U.S. banks are poised to deliver another round of stellar quarterly results in coming weeks, fueled by a familiar blend of wide net interest margins, credit quality improvements, and pins in fee income and efficiency.

The reports of second-quarter performance should soothe investor concerns that net interest margins are in for a precipitous decline, experts said.

"Episodes of shrinkage notwithstanding, margins will remain close to historical peaks, which makes running a bank like playing golf with the wind at your back," said Joseph Stieven, an analyst with Stifel, Nicolaus & Co., St. Louis.

But while that sentiment may hearten short-term investors, many observers have longer-term vexations about bank profitability,

Some analysts expect to see a faint contraction of interest margins in the second quarter. Absent meaningful loan demand, they said, banks appear destined to lose progressively more yield on their assets as securities investments mature and borrowers pay off loans.

"Without a resurgence of loan demand, the industry will find it increasingly difficult to offset failing margins," said Thomas Maier, an analyst at Kemper Securities in Chicago.

Years of Struggle Seen

While in no way portending another climate of doom, as in the early 1990s, the trend signifies that progress for the banking industry will remain an inch-by-inch struggle for years to come.

Most of the nation's banks are expected to report second-quarter results from July 12 to July 22. Here's a rundown of expectations from some of the larger banks, broken down by

Recovering banks in New England and the Northeast will again show vast improvements over weak year-earlier results, according to Anthony Davis, an analyst with Dean Witter, Discover & Co. in New York.

Improvement in New England

Bank of Boston Corp. is expected to report a 40% year-over-year gain to 95 cents a share, he said, while Rhode Island-based Fleet Financial Group should soar 60% to 73 cents a share.

Shawmut National Corp., completing the trio of big New England banks, also is expected to report a very strong quarter.

New Jersey's UJB Financial Corp., based in Princeton, is expected to show a 90% year-to-year gain, with earnings per share of 41 cents for the quarter, according to Mr. Davis.

New York's money-center banks should continue to exhibit strength through the diversity of wide spreads and continued cost cutting. However, results at some of the companies could be off from the first quarter of this year when J.P. Morgan & Co., Bankers Trust New York Corp., and some others realized vast trading gains.

Analysts' consensus forecast for Citicorp, the nation's biggest bank company, is 57 cents a share, according to First Call. That would be down 15% from its first-quarter net before extraordinary items, but more than double year-ago second-quarter results.

Citicorp is expected to report further progress in cutting problem assets, but balance sheet shrinkage will work against earnings growth, analysts said.

Loan Growth Seen in Southeast

Several southeastern banks will sport modest loan growth, analysts said, including First Union Corp. and NationsBank Corp., both based in Charlotte, N.C.

First Call has compiled a consensus forecast of $1.19 a share for First Union, up 32% from a year ago. It predicts NationsBank will earn $1.14 a share, up 16%.

North Carolina's other powerhouse bank company, Wachovia Corp., will come in at 68 cents a share, a 9.7% rise from the second quarter of 1992.

Barnett Banks Inc., based in Jacksonville, Fla., is meeting cost-cutting and loan-workout targets on its acquisition of First Florida, analysts said, though they expect little loan growth and mild shrinkage in net interest margin.

Boosted by its new acquisition, Barnett is expected to report a 35.82% earnings gain from 1992, to 91 cents a share, First Call said.

Gain Expected for Sun Trust

Atlanta-based Sun Trust Banks should come in at 92 cents, up 12%, according to the data collection company.

The Midwest is once again expected to host the strongest regional results, although some banks will fall a bit from their strong first-quarter reports.

Banc One is expected to report strong consumer loan growth but a slight margin contraction. The Columbus, Ohiobased company should earn $1.01 a share - up from 87 cents a year ago but down from $1.03 in the first quarter, according to Oppenheimer & Co. analysts.

Detroit-based Comerica Inc., which has conceded that it is behind schedule on reaching expense-cutting goals from its merger with Manufacturers National Corp., is expected to report 71 cents a share, versus 69 cents in the first quarter and a loss one year ago when the company took a major restructuring charge.

Help from Card Portfolio

First Chicago Corp. is expected to report further Progress in shedding problem assets and should get a boost from its highyielding credit card portfolio. Analysts see the company earning $1.07 a share, up 35.4% from the second quarter of 1992.

In Minneapolis, Norwest Corp. will boast strong second-quarter results, said Steven R. Schroll, an analyst at Piper, Jaffray & Hopwood, because of an expanding net interest margin and solid fee income related to its proliferating mortgage business. Norwest is expected to earn $1.00 a share, up 17.6% from the second quarter of 1992.

Big Winner in California

On the West Coast, California's First Interstate Bancorp is expected to be a big winner, reflecting continued improvement in credit quality and loan growth from operations outside its home state. The company is predicted to earn $1.39 a share, an 85.33% jump from the year-earlier period.

BankAmerica Corp., reflecting further progress in assimilating the Security Pacific Corp., should see an 85.71% gain over 1992, coming in at $1.17 a share, according to First Call.

But continued loan contraction and the weak California economy has prompted some analysts to lower their forecasts for the nation's second-largest bank company in recent weeks.


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