Several large banks reported strong third-quarter earnings on Wednesday, but analysts said results could take a turn for the worse in the months ahead.

Though some companies reported double-digit gains, analysts said the results were marred by continued problems in consumer loan portfolios, sluggish revenue growth and heavy spending on technology and high-priced speciality personnel.

"Earnings are clearly slowing and if trends continue, earnings will be increasingly constrained," said Thomas McCandless, a bank analyst with Natwest Markets.

To be sure, analysts noted that the bottom lines were largely positive. Republic New York Corp. posted a 13% gain in earnings, to $107.7 million; Fleet Financial Corp. reported a 10% increase, to $295 million; and Wachovia Corp. said its earnings rose 9%, to $164.6 million. Revenue gains from mergers gave a lift to both Republic and Fleet.

Some other banking companies, however, reported flat or lower profits. BankAmerica Corp., for example, reported a 3% decline from a year earlier, to $683 million, amid a sharp rise in loan chargeoffs.

Analysts said they were especially discouraged by the credit quality of banks' consumer portfolios.

"We had hoped to see some stabilization of the consumer delinquency rate this quarter," said Anthony Davis, a banking analyst with Dean Witter.

Mr. Davis, however, said nearly all banks have controlled expenses well and have been actively managing their balance sheets. Two-thirds of the banks he covers are buying back their own stock, he noted.

BankAmerica Corp.

San Francisco-based BankAmerica was hurt by both credit losses and an $82 million charge for payments to the Saving Association Insurance Fund.

Without the SAIF assessment, the bank would have earned $731 million, a 4% gain.

The nation's third-largest banking company hiked its loan-loss provision by 114% from a year earlier, to $235 million, and booked a 50% increase in net chargeoffs, to $226 million. Both measures, however, were down somewhat from the second quarter.

"You need to look at this area on a sequential basis," said Ronald I. Mandle, an analyst at Sanford C. Bernstein & Co. "Their increase was about the same from the previous quarter, which was much less than some others in the industry."

Michael O'Neill, chief financial officer for BankAmerica, expressed confidence quality of the company's credit card portfolio.

"I know that this area gets a lot of attention, but I would suggest that we continue to outperform the industry group here," he said. He added that cards remained a modest portion of total loans.

Though revenues are not growing rapidly, analysts praised the bank for its capital management, expense control, and consistency.

Anthony Lombardi, a banking analyst with Dean Witter, said that revenue from trust fees has decreased by 26% due to the sale of a large chunk of the business in the past 18 months.

Fleet Financial Group

Boston-based Fleet Financial Group, which is attempting to increase revenue growth through acquisitions, is evidently making headway.

Since last year, Fleet has acquired Shawmut National Corp., and National Westminster USA. Although results were restated to adjust for the acquisition of Shawmut, they were not adjusted for the Natwest purchase.

Fleet can thank the two deals for its 21% increase in net interest income to $934 million.

Fleet also made use of balance sheet restructuring to boost income, selling off more than $20 billion in low yielding assets while shifting other assets into higher yielding categories.

Both Terrence Murray, Fleet's president and chief executive, and Eugene M. McQuade, chief financial officer, said that Fleet's acquisitions provided a power stimulus to earnings.

"The balance sheet restructuring and acquisition of Natwest have provided a strong impetus to net income," Mr. McQuade said in a statement. He noted that in addition to the $162 million increase in net interest income, net interest margins rose 25 basis points to more than 5%, reflecting the addition of higher yielding loans and lower cost core deposits.

Analysts said that so far, Fleet has performed admirably despite earlier concerns that it would have difficulty integrating Shawmut and Natwest. But they added that the real challenge, once expenses savings kick in, will be revenue growth.

"The real challenge will not be on the expense side but how to generate revenues in what its arguably the slowest region in the country," said Thomas Theurkauf, a bank analyst at Keefe, Bruyette & Woods Inc.

Republic New York Corp.

