Six big New York-area banks reported third-quarter earnings Thursday, and the news was all good.

Net interest margins and loans rose, and credit problems dropped at the retail-oriented companies. Trading gains and strong merchant banking profits fueled results at J.P. Morgan & Co., the biggest bank company to report.

Morgan reported net income of $468 million, up 46% from $320 million in the same period last year. The results, which translated to $2.30 per share, were broadly based and far exceeded Wall Street's consensus estimate of $1.93 per share, according to First Call Corp., Boston.

Still, shares of Morgan as well as several large regional banks fell as short-term profit-takers sold on the news. (See related earnings story on page 4 and stock market story on page 24.)

Profits at Bank of New York Co. surged 45% from the 1992 third quarter, to $151 million. The company's per-share earnings of $1.47 beat analysts' estimates, reflecting an unexpectedly large boost in net interest income from Bank of New York's purchase of a New Jersey company in August.

Accelerating fee income and a reduced credit provision also bolstered earning at the nation's 17th-largest bank-company.

Keycorp, the Albany, N.Y.-based bank company that two weeks ago agreed to merge with Cleveland-based Society Corp., said it netted $102.6 million in the third quarter, a 31.4% jump from the year-earlier period.

Stronger-than-anticipated loan growth and a wide net interest margin fueled results. Pershare earnings were in line with analysts' expectations because of a conservative decision to plow some of the unexpected gains back into loan-loss reserves. said Nancy Bush, an analyst at Brown Brothers, Harriman & Co.

Three New Jersey-based banks also weighed in with strong reports.

First Fidelity Bancorp, the state's biggest bank company, notched a 23.3% gain, to $101.5 million. A $154 million decline in nonperforming assets and strong net interest income drove the results. The earnings met analysts' expectations.

National Westminster Bancorp, a Jersey City-based unit of the British clearing bank, recorded a profit of $71.5 million in the third quarter, or 82% more than its year-earlier results.

A faster-than-expected recuperation from credit problems and improved net interest margins told the story at Midlantic Corp., where profits skyrocketed to $46.9 million in the third quarter, from $17.1 million a year earlier.

Earnings of 86 cents a share at New Jersey's second-largest bank far exceeded analysts' predictions.

J.P. MORGAN

Analysts applauded the quarterly performance at the nation's fourth-largest bank company, saying it demonstrated strengths in corporate finance, investment management, and trading.

Morgan's results rose above expectations, however, because of a $152 million after-tax gain from the sale of equity investments -- including $86 million of stock in Hospital Corporation of America, a leveraged buyout it helped finance.

Several analysts said they no longer consider equity gains to be a nonrecurring item at Morgan, which boasts as many characteristics of an investment bank as it does of a commercial bank.

"We include equity gains in their operating earnings," said Diane Glossman, an analyst at Salomon Brothers in New York. "We think that is a legitimate business for them."

Morgan's unique profile also showed up in another strong quarter from trading and corporate finance advisory activities.

It booked trading revenues of $464 million in the third quarter. Though down from exceptional trading results of $520 million in the second quarter and $494 million in the first quarter, the numbers still impressed analysts.

Similarly, Morgan booked corporate finance revenues of $140 million in the third quarter, up 14% from $123 million during the same period last year.

The corproate finance total included $56 million from Morgan's flourishing securities underwriting business. The company, which only recently was permitted to underwrite equity, lead managed two offerings during the third quarter.

Morgan said investment management fees totaled $116 million in the quarter, up 20% from last year.

-- Yvette KantrowJ.P. Morgan & Co.New York-- Dollar amounts in millions (except per share) --Third Quarter 3Q93 3Q92Net income $468.0 $320.0Per share 2.30 1.61ROA 1.19% 0.99%ROE 23.92% 18.82%Net interest margin 1.39% 1.71%Net interest income 474.0 485.0Noninterest income 1,174.0 805.0Noninterest expense 882.0 747.0Loss provision 0.0 10.0Net chargeoffs 25.0 33.0Year to Date 1993 1992Net income $1,194.0 $1,361.0Per share 5.89 6.86ROA 1.13% 1.40%ROE 23.61% 25.74%Net interest margin 1.49% 1.80%Net interest income 1,403.0 1,415.0Noninterest income 3,341.0 2,264.0Noninterest expense 2,557.0 2,107.0Loss provision 0.0 45.0Net chargeoffs 95.0 164.0Balance Sheet 9/30/93 9/30/92Assets $129,285.0 $117,853.0Deposits 38,987.0 38,418.0Loans 24,478.0 28,464.0Reserve/nonp. loans 329.90% 215.60%Nonperf loans/loans 1.20% 2.10%Nonperf asset/asset 0.20% 0.50%Leverage cap. ratio 7.00% 7.10%Tier 1 cap. ratio 9.30% 7.80%Tier 1+2 cap ratio 13.30% 11.70%

BANK OF NEW YORK

In addition to another strong quarter of fee income, the nation's 16th-largest bank company enjoyed $22 million of profits from National Community Banks, the New Jersey company that was incorporated onto its books during the quarter.

