First Chicago raises payout, sets stock buyback program.

First Chicago Corp.'s board on Friday approved a 33% increase in the common stock dividend and a repurchase program for up to 2.5 million common shares.

"Our strong core earnings performance this year ad our very healthy balance sheet support these actions," chairman Richard L. Thomas said. "We are also optimistic about prospects for growth in our fundamental businesses."

First Chicago had reduced its quarterly common dividend to 30 cents a share from 50 cents in early 1992, as part of a plan to reduce nonperforming assets and improve lackluster earnings. The bank's board on Friday voted to raise the dividend to 40 cents a share.

Credit Problems Ease

The bank has largely rebounded from credit problems. A $2.1 billion portfolio of assets to be sold was reduced in 12 months to $240 million at Sept. 30.

Other nonperforming assets and foreclosed real estate have fallen during that time to $351 million from $516 million.

Mr. Thomas said the ratio of the new dividend rate to core earnings will be in the "high 20%" area, compared with a 30% to 35% average among the bank's peers.

Gradual Rises

"I think it's likely we would move into the 30% to 35% payout ratio over the next several years," said Mr. Thomas. But, he added, "I think it would be unusual for us to change the dividend more than once every 12 months."

The $53 billion-asset bank earned $1.78 a share in the third quarter, excluding venture capital gains. The stock repurchase program, for up to 2.9% of total shares outstanding, is expected to neutralize expected stock issuance under the bank's employee stock option and stock purchase plans, said a spokeswoman.

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