In a welcome change of pace for investors, big banks posted higher returns on equity in the first quarter.

Performance ratios were bolstered by improved interest margins and slackening credit problems.

Return on common shareholder equity, a key indicator of profitability for investors and Wall Street analysts, rose at money-centers, superregionals, and large regional bank companies when compared with full-year 1991 results, according to an American Banker survey. (See tables at left and on page 10.)

Money-center banks registered the biggest improvements in returns on equity. The mean average ROE for the eight banks was 14.12%, more than double the 7.03% achieved last year.

High Point for Superregionals

However, when ranked by return on average assets, superregional banks outranked both money-center and large regional banks.

The 25 largest supperregionals, defined as bank companies with large retail networks and at least $20 billion of assets, averaged ROAs of 0.79%, or 79 cents for every $100 of assets.

Last year they also outpaced their banking brethren, though mean ROA then was a slim 0.53%.

Upturn for Money-Centers

Nevertheless, the money-centers showed a big improvement from last year's ROA of 0.40%, a lowly number that reflected major loan-loss provisions.

Taking the Wall Street bench-mark of a 15% return on equity and a 1% return on assets as standards of strength, superregional bank companies outshone other categories.

Twelve of the 24 superregionals achieved the benchmarks in the first quarter, compared with seven that had a 15% ROE and six with a 1% ROA in 1991.

Only three of the eight money-center banks topped 15% ROE or 1% ROA - Bankers Trust New York Corp., J.P. Morgan & Co., and Continental Bank Corp. Among the money-centers, only Bankers and Morgan achieved those levels last year.

Eight of the 23 regional banks hit the ROE mark, the same number as the previous year. Ten reached the ROA standard versus nine one year earlier.

Startling Improvement

Chicago's Continental registered the most dramatic performance shifts among the top banks, flaunting a 16.71% ROE and a 1.02% ROA versus negative 9.22% ROE and a negative 0.31% in 1991.

Continental chairman Thomas Theobald said at the company's annual meeting in April that the bank expects a consistent 15% ROE in the future now that the company has "jettisoned the significant [credit] drags" on profitability and institutionalized a cost-cutting mentality.

As a general rule, analysts said, regional banks will continue to register more consistent performance ratios because they are more narrowly focused on their businesses and undergo fewer performance-busting mergers.

'More Restructuring Costs'

"The superregionals and money-center banks have been more heavily involved in mergers, so they've had more restructuring costs," said Jeffrey B. Naschek, an analyst at Salomon Brothers Inc.

"Banks in those categories have also had more restructuring of business units and divesting of assets, which comes through the expense lines, whereas the regionals had been more focused."

The regional banks also excelled in working out credit problems. Their average non-performing asset ratio at the end of the first quarter was 2.78%, compared with 3.02% at the superregionals and 3.44% at money-centers.

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