BankBoston reports Q1'97 net income of $207MM or $1.27 per share; Dividend increased 16% to 51 cents.

BOSTON--(BUSINESS WIRE)--April 17, 1997--

12% growth in EPS from prior year

Bank of Boston Corporation ("BankBoston"; NYSE: "BKB") reported today first quarter net income of $207 million, or $1.27 per common share on a fully diluted basis compared with net income for the first quarter of 1996 of $186 million, or $1.13 per share, before special items related to the sale of the mortgage banking subsidiary ($155 million, or $.93 per share, including these special items). Net income for the fourth quarter of 1996 was $202 million, or $1.24 per share.

Operating highlights were (amounts shown are before special items):

-- On a fully taxable equivalent basis, operating income (before credit costs) was $413 million in the first quarter, compared with $410 million in the prior quarter and $381 million in the first quarter of 1996;

-- Return on average common equity was 18.02% in the first quarter compared with 17.71% in the prior quarter and 16.96% in the first quarter of 1996;

-- Return on average assets was 1.33% in the first quarter, 1.31% in the prior quarter and 1.28% in the first quarter of 1996;

-- Nonaccrual loans and OREO totaled $445 million at March 31, 1997, compared with $452 million at December 31, 1996 and $449 million at March 31, 1996. Net credit losses were $79 million in the first quarter compared with $75 million in the prior quarter and $51 million in the first quarter of 1996.

The Board of Directors approved an increase in the Corporation's quarterly dividend on common stock to 51 cents per share from 44 cents per share. The dividend is payable on May 30 to stockholders of record on May 5.

Chad Gifford, Chief Executive Officer, said, "Our momentum is carrying over into 1997 as demonstrated by our first quarter results. Our operating performance continued to be marked by top line growth as operating income levels have steadily risen. We are especially encouraged by our ability to produce double-digit earnings growth and ongoing return improvement. The increase in the common dividend reflects our commitment to improving shareholder returns and our emphasis remains on value creation by focusing on our strengths."

Henrique Meirelles, President and Chief Operating Officer, said, "The initiatives announced this year alone provide strong evidence of our value creation efforts. We launched our Section 20 subsidiary that expands our ability to comprehensively serve our important corporate banking relationships. Our integration with BayBanks is heading into its final stages bringing us closer to delivering an exciting new retail platform to our New England customers and, in Latin America, we are continually expanding our branch and sales points to capitalize on our strengths in these high growth markets. The common denominator in many of our efforts is to carve out greater synergies between our domestic and global businesses, especially in areas such as asset management, capital markets, and convenience banking."

William J. Shea, Vice Chairman and Chief Financial Officer, said, "Disciplined capital management is critical to our progress and our recently announced share repurchase program provides us with greater flexibility in this regard. Our primary uses of capital continue to be the funding of business development and attractive acquisitions, and the pace of our repurchase program will depend principally on these activities. Our agreement to sell Ganis Credit Corp. will free up capital for other growth areas and is consistent with our stated intent to rationalize our national consumer business. Our return on equity has improved by over 100 basis points to 18% in the past year, reflecting our objective to generate top tier returns in our industry."

Noninterest income

The components of noninterest income are as follows:

Fourth
Quarter                                      First Quarter
1996   (in millions)                         1997    1996    Change
$147   Financial service fees                $138    $163    $(25)
  45   Net equity and mezzanine profits        37      37       0
  25   Mutual fund fees                        25      21       4
  34   Personal trust fees                     34      32       2
   6   Other trust and agency fees              7       4       3
  17   Trading profits and commissions         19      13       6
  17   Net foreign exchange trading profits    19      13       6
       Securities portfolio gains, net
   7    (before valuation charges in Q4 '96)    9      13      (4)
  31   Other income                            42      40       2
  11   Other items                              0       0       0
 340   Subtotal                               330     336      (6)

        Mortgage banking related items,
   0     net (details on following page)        0     (51)     51
$340    Total                                $330    $285     $45

-0-

-- Changes in financial service fees are detailed below. The decline from the first quarter of 1996 was greatly influenced by the sale of the Corporation's mortgage banking subsidiary in March 1996.

-- Equity and mezzanine profits declined from the fourth quarter of 1996 and were flat with the prior year. The Corporation continues to make new investments and the portfolio balance has grown over $200 million since the beginning of 1996.

