared with the third quarter of 1997, operating income from the Corporation's businesses in Argentina and Brazil improved by more than 50%;

-- Provision for credit losses was $60 million in the third quarter compared with net credit losses in the quarter of $59 million. The provision in the third quarter of 1997 was $40 million compared with net credit losses of $61 million. Nonaccrual loans and OREO totaled $395 million at September 30, 1998, compared with $387 million at September 30, 1997;

-- Return on average common equity was 16.29% in the third quarter compared with 21.11% in the third quarter of 1997. Return on average assets was 1.07% in the third quarter compared with 1.36% in the third quarter of 1997. The declines in returns were mainly driven by trading account losses incurred during the third quarter of 1998 as discussed above.

Acquisition-related and business realignment costs

-- The Corporation incurred approximately $80 million ($50 million after-tax) of previously announced costs associated with the August 31 acquisition of Robertson Stephens which were principally related to bonus payments due to employees under the acquisition agreement. September operating results for Robertson Stephens were essentially break-even.

-- Nonrecurring charges totaling $65 million ($40 million after-tax) were incurred in connection with the realignment and downsizing of certain businesses. This included $50 million related to the closing of branches in Asia, the downsizing of the Boston-based emerging markets investment banking unit, and the writedown of the Corporation's equity investment in a Korean merchant banking company. As announced yesterday, the Corporation will be closing offices in India, Japan, the Philippines, and Taiwan and will be reducing its staff by approximately 25% in the emerging markets unit. The charges also included $15 million primarily associated with regional banking operations in New England and its related redesign project. These costs include such items as completing the full merger of all New England bank subsidiaries and related systems into one entity, costs related to branch closings, and redesign consulting fees. -0-

The principal factors causing the change in core earnings from
the second quarter are:

 Diluted earnings per share: second quarter 1998                $ .80
 Decline in trading account results from the Boston-based
  high yield and emerging markets desks ($54 million)            (.11)
 Decline in revenue from the Private Equity business
  ($39 million)                                                  (.08)
 Increase in revenue from Argentina and Brazil ($19 million)      .04
 Decline in consolidated core noninterest expense, excluding
  acquisitions of Robertson Stephens and OCA ($12 million)        .03
 Other factors, net                                              (.02)
 Diluted core earnings per share: third quarter 1998            $ .66

-- Trading account results: During the third quarter and as a result of turmoil in global financial markets and illiquidity in the domestic high yield bond market, the Boston-based emerging markets and high yield desks incurred trading account losses totaling $78 million on a pre-tax basis, $54 million worse than the prior quarter (total consolidated pre-tax trading account losses in the third quarter were $52 million as the losses from these two units were partially offset by profits from other areas, including Argentina and Brazil).

-- Private Equity: The decline in revenue was due to a lower level of gains from sales of investments coupled with a lower level of dividend income. While influenced by current economic conditions, the level of revenue from the Private Equity business in the third quarter remained within the range of quarterly revenue performance exhibited over the past two years due to portfolio diversification efforts. Gains are recognized through the income statement only upon exit from an investment. Historically, about one-quarter of investment exits are due to IPOs.

-- Argentina and Brazil: Revenue continued its upward trend in the third quarter mainly as a result of higher net interest revenue, stemming from wider spreads coupled with growth in the Argentine loan portfolio, and an increase in fee income.

-- Noninterest Expense: The decline in consolidated core noninterest expense, excluding the acquisitions of Robertson Stephens and OCA (Uruguayan consumer finance company), was due mainly to a drop in incentive compensation caused by lower levels of market sensitive revenue. This was partially offset by higher levels of expenses from Argentina and Brazil primarily due to increased branch expansion costs.

Chad Gifford, Chairman and Chief Executive Officer, said, "The last weeks and months have witnessed remarkable turmoil in world financial markets. This has obviously put pressure in the third quarter on our domestic-based market-oriented businesses, particularly trading. Part of this impact has been offset by the contribution of our Argentine and Brazilian units which continue to perform quite well in volatile settings."

