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CONTINENTAL BANK REPORTS FOURTH-QUARTER EARNINGS OF $50 MILLION; NET LOSS OF $76 MILLION FOR THE YEAR

 CONTINENTAL BANK REPORTS FOURTH-QUARTER EARNINGS OF $50 MILLION;
 NET LOSS OF $76 MILLION FOR THE YEAR
 CHICAGO, Jan. 16 /PRNewswire/ -- Continental Bank Corporation (NYSE: CBK) today reported net income of $50 million, or $0.77 per common share, for the fourth quarter of 1991, compared with $35 million, or $0.46 per common share, for the same period last year. The increase resulted primarily from a lower provision for credit losses and lower operating expenses. Return on common equity was 14.7 percent.
 "This is a promising finish to a year in which we completed our restructuring," said Continental Chairman Thomas C. Theobald. "Despite the economic climate and our getting out of some businesses, banking product revenues increased, operating expenses are about where we want them, and nonperforming assets came down during the quarter."
 For the full year 1991, Continental reported a net loss of $76 million, or $2.08 per common share, compared with net income of $75 million, or $0.70 per common share, in 1990. The current year's loss from continuing operations was $73 million, or $2.03 per common share, compared with income of $88 million, or $0.95 per common share, last year. A sharply higher provision for credit losses in 1991 more than offset the progress made in reducing operating costs and increasing total revenues.
 Banking Product Revenues Increase Slightly
 Banking product revenues exceeded the 1990 levels, despite the lingering slow economy and Continental's restructuring which included exiting the primary dealership in U.S. Government securities and closing or downsizing several international offices. These revenues in the fourth quarter of 1991 increased 2 percent from a year ago, and full- year revenues were up 7 percent. Banking product revenues include management's internal allocations of funding costs.
 CONTINENTAL BANK CORPORATION
 ($ in millions)
 Periods ended: Fourth Quarter Full Year
 1991 1990(A) 1991(A) 1990(A)
 Corporate finance $128 $143 $467 $487
 Specialized financial services 72 65 278 264
 Trading 22 30 107 125
 Equity investments 29 9 115 29
 Total banking product revenues 251 247 967 905
 All other (8) (1) (18) 29
 Total revenues $243 $246 $949 $934
 (A) -- Prior-period revenues have been restated to conform to the current period's presentation.
 Corporate finance revenues include lending, syndication and distribution. These revenues decreased 10 percent from the fourth quarter of 1990. Improved interest-rate spreads in the fourth quarter of 1991 were offset by a lower level of earning assets. Additionally, write-downs of other nonperforming assets and decreased advisory, syndication and other fees reduced financing revenues. Also, the 1990 fourth quarter included deferred gains of $10 million from the disposition of certain less-developed countries' (LDC) debt.
 Revenues from specialized financial services rose 11 percent from the year-ago quarter, due to increased cash management, securities services, and personal trust activity. In addition, fees increased as more customers chose to pay for bank services rather than keep compensating deposit balances in the lower-interest-rate environment.
 Revenues from trading activities decreased 27 percent from the fourth quarter of last year, primarily due to lower foreign-exchange trading profits, reflecting the downsizing of international offices.
 Equity investments, both domestic and foreign, continue to be a regular source of revenue for Continental. Following the pattern of the first three quarters of 1991, fourth-quarter revenues from equity investments increased from the same period last year, up $20 million.
 All other revenue in 1991 consisted primarily of foreign-exchange translation losses.
 Fourth-quarter 1991 total corporate revenues remained nearly even with the 1990 level. For the year, total corporate revenues increased 2 percent, compared with last year. Revenues last year included gains of $49 million from the sale of real estate properties and losses of $22 million from the sale of investment securities.
 Operating Expenses Decrease
 ($ in millions)
 Periods ended Fourth Quarter Full Year
 1991 1990 1991 1990
 Employee expenses $ 80 $ 88 $344 $368
 Restructuring provision 6 -- 46 46
 Other operating expenses 66 76 275 308
 Total operating expenses $152 $164 $665 $722
 Staff Level--Continuing Operations 4,596 5,724
 Operating expenses declined in the fourth quarter and for the full year. Over the past two years, Continental has invested $92 million in restructuring costs to produce these efficiencies. Excluding these costs, operating expenses since the first half of 1990 have been reduced approximately $20 million per quarter.
 Fourth-quarter 1991 operating expenses were down $12 million, or 7 percent, from the 1990 quarter. While several expense categories were lower as a result of ongoing expense-control efforts and corporate restructurings, more than half of the decrease resulted from lower employee expenses. In addition, legal expense was reduced in the 1991 fourth quarter by a $7 million recovery of costs incurred in prior years. However, the recovery was offset by a $6 million provision for business restructuring.
 Continental's efforts to improve efficiency have resulted in an 8 percent reduction in operating expenses in 1991 across most expense categories. These savings resulted from exiting unprofitable business lines and reducing resource consumption for remaining products. A notable exception to declining expenses has been Federal Deposit Insurance Corporation assessments which increased to $22 million in 1991 from $14 million in 1990.
