Smooth merger integration helped Firstar Corp., SunTrust Banks, and BB&T Corp. post second-quarter earnings reports Tuesday that were comfortably in line with analysts' expectations.

The November merger of Star Banc with the old Firstar Corp. continued to pay off in impressive revenue growth, helping the Milwaukee banking company post a 14.8% gain in second-quarter earnings, to $170.8 million.

Atlanta-based SunTrust, with about 25% of its cost savings from its Dec. 31 acquisition of Crestar Financial Corp. already achieved, reported 8% net income growth, to $293.7 million.

And BB&T, which is integrating several smaller companies, including Mainstreet Financial Corp., which it bought in March, posted a 19% earnings jump, to $152.8 million.

BB&T is "maintaining momentum through a period of a lot of acquisition action, taking small bites and pricing the deals appropriately," said A.G. Edwards & Sons analyst David C. Stumpf.

The successful integrations stand in sharp contrast to those of larger banks such as First Union Corp., which have disappointed the market after big deals. BB&T, for example, "remembers that old-fashioned customer service is the name of the game," Mr. Stumpf said. "I'm not sure you're getting that at places like First Union."

As bank stocks generally fell for the day, Firstar slipped 62.5 cents, to $28.125; SunTrust 31.25 cents, to $68.9375, and BB&T 50 cents, to $34.9375.

Firstar Corp.

In line with expectations, Firstar reported earnings per share of 22 cents after a one-time merger-related charge of $30.1 million. Excluding the charge, the bank earned 28 cents a share.

Revenues improved by 8.5%, to $620 million, thanks to a 7.9% increase in loans, to $26.6 billion, and a 12.1% rise in fee income, to $237.4 million.

David M. Moffett, chief financial officer of $38.4 billion-asset Firstar, said the company's revenue has improved as Star Banc's retail products have been introduced in pre-merger Firstar branches.

"We've made considerable progress in a short amount of time," he said. "We're selling a lot more to the old Firstar market."

Analysts said the revenue growth is a sign that former Cincinnati-based Star Banc executives are molding Firstar into a savvy retailer.

"It shows that this company has the ability to turn around slow-growing retail companies," said Lori Appelbaum, a bank analyst at Goldman, Sachs & Co. in New York.

"They look more like the old Star Banc-strong in expense control and revenue growth," said Joseph Duwan, a bank analyst at Keefe, Bruyette & Woods in New York.

Before merger-related charges, noninterest expenses were down 7.5%, to $291.5 million. The company's efficiency ratio improved to 46.95%, from 55.09% a year earlier.

Firstar's performance ratios also improved, with return on assets up to 2.0%, from 1.65% a year earlier, and return on equity topping out at 20.55%, up from 19.88%

On the revenue side, Firstar reported increases in fee income across almost all categories. New customers and products helped boost trust income by 17.8%, to $75.0 million, and retail deposit income by 6.6%, to $24.3 million. Credit card income increased 7.6%, to $24.8 million, as Firstar picked up new customers and existing ones used their cards more frequently.

Those fee income gains were offset by a decline in mortgage banking income of 7.6%, to $37.3 million, as higher interest rates curbed refinancing volumes.

Looking ahead to the third quarter, Mr. Moffett said Firstar is focused on executing its merger with St. Louis' Mercantile Bancorp., which was announced in May and is expected to close in September, pending regulatory approval.

Though the Mercantile deal is by far Firstar's largest, the acquisition is similar to the Firstar-Star Banc combination, because Mercantile shares the old Firstar's weakness in retailing and high overhead.

For that reason, Firstar expects to see similar cost savings and revenue growth trends with the Mercantile deal, as it has with the Star Banc- Firstar merger, Mr. Moffett said.

"We expect it to go quite well," Mr. Moffett said. "We keep a lot of things on our plate, a lot of things on our schedule."

SunTrust Banks

SunTrust's earnings of 91 cents a share were up from 85 cents a share a year earlier.

Revenue growth and cost controls contributed to SunTrust's performance, analysts said. "We are pleased with revenue growth, and there are early signs of progress on the expense side," as SunTrust integrates the operations of Crestar, said Michael Granger, a bank analyst at Fox-Pitt, Kelton Inc.

He estimated that 75% of the expense savings from the deal will be in place by yearend.

Net interest income rose 7% in the second quarter, to $795.4 million, from $745.6 million a year earlier. The net interest margin was 3.92%, down from 4.02% from a year ago, but unchanged from the first quarter. "The margin stability is good news," Granger said.

Noninterest income totaled $465.4 million, up 12% from the second quarter of 1998.

"Crestar is doing well," said Peter Kuper, a bank analyst at Keefe, Bruyette & Woods Inc.

SunTrust's only black mark was a $28 million year-over-year increase in nonperforming assets, to $267.8 million in the second quarter, analysts said. That development stemmed from a loan to Pluma Inc., a North Carolina sportswear maker that has filed for bankruptcy.

But the Pluma loan is an isolated incident, bank officials and outside analysts said. "They are cleaning up Pluma," Kuper said. "Credit quality isn't an issue."

BB&T Corp.

BB&T, based in Winston-Salem, N.C., reported second-quarter earnings of 49 cents a share, up from 41 cents a share a year earlier.

The country's 24th-largest bank, "continues to report strong numbers across the board," said Mr. Stumpf of A.G. Edwards.

Net interest income rose 12% in the second quarter, to $362.3 million. Noninterest income gained 37%, to $184.2 million.

The bank's efficiency ratio, on a taxable equivalent basis, was slightly better at 52.8%, up from 52.3% in the second quarter of 1998.

"They continue to have strong revenue growth, solid expense management, solid loan growth, and very good credit quality," said John Balkind, a bank analyst at Fox-Pitt.

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