Gifford added, "Today's environment demands relentless focus and execution. We will continue to take forceful actions as we recently did in our Asian and Boston-based emerging markets businesses so that we can focus on our competitively advantaged activities and reduce the level of earnings volatility. The earlier announced divestitures of our institutional custody and Berkshire county businesses should both close in the fourth quarter and generate some gains for us. We will likewise challenge ourselves on expenses to make sure they are being made in the right areas and are in line with revenues. Our risk management efforts remain focused on stress-testing for varying scenarios and serve as the catalyst for reducing exposures where warranted."

Gifford concluded, "We bring a healthy respect towards the uncertainty prevailing in the current operating environment and will manage our institution accordingly. Thus, we will balance our expected growth with a vigilant approach to downside risk. Yet we retain a high degree of conviction in the ability of our core businesses to grow earnings per share and create long-term value. We have not altered our strategic direction and will build upon our basic strengths. Our expansion program in Latin America, our ongoing redesign efforts in the New England region, and the addition of Robertson Stephens to our strong corporate bank will be the drivers of future value creation. In each of these areas, we have the brand, expertise, products and proven track record within our targeted customer segments that gives us strong confidence in our franchise."

Noninterest income
The components of noninterest income are as follows:

Second
Quarter                            Third Quarter       Nine Months
1998   (in millions)             1998  1997 Change   1998  1997 Change

$192  Financial service fees    $221  $168  $ 53  $  575 $  462  $113
      Net equity and mezzanine
  84   profits                    54    61    (7)    190    153    37
  32  Mutual fund fees            33    29     4      95     81    14
  41  Personal trust fees         40    37     3     122    107    15
      Other trust and agency
   9   fees                        9     7     2      27     20     7
      Trading profits and
  (4)  commissions               (52)   20   (72)    (22)    67   (89)
      Net foreign exchange
  32   trading profits            35    18    17      96     57    39
      Securities portfolio
  11   gains, net                 17    11     6      53     52     1
  60  Other income                48    29    19     150     88    62
      Writedown of Korean equity
   0   investment                (20)    0   (20)    (20)     0   (20)
      Gain on sale of Fidelity
   0   Acceptance Corp.            0    68   (68)      0     68   (68)
   0  Gain on sale of HomeSide     0     0     0     165      0   165
$457  Total                     $385  $448  $(63) $1,431 $1,155  $276

     -- Changes in financial service fees are detailed below.
     -- Equity and mezzanine profits declined in the third quarter
from the record performance registered in the prior quarter. In the
nine month comparison, profits are running 24% ahead of 1997
reflecting the continued strong performance from the Corporation's
Private Equity business. At September 30, 1998, the Private Equity
portfolio had a carrying value of $1.3 billion compared with
approximately $875 million at September 30, 1997.
     -- Mutual fund fees improved in all comparisons, mainly driven by
higher fees from Latin America and Private Banking. The combined level
of assets under management in Argentina and Brazil was $7.1 billion at
September 30, 1998 compared with $6.0 billion at September 30, 1997.
     -- The increase in personal trust fees from prior year periods
mainly relates to an increase in domestic assets under management.
     -- The third quarter loss in trading account profits and
commissions relates to trading losses incurred by the Boston-based
emerging markets and high yield trading units, partially offset by
profits registered from other areas, including Argentina and Brazil.
The losses from the emerging markets and high yield trading portfolios
mainly reflect the severe volatility that is present in the world
financial markets. These losses were the major factor behind the
declines in trading account profits and commissions in all prior
period comparisons.
     -- Foreign exchange profits improved in all comparisons as the
Corporation continued to benefit from higher customer demand for
products arising out of volatile market conditions.
     -- The increase in securities gains from the second quarter was
due, in part, to higher gains from international operations.
     -- The decline in other income from the second quarter mainly
reflected the absence of a prior quarter gain from the sale of the
Corporation's minority interest in a Mexican pension company. The
comparisons with prior year periods were affected by earnings in 1998
from an investment in bank owned life insurance policies, which was
largely offset by the funding cost for the investment that is included
in net interest revenue, and the absence of an $11 million charge
related to interest rate futures contracts that had been used to hedge
the funding of Fidelity Acceptance Corporation.


