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 CHICAGO, Jan. 21 /PRNewswire/ -- Continental Bank Corporation (NYSE: CBK) today reported 1992 net income of $222 million, compared with a net loss of $76 million in 1991. On a per share basis, earnings were $3.44 in 1992, compared with a loss of $2.08 last year. The 1991 loss was primarily due to an unusually high provision for credit losses. Revenues in 1992 were up slightly over the prior year, while operating expenses fell 12 percent.
 "This was a very successful year for Continental," said Chairman Thomas C. Theobald. "Earnings were consistent quarter to quarter, and return on common equity exceeded 15 percent."
 For the fourth quarter of 1992, Continental reported net income of $61 million, compared with $50 million for the same period last year. Earnings per share were $0.95 for the quarter, compared with $0.77 a year ago. The improvement in the quarter over the prior year was due to higher revenues and lower income tax expense, offset, in part, by an increase in the credit loss provision and higher operating expenses.
 Banking Product Revenues
 Banking product revenues in the fourth quarter were at their highest level in the last four years and up $9 million from last year's fourth quarter. On an annual basis, these revenues were at the 1991 level, with increases in all categories except trading. Banking product revenues include management's internal allocations of funding costs.
 ($ in millions)
 Periods ended Fourth quarter Full year
 1992 1991(A) 1992 1991(A)
 Corporate finance $143 $131 $503 $479
 Specialized financial services 71 69 276 268
 Trading 18 22 60 103
 Equity investments 28 29 128 117
 Total banking product revenues 260 251 967 967
 All other 6 (8) (14) (18)
 Total revenues $266 $243 $953 $949
 (A) -- Restated to conform to the current period's presentation. Corporate finance, which includes lending, syndication and distribution, posted a 9 percent increase in revenues from the 1991 fourth quarter. Although average loans were down $1.3 billion from the year earlier, the current quarter benefited from gains on sales of loan related assets, higher cash collections on nonperforming loans (primarily Brazilian), a lower level of write-downs of nonperforming asset and a wider net interest-rate spread.
 Revenues from specialized financial services rose 3 percent from the year-ago quarter. Cash management and fiduciary services registered volume-related improvements. Specialized financial services revenues include fees for cash and securities management, fiduciary services and private banking.
 Revenues from trading activities declined 18 percent from the same quarter last year. Trading of foreign-exchange and interest-rate derivative products and securities produced lower revenues than in the year-earlier quarter.
 Revenues from equity investments were slightly lower than the 1991 fourth-quarter level. Higher gains on sales of investments, primarily domestic, were offset by valuation declines and lower dividend revenue, compared with last year's quarter. Equity investments have consistently contributed to product revenues, averaging 13 percent of total revenues over the past two years, and producing revenues between $24 million and $53 million in each of the prior seven quarters. The size of the equity investment portfolio at year-end 1992 was $504 million, $121 million higher than a year ago.
 Translation losses, the major component of all other revenues, were attributable to Latin American operations in both quarters. In addition, the fourth quarter of 1992 included $8 million of revenues from claims retained from the sale of a business.
 Operating Expenses
 ($ in millions)
 Fourth Quarter Full Year
 1992 1991 1992 1991
 Employee $ 80 $ 80 $299 $344
 Occupancy & equipment 17 23 66 95
 Other operating 59 49 221 226
 Total operating expenses $156 $152 $586 $665
 Operating staff level 4,235 4,596
 Full-year 1992 operating expenses were down $79 million. However, when restructuring provisions of $46 million in 1991 and $6 million in 1992 are excluded, operating expenses declined $39 million, or 6 percent, reflecting the benefits from the restructuring and other ongoing cost-control efforts. The slight increase in fourth-quarter 1992 expenses was largely due to higher costs for purchased services, as well as a greater provision for incentive compensation tied to the improved results for the year.
 "We've achieved the expense reductions we expected from the changes we've made over the past three years," said Theobald. "Excluding restructuring provisions, our fourth-quarter operating expenses were 85 percent of what they were in 1989."
 The year-end 1991 outsourcing of information technology services reduced employee and equipment expenses in 1992 and increased other operating expenses, specifically purchased services. This action, along with the outsourcing of the law function, resulted in an overall cost savings of approximately $16 million in 1992, an outcome consistent with last year's estimate.
 Staff levels declined 8 percent, or 361 people, during the year, contributing, along with the year-end 1991 staff reduction, to the sharp drop in employee expenses. Fourth-quarter employee expenses, while flat with the 1991 fourth quarter, included the higher provision for incentive compensation.
 Provision for Credit Losses
 The fourth-quarter provision for credit losses rose $15 million over the same period last year. The credit loss provision for the year was down sharply from 1991.
 Fourth-quarter 1992 charge-offs declined $64 million, or 53 percent, from the same period last year, primarily due to lower write-downs in the residential real estate portfolio. The largest single charge-off in the current quarter resulted from the restructuring of an HLT loan.
