Credit quality, or the lack of it, continued to dog the banking sector last week even while bank stocks traded up on the promise of interest rate relief.

There was an element of loan portfolio “show-and-tell” afoot in New York during Goldman Sachs & Co.’s annual banking conference as a steady stream of top banking executives tried to buck up investor confidence.

The issue of credit quality has festered since June, when Wachovia Corp., of Winston-Salem, N.C., shocked the market by revealing its troubles with nonperforming loans. The issue has periodically erupted, as it did last month when First Union Corp. said it would have higher credit costs this quarter and next year.

First Union, Comerica Inc., and SunTrust Banks Inc. were among those that went into “excruciating detail” about their loan portfolios in presentations at the conference, said Lori Appelbaum, a banking analyst with Goldman Sachs.

Faced with sharply declining stock prices, it seemed many bank executives thought honesty was the best policy. “A lot of these managements are fed up with their valuations,” Ms. Appelbaum said. “So they’re coming from the angle that you build confidence with investors the more you let them know how you manage your credit risk.”

First Union demonstrated that it has been actively selling off higher risk and large loan exposures since early 1999, Ms. Appelbaum said. Consequently, any one problem in the portfolio is unlikely to cause much havoc on the quarterly results, she said.

SunTrust, meanwhile, made the case that the largest problem loan on its books — for $45 million — probably will not be counted as a loss, Ms. Appelbaum said. Meanwhile, Comerica has also been writing down problem loans for some time; its syndicated loans average just $11 million, she said.

Not all the news was quite so rosy.

A Bank of America Corp. presentation on Wednesday dropped quite a bomb on the market, when James H. Hance Jr., vice chairman and chief financial officer, revealed that the bank has some $1 billion in uncollectable debts for the fourth quarter.

Ms. Appelbaum said that the conference room was buzzing with the noise of cell phones and beepers and there was a general dash for the exits. Stock in Charlotte, N.C.-based Bank of America was pummeled that afternoon, falling 7.74% and spoiling the day’s bank-sector rally. However, Bank of America ended the week up 4.6%, at $40.87. But Comerica’s stock, which had been under pressure in the days before the conference, held after the Bank of America revelation, Ms. Appelbaum observed. That shows that certain banks are actively addressing the issue, she said. Comerica ended the week up 11%, at $55.06.

On Friday the American Banker index of the top 50 banks was up 4.67%, while its index of 225 banks rose 7.24%, buoyed by a broad stock market rally.

“Bank stocks have been strong for several days,” said Frank S. Doyle, head of equity trading at New York-based Keefe, Bruyette & Woods, speaking late Friday. He attributed the rise to investor relief over Federal Reserve Chairman Alan Greenspan’s indication that he will trim interest rates next year. “It’s encouraging that even with Bank of America’s news, the sector seems to be up,” he said.

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