Regional banks in two parts of the country reported strong second-quarter earnings Monday, buoyed by accelerating loan demand, stable net interest margins, and better asset quality.

First Empire State Corp., Buffalo, said it earned $28.7 million, up 14% from $25.2 million in the second quarter of 1993.

Southern National Corp., Winston-Salem, N.C., reported $26.9 million in net income, 19% more than in the previous year's quarter.

27% Gain and a Slight Drop

Centura Banks Inc., Rocky Mount, N.C., gained 27%, to $12 million, from $9.4 million in last year's second quarter.

Earnings at First Virginia Banks Inc., Falls Church, were down 1%, to $29 million, but only because the company had reported record earnings of $29.3 million in the year-earlier quarter.

Even with the small decline, $7.2 billion-asset First Virginia posted second-quarter return on assets of 1.62% and return on equity of 16.11%.

The earnings boost at First Empire, which has $10.3 billion in assets, derived largely from improved asset quality. Its loanloss provision dropped 31%, to $14 million, from $20.2 million in the year-earlier quarter. Net chargeoffs fell 58%, to $3.9 million, during the period.

First Empire's nonperforming loans were down to $80.3 million, or 1.09% of loans outstanding, from $91.9 million, or 1.31%, in the 1993 second quarter.

Loan Growth in Upstate N.Y.

Despite a decline in fixed-rate residential mortgage originations, First Empire reported good loan growth in other areas, particularly consumer lending but also commercial loans and commercial real estate.

Investor relations spokes-woman Darlene Spychala said loans grew 8% in the quarter, excluding residential mortgages.

Loan growth was even stronger among the southeastern banks.

Gains from its automobile financing and home equity lending specialties were behind First Virginia's loans of $4.5 billion, up 15% from the year-ago quarter and 29% annualized from the first-quarter total.

Chairman and CEO Robert H. Zalokar said, in a published statement, that First Virginia's "commercial activity was as strong as it has been in years."

Southern National reported a 10% annualized rise in loans in the quarter, primarily to retail customers. Leasing, residential mortgages, installment loans, and revolving credits were strong categories for Southern National, which has $8 billion of assets.

Centura, with $4.1 billion of assets, reported 12.2% growth in loans for the quarter, to $2.7 billion, despite a dramatic decrease in mortgage loan volume resulting from higher interest rates.

Chief financial officer Frank L. Patillo said Centura's loan growth came primarily from small business.

Analyst's View of N. Carolina

Robinson-Humphrey Co. analyst John W. Coffey, who follows the two North Carolina banks, said their loan growth "is a reflection not only of the individual companies but of that market."

Most of the banks enjoyed stable net interest margins, as their loans repriced upward faster than their deposits. During the last several months, as the Federal Reserve has raised interest rates, the prime rate has risen 1.25 point, to 7.25%, while rates on one-year certificates of deposit have gone up only 0.9 point, on average, according to Bank Rate Monitor.

Centura's interest margin gained a remarkable 29 basis points, to 4.91%, from the first quarter, largely because of $290 million in deposits acquired last year from the Resolution Trust Corp. Centura has gradually put that money to work funding loans, as demand increased, Mr. Patillo said.

Southern National's margin was down a mere 1 basis point, to 4.28%, from the first quarter. Chief financial officer John R. Spruill said the company had to raise some deposit rates, while "all the effects of the prime increase have not flowed through."

Southern National's home equity portfolio, for example, is pegged to the prime, Mr. Spruill said, but there was a one-month lag in raising portfolio rates. "We have more benefit from that to accrue to us."

First Empire's margin fell slightly, 6 basis points, to 4.93%, from the first quarter. Ms. Spychala attributed the decline to loan pricing. "We've had some pricing pressures, particularly on the consumer side," she said. "Springtime is a big time for everybody to hit campaigns for home equity and new-car loans."

First Virginia's margin increased 4 basis points during the quarter, to 5.32%, due to its slight asset sensitivity. Also, the mix of earning assets into higher-yielding loans and out of investment securities increased due to strong loan demand, the company said.

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