The components of financial service fees are as follows:

Second
Quarter                           Third Quarter       Nine Months
1998   (in millions)            1998  1997  Change  1998   1997 Change
       Deposit and ATM-related
$ 76    fees                    $ 78  $ 69   $ 9    $224   $189  $ 35
       Letters of credit and
  19    acceptance fees           21    19     2      59     53     6
       Syndication and agent
  20    fees                      17    22    (5)     51     60    (9)
  12   Other loan-related fees    11    11     0      33     29     4
  65   Other                      94    47    47     208    131    77
$192   Total                    $221  $168   $53    $575   $462  $113

     -- Deposit and ATM-related fees increased in all comparisons due,
in part, to higher fees from Argentine operations, including an
increase from the acquisition of Deutsche Bank Argentina, and an
increase in domestic electronic banking fees.
     -- The totals of other financial service fees for the current
quarter and the first nine months of 1998 are affected by two
acquisitions which closed during the third quarter. Specifically, the
acquisition of Robertson Stephens contributed $20 million, mainly
brokerage and advisory fees, while the acquisition of OCA, a consumer
finance company in Uruguay, contributed $4 million of credit card
fees. Beyond these acquisitions, the increases in all prior period
comparisons were affected by higher levels of underwriting fees and
Latin American credit card fees. In addition, the prior year
comparisons were boosted by an increase in advisory fees.

Net interest revenue

Net interest revenue, on a fully taxable equivalent basis, was $630 million for the third quarter of 1998, compared with $645 million in the prior quarter and $577 million in the third quarter of 1997. Net interest margin was 3.97% for the third quarter of 1998, compared with 4.17% in the second quarter of 1998 and 3.96% in the third quarter of last year. For the first nine months of 1998, net interest revenue on a fully taxable equivalent basis was $1,881 million, compared with $1,822 million in the first nine months of 1997. Net interest margin was 4.07% for the first nine months of 1998, compared with 4.27% for the first nine months of 1997.

The declines in net interest revenue and net interest margin from the prior quarter were affected by several items related to domestic operations including lower levels of dividends from private equity investments, loan fees, and lease residual gains, as well as the redemption of the Corporation's remaining preferred stock, which was replaced by an issuance of floating rate capital securities. Net interest margin was also adversely affected by an increase in low-yielding assets in the Corporation's Section 20 subsidiary related to the acquisition of Robertson Stephens. Partially offsetting these factors were wider spreads in Brazil and Argentina as the Corporation's interest rate positions benefited from volatility in the local markets, and the July 31 acquisition of OCA, a Uruguayan consumer finance company. In addition, net interest revenue benefited from a higher level of average earning loans and one more day in the accrual period.

Compared with prior year periods, net interest revenue increased while net interest margin declined. Net interest revenue was favorably affected by increases in average earning assets, which, excluding the effect of national consumer loans, were up approximately $7 billion in both the quarterly and nine month comparisons. Approximately $4.5 billion of these increases related to average loans and leases mainly reflecting growth in the domestic commercial portfolio and in Argentina. The prior year comparisons of net interest revenue and margin were favorably affected by wider spreads and a higher volume of average earning assets in Brazil. Partially offsetting the improvements in net interest revenue and contributing to the decline in net interest margin were the Corporation's exit from its national consumer businesses and the impact of funding costs associated with an investment in bank owned life insurance policies. The latter was largely offset by the revenue from this investment that is included in noninterest income as discussed previously.

