Allowance for Possible Loan Losses

The Corporation maintains what Management believes is an adequate allowance for possible loan losses. The Parent Company and the subsidiary bank regularly analyze the adequacy of their allowances through ongoing reviews of trends in risk ratings, delinquencies, non-performing assets, charge-offs, economic conditions, and changes in the composition of the loan portfolio.

At year-end 1999, the allowance was $104.9 million or
1.50% of loans outstanding compared to $96.1 million or
1.51% at year-end 1998 and $67.7 million or 1.18% at year-end 1997. The allowance equaled 474.4% of nonperforming loans at year-end 1999 compared to 495.0% at year-end 1998. The allowance for possible loan losses related to impaired loans was $5.7 million at year-end 1999 and $3.7 million at year-end 1998.

Net charge-offs were $29.7 million 1999 compared to $20.7 million in 1998 and $18.4 million in 1997. As a percentage of average loans outstanding, net charge-offs equaled 0.43% in 1999 and 0.34% in 1998 and 1997. Losses are charged against the allowance as soon as they are identified.

A five year summary of activity follows: