"The robust profit increases have begun to flatten out a little bit as margin compression has squeezed in and as loss provisioning has returned to normalized levels," said John Carusone, president of Hartford's Bank Analysis Center. "The earnings increases are not as dramatic as they were earlier in the year." Other analysts expressed concern about the possibility of rising delinquencies, particularly in the area of consumer loans. "There's no denying that we're probably at the end of the cycle of asset-quality improvement, and we're seeing, as the economy slows, some increase in delinquencies, primarily on the consumer side," said Frank Barkocy, senior vice president of Advest Inc., New York. Gary Ford, bank equity analyst at H.C. Wainwright, Boston, said he has seen a rise in single-family delinquencies across the country this quarter. He couldn't say how many more delinquencies were occurring, but noted that bank managers shared the impression that delinquencies are becoming more common. "Hopefully, it's an aberration in the quarter," he said. "A lot of people have overextended themselves, the economy isn't as strong as people might like to think, and this could be an early indicator of that." Still, analysts agree, even with the slight rise in problem assets, community banks shouldn't be affected much, because their reserve coverage and capital levels are much higher than in the past. "Banks should be able to take a bump in the asset-quality highway without any significant impact" on profits, Mr. Barkocy said. And most analysts seemed pleased with the performance of banks and thrifts during the July-to-September period. It was a "very solid quarter across the board," said Mr. Ford. Burlington, Vt.-based Chittenden Corp., for example, reported third- quarter earnings of $5.8 million, a 44% increase over $4 million in the same quarter last year. Those results exceeded Mr. Barkocy's expectations. Besides good interest margins and strong loan volume, Mr. Barkocy said the earnings were helped by a $780,000 refund in federal insurance premiums and the company's March acquisition of Bank of Western Massachusetts. Also, BMJ Financial, a $566 million-asset bank in central New Jersey, reported earnings at 36 cents per share, 13 cents higher than the expectations of Elizabeth A. Summers, first vice president of Ryan, Beck & Co. But that's almost entirely due to a tax reversal that added $1 million to the bottom line this quarter. And Johnstown, Pa.-based USBancorp earned $3.9 million, up 5.4% from the $3.7 million earned in the prior year's third quarter. The earnings reports weren't uniformly bright, however. Kevin Timmons, a bank stock analyst with First Albany Corp. said banks he follows ran the gamut, with some falling short of his expectations and others well beyond. "There seems to be a lot of differentiation between the companies," he said. Thrift margins, while stabilizing, are down about 10 basis points from the second quarter, said Salvatore DiMartino, thrift analyst with Advest. Queens County Bancorp and the Greater New York Savings Bank both reported quarterly earnings above his expectations. Queens County had a "blowout quarter," earning 90 cents per share, a 22% increase, he said.

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