Republic, too, could credit its earnings gains to acquisitions, mainly in its New York City home market.

Mergers boosted net interest income 20% to $254.4 million.

Total assets grew 25% to $50.6 billion, underscoring the importance of Republic's most recent deals, the acquisition of Brooklyn Bancorp, and the purchase of branches and deposit from First Nationwide, Bank Leumi, and Independence Savings Bank.

Noninterest income, including increases in trading and commissions, as well as a 20% jump in earnings, to $23.8 million, from Safra Republic Holdings SA, confirmed that Republic's attempt to create a diversified profit stream is working.

Republic holds a 49% stake in Luxembourg-based Safra Republic Holdings.

"They know what they're buying and their retail strategy for bringing in low cost deposits appears to be working," said Marni Pont, a banking analyst with Keefe, Bruyette & Woods.

Wachovia Corp.

Bucking an industry trend of slower loan growth due to consumer credit quality concerns, Wachovia Corp. said its income rose 8.8% from a year ago to $165 million.

Mr. Davis said an increase in Wachovia's credit card portfolio is driving consumer loan growth, and the Winston-Salem, N.C.-based company doesn't appear to be sacrificing credit quality to add loans to its books. While the provision for loan losses increased 76% to $40.7 million, Mr. Davis said Wachovia compares favorably with other banks.

Wachovia also added $225 million in credit card receivables last quarter.

While noninterest expense was up 5.9% over a year ago to $316 million, Mr. Davis said investments the company has made in technology have begun to pay off in additional revenue. He also noted the company's efficiency ratio improved to 51.6%, down from 52.9% a year ago.

The $47.5 billion-asset Wachovia also had an 8% increase in noninterest income, which was attributable to service charges on deposits, trust fees and credit card processing.

Wachovia also benefited from $393 million gain from the sale of investment securities, which was 24% higher than securities gains realized a year ago.

CoreStates Financial Corp.

CoreStates, which posted a 1% earnings gain to $197 million, has had troubles generating revenue growth in recent years.

The most recent quarter proved no exception for a bank that has struggled through a slow-growth regional economy, and two years of reorganizational issues related to downsizing and its merger with Meridian Bancorp last April.

Excluding security gains, revenues growth at the bank was flat for the quarter.

Analysts say that may help explain why the bank decided to reward shareholders with larger-than expected share buyback program and dividend increase.

The bank announced it would be repurchasing up to 22 million, or about 10% of its outstanding shares, by the end of 1997. Analysts had expected the amount to be about 8%. The company also announced a 11.9% dividend increase.

"They are faced with sluggish growth and excess capital," said Dennis Shea, an analyst with Morgan Stanley. "So the sensible thing is to institute a share buyback and a dividend increase, which will accelerate its earnings per share growth even though there isn't a lot of revenue growth."

Boatmen's Bancshares

At Boatmen's Bancshares, charges for a payment to the SAIF and for its merger with NationsBank Corp., contributed to a 6% decline to $125 million.

St. Louis-based Boatmen's took charges of $24 million for SAIF and $18 million for the NationsBank deal.

These costs were partly offset by a $10 million gain from four branches sold in Iowa.

Analysts said they were looking beyond this quarter to January when the $41 billion-asset Boatmen's will be merged into Charlotte-based NationsBank.

"Boatmen's stock is not going to trade on its own fundamentals. It's going to trade on NationsBank's fundamentals," said Joseph Stieven, an analyst with Stifel, Nicholaus & Co.

