earnings report Thursday, though the 19% decline in net income had been expected. The banking company's shares fell 3.21%, while bank indexes were basically unchanged.

Stock in Charlotte, N.C.-based First Union fell $1.1875, to $35.8125.

Investors seemed more disheartened by the bank's conference call following release of the figures than they were with the numbers themselves. Some analysts complained that First Union was evasive on the issue of credit quality.

During the conference call, Hal Schroeder, a bank analyst at Schroder & Co., asked senior management if they planned to raise loan-loss reserves in the face of rising nonperforming assets. A First Union senior executive answered that the company was "comfortable" with its level of reserves and remarked: "We don't reserve for nonaccrual loans, we reserve for losses. We think our reserves are in good shape."

According to its earnings report, First Union's nonperforming assets climbed above $1 billion during the third quarter, to $1.1041 billion. At the end of the second quarter they had stood at $940 million. Moreover, nonperforming assets rose to 0.77% of total loans and foreclosed properties, from 0.70% in the second quarter.

At least as important, reserve coverage of its nonperforming loans has been steadily declining. It was 188% in the third quarter, down from 212% in the second quarter and 267% in the third quarter of 1998.

Mr. Schroeder further asked: "What would give us comfort that the risks are proportional to the reserves. What additional information should we be looking at?"

First Union said it would "think of more specific measures or additional disclosures" and asked Mr. Schroeder to come up with other suggestions after the call.

"They answered questions, but they didn't give what we were looking for," said one analyst, who requested anonymity. "There are still a lot of question marks about the company."

Frank Barkocy, a senior analyst at Keefe Managers, a financial hedge fund in New York, said he still had some concerns about First Union after the conference call. He, too, focused on the rise in First Union's higher nonperforming assets and the level of its loan-loss reserves.

"I did not come away with great satisfaction," Mr. Barkocy said. "Their reaction to reserve levels left me a little uncomfortable. It did not turn me more negative on the company, but did not offer great encouragement to buy the stock, even at these prices."

For banks as a whole, the market bounced around Thursday. Many investors are worried that the Federal Reserve will raise interest rates at their next Federal Open Market Committee meeting, in November, a move that would push bank stocks lower. Initially they were disappointed by the release of a government report showing a higher-than-expected increase in U.S. retail sales.

"The bottom line for the stock market is that the higher retail sales in September is just another indication that the Fed will raise rates in November," said Sung Won Sohn, chief economist at Wells Fargo & Co.

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