Hamstrung by continued problems generating revenue growth, CoreStates Wednesday reported a 2% gain in fourth-quarter earnings.

The Philadelphia-based banking company, the nation's 21st largest, reported net income of $195.5 million, or 91 cents a share, compared with $192 million, or 87 cents a share, for the same period a year earlier.

While CoreStates' bottom line was bolstered by cost savings and 15% growth in fees related to its international processing businesses, the bank was hurt by weak domestic growth, particularly in its retail markets in the Philadelphia area.

Overall, revenues at the $44.7 billion-asset institution fell to $761.5 billion in the fourth quarter, a 1.3% decline. Those results underperformed other regional banks that have reported this quarter.

The bank's earnings also fell 4 cents short of analysts' consensus estimates. Nevertheless, in keeping with an overall gain in bank stocks Wednesday, CoreStates' shares rose $1.125, to close at $52.625.

Terrence A. Larsen, CoreStates' chairman, has said that the bank's focus on downsizing and closing branches has taken its toll on revenue growth.

In an interview Wednesday, he said the bank's retail operation continues to experience a falloff in new business. But, he said, the wholesale side of the business is showing signs of recovery. He pointed out that the bank has made a conscious decision to forgo some loan growth by selling off lesser-quality loans.

"We anticipate that growth will be there in 1997," he said.

Michael Mayo, an analyst with Lehman Brothers, argued that it is shortsighted to focus on the bank's inability to generate revenues. He argued that CoreStates, which has an above-average return on equity of 21%, has pleased shareholders in other ways, particularly by buying back its own shares.

"I think it's important not to focus on any one-line item," he said. +++

Corestates Financial Corp. Philadelphia Dollar amounts in millions (except per share) Fourth Quarter 4Q96 4Q95 Net income $195.5 $192.1 Per share 0.91 0.87 ROA 1.81% 1.74% ROE 21.03% 20.36% Net interest margin 5.46% 5.50% Net interest income 543.1 554.3 Noninterest income 224.4 225.4 Noninterest expense 417.3 430.5 Loss provision 40.0 38.2 Net chargeoffs 37.9 54.5 Year to Date 1996 1995 Net income $649.1 $655.2 Per share 2.97 2.95 ROA 1.78% 1.63% ROE 20.07% 19.43% Net interest margin 5.53% 5.47% Net interest income 2,167.7 2,200.2 Noninterest income 899.1 882.2 Noninterest expense 1,776.8 1,885.5 Loss provision 228.8 144.0 Net chargeoffs 188.7 154.9 Balance Sheet 12/31/96 12/31/95 Assets $45,494.0 $45,997.0 Deposits 33,727.0 33,964.0 Loans 32,777.0 31,714.0 Reserve/nonp. loans 321.72% 290.40% Nonperf. loans/loans 0.67% 0.73% Nonperf. assets/assets 0.54% 0.58% Nonperf. assets/loans + OREO 0.75% 0.85% Leverage cap. ratio 8.46% 7.99% Tier 1 cap. ratio 9.45% 9.20% Tier 1+2 cap. ratio 13.23% 12.71% ===

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