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CONTINENTAL BANK REPORTS SECOND-QUARTER EARNINGS OF $51M; NET INCOME UP 65 PERCENT FROM LAST YEAR'S QUARTER; OPERATING EXPENSES, PROVISION DOWN

CONTINENTAL BANK REPORTS SECOND-QUARTER EARNINGS OF $51M; NET INCOME UP 65 PERCENT FROM LAST YEAR'S QUARTER; OPERATING EXPENSES, PROVISION DOWN
 CHICAGO, July 16 /PRNewswire/ -- Continental Bank Corp. (NYSE: CBK) today reported second-quarter net income of $51 million, up from $31 million for the same period last year. On a per share basis, earnings were 78 cents for the quarter, compared with 41 cents a year ago.
 Operating results improved despite a decline in revenues from equity investments and the impact of foreign-currency translation losses. Lower operating expenses and credit loss provisions more than offset these factors.
 "This is another satisfactory quarter in terms of profits and return on equity," said Chairman Thomas C. Theobald. "Our job is to continue the trends of the past three quarters for the rest of the year."
 Banking Product Revenues Decrease
 Total banking product revenues decreased from the second quarter of last year. Banking product revenues include management's internal allocations of funding costs.
 CONTINENTAL BANK CORP.
 ($ in millions)
 Second Quarter Year-to-Date
 1992 1991 1992 1991
 Corporate finance $113 $124 $238 $241
 Specialized financial services 75 63 137 136
 Trading 10 15 21 62
 Equity investments 25 53 74 63
 Total banking product revenues 223 255 470 502
 All other (8) 1 (14) (5)
 Total revenues $215 $256 $456 $497
 Restated to conform to the current period's presentation.
 Corporate finance includes revenues from lending, syndication and distribution. These revenues decreased 9 percent from the second quarter of 1991, due to a $1.6 billion decline in loans held as assets, and a $2 million decrease in revenues from syndication, distribution and other credit products.
 Revenues from specialized financial services rose 19 percent from the year-ago quarter. Specialized financial services revenues include fees for cash and securities management, private banking and fiduciary services. Cash management services and trust activities continued to produce growing revenue streams, as exemplified by cash management's increase of 27 percent over last year's second quarter.
 Revenues from trading activities fell 33 percent from the same quarter last year, as lower profits were derived from all major trading products.
 The $28 million decline in revenues from equity investments resulted from lower foreign and domestic revenues. Last year's second quarter included $33 million of gains from Latin American investments, compared with $14 million in the current quarter. Last year's domestic equity revenues totaled $23 million, compared with $17 million in the current quarter.
 The decrease in all other revenues in the second quarter of 1992 largely resulted from foreign translation losses in the current period, compared with foreign translation gains in the year-ago period.
 Operating Expenses Decline 16 Percent
 ($ in millions)
 Second Quarter Year-to-Date
 1992 1991 1992 1991
 Employee $ 69 $ 84 $145 $176
 Occupancy & Equipment 15 23 31 48
 Other Operating 50 52 107 101
 Total Operating Expenses $134 $159 $283 $325
 Operating Staff Level 4,346 5,283
 Continental continued to benefit from the 1991 restructuring and other ongoing cost-control measures. Staff levels dropped 18 percent, or 937 people, from last year. The outsourcing of information technology services at year-end 1991 has reduced employee and equipment expenses, while the cost of purchasing these services is included in other operating expenses. In the current quarter, other operating expenses were reduced by the receipt of proceeds from a settled litigation claim. Continental expects total operating expenses to rise in the third quarter to approximate earlier levels due, in part, to the non-recurring litigation settlement.
 Provision for Credit Losses Decreases
 The second-quarter provision for credit losses and charge-offs declined from the first quarter of this year and the second quarter of 1991. The state of the economy and its impact on Continental's customers will influence the future level of charge-offs and provisions for credit losses.
 ($ in millions)
 Second Quarter Year-to-Date
 1992 1991 1992 1991
 Provision for Credit Losses $ 25 $ 63 $ 55 $106
 Charge-offs $ 29 $ 52 $ 69 $ 91
 Recoveries (8) (8) (19) (22)
 Net Charge-offs $ 21 $ 44 $ 50 $ 69
 The reserve for credit losses increased slightly to $415 million, or 3.2 percent of total loans, on June 30, compared with $411 million, or 3.1 percent, on March 31 and $328 million, or 2.3 percent, a year ago. The reserve for credit losses as a percent of nonperforming loans was 57.9 percent on June 30, up from 57.2 percent on March 31 and 46.4 percent a year ago.
 Nonperforming Assets Hold Steady
 Nonperforming assets remained about level with March 31 and increased 6 percent from June 30 of last year. Increases in real estate and corporate nonperforming loans as well as other real estate owned (OREO) were partially offset by a drop in nonperforming loans from highly leveraged transactions (HLTs).
 ($ in millions)
 6/30/92 3/31/92 6/30/91
 Corporate $220 $206 $143
 Real estate 184 166 104
 HLT 162 191 267
 Total non-LDC nonperforming loans 566 563 514
 LDC 151 156 193
 Total nonperforming loans 717 719 707
 OREO 85 79 53
 Other nonperforming assets 16 21 10
 Total nonperforming assets $818 $819 $770
 Nonperforming loans to total loans
 (As a percent) 5.45 5.36 4.94
 Includes credits designated as being in-substance foreclosed for accounting purposes.
 The combined cost of credit provisions and forgone revenue on nonperforming loans was $40 million in the second quarter of 1992, compared with $84 million in last year's second quarter.
 Balance Sheet
 Total assets of $23.7 billion on June 30 were up $1.2 billion from March 31, but were lower than the $25.2 billion level of a year ago. Most of the increase since March 31 was in short-term liquid assets, partially offset by a 2 percent decline in loans. Continental's strategy is to manage the size, composition and liquidity of the balance sheet to maximize yield potential.
 Continental's equity-to-assets ratio was 6.7 percent on June 30, 6.9 percent on March 31 and 6.6 percent a year earlier. Book value per common share on June 30 was $22.39, compared with $21.78 at March 31 and $23.90 a year ago.
 Capital Ratios
 On June 30, Continental's estimated ratios of both Tier 1 capital to risk-adjusted assets of 6.4 percent and total capital to risk adjusted assets of 9.2 percent exceeded the regulatory minimums under the year- end 1992 guidelines. The leverage ratio was 7.2 percent on June 30, compared with 6.7 percent on June 30, 1991.
 Continental Bank Corp. 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- 7/16/92
 /CONTACT: Jane Crowley Griffin, 312-923-5122, or Edgar P. McDougal, 312-923-5200, or William C. Murschel, 312-923-5130, all of Continental Bank Corp./
 (CBK) CO: Continental Bank Corp. ST: Illinois IN: FIN SU: ERN


TS -- NY019 -- 9898 07/16/92 09:30 EDT
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Date:Jul 16, 1992
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