This article was written by Jacqueline S. Gold on the basis of reporting from Christopher Rhoads, James R. Kraus, Brett Chase, and John Kimelman. +++

Wachovia Corp. Winston-Salem, N.C. Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $164.6 $151.3 Per share 0.97 0.87 ROA 1.44% 1.42% ROE 18.13% 17.47% Net interest margin 4.03% 4.11% Net interest income 398.5 367.6 Noninterest income 198.2 170.7 Noninterest expense 316.5 298.9 Loss provision 40.7 23.2 Net chargeoffs 40.7 23.1 Year to Date 1996 1995 Net income $473.8 $456.3 Per share 2.78 2.64 ROA 1.40% 1.49% ROE 17.29% 18.14% Net interest margin 3.99% 4.21% Net interest income 1,149.7 1,073.9 Noninterest income 581.4 546.8 Noninterest expense 934.8 888.5 Loss provision 102.5 73.6 Net chargeoffs 102.2 71.1 Balance Sheet 9/30/96 9/30/95 Assets $47,483.0 $44,101.0 Deposits 27,436.0 25,283.0 Loans 31,549.0 29,012.0 Reserve/nonp. loans 668% 710% Nonperf. loans/loans 0.19% 0.20% Nonperf. assets/assets 0.16% 0.17% Nonperf. assets/loans + OREO 0.25% 0.26% Leverage cap. ratio 8.01%* 8.34% Tier 1 cap. ratio 8.90%* 9.32% Tier 1+2 cap. ratio 12.80%* 13.08%

*Estimated

Republic New York Corp. New York Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $107.7 $95.2 Per share 1.80 1.55 ROA 0.80% 0.83% ROE 15.59% 15.47% Net interest margin 2.47% 2.56% Net interest income 246.5 203.6 Noninterest income 109.8 96.8 Noninterest expense 198.3 162.2 Loss provision 20.0 3.0 Net chargeoffs 9.0 4.0 Year to Date 1996 1995 Net income $310.3 $193.8 Per share 5.15 3.05 ROA 0.80% 0.54% ROE 15.37% 10.64% Net interest margin 2.50% 2.65% Net interest income 711.5 608.9 Noninterest income 326.2 315.9

Noninterest expense 578.5 652.4 Loss provision 28.0 9.0 Net chargeoffs 21.2 15.5 Balance Sheet 9/30/96 9/30/95 Assets $50,602.0 $41,637.0 Deposits 30,981.0 23,133.0 Loans 11,789.0 9,810.0 Reserve/nonp. loans 312.92% 585.23% Nonperf. loans/loans 0.95% 0.55% Nonperf. assets/assets 0.19% 0.20% Nonperf. assets/loans + OREO NA NA Leverage cap. ratio 5.25%* 6.35% Tier 1 cap. ratio 12.75%* 15.69% Tier 1+2 cap. ratio 21.85%* 26.56%

*Estimated

Fleet Financial Corp. Boston Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $295.0 $268.0 Per share 1.02 0.96 ROA 1.35% 1.27% ROE 17.83% 16.86% Net interest margin 5.01% 4.12% Net interest income 934.0 772.0 Noninterest income 555.0 448.0 Noninterest expense 911.0 747.0 Loss provision 65.0 27.0 Net chargeoffs 110.0 71.0 Year to Date 1996 1995 Net income $836.0 $748.0 Per share 2.91 2.69 ROA 1.36% 1.21% ROE 17.34% 16.65% Net interest margin 4.75% 4.18% Net interest income 2,528.0 2,318.0 Noninterest income 1,624.0 1,329.0 Noninterest expense 2,555.0 2,311.0 Loss provision 148.0 75.0 Net chargeoffs 246.0 207.0 Balance Sheet 9/30/96 9/30/95 Assets $87,192.0 $83,751.0 Deposits 67,551.0 53,822.0 Loans 60,086.0 52,435.0 Reserve/nonp. loans 218.03% 210.16% Nonperf. loans/loans 1.18% 1.31% Nonperf. assets/assets 0.87% 0.92% Nonperf. assets/loans + OREO 1.26% 1.47% Leverage cap. ratio 6.63% 6.84% Tier 1 cap. ratio 7.06% 8.36% Tier 1+2 cap. ratio 10.82% 12.20%