Noninterest expense
The components of noninterest expense are as follows:

Second
Quarter                           Third Quarter       Nine Months
1998 (in millions)             1998  1997 Change  1998    1997  Change
$368   Employee costs          $449  $318  $131  $1,170  $  939  $231
  96   Occupancy & equipment     99    86    13     289     260    29
  22   Professional fees         29    14    15      75      38    37
       Advertising and public
  32    relations                30    25     5      84      73    11
  31   Communications            33    29     4      94      83    11
   8   Goodwill amortization     10     6     4      26      21     5
  90   Other                    136   123    13     356     309    47
$647   Total                   $786  $601  $185  $2,094  $1,723  $371


The principal factors causing the change in noninterest expense from
the second quarter are:

 Noninterest expense: second quarter 1998                      $647
 Increase related to charges for acquisition-related and
  business realignment costs                                    125
 Increase in core expenses from acquired companies
  (Robertson Stephens and OCA)                                   26
 Expense reductions, net                                        (12)
 Noninterest expense: third quarter 1998                       $786

Excluding acquisition-related and business realignment costs and the impact of the Robertson Stephens and OCA acquisitions, noninterest expense declined $12 million from the second quarter. This was mainly due to a decline in incentive compensation related to the lower levels of revenue and a decline in expenses from the regional consumer business. These declines were partially offset by an increase in expenses from Argentina and Brazil due to the ongoing branch expansion programs.

Noninterest expense increased $185 million from the third quarter of 1997 and $371 million in the nine month comparison. These increases were mainly related to the third quarter 1998 charges for acquisition-related and business realignment costs referred to above, the increase in core expenses from acquired companies (Robertson Stephens and OCA), investment spending in Latin America, including de novo expansion costs and the Deutsche Bank Argentina acquisition, and the ongoing buildup of the Corporation's Corporate Banking businesses. In addition, charges incurred in the first quarter of 1998 related to the European, private banking, and regional consumer businesses contributed to the increase in the nine month comparison. Partially offsetting these increases was the absence of expenses from the national consumer businesses and the absence of third quarter 1997 charges related to the regional consumer business for additional conversion costs for BayBanks, the closing of branches and changes to the Connecticut operations.

Credit Profile
Loan and Lease Portfolio

    The segments of the lending portfolio are as follows:
(in millions)             9-30-98  6-30-98  3-31-98  12-31-97 9-30-97
United States Operations:
 Commercial, industrial and
  financial               $18,218  $16,275  $15,887  $15,268  $15,062
 Commercial real estate:
  Construction                209      219      260      271      317
  Other commercial real
   estate                   4,089    3,876    3,736    4,211    3,845
 Consumer-related loans:
  Residential mortgages     2,111    2,229    2,551    2,570    2,720
  Home equity               2,672    2,871    2,802    2,823    2,952
  Credit card                 393      412      503    1,756    1,596
  Other                     2,693    2,753    2,801    2,956    3,118
 Lease financing            1,607    1,609    2,017    1,938    1,880
 Unearned income             (231)    (232)    (303)    (302)    (293)
                           31,761   30,012   30,254   31,491   31,197

International Operations:
 Commercial                10,636   10,218   10,682   10,159    9,261
 Consumer-related loans:
  Residential mortgages     1,383    1,318    1,302      947      893
  Credit card                 339      248      226      182      155
  Other                     1,164    1,087      987      828      678
 Lease financing              652      519      517      452      345
 Unearned Income             (188)    (148)    (146)     (79)     (68)
                           13,986   13,242   13,568   12,489   11,264
Total loans and lease
 financing                $45,747  $43,254  $43,822  $43,980  $42,461

Loans and leases were $45.7 billion at September 30, 1998, compared with $43.3 billion at June 30, 1998. The domestic portfolio grew $1.7 billion due mainly to a higher level of commercial loans as increases were registered by several of the Corporation's lending divisions including Energy & Utilities, Media & Communications, Asset Based Finance, and Environmental Services. In addition, international loans grew $700 million mainly reflecting growth in the Argentine portfolio and the July 31 acquisition of OCA, a consumer finance company in Uruguay.

