Continuing the second quarter's strong earning trend, five major banking companies reported solid gains on Tuesday.

Leading the way was New Jersey-based First Fidelity Bancorp., which posted a 47% rise. The quarter exceeded analysts' expectations and marked the first time that return on assets surpassed 1% since the company was formed by a merger in 1988.

National City Corp. of Cleveland weighed in with a 26% increase, reflecting the purchase of Merchants National Corp. Wachovia Corp. of Winston-Salem, N.C., posted a 13% gain, and Atlanta-based Sun Trust Banks Inc. and Detroit-based NBD Bancorp Inc. reported 12% gains.

Also reporting Tuesday was Golden West Finacial Corp., parent of the nation's third-largest thrift, whose earnings were up 20%.

Despite their solid performances, First Fidelity's shares fell 75 cents to 38.25, Wachovia's shares fell 50 cents to $64.25, and National City's shares dropped 25 cents to $44.875.

"There is some uncertainty among investors as to whether we're seeing a near-term peak in some of these stocks," said John Heffern, an analyst at Alex. Brown & Sons.

Specifically, he said, investors are concerned that margins won't get wider and that, in the face of continued weak loan demand, earnings may be lower in future quarters. (See Stocks column on page 10.)

In Tuesday trading, NBD's shares rose 12.5 cents to $29.25, Golden West gained 25 cents to $44, and Sun Trust added $1.50 to $42.25.


Analysts had been expecting profits of about $71 million, but a better-than-expected margin of 4.59%, versus 4.33% in the first quarter, gave net interest income a lift.

The company earned a 1.06% return on assets, breaking the 1% threshold for the first time since 1989.

"It's the best quarter far and away since [chairman and chief executive Anthony P.] Terracciano took over," said Michael Plodwick, an analyst at C.J. Lawrence Inc.

Mr. Terracciano joined First Fidelity from Mellon Bank Corp. in 1990, when the Lawrenceville, N.J.-based company was struggling with a huge portfolio of bad assets.

Analysts said they were particularly impressed because there were few one-time gains, something First Fidelity and other banks have used liberally in the past two years to bolster results.

Securities gains were a mere $1.1 million, down from $3.8 million in the first quarter and $7.2 million in last year's second quarter.

Nonperforming assets fell 6.8%, to $809.7 million. It was the fourth straight quarterly decline. Such assets now equal 4.6% of loans and foreclosed real estate.

The provision for loan losses was $59 million, down from $61 million in the first quarter. Reserves for nonperforming loans stand at 101%, up from 92% in the first quarter.


Rebounding on the strength of improved credit quality, National City Corp. earned $85.1 million, a 26% rise from year-ago results that were restated to reflect the purchase of Merchants National Corp.

The company's performance represented annualized returns of 15.3% on average common equity and 1.19% on average assets. Year-ago pro forma returns were 12.51% on equity and 0.89% on assets.

National City booked a loan-loss provision of $38.6 million, down from $41.8 million in the first quarter and $55.8 million a year ago. The conpany's $446 million in nonperforming assets at June 30 was down 27% from a year ago. Loss reserves equaled 160.9% of problem loans, compared with 98.6% a year ago.

Securities gains of $4.4 million played a nominal role in National City's strong showing, accounting for just 4% of pretax income. National City said gains from loan sales partially offset one-time charges stemming from the Merchants National transaction, which reduced net income by $4.5 million.


The Winston-Salem, N.C.-based bank earned $1.25 a share 2 cents above the Wall Street consensus.

Chief financial officer Anthony L. Furr said the earnings gain came from improvements in the net interest margin, noninterest income, and loan quality, as well as good expense control.

Wachovia's margin, the spread between what it pays for deposits and earn on loans, reached 4.82%, up 37 basis points from spread a year ago and 13 points higher than in the first quarter. The loan-loss provision fell to $28 million, a 26% decline from a year earlier.

In another sign of improved credit quality, nonperforming assets dipped to $290 million, down 5% from the first quarter. Wachovia's ratio of nonperforming assets to total assets is only 1.45%, the best performance among the large south-eastern banks.