Bank of New York said its reported earnings were restated for 1992 and 1993 to reflect the acquisition, which was accounted for on a pooling-of-interest basis.

"Most people figured [the acquisition] would be a little dilutive this quarter, but it ended up being slightly accretive," said John Leonard, an analyst at Salomon Brothers.

Some of the unexpected gain was offset by a $5 million, or 5-cent-a-share, reduction in tax benefits because of new legislation, the bank said.

Fees from trust, investment, and securities processing rose 6% from the second quarter and 11% from the year-earlier third quarter, to $119 million. "Other" charges and fees, primarily related to strong credit card growth, gained 6% from the second quarter, to $117 million.

Bank of New York's net interest spread also widened, to 3.09%, from 3.07% in the second quarter, while net interest income jumped 14% to $389 million.

On the credit-quality side, nonperforming assets declined for the ninth consecutive quarter, highlighted by a 13% decrease during the quarter in foreclosed real estate and other realty nonperformers, to $2Q3 million at Sept. 30.

Bank of New York's $55 million addition to its loan loss-reserves was $31 million less than in the second quarter.

-- Karen GulloBank of New York Co.New York-- Dollar amounts in millions (except per share) --Third Quarter 3Q93 3Q92Net income $151.0 $104.0Per share 1.47 1.01ROA 1.28% .89%ROE 15.95% 11.95%Net interest margin 3.81% 3.90%Net interest income 389.0 358.0Noninterest income 335.0 312.0Noninterest expense 405.0 401.0Loss provision 55.0 95.0Net chargeoffs 89.0 108.0Year to Date 1993 1992Net income $402.0 $281.0Per share 3.91 2.92ROA 1.16% .82%ROE 14.56% 11.81%Net interest margin 3.85% 3.59%Net interest income 1,157.0 1,056.0Noninterest income 1,011.0 894.0Noninterest expense 1,238.0 1,129.0Loss provision 234.0 346.0Net chargeoffs 302.0 394.0Balance Sheet 9/30/93 9/30/92Assets $45,544.0 $46,506.0Deposits 31,723.0 31,662.0Loans 30,368.0 30,394.0Reserve/nonp. loans 175.20% 123.30%Nonperf loans/loans 1.89% 2.76%Nonperf asset/asset 1.58% 1.81%Leverage cap. ratio 7.85% 6.98%Tier 1 cap. ratio 8.45% 7.14%Tier 1+2 cap ratio 13.24% 11.44%

FIRST FIDELITY

First Fidelity supplemented its report about declining nonperforming assets by announcing plans to sell a package of loans and foreclosed property originally worth $161.9 million.

The portfolio, which is being carried at $91 million, or 56% of original loan value, was put in the "held for sale" category.

First Fidelity said it will take an additional $6.6 million writedown against the package in the third quarter. About half of the portfolio was under contract for sale at Sept. 30, the bank company said.

During the third quarter, First Fidelity recorded a $5 million jump in net interest income from its second quarter, to $353.5 million. But its interest margin declined 10 basis points, to 4.82%, primarily from the impact of acquisitions.

Acquisitions also drove up noninterest expenses, the company said.

-- Karen GulloFirst Fidelity Bancorp.Lawrenceville, N.J.-- Dollar amounts in millions (except per share) --Third Quarter 3Q93 3Q92Net income $101.5 $82.3Per share 1.17 1.03ROA 1.24% 1.14%ROE 15.80% 15.70%Net interest margin 4.82% 4.73%Net interest income 353.5 313.0Noninterest income 97.5 81.1Noninterest expense 260.2 224.3Loss provision 33.0 56.0Net chargeoffs 92.8 60.8Year to Date 1993 1992Net income $294.5 $224.1Per share 3.43 2.80ROA 1.26% 1.03%ROE 16.29% 14.80%Net interest margin 4.87% 4.55%Net interest income 1,036.3 914.7Noninterest income 281.3 245.3Noninterest expense 752.4 671.0Loss provision 119.0 176.0Net chargeoffs 193.3 188.4Balance Sheet 9/30/93 9/30/92Assets $32,602.7 $28,866.7Deposits 27,378.0 23,595.8Loans 20,275.8 16,673.5Reserve/nonp. loans 159.00% 110.00%Nonperf loans/loans 1.88% 3.25%Nonperf asset/asset 1.57% 2.60%Leverage cap. ratio 7.20% 6.74%Tier 1 cap. ratio 10.50% 10.42%Tier 1+2 cap ratio 14.05% 14.03%

KEYCORP

The company, which ended the quarter with $32.4 billion of assets, outpaced both last year's third quarter and this year's second quarter on two fronts: net interest margin and credit quality. (See related table.)

