Bank One Corporation - Page 52

                                        -138-                                         
          experience, including real estate loans for certain periods at              
          issue.  Management judgment also was applied to evaluate whether            
          past experience was likely to be an effective guide to future               
          loss experience for commercial loans in light of changes in                 
          procedures or underwriting standards.                                       
               The CRESCO loss reserve factors were not determined with a             
          view toward using those factors for valuation purposes or in                
          calculating a credit adjustment.  The CRESCO loss reserve factors           
          were used by FNBC in assessing the adequacy of its loan loss                
          reserves.  Loan loss reserves were the amounts set aside for                
          credit losses that FNBC incurred in the ordinary course of                  
          business.  FNBC’s allowance for loan loss reserves contained no             
          specific accrual for swap credit risks.                                     
                         c.  Accuracy of CRESCO Loss Factors                          
               In August 1992, CRESCO adopted the following loss reserve              
          factors for non-real-estate transactions (e.g., a swap):                    
          Risk rating          Reserve Factor                                         
          1                    0.00%                                                  
          2                    0.05                                                   
          3                    0.25                                                   
          4                    0.45                                                   
          5                    1.60                                                   
          Before that time, the loss reserve factors for non-real-estate              
          transactions were:                                                          









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