Increases in loan-loss provisions and the prospect of further chargeoffs did not prevent major regional banking companies from reporting significant earnings increases Wednesday.

Double-digit gains in credit card and trust fees combined with expense controls to boost First Bank System Inc.'s second-quarter net income by 84%, to $254 million.

Excluding nonrecurring pretax gains of $140 million - a $65 million state tax refund and $75 million from Wells Fargo & Co. for the termination of First Bank's merger agreement with First Interstate Bancorp - the year- to-year increase would have been 21%.

Meanwhile, profits at Barnett Banks Inc. rose 6%, to $139.5 million, even as the loan-loss provision jumped almost 50%, to $39.4 million, attributable almost entirely to credit cards.

At Central Fidelity Banks Inc. of Richmond, net chargeoffs more than tripled, to $10.3 million, and net income came in 11% higher, at $28.8 million.

Robinson-Humphrey Co. analyst John Coffey, who follows Barnett and Central Fidelity, said the companies "showed this quarter that they had earnings power sufficient to get through (consumer credit problems) without missing expectations."

Barnett Banks' chief financial officer, Charles W. Newman, pointed out that outstanding loans in Barnett's $1.7 billion credit card portfolio fell by $10 million in the three months ending June 30. The Jacksonville, Fla.- based company is further cushioned by the fact that cards account for only 6% of total loans.

Card chargeoffs jumped a relatively slight $1.5 million, or 37 basis points, between the first and second quarter, to 6.47%.

"The good news is that they have a small exposure," said Prudential Securities analyst Ruchi Madan.

Barnett's earnings growth came from both interest income, up 10% to $480.3 million, and fees, which rose 6% to $194 million.

Mr. Newman cited home equity loans, securities sales, credit card fees, and ATM charges as major contributors to noninterest income.

Central Fidelity blamed its higher chargeoffs on "an accelerating trend of consumer bankruptcies in both the credit card and installment loan portfolios." The bank predicted consumer chargeoffs will increase by $1.5 million to $2 million a quarter for the remainder of the year.

Mr. Coffey at Robinson-Humphrey pointed out that Central Fidelity's $791 million card portfolio constitutes only 12% of its loans, while its bank card chargeoff rate, at 3.95%, is lower than Barnett's.

"Yes, credit cards are an issue," he said, "but is it going to impair the earnings of these companies? For the most part, I don't think so."

"It was good to see some revenue growth," said George Bicher, an Alex. Brown analyst. "Aside from acquisitions, revenue growth has been a little sluggish. Core revenues are finally showing signs of life."

The provision for credit losses at Minneapolis-based First Bank increased 30%, to $35 million, in response to higher loan volumes and credit card chargeoffs.

Writedowns of consumer loans increased 21% from the 1995 second quarter, to $40 million. But fee income more than offset the shortfalls.

Mr. Bicher said First Bank's conservative credit culture has helped it avoid the pitfalls of other regional banks, which are expected to post higher chargeoffs on consumer loans, particularly credit cards.

"Although we're still seeing increases in consumer chargeoffs, there are signs that this is going to be a pretty good quarter," Mr. Bicher said. "Not bad for a group as maligned as banks."

First Bank reported a 30% year-over-year increase in credit card fees, to $73.5 million, and a 36% increase in trust fees, to $58.5 million. While noninterest income rose 15.7%, noninterest expenses increased only 1%.

First Bank cited higher sales volumes on its corporate and purchasing cards and its cobranded credit card with Northwest Airlines. Its trust business was bolstered by the acquisition of BankAmerica Corp.'s corporate trust business earlier this year.

Mr. Bicher described First Bank's credit card loss rate as "among the best in the industry." The chargeoff rate in the second quarter was 3.56%, up by 0.25 points from the second quarter last year. However, he expects First Bank will face more competition from other card issuers going after business customers.

Analysts also noted that First Bank had commercial loan growth sufficient to offset a decline of 32.5% in residential mortgage lending. First Bank had sold its mortgage banking business to three companies in the first quarter.

Total loans were up $1.6 billion, or 6%, from last year's second quarter. Net interest income increased 8%, to $392 million.

This article was written by Jacqueline S. Gold with reporting by Kenneth Cline and Brett Chase. +++

First Bank System Inc. Minneapolis Dollar amounts in millions (except per share) Second Quarter 2Q96 2Q95 Net income $254.1 $137.9 Per share 1.81 1.00 ROA 1.87% 1.68% ROE 21.3% 20.4% Net interest margin 4.91% 4.93% Net interest income 391.8 363.0 Noninterest income 219.5 189.7 Noninterest expense 306.2 303.2 Loss provision 35.0 27.0 Net chargeoffs 36.0 29.9 Year to Date 1996 1995 Net income $430.9 $271.7 Per share 3.09 1.97 ROA 1.85% 1.67% ROE 21.1% 20.8% Net interest margin 4.89% 4.99% Net interest income 771.1 729.8 Noninterest income 427.6 369.3 Noninterest expense 603.8 607.5 Loss provision 66.0 53.0 Net chargeoffs 69.5 62.0 Balance Sheet 6/30/96 6/30/95 Assets $36,184.0 $33,456.0 Deposits 24,589.0 22,849.0 Loans 27,029.0 25,699.0 Reserve/nonp. loans 418% 388% Nonperf. loans/loans 0.47% 0.47% Nonperf. assets/assets 0.43% 0.52% Nonperf. assets/loans + OREO 0.58% 0.68% Leverage cap. ratio 6.30% 7.00% Tier 1 cap. ratio 6.80% 7.70% Tier 1+2 cap. ratio 11.50% 12.00%

Barnett Banks Inc. Jacksonville, Fla. Dollar amounts in millions (except per share) Second Quarter 2Q96 2Q95 Net income $139.5 $132.2 Per share 1.42 1.26 ROA 1.36% 1.28% ROE 16.92% 15.83% Net interest margin 5.30% 4.80% Net interest income 480.3 435.6 Noninterest income 193.9 183.1 Noninterest expense 400.7 381.9 Loss provision 39.4 26.8 Net chargeoffs 39.4 27.3 Year to Date 1996 1995 Net income $287.7 $260.9 Per share 2.91 2.49 ROA 1.40% 1.27% ROE 17.41% 15.90% Net interest margin 5.29% 4.79% Net interest income 955.6 866.1 Noninterest income 390.5 345.9 Noninterest expense 808.3 745.5 Loss provision 81.0 51.1 Net chargeoffs 80.8 51.7 Balance Sheet 6/30/96 6/30/95 Assets $41,674.0 $41,787.0 Deposits 34,345.0 33,970.0 Loans 30,455.0 29,952.0 Reserve/nonp. loans 263.0% 241.0% Nonperf. loans/loans 0.63% 0.70% Nonperf. assets/assets 0.60% 0.67% Nonperf. assets/loans + OREO 0.82% 0.93% Leverage cap. ratio 6.67% 6.31% Tier 1 cap. ratio NA NA Tier 1+2 cap. ratio NA NA ===

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