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DUFF & PHELPS: DUFF & PHELPS UPGRADES SHAWMUT NATIONAL CORPORATION

 CHICAGO, Feb. 16 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has upgraded the ratings of Shawmut National Corporation and its lower tier holding companies, Shawmut Corporation and Hartford National Corporation, as well as the ratings of its two subsidiary banks, Boston- based Shawmut Bank, N.A. and Hartford-based Shawmut Bank. The senior debt rating of Shawmut Corporation and Hartford National is raised to BBB-' (Triple-B-Minus) from BB+' (Double-B- Plus) and the subordinated debt rating is raised to BB+' (Double-B-Plus) from BB' (Double-B). The subordinated debt rating of Shawmut National Corporation is raised to BB+' (Double-B-Plus) from BB' (Double-B) and the preferred stock rating is upgraded to BB' (Double-B) from BB-' (Double-B-Minus). Importantly, the senior debt rating is raised to an investment grade level from speculative
grade. The short-term deposit rating for


Shawmut Bank, N.A. and Shawmut Bank is raised to Duff 2 from Duff 3 and the long-term deposit rating is upgraded to BBB' (Triple-B) from BBB-' (Triple-B-Minus).
 The rating upgrades recognize the overall improvement in the corporation's financial condition and operating performance and our expectation for additional progress in 1993. Asset quality measures are substantially improved, capital has been enhanced, and profitability is strengthening. Importantly, the recovery from severe loan quality problems has progressed beyond containment and resolution of problem assets to rebuilding core earnings power and establishing an organizational framework within which to improve the corporation's competitive position. While the improvement to date is clear, the regional real estate market and economy remain weak which adds an element of uncertainty to the pace of further progress. The long-term challenge, in our view, is the ability to increase core profitability, i.e., earnings before asset quality charges, given the weakness in the regional economy.
 Non-performing assets, although still above industry standards, have declined significantly, equaling $1.03 billion, 6.78 percent of loans and other real estate owned at year end 1992, compared to $1.20 billion, 8.56 percent three months earlier, and down from a peak of $1.74 billion, 11.80 percent on March 31, 1991. Excluding restructured credits, non-performing assets declined to 5.69 percent at Dec. 31, 1992, from 7.63 percent at Sept. 30, 1992. Positively, the inflow of new problem assets has eased considerably with a concurrent, sustained level of problem loan resolutions. Loan loss reserves are adequate, equaling 5.79 percent of loans and 140 percent of non-accruing loans.
 Shawmut National significantly boosted capital ratios during 1992 due mainly to a common stock offering which raised approximately $200 million and a preferred stock offering which raised about $140 million. This additional capital will provide flexibility to more effectively resolve problem assets, and to a lesser extent, provide the wherewithal to take advantage of growth opportunities.
 Core earnings, pretax earnings before credit expenses and special items, have shown significant improvement from the 1990 and 1991 level, but have recently plateaued, somewhat. Core earnings increased to $77 million in the fourth quarter compared with $76 million in the third quarter and $62 million in the fourth quarter of 1991. As credit costs decline in 1993, we expect a concomitant improvement in reported net income.
 Shawmut National Corporation is a super-regional bank holding company based in southern New England. Its principal subsidiaries are Shawmut Bank, N.A., based in Boston, and Shawmut Bank, Connecticut, based in Hartford. The corporation has developed an attractive franchise in the retail and middle-market areas serviced through a network of 311 branches. With total assets of $25.3 billion at Dec. 31, 1992, the company ranks among the 30 largest U.S. bank holding companies.
 -0- 2/16/93
 /CONTACT: Charles J. Orabutt of Duff & Phelps, 312-368-3153/
 (SNC)


CO: Shawmut National Corporation ST: Massachusetts, Connecticut IN: FIN SU: RTG

WB -- NY100 -- 6832 02/16/93 13:35 EST
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Date:Feb 16, 1993
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