But a weak economy prevents Wachovia from making many new loans. Total loans fell to $19.8 billion, a 5% reduction from the year-ago quarter and a 2% drop from the first quarter. Mr. Furr was not able to offer much hope that loan demand would pick up anytime soon.

"There's some pickup in the pipeline, but not necessarily on the books," he said. "There are some encouraging signs - things like automobile financing - but its too early to say we're seeing a noticeable recovery."


The company reported $103.4 million in profits, 12% higher than the year-ago quarter's $92.6 million and exactly in line with figures pre-released on July 6.

On a per-share basis, the Atlanta-based company earned 82 cents, compared with 72 cents a year ago.

SunTrust's earnings lift came largely from an improved net interest margin, which reached 5.14%, up 37 basis points from the year-ago quarter and a gain of 14 points from the first quarter.

Noninterest income was $162.7 million, a 5% improvement over $155 million reported in the year-ago quarter. The major sources of expansion in that category were trust income, up 8% to $56.8 million, and service charges on deposit accounts, up 6% to $51.8 million.

The loan-loss provision was $55 million, down 4% from the year-ago quarter. Nonperforming assets fell 7% from the first quarter to $610.4 million.

SunTrust also enjoyed some slight loan growth. Total loans reached $22 billion, 2% above the year-ago quarter's $21.5 billion and 1% more than in the first quarter.


On a per-share basis, the company's earnings rose 10%, to 67 cents fully diluted, adjusted for a 3-to-2 stock split on Jan.6.

Despite a 10% increase in the loan-loss provision, to $25.6 million, NBD maintained its consistent profitability record, with return on average assets rising to 1.07% from 1.04% in the 1991 second quarter, and return on average common equity improving to 14.70% from 14.49%.

Net interest income in the second quarter was up 14%, or $34 million, as earning assets grew 10%, to $28.7 billion out of the $31.1 billion total on June 30. The net interest margin improved to 4.26% from 4.16% in the second quarter of 1991.

Noninterest income grew 13%, or $10.4 million, and non-interest expenses rose 10%, or $21.8 million. Net loan charge-offs totaled $23.3 million,equal to an annualized 0.49% of average loan and lease balances, compared with $13.4 million, or 0.31%, in the 1991 quarter.


Golden West Financial Corp. earned $74 million, or $1.16 a share, 20% more than in the second quarter of 1991.

The parent of Oakland, Calif.-based World Savings and Loan Association also said its core earnings grew 14%, to $68 million, or $1.06 a share.

