Banks learned some hard lessons from being burned by interest rate risks to their investment securities, and they've worked to reduce their exposure, analysts said. Banc One Corp., PNC Bank Corp., and a number of others suffered lower- than-expected earnings in 1994 because they had bet that interest rates would remain low.

Indeed, some analysts estimated that interest rate bets caused more than half of the bank group to underperform. "Banks got very complacent with interest rate risk in 1994," said Dennis Shea, a bank analyst at Morgan Stanley & Co.

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