A federal regulator warned bankers Thursday to be prepared for potential economic upheavals.

Nancy Wentzler, director of economic analysis at the Office of the Comptroller of the Currency, said evolution in industries such as telecommunications and energy, instability in the world's capital markets, and hints of an economic slowdown are all potential threats to the banking industry's health.

In a briefing, Ms. Wentzler said the agency is not planning any specific regulatory action, but is watching how banks are preparing for these jolts. "The strategies that banks adopt should be carefully evaluated," she said.

The focus comes despite continued strong earnings for the industry. Banks earned $15 billion in the third quarter, down $1.1 billion from the second quarter, but still the fourth-highest ever.

Consumer credit is a potential hot spot. The savings rate has slipped from 5.7% in 1990 to 0.1% today, "barely showing up on the Richter scale," Ms. Wentzler said.

If a region were hit with layoffs, as some economists are predicting, consumers could quickly default on their credit cards and other loans, Ms. Wentzler said. Not surprisingly, banks have steadily reduced their consumer lending since 1994. Still, the consumer loan delinquency rate has grown 100 basis points, to 3.7%, during this four-year period.

Commercial and industrial loans grew 14% in the third quarter, continuing a sharp upward spike and underscoring regulators' concerns that underwriting standards have slipped, the agency said.

At the same time, provisions for loan losses are at 0.5% of assets, higher than the 0.28% level of 1994 but well below the 1% level recorded during the banking crisis in 1991.

Though that may not be immediate cause for alarm-the percentage of delinquent loans is below 1%-"asset quality deterioration can be fairly rapid in the event of economic distress, such as occurred during the 1990- 91 recession," the agency said.

Bank economists, however, were more optimistic about the industry's prospects. "As far as I can tell, the banking industry is in pretty good shape," said Joel L. Naroff, chief banking economist for First Union Corp. "It doesn't look like there's a real estate crisis developing, delinquency rates are not rising dramatically. We don't seem to be making the same mistakes" as were made in late 1980s.

"It would appear that overall credit quality is in good shape," said Alan M. Gayle, senior investment strategist at Crestar Asset Management Co. in Richmond, Va.

However, banks are going to be more dependent than ever on noninterest income, such as fees and service charges, Mr. Gayle said. One reason is that lower interest rates have sapped the profits out of lending. Another is that the traditional bank customer is aging and demanding more deposit products and fewer loans.

By one key measure, the industry has become more prepared than ever to deal with a slow down by bulking up on equity capital.

The percentage of big banks-those with more than $10 billion of assets- that keep an equity capital ratio of more than 8% jumped from 32% in 1996 to nearly 60% in 1998. Midsize and smaller banks reported a similar trend.

Currently, 79% of all banks have an equity capital ratio higher than 8%, compared with 55% in 1990.

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