Included in the September 30 portfolio are direct loan outstandings to hedge funds of $30 million. Subsequent to September 30, this portfolio has been paid down to $5 million.

Nonaccrual Loans and OREO

Nonaccrual loans and OREO amounted to $395 million at September 30, 1998, compared with $382 million at June 30, 1998, and $387 million at September 30, 1997. Nonaccrual loans and OREO represented .9% of related assets at September 30, 1998, June 30, 1998 and September 30, 1997.

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

(in millions)                9-30-98  6-30-98 3-31-98 12-31-97 9-30-97
Domestic nonaccrual loans:
 Commercial, industrial and
  financial                     $ 71   $ 63     $ 43    $ 59    $ 68
 Commercial real estate:
  Construction                     2      2        3       3       4
  Other commercial real estate    30     33       41      40      44
 Consumer-related loans:
  Residential mortgages           36     42       46      50      51
  Home equity                     18     15       15      14      26
  Credit card                      6      6        6      26      22
  Other                           21     18       20      20      23
                                 184    179      174     212     238
International nonaccrual loans:
 Commercial                      103    107       97      64      58
 Consumer-related loans:
  Residential mortgages           39     36       34      28      31
  Credit card                      7      6        4       4       3
  Other                           33     26       18      12       7
                                 182    175      153     108      99
  Total nonaccrual loans         366    354      327     320     337
OREO                              29     28       42      36      50
  Total                         $395   $382     $369    $356    $387

Provision and Reserve for Credit Losses

The reserve for credit losses at September 30, 1998 was $740 million, or 1.62% of outstanding loans and leases, compared with $734 million, or 1.70% at June 30, 1998, and $729 million, or 1.72% at September 30, 1997. The reserve for credit losses was 202% of nonaccrual loans at September 30, 1998, compared with 207% at June 30, 1998 and 216% at September 30, 1997.

The provision for credit losses was $60 million in the third and second quarters of 1998, compared with $40 million in the third quarter of 1997.

Net credit losses were $59 million in the third quarter of 1998, compared with $51 million in the second quarter of 1998 and $61 million in the third quarter of 1997. Net credit losses as a percent of average loans and leases on an annualized basis were .52% in the third quarter of 1998, compared with .46% for the second quarter of 1998 and .57% for the third quarter of 1997.

    Net credit losses were as follows:

Second
Quarter                              Third Quarter     Nine Months
1998 (in millions)                   1998     1997     1998      1997
     Domestic
     Commercial, industrial
$ 5   and financial                 $ 9      $ 2      $ 28      $ 25
 (1) Commercial real estate          (1)      (2)       (3)       (5)
     Consumer-related loans:
  1   Residential mortgages           1        1         4         2
  6   Credit card                     6       24        31        67
  1   Home equity                     1        2         4         6
 11   Other                          13       12        43        81
 23                                  29       39       107       176
     International
 13   Commercial                      7       15        96        25
      Consumer-related loans:
  2    Credit card                    6        3        10         6
 13    Other                         17        4        38        12
 28                                  30       22       144        43
$51    Total                        $59      $61      $251      $219

The Corporation

BankBoston, with assets of $73.8 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.

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 general economic conditions, both domestic and international, including the impact of the Asian economic crisis on the economies of the United States, Latin American countries and other countries in which the Corporation does business; (2) the impact of market and economic conditions on debt, equity and emerging markets and trade-related revenues; (3) sharp changes in credit quality, interest rates and foreign exchange rates; and (4) the Corporation's ability and resources, in both its domestic and international operations, to execute its articulated business strategies and manage risks associated with integration of acquisitions, expansion plans, the Year 2000 issue, the business redesign initiative and the introduction of the euro.