 For 1992, charge-offs decreased $61 million, or 22 percent, from the prior year. The most significant drops occurred in the general corporate ($39 million) and residential real estate ($24 million) portfolios. Latin American charge-offs were $19 million higher in 1992, primarily due to a directive from bank regulatory agencies to lower the carrying value of Brazilian term outstandings to 40 percent and due to Brazilian loan sales.
 Recoveries were down from last year's fourth quarter, but up slightly year-to-year.
 ($ in millions)
 Periods ended Fourth Quarter Full Year
 1992 1991 1992 1991
 Provision for credit losses $ 45 $ 30 $125 $340
 Charge-offs 57 121 216 277
 Recoveries (9) (23) (58) (54)
 Net charge-offs 48 98 158 223
 The reserve for credit losses was $376 million, or 3.0 percent of total loans, on Dec. 31, compared with $380 million, or 2.9 percent, on Sept. 30 and $410 million, or 3.0 percent, a year ago. The reserve for credit losses as a percent of nonperforming loans was 56.9 percent on Dec. 31, down from 57.8 percent on Sept. 30, but up from 55.9 percent a year ago.
 Nonperforming Assets
 Nonperforming assets increased modestly, up $7 million from Sept. 30 and $20 million from a year ago. Continental estimates that at least $171 million, or 31 percent, of its worldwide nonperforming loans, excluding remaining LDC, were contractually current as to principal and interest payments on Dec. 31, 1992.
 ($ in millions)
 Dec. 31 Sept. 30 Dec. 31
 1992 1992 1991
 General Corporate $102 $199 $185
 Commercial Real Estate 46 44 80
 Residential Real Estate 205 202 78
 HLT 204 108 215
 Latin American (LDC) 104 104 175
 Total Nonperforming Loans 661 657 733
 OREO(A) 153 142 59
 Other Nonperforming Assets(A) 20 28 22
 Total Nonperforming Assets $834 $827 $814
 Nonperforming Loans to Total Loans
 (as a percent) 5.33 4.97 5.28
 (A) -- Includes credits designated as in-substance foreclosures for accounting purposes.
 Continental monitors its loans by dividing them into five portfolios. The general corporate portfolio, which approximates $8 billion, is Continental's largest and strategically most important. Nonperforming loans in this portfolio declined almost 50 percent from Sept. 30 and $83 million since year-end 1991. At year-end 1992, general corporate nonperforming loans represented less than 2 percent of this portfolio.
 The fourth-quarter decrease in general corporate nonperforming loans was almost entirely offset by the addition of two large HLT credits, both originated more than three years ago. One loan, which remained contractually current, was restructured in the fourth quarter and should be restored to performing status in the first half of 1993. The second loan is being restructured and, as a result, should be restored to performing status at some later date. HLT loan outstandings have declined steadily since the first quarter of 1990.
 HLT and other loan restructurings, as well as an improvement in Continental's internal credit quality measures over the past year, lead management to expect a significant decline in nonperforming assets in 1993, assuming a stable or improving economic climate.
 Deterioration in real estate since Sept. 30 has been moderating, with real estate nonperforming assets (nonperforming loans plus OREO) totaling $404 million at year-end. Of this amount, commercial real estate properties accounted for $108 million, or less than 10 percent of the commercial real estate portfolio. Residential real estate nonperforming assets are related to single-family home building; this industry has been stable over the past few months.
 The combined cost of credit provisions and forgone revenue on nonperforming loans was $183 million in 1992, compared with $428 million in 1991.
 Balance Sheet
 Total assets of $22.5 billion on Dec. 31 were down more than $500 million from Sept. 30, 1992, and $1.5 billion from Dec. 31, 1991. Loans declined $1.5 billion from year-end 1991, in response to economic conditions, portfolio strategies and the sale of a foreign unit. The $800 million decline in loans since Sept. 30 was partially offset by a net increase in short-term, liquid assets.
 Continental's equity-to-assets ratio rose to 7.5 percent on Dec. 31 from 7.1 percent on Sept. 30 and 6.3 percent a year earlier. Book value per common share on Dec. 31 was $24.06, compared with $23.14 on Sept. 30 and $20.89 a year ago.
 Capital Ratios
 At year-end 1992, Continental Bank N.A. exceeded the capital ratios required to be categorized as "well capitalized," with estimated ratios of 7.8 percent for Tier 1 capital and 10.4 percent for total capital. The bank's leverage ratio (Tier 1 capital to quarterly average assets) was 8.6 percent.
 On Dec. 31, Continental Bank Corporation's estimated ratio of Tier 1 capital to risk-adjusted assets was 7.2 percent, and total capital to risk-adjusted assets was 9.9 percent, up from 5.8 percent and 8.6 percent, respectively, a year ago. The leverage ratio was 7.9 percent at year-end, compared with 6.4 percent a year ago.
 Continental Bank Corporation is a bank holding company that focuses on meeting the capital and financial management needs of public and privately held businesses nationwide. Through its subsidiaries, the company provides business financing, specialized financial and operating services and private banking services. Continental also engages in equity finance and investing, as both principal and arranger, and international trading, for customers and its own account.
 -0- 1/21/93
 /CONTACT: Lisa M. Hewitt, 312-923-5166, or Edgar P. McDougal, 312-923-5200, or William C. Murschel, 312-923-5130, all of Continental Bank Corporation/

CO: Continental Bank Corporation ST: Illinois IN: FIN SU: ERN

TS -- NY008 -- 7216 01/21/93 08:20 EST
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Date:Jan 21, 1993

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