Strong loan growth, sparked by a robust regional economy, helped boost second-quarter earnings at several midwestern banking companies.

Though some analysts had predicted a downturn in credit quality, the issue never became a problem during the period.

"Everyone keeps expecting the wheel to come off the bus, but in this part of the country at least, that hasn't happened yet," said Michael M. Moran, a bank analyst at Roney & Co. in Detroit.

Still, there are some warning signs that the winning streak may not persist. One analyst said many banks were stretching to beat expectations by using one-time gains or reducing contributions to loan-loss reserves.

"I think there are some companies running scared from the market," said Timothy W. Willi, a bank analyst at A.G. Edwards & Sons Inc. in St. Louis. "They're trying to keep shareholders happy so they don't have to sell."

One company analysts say is under pressure to improve its performance is Columbus, Ohio's Huntington Bancshares. It beat Wall Street estimates by a penny per share - but only because it sold a branch and reduced its loan- loss reserves.

Huntington reported net income of $104.9 million, up 13.7%. Earnings per share at the $28 billion-asset company were 44 cents.

But the gain was largely attributed to the branch sale, a one-time event that yielded $2.5 million, and the reduction of the loan-loss reserve to 1.46%, from 1.5% a year earlier.

Bank regulators recommend that loan-loss reserves be 1.5% of an institution's portfolio.

Mr. Willi said he does not believe the strong economy will hold up indefinitely.

"Now is the time, while things are so good, to put away for a rainy day," he said.

However, Huntington did show promising revenue growth. Net interest income for the quarter was up 5.5%, to $261 million, primarily because of stronger loan demand. Fee income grew 20.1%, to $115 million, as income from brokerage and insurance sales rose 50%.

However, Mr. Willi said he remains skeptical. "They do a good job on fee revenue, but that's not going to carry this company," he warned.

At Fifth Third Bancorp of Cincinnati, profits grew 21%, to $161.6 million. Earnings of 59 cents per share beat analysts' expectations by a penny.

Earnings were fueled by a 6.9% increase in loans, to $19.2 billion. Customers in Cincinnati, Cleveland, and Indianapolis were largely responsible for a 12% boost in commercial loans and a 15% increase in leases.

Fee income at the $29.9 billion-asset company rose 26%, to $187.4 million, as revenue from investment advisory and data processing services soared by 35.9% and 34.7%, respectively.

Like Huntington, Fifth Third reduced the funds it kept in reserve for loan losses to 1.48% of its portfolio, from 1.5%.

Milwaukee-based Marshall & Ilsley Corp. credited its data processing business for much of its 11.5% rise in net income, to $87.5 million. The $22.3 billion-asset company earned 77 cents per share, matching analysts' expectations.

M&I's fee income gained 12.9%, to $209 million, driven by processing fees from Internet commerce.

In the past year e-commerce processing revenue has grown 80%, to $36 million, the company said.

Analysts said they expect M&I to continue to reap profits from the Internet. The company announced during the quarter that it would roll out an on-line bank specializing in mortgages.

"M&I is much better positioned than many of its peers in this area," according to Michael A. Plodwick, a Lehman Brothers banking analyst.

Loan growth helped fuel earnings gains at Grand Rapids, Mich.-based Old Kent Financial Corp.

The $16.6 billion-asset company reported net income of $62 million, up 13.1% from a year earlier.

Earnings per share of 57 cents beat analysts' consensus by 2 cents.

The company's loan portfolio grew 11% in the preceding 12 months, to $9.8 billion. Commercial loans rose 10%, and consumer loans 18%.

At Commerce Bancshares of Kansas City, Mo., loan growth helped boost earnings 11%, to $41.8 million.

Earnings per share of 68 cents beat the analysts' consensus by 3 cents.

The $11.1 billion-asset Commerce increased its loan portfolio by 8%, to $7.2 billion. Fee income was also strong, up 10%, to $61.4 million.

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