Ohio's Banc One Corp. posted second quarter earnings Tuesday of $315.9 million, up 12.06%, while Chicago's Continental Bank Corp. said it boosted earnings by 26%, to $77 million.

Bane One's profitability, though hearty, was virtually flat from a year ago, and it was down slightly from the first quarter. The Columbus-based banking company said rising short-term rates clipped its net interest margin.

Continental cited firming credit quality, equity investment gains, and net interest income growth in its performance.

BANC ONE CORP.

Loan growth figured strongly in Banc One's results, with average net loans and leases rising by 12.9% from a year ago. Consumer installment and credit card loans led the expansion, with average combined balances rising by 24.7%, or $4.6 billion.

Net interest income was flat, however, owing to a whopping 7g-basis-point decline in Bane One's net interest margin.

The company attributed the drop to "increasingly competitive loan pricing," and to the positioning of its balance sheet, on which liabilities were set to reprice more quickly than assets.

Carole Berger, a banking analyst with Salomon Brothers Inc., said she expects Bane One's net interest margin to stabilize. She expressed optimism about the bank's expense reduction campaign, saying, "efficiency gains will accelerate earnings growth."

Banc One's cost of interestbearing liabilities rose by 20 basis points, to 3.24%, while its yield on earning assets fell by 60 basis points, to 8.2%.

Revenues from derivatives contracts, mostly interest rate swaps, totaled $38 million, or 3.7% of net interest income, Bane One said. That compares with $107 million, or 10.4%, a year ago.

Helping offset margin compression were firming credit quality and expense cuts. A loss provision of $47.3 million was down 19%. Noninterest expenses fell by 2.2%, led by declines in personnel and equipment outlays.

Bane One's ratio of operating expenses to revenues was 61.7%, up slightly from the first quarter but down noticeably from 63.4% a year ago.

Problem assets fell 34.2% from a year ago, to $485.9 million, or 0.57% of total assets. The ratio of loss reserves to problem loans rose nearly 69 percentage points. to 225.2%.

The superregional banking company posted an unrealized loss of $194 million on securities held for sale at June 30.

CONTINENTAL BANK CORP.

Annualized, Continental's returns equaled 1.43% on average assets, up 29 basis points from normalized results of a year ago; and 17.54% on equity, up 286 basis points.

The $21.6 billion-asset banking company's effective tax rate was 7.23%. If taxed at the marginal corporate tax rate of 35%, it would have posted a 1% annualized return on assets.

Thomas C. Theobald, chairman and chief executive, called Continental's results "great." He said firming credit quality, expanded net interest income, and healthy equity investment gains fueled the earnings jump.

A loss provision of $20 million was down 43% from a year ago. Problem assets fell by 43%. to $436 million, or 2% of total assets at June 30. Loss reserves equaled 134% of problem loans.

Although trading revenues fell 25.8%, to $23 million, equity investment gains rose 65.5%, to $48 million. Corporate finance revenues rose by 5%, to $131 million; and revenues from specialized services such as cash management, trust, and private banking rose 6%, to $69 million.

Continental recently won shareholder approval for a proposed merger with BankAmerica Corp., San Francisco. The Federal Reserve Board on Monday gave its approval for the transaction.

Subject "to further regulatory approval," Continental said the deal will case in 1994's third quarter.

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