Analysts expect most of the nation's largest banks to post improved results for the second quarter, with earnings per share rising on the strength of loan growth, firm credit quality, and stock repurchases.

According to a survey performed by First Call Corp., an American Banker affiliate, 37 of the nation's 50 largest banking companies are expected to post higher earnings per share than in the second quarter of last year.

Second-quarter earnings reports, which will be released over the next two weeks, generally are expected to show more strength and stability than what was anticipated back when rates were rising sharply.

At the same time, experts remain cautious about the second half of 1995, citing rising funding pressures.

Although the Fed's recent rate cut was welcome news, deposit yields probably will remain relatively high as banks compete for funds needed to support swelling loan portfolios.

In turn, net interest margins could fall still further, experts say, offsetting some of the benefits of loan growth and cutting into profitability.

"We're seeing tremendous pressure not to lower deposit rates, even though other rates may be coming down," said Carole Berger, a bank analyst for Salomon Brothers Inc.

Part of the problem with funding costs is that loan-to-deposit ratios are at high levels, Ms. Berger said.

At a time when deposit levels are stagnant and loan volumes continue to show strong gains, many banks are reluctant to lower deposit rates for fear of losing this important funding source.

Art Soter, a senior analyst and managing director at Morgan Stanley & Co., noted that money-center banks rely less heavily on retail deposits than do their regional counterparts, and thus will be less affected by the squeeze on deposit rates.

Although some analysts say money-center trading revenues won't match year-ago levels, Mr. Soter said results should improve from the first quarter.

"In general, I would expect trading to be better in the second quarter than in the first," he said.

"Investment portfolios should have appreciated, and you should see higher gains on securities transactions and the potential for healthy equity gains as well."

Beyond trading, Mr. Soter said, the same money-center trends dominating first quarter results should prevail in the second quarter. These include moderate loan growth, stable credit quality, slightly lower interest margins, tight expense controls, and rising fee income.

The decline in most interest rates during the second quarter won't fully revive formerly high-flying institutions such as Keycorp and PNC Bank Corp., which were caught last year with balance sheets that were highly liability-sensitive.

"Both moved very aggressively late last year to reduce that sensitivity," said Salomon Brothers' Ms. Berger. "So they're not going to benefit full blown from the rate decline in the quarter."

According to First Call, analysts expect Keycorp to post earnings of 81 cents per share for the second quarter, a 9% decline from the year-ago period.

Analysts expect PNC to report earnings of 57 cents a share, First Call said, an anticipated decline of 27.8% from a year ago.

One bank expected to post stronger results for the quarter is Signet Banking Corp. of Richmond, Va.

The consensus view is the company will report earnings of 47 cents a share. That would amount to a 67.9% increase over the same period a year ago, when the company's performance suffered while awaiting the spinoff of its credit card operation.

One impetus for Signet's turnaround, Ms. Berger said, is that the company applied the lessons learned at the credit card affiliate to other retail businesses.

"They took the technology of a credit card bank and are using it in other consumer loan products," she said.

Analysts expect 13 of the nation's 25 largest thrifts to boost results from a year ago, First Call said. By contrast, analysts expect 19 of 22 specialty finance companies to boost results.

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