Bank of Boston Corp. posted strong second-quarter earnings of $95 million, a 33.8% increase from $71 million in the same period last year.

The $43.4 billion-asset bank said it would have earned $104 million had it not taken a $16 million restructuring charge for its first-quarter acquisition of BankWorcester Corp.

Analysts said the bank's earnings - which came in at 77 cents a share after the restructuring charge - met expectations.

A major indication of the bank's strength was a raised loan-loss provision, which went from $10 million in the first quarter to $25 million. Analysts say that boosting the loan-loss provision is a sign of loan growth. It proves that the bank can show improved earning by doing business, and not just by lowering reserves, which has been the case for other banks in the second quarter.

Revenue Is Growing

"Unlike most other banks, Bank of Boston has now started pushing its loan loss provision up and they're doing it because they've got revenue growth when the rest of the industry doesn't," said Lawrence Cohn, an analyst at PaineWebber.

The bank said revenues grew to $568 million in the second quarter, a 9% increase from $523 million last year.

Bill Shea, Bank of Boston's chief financial officer, attributed the revenue growth to the bank's Latin American operations, which saw a 14% increase in loan growth to $26.9 million from last year's second quarter.

Mr. Shea also attributed net income growth to Bank of Boston's mortgage servicing portfolio, which saw a 37.5% increase to $33 billion, from $24 billion a year ago.

Assets Rise Faster

The bank also reported a jump in its net interest margin, from 3.80% in the first quarter to 3.98% in the second quarter "due to assets repricing faster than liabilities," Mr. Shea said.

The number of nonperforming loans jumped about $53 million, but analysts don't see that as significant to the bank's bottom line. They say the increase in loan-loss provision is unrelated.

"When you get down to it, nonperformers were 1.6% of loans at the end of the first quarter and they were up 1.7% at the end of the second quarter," explains Mr. Cohn.

'Random Noise'

"Those numbers are ... very low numbers. Bouncing around one tenth of a percentage point or two is, in my opinion, random noise," he said.

The bank has also significantly reduced its operating ratio to 61% from 68% in the second quarter of 1993. That's far ahead of the bank's stated goal of 60% by 1995.

One reason the operating ratio has dropped is the bank's diminished work force, down 1,000 from a year ago.


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