Marion O. Sandler, president and chief executive officer, said virtually all recent profits have been retained for capital, raising net worth by $257 million, to $1.6 billion, in the 12 months ended June 30. Assets grew over that period by 9%, to $25.4 billion.National City Corp.ClevelandDollar amounts in millions (except per share)SECOND QUARTER 2Q92 2Q91Net income $85.1 $65.5Per share 1.02 0.81ROA 1.19% 0.89ROE 15.30% 12.51%Net interest margin 4.63% 4.52%Net interest income 298.7 299.1Noninterest income 183.9 163.1Noninterest expense 322.4 305.8Loss provision 38.6 55.8Net chargeoffs 43.3 44.2Year to Date 1992 1991Net income $167.3 $126.3Per share 2.02 1.60ROA 1.17% 0.86%ROE 15.22% 12.52%Net interest margin 4.60% 4.49%Net interest income 594.1 591.6Noninterest income 372.1 320.7Noninterest expense 637.6 595.0Loss provision 80.4 121.8Net chargeoffs 77.5 100.7Balance Sheet 6/30/92 6/30/91Assets $28,627.0 $29,665.0Deposits 22,023.0 22,639.0Loans 18,547.0 19,780.0Reserve/ 160.90% 98.60%Nonperf. loans/loans 1.31% 1.87%Nonperf. asset/asset 1.56% 2.06%Leverage cap. ratio 7.77% 7.05%Tier 1 cap. ratio 9.36% 8.47%Tier 1+2 cap. ratio 11.77% 10.84%WACHOVIA CORP.Winston-Salem, N.C.Dollar amounts in millions (except per share)Second Quarter 2Q92 2Q91Net income $108.6 $96.3Per share 1.25 1.11ROA 1.38% 1.20%ROE 16.92% 15.80%Net interest margin 4.82% 4.45%Net interest income 333.2 315.3Noninterest income 129.7 127.8Noninterest expense 265.4 254.9Loss provision 28 38Net chargeoffs 20.9 34.9YEAR TO DATE 1992 1991Net income $214.7 $180.4Per share 2.46 2.08ROA 1.35% 1.13%ROE 16.96% 14.97%Net interest margin 4.75% 4.44%Net interest income 663.7 625.1Noninterest income 259.7 247.3Noninterest expense 524.6 506.8Loss provision 62.6 83.2Net chargeoffs 47.8 60.9BALANCE SHEET 6/30/92 6/30/91Assets $31,445 $32,336Deposits 22,324 22,324Loans 19,813 20,753Reserve/nonp. loans 194% 128%Nonperf. loans/loans 0.98% 1.10%Nonperf. asset/asset 1.45% 1.35%Leverage cap. ratio 8.26% 7.67%Tier 1 cap. ratio 9.6% 9.4%Tier 1+2 cap. ratio 11.3% 11.1%SUNTRUST BANKS INC.AtlantaDollar amounts in millions (except per share)SECOND QUARTER 2Q92 2Q91Net income $103.4 $92.6Per share 0.82 0.72ROA 1.22% 1.13%ROE 16.05% 15.54%Net interest margin 5.14% 4.77%Net interest income 395.8 353.2Noninterest income 162.7 155.0Noninterest expense 334.6 304.9Loss provision 55.0 57.2Net chargeoffs 36.5 48.5YEAR TO DATE 1992 1991Net income $203.5 $181.6Per share 1.60 1.42ROA 1.20% 1.12%ROE 15.86% 15.53%Net interest margin 5.07% 4.82%Net interest income 778.2 702.9Noninterest income 328.2 296.2Noninterest expense 674.0 608.4Loss provision 106.8 107.3Net chargeoffs 76.2 88.9BALANCE SHEET 6/30/92 6/30/91Assets $34,483.0 $33,108.0Deposits 27,631.0 26,650.0Loans 22,030.0 21,540.0Reserve/nonp. loans 112.00% 87.00%Nonperf. loans/loans 1.66% 2.02%Nonperf. asset/asset 1.77% 2.08%Leverage cap. ratio NA NATier 1 cap. ratio NA NATier 1+2 cap. ratio NA NAFIRST FIDELITY BANCORP.Lawrenceville, N.J.Dollar amounts in millions (except per share)SECOND QUARTER 2Q92 2Q91Net income $76.3 $52.0Per share 0.95 0.81ROA 1.06% 0.74%ROE 15.29% 13.39%Net interest margin 4.59% 4.22%Net interest income 307.2 275.8Noninterest income 82.2 82.6Noninterest expense 223.4 214.5Loss provision 59.0 65.0Net chargeoffs 64.2 71.3YEAR TO DATE 1992 1991Net income $141.8 $108.1Per share 1.77 1.69ROA 0.98% 0.77%ROE 14.32% 14.15%Net interest margin 4.47% 4.06%Net interest income 601.7 535.9Noninterest income 164.2 203.1Noninterest expense 446.7 426.0Loss provision 120.0 150.0Net chargeoffs 127.6 137.3BALANCE SHEET 6/30/92 6/30/91Assets $29,332.2 $28,818.0Deposits 24,107.5 24,364.7Loans 17,209.2 17,577.1Reserve/nonp. loans 101.0% 76.0%Nonperf. loans/loans 3.47% 4.57%Nonperf. asset/asset 2.76% 3.41%Leverage cap. ratio 6.46% 4.78%Tier 1 cap. ratio 9.65% 6.63%Tier 1+2 cap ratio 13.14% 10.42%

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