Despite rising consumer credit problems, analysts expect banks to report that second-quarter earnings were up an average of about 12% from a year ago.

Only three of the top 50 banks are expected to report lower second- quarter earnings than in 1995, according to First Call Corp. consensus estimates.

Rising fee income, stock buybacks, and steady loan growth all contributed to a strong quarter for the banking industry, analysts said.

Still, there are a few dark clouds hovering over the industry.

Costs rose at some banks that made heavy investments on marketing and technology. And credit concerns, particularly rising credit card delinquencies and chargeoffs, persist as a problem that could nag at banks for some time.

In fact, even if banks meet earnings expectations, Wall Street may instead focus on any rise in consumer credit costs, said Thomas McCandless, a bank analyst with Natwest Securities Inc.

"There is a risk the market will overreact to a small part of the company," he said. Although last week First Chicago/NBD Corp. told analysts that it expected to match their earnings estimates, but because it reported a rise in the company's credit card chargeoff rate, its stock declined.

Leading the pack are Bankers Trust New York Corp., expected to post earnings 57.14% higher than a year before. Next come Southern National Corp., Firstar Corp., and First Empire State Corp., epxected to show gains of 26.42%, 22.08%, and 21.11%, respectively.

"The second-quarter 1996 profits for the U.S. commercial banking industry will be characterized by continued strength in fundamental operating trends," said Thomas Hanley, an analyst with UBS Securities Inc.

"Most of the second-quarter earnings reports (will) include moderate core revenue growth and significant improvements in operating efficiency," Hanley said.

But because of competitive challenges, many banks have been forced to devote money they gained from efficiency to marketing and technology, said Sandra Flannigan, a bank analyst with Merrill Lynch & Co.

"Banks are stepping up spending to be competitive, and while it does not mean expenses are getting out of line, expenses are nonetheless higher than we might have thought at the beginning of the year," she said.

One example of this trend, she said, is CoreStates Financial Corp., which is expected to report that earnings grew only 4.55% year to year in the second quarter.

Banks are also seeing an unexpected increase in revenues, Mr. McCandless said.

For the first time in nearly six quarters, banks are building up their investment portfolios of bonds and securities, an action that contributed to the rise in revenues this quarter, he said.

The increased revenue offset a 40% to 50% growth in provisions to account for higher credit costs, he said.

The remainder of the year could hold some nasty surprises for banks that have large credit card portfolios or have built up the credit card business aggressively in the last 18 months, Mr. McCandless said. Companies like Banc One Corp. and First Union Corp. bear watching for this reason, he said.

The worst performer for the quarter is expected to be Wells Fargo & Co., which is integrating the $13.2 billion purchase of First Interstate. The consensus estimate is that Wells will report second-quarter earnings 9% lower than last year.

Wells has argued the reported figure is not as important as cash earnings, a figure that does not include a sizable goodwill charge.

Even on the reported figure, however, there is wide disagreement among analysts, because Wells has not yet disclosed key information about Interstate's books.

Wells had waged a hostile battle to acquire Interstate and did not have access to Interstate's internal records until the bank succumbed in January.

The standard deviation, a measure of the disparity in analysts' estimates, is 33 cents a share for Wells Fargo. By contrast, the next- highest deviation score is J.P. Morgan & Co., at 16 cents per share.

Among the expected gainers, Bankers Trust New York Corp. is predicted to show the largest earnings increase from the previous year's second quarter. The analyst consensus forecast is for a 57% increase over the second quarter of 1995, when Bankers Trust was saddled with problems in its derivatives business.

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In trading Monday, shares of CoreStates Financial Corp. rose only 62.5 cents, to $39.125, after J.P. Morgan Securities analyst Catherine L. Murray removed her "buy" rating on the Philadelphia bank, while bank stocks in general rallied.

Ms. Murray downgraded CoreStates to "market performer" and lowered her earnings forecasts for the second quarter to 89 cents a share from 94 cents.

National City Corp. shares soared $1.75, to $36.875, after the company announced a dividend increase and said it expected its 1996 earnings to exceed the First Call consensus estimates of $3.19 a share by about five cents a share.

Also lifting the stock, Smith Barney included National City on its list of 15 favorite stocks.

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