                      Consolidated Balance Sheet

(dollars in millions)
June 30                                                 September 30
   1998                                                1998      1997
       Assets
        Securities:
$11,142   Available for sale                        $ 11,910  $  9,442
    604   Held to maturity                               594       637

 43,254  Loans and lease financing                    45,747    42,461
   (734) Reserve for credit losses                      (740)     (729)
 42,520  Net loans and lease financing                45,007    41,732

  5,704  Other earning assets                          4,401     6,901
 10,529  Cash and other nonearning assets             11,922     9,518
$70,499   Total Assets                              $ 73,834  $ 68,230

         Liabilities and Stockholders' Equity
$45,196   Deposits                                  $ 46,420  $ 44,655
 12,507   Funds borrowed                              13,214    12,585
  3,682   Notes payable                                4,436     2,781
  3,139   Other liabilities                            4,054     3,080
          Guaranteed preferred beneficial interests
           in Corporation's junior subordinated
    995    debentures                                    995       747
 65,519    Total Liabilities                          69,119    63,848

         Stockholders' Equity
    278   Preferred equity                                  0      278
  4,702   Common equity                                 4,715    4,104
  4,980   Total Stockholders' Equity                    4,715    4,382
$70,499   Total Liabilities and Stockholders' Equity $ 73,834 $ 68,230



                      Selected Average Balances

Quarter
  Ended                              Quarters Ended  Nine Months Ended
June 30                                September 30    September 30
   1998                                1998    1997    1998    1997
        Assets
$44,196  Loans and lease financing    $45,069 $42,429 $44,328 $42,093
 11,188  Securities                    11,692   9,661  11,166   9,471
 61,961  Total earning assets          62,869  57,769  61,781  57,085
 71,236  Total assets                  72,501  65,704  71,139  64,292

        Liabilities and Stockholders'
          Equity
 37,195  Interest bearing deposits     37,334  35,098  37,230  34,616
  8,209  Noninterest bearing deposits   7,205   7,891   8,005   7,766
 45,404   Total deposits               44,539  42,989  45,235  42,382
  4,392  Notes payable(1)               5,149   3,336   4,435   3,334
         Total interest bearing
 54,641   liabilities                  56,906  50,801  54,934  49,522
  4,600  Common stockholders' equity    4,734   4,080   4,576   4,218
  4,878  Total stockholders' equity     4,772   4,548   4,773   4,713

(1) Amounts include guaranteed beneficial interests in Corporation's
junior subordinated debentures.



                   Consolidated Statement of Income

(dollars in millions, except per share amounts)
 Quarter
   Ended                             Quarters Ended  Nine Months Ended
 June 30                              September 30      September 30
    1998                             1998     1997     1998     1997

$1,390.2  Interest income          $1,409.6 $1,266.8 $4,137.2 $3,822.5
   750.7  Interest expense            784.7    695.7  2,269.5  2,015.5
   639.5   Net interest revenue       624.9    571.1  1,867.7  1,807.0
          Provision for credit
    60.0   losses                      60.0     40.0    260.0    160.0
           Net interest revenue
            after provision for
   579.5    credit losses             564.9    531.1  1,607.7  1,647.0
          Noninterest income:
   191.7   Financial service fees     220.6    168.4    575.0    461.7
    82.1   Trust and agency fees       82.3     72.8    243.7    208.2
           Trading profits and
    (3.7)   commissions               (52.1)    19.9    (21.6)    67.0
           Securities portfolio
    11.4    gains, net                 16.6     11.3     52.8     52.0
   175.9   Other income               117.7    175.8    581.7    365.8
   457.4    Total noninterest income  385.1    448.2  1,431.6  1,154.7
          Noninterest expense:
   305.1   Salaries                   384.4    263.8    982.2    781.6
    63.3   Employee benefits           64.1     54.0    188.3    158.0
    55.8   Occupancy expense           58.3     49.6    168.5    152.5
    39.6   Equipment expense           40.8     36.1    120.6    107.6
   183.6   Other expense              238.0    197.8    634.5    523.7
            Total noninterest
   647.4     expense                  785.6    601.3  2,094.1  1,723.4

          Income before income
   389.5   taxes                      164.4    378.0    945.2  1,078.3
           Provision for income
   147.6    taxes                      59.4    152.3    360.0    433.8
$  241.9  NET INCOME               $  105.0 $  225.7 $  585.2 $  644.5