CoreStates Financial Corp. Philadelphia Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $196.9 $194.7 Per share 0.89 0.88 ROA 1.80% 1.73% ROE 19.74% 20.72% Net interest margin 5.58% 5.43% Net interest income 540.3 541.6 Noninterest income 236.6 209.4 Noninterest expense 431.9 411.1 Loss provision 40.0 38.1 Net chargeoffs 36.9 30.4 Year to Date 1996 1995 Net income $453.6 $463.0 Per share 2.06 2.08 ROA 1.39% 1.38% ROE 15.48% 16.66% Net interest margin 5.55% 5.46% Net interest income 1,604.6 1,620.5 Noninterest income 674.7 656.9 Noninterest expense 1,359.5 1,455.1 Loss provision 188.8 105.8 Net chargeoffs 150.8 100.3 Balance Sheet 9/30/96 9/30/95 Assets $45,198.0 $45,037.0 Deposits 32,303.0 33,102.0 Loans 32,834.0 31,938.0 Reserve/nonp. loans 708.2% 686.6% Nonperf. loans/loans NA NA Nonperf. assets/assets 0.58% 0.71% Nonperf. assets/loans + OREO 0.80% 1.00% Leverage cap. ratio 8.69% 7.74% Tier 1 cap. ratio 9.52% 8.95% Tier 1+2 cap. ratio 12.92% 12.53%

Boatmen's Bancshares St. Louis Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $125.3 $133.7 Per share 0.79 0.84 ROA 1.24% 1.32% ROE 14.00% 15.74% Net interest margin 4.43% 4.20% Net interest income 396.9 375.1 Noninterest income 216.3 195.4 Noninterest expense 397.0 351.5 Loss provision 19.3 12.4 Net chargeoffs 19.7 9.8 Year to Date 1996 1995 Net income $382.5 $351.8 Per share 2.40 2.21 ROA 1.26% 1.16% ROE 14.25% 14.18% Net interest margin 4.44% 4.20% Net interest income 1,184.3 1,108.0 Noninterest income 637.2 550.8 Noninterest expense 1,154.6 1,082.0 Loss provision 64.8 33.3 Net chargeoffs 46.7 26.7 Balance Sheet 9/30/96 9/30/95 Assets $40,694.0 $40,267.0 Deposits 30,562.0 30,541.0 Loans 24,315.0 24,184.0 Reserve/nonp. loans 228% 271% Nonperf. loans/loans 0.85% 0.70% Nonperf. assets/assets 0.59% 0.55% Nonperf. assets/loans + OREO 0.98% 0.90% Leverage cap. ratio 8.21% 7.86% Tier 1 cap. ratio 11.25% 11.04% Tier 1+2 cap. ratio 13.77% 13.75%

BankAmerica Corp. San Francisco Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $683.0 $704.0 Per share 1.75 1.72 ROA 1.12% 1.21% ROE 14.16% 15.09% Net interest margin 4.17% 4.52% Net interest income 2,152.0 2,156.0 Noninterest income 1,319.0 1,157.0 Noninterest expense 2,081.0 1,993.0 Loss provision 235.0 110.0 Net chargeoffs 226.0 151.0 Year to Date 1996 1995 Net income $2,126.0 $1,960.0 Per share 5.38 4.75 ROA 1.18% 1.16% ROE 14.92% 14.44% Net interest margin 4.26% 4.53% Net interest income 6,457.0 6,325.0 Noninterest income 3,913.0 3,388.0 Noninterest expense 6,091.0 6,035.0 Loss provision 665.0 310.0 Net chargeoffs 711.0 358.0 Balance Sheet 9/30/96 9/30/95 Assets $242,953.0 $229,926.0 Deposits 164,901.0 155,637.0 Loans 161,833.0 151,212.0 Reserve/nonp. loans 252.05% 186.77% Nonperf. loans/loans 0.86% 1.29% Nonperf. assets/assets 0.57% 0.85% Nonperf. assets/loans + OREO 0.86% 1.29% Leverage cap. ratio 6.90% 6.80% Tier 1 cap. ratio 7.25% 7.20% Tier 1+2 cap. ratio NA 11.46% ===

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