-- Mutual fund fees were flat with the fourth quarter of 1996 and improved $4 million from the prior year. The increase from the prior year was due, in part, to higher levels of funds under management in Brazil. These funds stood at $4.1 billion at March 31, 1997 compared with $3.0 billion a year earlier.

-- The increase in personal trust and other trust and agency fees from the first quarter of last year reflected a higher level of assets under management and higher custody fees, respectively.

-- Trading account profits and commissions improved in both comparisons driven mainly by a higher level of profits from Brazil.

-- The growth in foreign exchange profits from the prior periods reflected the Corporation's increased emphasis in this segment of its Global Capital Markets business.

-- The combination of other income and other items was flat with the prior quarter. Other income in the first quarter of 1997 included gains from the sale of consumer loans and a higher level of income from the Corporation's Argentine pension management and mortgage banking joint ventures, which included the effect of the recently completed initial public offering by HomeSide, Inc. Amounts included within other items in the fourth quarter of 1996 were as follows: (1) a gain of $47 million from the previously announced sale of twenty branches to US Trust, which involved the transfer of approximately $700 million of deposits and $500 million of loans, (2) a charge of $25 million from the transfer of approximately $400 million of commercial real estate loans into a held for sale account as part of the Corporation's balance sheet management program, and (3) valuation-related charges of $11 million associated with certain investments.

The components of financial service fees are as follows: -0-

Fourth
Quarter                                      First Quarter
1996   (in millions)                          1997    1996    Change
$ 59   Deposit and ATM-related fees           $57     $59      $(2)
  17   Letters of credit and acceptance fees   17      17        0
  21   Syndication and agent fees              14      10        4
  10   Other loan-related fees                  9      11       (2)
       Net mortgage servicing fees (before
   0    items detailed below)                   0      22      (22)
  40   Other                                   41      44       (3)
$147   Total                                 $138    $163     ($25)

-0-

-- Deposit and ATM-related fees declined in both comparisons due, in part, to the fourth quarter sale of branches to US Trust.

-- Syndication and agent fees declined from the unusually high level of income attained during the fourth quarter of 1996. The increase from the prior year reflected 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.

-- The decline in other financial service fees from the prior year is mainly due to lower levels of credit insurance and advisory fees.

Mortgage banking-related special items included in the first quarter of 1996 were as follows: -0-

     (in millions)
    Sale of mortgage subsidiary                       $  60
    Contracts used to manage prepayment risk, net      (111)
       Total                                          $ (51)

-0-

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 $625 million for the first quarter of 1997, compared with $616 million in the prior quarter and $571 million in the first quarter of 1996. Net interest margin was 4.47% for the first quarter of 1997 and the fourth quarter of 1996, compared with 4.40% in the first quarter of last year.

The $9 million increase in net interest revenue from the prior quarter reflected a growth in average earning assets of approximately $2 billion, higher levels of dividends from UK and Argentine equity investments, interest recoveries on loans, and wider spreads from the credit card business as the "promotional rate" period expired on additional loans in the portfolio. These factors were partially offset by the full quarter impact of the sale of approximately $700 million of retail deposits to US Trust, which occurred in the fourth quarter, and fewer days in the first quarter. Net interest margin was flat compared with the fourth quarter. The favorable impact of the equity dividends, interest recoveries, and wider credit card spreads served to offset a decline in margin from the US Trust sale and the aforementioned growth in average earning assets. The latter stemmed from an increase in various categories of treasury assets, mainly investment securities, as the Corporation sought to invest a portion of its excess capital in productive assets.

Compared with the prior year, net interest revenue and margin each improved. Contributing to the increase in net interest revenue were higher levels of average earning assets, which increased by over $4 billion, including an increase of $2.6 billion in average loans and leases. Increases in domestic commercial and consumer loans coupled with growth in the Latin American portfolio were partially offset by a decline in residential mortgages, which reflected sales that took place during 1996. The equity dividends and interest recoveries discussed above were also factors in the net interest revenue increase and were the main reasons for the improvement in net interest margin.