Keycorp, with outposts throughout the northern United States, upstaged its strong earnings quarter two weeks ago by announcing the deal to become the nation's 10th-largest bank company by merging with Society.

Analysts said the only surprise in the earnings announcement was the strong growth in loans and net interest margin, which was up four basis points from the second quarter, to 5.38%.

"They did it through their continued ability to reprice deposits at ever-lower interest rates," said Ms. Bush, the analyst.

In addition to enjoying "modest loan growth," paced by a 9.4% increase at its Rocky Mountain banks, Keycorp said fee income jumped 8.8% from the year-earlier quarter, to $117.6 million.

Credit highlights included a 13% decline in nonperforming assets and a 7.7% dip in foreclosed real-estate assets since the end of the second quarter. Keycorp's chargeoffs also fell 41% from the third quarter of 1992. The company took a provision of $32.8 million -- down from $50.8 million in the year-earlier quarter and $41.6 million in this, year's second quarter.

Expenses rose 10.5% from the 1992 quarter, primarily related to five acquisitions completed since last year, but Keycorp reported an admirable efficiency ratio of 58.03%.

-- Jed HorowitzKeycorpAlbany, N.Y.-- Dollar amounts in millions (except per share) --Third Quarter 3Q93 3Q92Net income $102.6 $78.1Per share 0.97 0.75ROA 1.28% 1.09%ROE 18.44% 16.01%Net interest margin 5.38% 5.30%Net interest income 389.9 343.3Noninterest income 117.9 110.7Noninterest expense 305.9 276.8Loss provision 32.8 50.8Net chargeoffs 26.2 43.5Year to Date 1993 1992Net income $297.4 $233.6Per share 2.83 2.26ROA 1.27% 1.12%ROE 18.76% 16.63%Net interest margin 5.37% 5.29%Net interest income 1,130.9 1,001.7Noninterest income 368.4 311.5Noninterest expense 905.2 799.0Loss provision 106.2 144.8Net chargeoffs 90.8 128.6Balance Sheet 9/30/93 9/30/92Assets $32.4 $30.0Deposits 26.6 24.4Loans 22.1 20.1Reserve/nonp. loans 174.70% 150.50%Nonperf loans/loans 0.82% 0.97%Nonperf asset/asset 1.43% 2.03%Leverage cap. ratio 6.35% 6.15%Tier 1 cap. ratio 8.71% 8.42%Tier 1+2 cap ratio 11.51% 10.87%

NATIONAL WESTMINSTER

The bank recognized $17 million in previously unrecorded tax benefits this quarter, the result of the adoption of a new accounting rule.

Offsetting the gains were $10.7 million in loan chargeoffs and $25.8 million in foreclosed property expense tied to the bulk sale of realty assets with an original loan value of $150 million.

Nonaccrual loans fell $72.8 million, to $717.9 million, during the third quarter. Nonaccruals now account for 5.22% of total loans, versus 5.59% in the previous quarter and 8% a year ago.

Chargeoffs totaled $81.9 million in the quarter, down $9.7 million from the previous quarter but up $33.6 million from a year ago.

Net interest income was $201.9 million, up $5.3 million from the previous quarter. Excluding securities gains, noninterest income rose $13.1 million, to $115.9 million, the result of growth in trading and capital market activities.

Operating expenses were up 16% compared to the previous quarter and 19% from a year ago, to $235.5 million. The rise in expenses was driven by higher foreclosed asset costs and increased spending on incentive compensation, new product introductions, and expansion in consumer banking infrastructure.

-- Karen Gullo

MIDLANTIC

Anthony Polini, an analyst at Mabon Securities, said Wall Street underestimated the degree to which Midlantic has moved to clean up its credit problems.

"At yearend 1992, nonperforming assets were 9% of assets, and now they account for 5.5%," the analyst said. "We think they will be even lower next quarter."

The Edison, N.J.-based bank company reduced nonperforming assets by 13% in the three months ended Sept. 30.

Midlantic also showed improvement in its net interest margin, which rose to 4.22%, from 4.12% three months earlier. Net interest income climbed 3%, to $130 million.

Reduced deposit costs, lower levels of nonaccruing assets, and an increase in higher-yielding consumer loans were largely responsible for the wider margins. While other loan categories were flat, consumer loans, excluding single-family mortgages, were up $300 million in the quarter.

-- Karen Gullo

U.S. TRUST

The New York City-based company, which ended the third quarter with $3.8 billion of assets, reported a gain of $11.9 million in the September period, up 8.8% from a year earlier.

Management and other fees rose 10.8%.

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