         Net Income Per Common Share:
    $.81  Basic                        $.35     $.75    $1.96    $2.07
    $.80  Diluted                      $.35     $.73    $1.94    $2.04
         Dividends Paid Per Common
    $.29  Share                        $.29     $.26    $ .87    $ .73

         Average number of common shares,
          in thousands:
 293,769  Basic                     294,379  290,766  293,570  297,750
 298,275  Diluted                   296,361  295,684  296,050  303,148

    $4.4  Preferred dividends          $ .7     $8.6    $ 9.4    $27.2



                         Number of Employees

                            Sept. 30 1998  June 30 1998  Sept. 30 1997

Full time equivalent employees   24,800       22,900         21,200




                              Other Data

(dollars in millions, except per share amounts)
 Quarter
   Ended                             Quarters Ended  Nine Months Ended
 June 30                              September 30      September 30
    1998                              1998    1997      1998     1997
        Return on average total assets
         (annualized):
         Based on actual net
  1.36%   income                       .57%   1.36%     1.10%    1.34%
  1.36%  Based on core net income     1.07%   1.36%     1.27%    1.34%
        Return on average common
          equity (annualized):
 20.70%  Based on actual net income   8.75%  21.11%    16.82%   19.56%
 20.70%  Based on core net income    16.29%  21.11%    19.45%   19.56%

        Net interest revenue, fully
 $644.9   taxable equivalent basis  $629.6  $576.5  $1,881.4 $1,822.0
        Consolidated net interest
  4.17%  margin                       3.97%   3.96%     4.07%    4.27%
        Domestic net interest margin
  4.12% (estimated)                   3.75%   4.01%     4.00%    4.37%
        International net interest
  4.29%  margin (estimated)           4.47%   3.83%     4.23%    3.98%


 June 30                                              September 30
    1998                                             1998       1997
          Common stockholders' equity:
$  4,702  Common stockholders' equity               $ 4,715   $ 4,104
 294,126  Common shares outstanding, in thousands   294,596   144,535
          Per common share:
$   15.99  Book value                               $ 16.01   $ 14.20
    55.63  Market value                               33.00     44.22

          Capital ratios/regulatory capital:
    6.09% Tangible common equity ratio                 5.38%     5.56%
          Risk-based capital ratios:               Estimate
          Tier 1 capital ratio
     8.4%  (minimum required 4.00%)                     7.0%      7.8%
          Total capital ratio
    13.0%  (minimum required 8.00%)                    11.3%     11.7%
     7.8% Leverage ratio                                6.8%      7.2%
$  5,491  Tier 1 capital                            $ 4,906   $ 4,626
   8,524  Total capital                               7,902     6,930
  65,351  Total risk-adjusted assets                 69,916    59,079



                      Reserve for Credit Losses

(dollars in millions)
Quarter
  Ended                             Quarters Ended   Nine Months Ended
June 30                              September 30       September 30
  1998                               1998     1997     1998     1997
$725.1  Beginning balance          $ 733.9  $ 844.7  $ 711.6  $ 883.3

  60.0  Provision for credit losses   60.0     40.0    260.0    160.0
        Reserve of acquired
   0.0   companies                     5.0      0.0     19.1      0.0
   0.0  Reserves of companies sold     0.0    (94.7)     0.0    (94.7)

 (73.4) Credit losses                (78.8)   (80.0)  (308.5)  (283.2)
  22.2  Recoveries                    19.9     19.1     57.8     63.7
 (51.2) Net credit losses            (58.9)   (60.9)  (250.7)  (219.5)

$733.9  Ending balance             $ 740.0  $ 729.1  $ 740.0  $ 729.1

        Reserve as a % of loans and
  1.70%  leases                       1.62%    1.72%    1.62%    1.72%

        Reserve as a % of nonaccrual
   207%  loans                         202%     216%     202%     216%