Noninterest expense

The components of noninterest expense are as follows:

-0-

Fourth
Quarter                                     First Quarter
1996   (in millions)                        1997    1996    Change
$299   Employee costs                       $310    $293     $17
  87   Occupancy & equipment                  86      85       1
  14   Professional fees                      12      13      (1)
  24   Advertising and public relations       22      27      (5)
  27   Communications                         26      26       0
   7   Goodwill amortization                   7       5       2
  88   Other                                  79      76       3
 546   Subtotal before OREO costs            542     525      17
   2   OREO costs                              2       2       0
$548   Total                                $544    $527     $17

-0-

Noninterest expense before OREO costs was $542 million in the first quarter of 1997, compared with $546 million in the prior quarter and $525 million for the same quarter in 1996.

The $4 million decrease from the fourth quarter was partly due to a lower level of expenses from the Regional Consumer business, including additional cost savings from the BayBanks integration. In addition, there were declines in various non-employee cost categories including professional fees, advertising, travel and litigation costs. These declines were partially offset by an increase in employee costs which reflected, in part, higher incentive compensation, an increase in expenses from Brazil caused by branch expansion and increased levels of payroll taxes, and Millennium Project ("Year 2000") costs. Incentive compensation in the fourth quarter included the effect of a $6 million charge associated with a performance restricted stock plan for certain employees.

Compared with first quarter of 1996, the growth in noninterest expense reflected ongoing expansion and investment spending in several of the Corporation's growth businesses, mainly Latin America and capital markets. Initiatives in these businesses included branch expansion and growth in fee-based businesses in Latin America and the start up of a Section 20 subsidiary and the hiring of sales/trading professionals in all capital markets businesses. Current year expense levels also included higher incentive compensation costs related to improved business unit performance. These increases were partially offset by cost savings achieved from the BayBanks integration.

Credit Profile

Loan and Lease Portfolio

The segments of the lending portfolio are as follows:

-0-

(in millions)            3-31-97  12-31-96   9-30-96  6-30-96  3-31-96
United States Operations:
 Commercial, industrial
  and financial          $14,203   $13,162   $13,828  $12,915  $12,677
 Commercial real estate
  Construction               265       284       323      410      383
  Other commercial real
   estate                  3,129     3,240     3,228    3,326    3,242
 Consumer-related loans:
  Residential mortgages    3,067     3,184     4,156    4,133    4,218
  Home equity loans        2,908     2,878     2,842    2,775    2,644
  Credit card              1,404     1,395     1,320    1,223      810
  Other                    4,708     5,503     5,349    5,218    5,200
 Lease financing           1,766     1,816     1,778    1,627    1,565
 Unearned income            (275)     (287)     (272)    (245)   (240)
                          31,175    31,175    32,552   31,382   30,499
International Operations:
 Loans and lease financing,
 net of unearned income    9,844     9,886     9,501    9,271    8,769
Total loans and lease
 financing               $41,019   $41,061   $42,053  $40,653  $39,268

-0-

Loans and leases were approximately $41 billion at March 31, 1997 and December 31, 1996. Growth in the domestic commercial, industrial and financial category, which was driven by increases in various corporate banking businesses, was offset by lower levels of domestic commercial real estate and consumer loans reflecting loan sales which occurred during the first quarter.

Nonaccrual Loans and OREO

Nonaccrual loans and OREO amounted to $445 million at March 31, 1997, compared with $452 million at December 31, 1996, and $449 million at March 31, 1996. Nonaccrual loans and OREO represented 1.1% of related assets at March 31, 1997, December 31, 1996 and March 31, 1996.

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

-0-

(in millions)            3-31-97  12-31-96  9-30-96  6-30-96  3-31-96
Domestic nonaccrual
 loans:
 Commercial, industrial
  and financial            $72       $82     $114      $140     $93
 Commercial real estate
  Construction               4         6        9        10      22
  Other commercial real
   estate                   47        67       84        86     102
 Consumer-related loans
  Residential mortgages     65        57       60        45      46
  Home equity loans         25        23       22        20      16
  Credit card               23        17        5         2       0
  Other                     41        44       44        38      42
                           277       296      338       341     321
International nonaccrual
 loans                     119       106      106        57      63
  Total nonaccrual loans   396       402      444       398     384
OREO                        49        50       52        62      65
  Total                   $445      $452     $496      $460    $449

-0-

Provision and Reserve for Credit Losses

The reserve for credit losses at March 31, 1997 was $864 million, or 2.11% of outstanding loans and leases, compared with $883 million, or 2.15% at December 31, 1996, and $884 million, or 2.25% at March 31, 1996. The reserve for credit losses was 218% of nonaccrual loans at March 31, 1997, 220% at December 31, 1996, and 230% at March 31, 1996.