 The staff level declined by 1,128 during 1991, primarily due to the elimination of services previously performed in-house, namely legal and information technology, and the other corporate restructuring initiatives. Since the staff reductions occurred throughout the year, Continental has not yet realized the full benefit of the lower staff levels.
 Nonperforming Assets Decline from Sept. 30
 ($ in millions)
 12/31/91 9/30/91 12/31/90
 Highly leveraged transactions $215 $240 $286
 Real estate 158 281 49
 Other non-LDC nonperforming loans 200 200 142
 Total non-LDC nonperforming loans 573 721 477
 LDC nonperforming loans 160 184 206
 Total nonperforming loans 733 905 683
 Other real estate owned 59 59 34
 Other nonperforming assets 22 9 2
 Total nonperforming assets $814 $973 $719
 Nonperforming loans to total loans
 (as a percent) 5.28 6.45 4.46
 Nonperforming loans increased 7 percent from year-end 1990, but decreased 19 percent from the Sept. 30, 1991, level. Real estate nonperforming loans and other real estate owned increased over last year, while loans to highly leveraged transactions declined. The decline in nonperforming loans since Sept. 30 resulted from loans returned to performing status due to improved performance of the borrower, charge-offs, payments by borrowers, the transfer of nonperforming loans to other nonperforming assets and sales of LDC debt. On a full-year basis, the combined cost of credit provisions and forgone revenue on nonperforming loans was $428 million in 1991, compared with $191 million in 1990.
 Provision for Credit Losses Decreases
 The fourth-quarter provision for credit losses dropped to $30 million, compared with $48 million in the same period last year. For the full year, the provision for credit losses was $340 million versus $118 million in 1990.
 The reserve for credit losses as a percent of nonperforming loans increased throughout 1991 to 56 percent on Dec. 31, from 53 percent on Sept. 30 and 42 percent a year ago. The reserve was $410 million, or 3.0 percent of total loans, on Dec. 31, up substantially from $288 million, or 1.9 percent, a year ago, but down from $476 million, or 3.4 percent, on Sept. 30.
 Fourth-quarter net loan charge-offs were $98 million, compared with $42 million in the 1990 quarter. Recoveries on loans were $23 million ($20 million for LDC loans) in the fourth quarter of 1991.
 For all of 1991, loan charge-offs were $277 million and recoveries were $54 million, compared with charge-offs of $131 million and recoveries of $44 million last year. Net LDC recoveries in 1991 were $19 million, compared with $6 million in 1990.
 Income Taxes
 Income tax expense in 1991, primarily foreign taxes applicable to higher equity gains, was $17 million, compared with $6 million in 1990. In 1991 no income tax benefit was recognized for the net loss recorded by Continental.
 Capital Ratios
 On Dec. 31, 1991, Continental's estimated ratios of both Tier 1 capital to risk-adjusted assets of 5.8 percent and total capital to risk-adjusted assets of 8.6 percent exceeded the regulatory minimums under the year-end 1992 guidelines. Despite the 1991 loss, the total capital ratios increased from year-end 1990 levels, reflecting the decrease in total risk-adjusted assets and the issuance of $284 million of qualifying debt.
 The leverage ratio was 6.4 percent on Dec. 31, 1991, compared with 6.0 percent at year-end 1990.
 Balance Sheet
 Total assets amounted to $24.0 billion on Dec. 31, compared with $27.1 billion a year ago. The decision to exit the primary dealership reduced assets and liabilities by approximately $1.2 billion. This reduction is reflected primarily in securities purchased under agreements to resell and sold under agreements to repurchase. Loans declined to $13.9 billion on Dec. 31, compared with $15.3 billion on Dec. 31, 1990, due to the lower level of business activity in 1991 and management's efforts to reduce the highly-leveraged-transaction and international loan portfolios.
 The equity-to-assets ratio was 6.3 percent on Dec. 31, compared with 6.2 percent on Sept. 30 and 6.1 percent on Dec. 31, 1990. Book value per common share was $20.89 on Dec. 31, 1991, compared with $20.16 on Sept. 30 and $23.73 a year ago.
 -0- 1/16/92
 /NOTE TO THE EDITOR: Continental Bank Corporation is a market- driven bank holding company devoted to serving corporations, institutional investors and individuals with complex financial requirements. Through its subsidiaries, the corporation arranges financing, makes markets, manages financial risk and processes cash and securities on behalf of its customers in key capital markets worldwide.
 /CONTACT: Jane Crowley Griffin, 312-923-5122, or William C. Murschel, 312-923-5130, or Edgar P. McDougal, 312-923-5200, all of Continental Bank/
 (CBK) CO: Continental Bank Corporation ST: Illinois IN: FIN SU: ERN


TS -- NY016 -- 0364 01/16/92 09:24 EST
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