Continued loan growth and falling expenses helped Bank of Boston Corp. post operating income of $98 million for the third quarter, up 78% from the $55 million earned in the same period last year.

New England's second-largest banking company reported net income of $41 million for the quarter ended Sept. 30, including a special merger and restructuring charge. Excluding that charge, Bank of Boston posted earnings of 82 cents per share, far exceeding Wall Street's expectation of 59 cents, according to Zachs Investment Research.

"They look terrific," said Lawrence W. Cohn, bank analyst at PaineWebber Inc., New York, referring to the earnings data. Shares of Bank of Boston closed at $22.75 Thursday, unchanged.

Loans Grow by $1.6 Billion

For the second consecutive quarter, Bank of Boston saw its loan levels swell, exclusive of acquisitions. The quarter's $1.6 billion uptick was evenly split among consumer, commercial, and international portfolios, the company said.

The increase helped push net interest revenue to $374 million in the third quarter, up from $369 million in the previous period and from $339 million one year ago. Net interest margin fell to 4.26%, compared with 4.43% in the second quarter, but was up from 4.05% in the third quarter of 1992.

Bank of Boston continued to cut expenses in the quarter, as it began to integrate newly acquired Society for Savings and Multibank into its operations. It also laid off 500 employees in the period, bringing total layoffs for the year to 800, or 4% of its work force.

As a result, noninterest expenses, excluding the costs of foreclosed real estate and merger and restructuring charges, fell $8 million in the quarter, to $348 million.

The company's operating ratio -- expenses to revenue -- improved to 65% in the quarter, from 68% in the second quarter and 67% last year.

Bank of Boston Corp.

Boston -Dollar amounts in millions (except per share) -Third Quarter 3Q93 3Q92Net income $41.4 $73.9Per share 0.30 0.63ROA 0.42% 0.80%ROE 32% 13.50%Net interest margin 4.26% 4.05%Net interest income 371.2 336.5Noninterest expense 440.2 365.5Loss provision 10.0 44.5Net chargeoffs 46.3 71.3Year to Date 1993 1992Net income $196.5 $199.4Per share 1.58 1.79ROA 0.70% 0.73%ROE 10.33% 13.22%Net interest margin 4.34% 3.88%Net interest income 1,086.1 956.4Noninterest income 466.1 542.3Noninterest expense 1,184.3 1,087.4Loss provision 60.1 157.6Net chargeoffs 184.4 224.8Balance Sheet 9/30/93 9/30/92Assets $39,189.1 $37,792.5Deposits 28,532.5 29,058.6Loans 27,937.2 25,651.1Reserve/nonp. loans 143.00% 112.00%Nonperf. loans/loans 1.70% 3.40%Nonperf. asset/asset 1.80% 2.90%Leverage cap. ratio 6.90% 6.50%Tier 1 cap. ratio 7.20% 7.10%Tier 1+2 cap. ratio 11.70% 11.10%

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