The provision for credit losses was $60 million in the first quarter of 1997 and the fourth quarter of 1996 compared with $57 million in the first quarter of 1996.

Net credit losses were $79 million for the first quarter of 1997, compared with $75 million (including $15 million related to the transfer of commercial real estate loans into a held for sale account) for the prior quarter and $51 million for the comparable period last year. Net credit losses as a percent of average loans and leases on an annualized basis were .77% in the first quarter of 1997, compared with .71% for the fourth quarter of 1996 and .52% for the first quarter of 1996.

Net credit losses were as follows: -0-

Fourth
Quarter                              First Quarter
1996   (in millions)                 1997     1996
       Domestic
       Commercial, industrial
$ 3     and financial                $18      $ 3
 16    Commercial real estate (A)      0       11
       Consumer-related loans:
  2     Residential mortgages          1        4
 13     Credit card                   19        3
  3     Home equity loans              2        2
 26     Other                         35       23
 63                                   75       46
 12    International                   4        5
$75     Total                        $79      $51

-0-

(A) The fourth quarter commercial real estate total includes $15 million associated with the transfer of loans into a held for sale category.

The Corporation

BankBoston, with assets of $64.8 billion, was founded in 1784. BankBoston is engaged primarily in consumer banking in southern New England, providing financing and capital markets services 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 650 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. -0-

                        Consolidated Balance Sheet
(dollars in
 millions)
December 31                                           March 31
   1996                                     1997        1996
            Assets
            Securities:
$   680      Held to maturity               $692     $   699
  7,804      Available for sale            9,082       7,280

 41,061      Loans and lease financing    41,019      39,268
   (883)     Reserve for credit losses      (864)       (884)
              Net loans and lease
 40,178        financing                  40,155      38,384
  4,729      Other earning assets          5,755       4,500
             Cash and other nonearning
  8,915       assets                       9,096       7,152
$62,306       Total Assets               $64,780     $58,015

            Liabilities and
            Stockholders' Equity
$42,831      Deposits                    $42,307     $41,349
  9,158      Funds borrowed               11,838       7,635
  2,821      Notes payable                 2,708       2,499
  2,062      Other liabilities             2,566       1,846
             Guaranteed preferred
             beneficial interest in
             corporation's junior
    500      subordinated debt               500           0
 57,372      Total Liabilities            59,919      53,329

            Stockholders' Equity
    508      Preferred equity                508         508
  4,426      Common equity                 4,353       4,178
  4,934       Total Stockholders' Equity   4,861       4,686
             Total Liabilities and
$62,306        Stockholders' Equity      $64,780     $58,015

                           Selected Average Balances

Quarter Ended                                    Quarters Ended
December 31                                            March 31
  1996                                        1997       1996
             Assets
$41,835       Loans and lease financing    $41,732      $39,179
  8,029       Securities                     9,261        8,143
 54,819       Total earning assets          56,641       52,172
 61,056       Total assets                  63,224       58,587
             Liabilities and
             Stockholders' Equity
 34,739       Interest bearing deposits     34,349       33,547
  7,292       Noninterest bearing deposits   7,550        7,085
 42,031        Total deposits               41,899       40,632
  2,983       Notes payable                  3,316        2,421
              Total interest bearing
 47,079        liabilities                  48,531       45,029
  4,317       Common stockholders' equity    4,444        4,198
  4,825       Total stockholders' equity     4,952        4,706

-0-
                              Number of Employees

                                   March 31     Dec 31    Mar 31
                                     1997        1996      1996
Full time equivalent employees     22,000       22,000    22,400


-0-

                  Consolidated Statement of Income

(dollars in millions, except per share amounts)
Quarter Ended                                       Quarters Ended
December 31                                             March 31
  1996                                        1997         1996
$1,250.1   Interest income                 $1,275.0     $1,240.3
   638.9   Interest expense                   655.0        674.8
   611.2    Net interest revenue              620.0        565.5
    60.0   Provision for credit losses         60.0         56.9
            Net interest revenue after
   551.2     provision for credit losses      560.0        508.6
           Noninterest income:
   146.6    Financial service fees            137.5         51.6
    65.0    Trust and agency fees              66.0         57.4
    17.2    Trading profits and commissions    19.3         12.9
     (.8)   Securities portfolio gains, net     8.8         13.4
   111.5    Other income                       98.1        149.9
   339.5     Total noninterest income         329.7        285.2
            Noninterest expense:
   254.5     Salaries                         257.7        240.8
    44.4     Employee benefits                 52.7         52.2
    50.6     Occupancy expense                 50.8         51.1
    36.2     Equipment expense                 35.6         34.3
   160.4     Other expense                    145.9        147.0
   546.1      Subtotal                        542.7        525.4
     1.8     OREO costs                         1.5          1.5
   547.9      Total noninterest expense       544.2        526.9

   342.8    Income before income taxes        345.5        266.9
   141.3     Provision for income taxes       138.7        112.0
  $201.5    NET INCOME                       $206.8       $154.9

            Net Income Per Common Share:
   $1.26     Primary                         $1.29          $.94
   $1.24     Fully diluted                   $1.27          $.93
    $.44     Dividends Paid Per Common Share  $.44          $.37

            Average number of common
             shares, in thousands:
 152,975     Primary                       153,421       154,988
 155,157     Fully diluted                 155,592       156,844

    $9.4     Preferred dividends              $9.3          $9.3

-0-

                           Other Data

(dollars in millions, except per share amounts)

Quarter Ended                                         Quarters Ended
December 31                                              March 31
 1996                                        1997          1996

          Earnings per share before
           special items (A):
 $1.26     Primary                          $1.29         $1.14
 $1.24     Fully diluted                    $1.27         $1.13

          Return on average total
           assets (annualized):
  1.31%    Net income                        1.33%         1.06%
           Net income before special
  1.31%     items (A)                        1.33%         1.28%

          Return on average common
           equity (annualized):
 17.71%    Net income                       18.02%        13.94%
           Net income before special
 17.71%     items (A)                       18.02%        16.96%

          (A) First quarter 1996 amounts exclude items
          related to the sale of the mortgage banking
          subsidiary.


          Consolidated net interest revenue and margin:
           Net interest revenue, fully taxable
$616.5      equivalent basis               $625.0        $570.9
  4.47%    Net interest margin               4.47%         4.40%

          Domestic net interest margin
  4.65%    (estimated)                       4.54%         4.53%
          International net interest
  3.97%    margin (estimated)                4.30%         3.99%


Dec. 31                                                 Mar. 31
 1996                                        1997         1996
          Common stockholders' equity:
 $4,426   Common stockholders' equity      $4,353        $4,178
          Common shares outstanding,
153,173    in thousands                   151,807       153,935
          Per common share:
 $28.89    Book value                      $28.67        $27.14
  64.25    Market value                     67.00         49.63

          Capital Ratios/Regulatory capital:
   6.49%  Tangible Common Equity ratio       6.13%         6.63%
          Risk-based capital ratios:       Estimate
            Tier 1 capital ratio (minimum
    9.2%     required 4.00%)                  8.9%          8.7%
            Total capital ratio (minimum
   13.6%     required 8.00%)                 13.0%         12.9%
    8.2%   Leverage ratio                     7.7%          7.4%
 $4,954    Tier 1 capital                  $4,838        $4,296
  7,291    Total capital                    7,045         6,402
 53,583    Total risk-adjusted assets      54,093        49,476

-0-

                    Reserve for Credit Losses
(dollars in millions)
Quarter Ended                                       Quarters Ended
December 31                                            March 31
 1996                                        1997         1996
$896.7     Beginning balance                $883.3       $889.2

  60.0     Provision for credit losses        60.0         56.9
   1.5     Reserve of acquired companies       0.0          0.0
   0.0     Reserves of companies sold          0.0        (10.9)

 (98.1)    Credit losses                     (96.7)       (71.9)
  23.2     Recoveries                         17.4         20.8
 (74.9)     Net credit losses                (79.3)       (51.1)

$883.3     Ending balance                   $864.0       $884.1

           Reserve as a % of loans
  2.15%     and leases                        2.11%        2.25%

           Reserve as a % of
   220%     nonaccrual loans                   218%         230%


Renegotiated Loans

                                                   1996     1997
                         First   Second   Third   Fourth   First
                          Qtr     Qtr      Qtr      Qtr     Qtr

Renegotiated loans       $28      $13      $11      $8      $0

CONTACT: BankBoston

Investor Relations contact:

John Kahwaty [phone]

or

Media contact:

Karen Schwartzman [phone]