Shares of regional banks failed to advance sharply with other stocks Thursday, and two companies were hit by analysts' downgradings.

Shares of Bank One Corp. of Chicago were unchanged after a downgrading to "buy," from "strong buy," by Nancy A. Bush of Ryan, Beck & Co. in Livingston, N.J.

Shares of Huntington Bancshares of Columbus, Ohio, fell 25 cents, to $34.5625, after a shift to "neutral," from "outperform," by David B. Hilder of Morgan Stanley Dean Witter & Co. in New York.

Both analysts said the stocks had reached their target prices, and Ms. Bush sounded a note of caution about asset quality.

"The point of contention for the quarter was-and will be-a big leap in nonperforming assets," she said.

"However, we do not think that this is the beginning of some ominous new credit-quality trend. It's simply the return to a more normal credit- quality environment at commercial banks," she added.

"A lot of the bank stocks are in flux," said Phil Cuthbertson, head trader at Keefe, Bruyette & Woods Inc. in New York. "There are some asset- quality concerns out there."

Shares of Fleet Financial Group fell $1, to $43.9375; KeyCorp 50 cents, to $30.375; and National City Corp. 75 cents, to $71.125.

Larger banking companies fared better. BankAmerica Corp. was up $1, to $74.25; Chase Manhattan Corp. $2.3125, to $85.75; Citigroup $1, to $75; and J.P. Morgan & Co. $1.125, to $142.625.

The Standard & Poor's bank index added 0.45%, and the Dow Jones industrial average 1.38%. The Nasdaq bank index rose 0.10%, and the S&P 500 1.70%.

In her update on Bank One, Ms. Bush offered some praise. "Expense trends were better than expected as the company began to show the tangible results of the many initiatives and merger-related cost savings drives which have been ongoing for the past many quarters."

Still, she said, Bank One needs to remain vigilant. "We have to see more consistent attention by this company on the expense control front," she said.

Meanwhile, William Katz, a banking analyst at Merrill Lynch & Co. in New York, resumed coverage of Huntington with a "neutral" rating.

"Investment positives include an improving business mix, greater operating leverage, potentially higher quality earnings per share growth, rising capital management flexibility, and enhanced franchise value," Mr. Katz said.

On the other hand, he said, intermediate risks include a poor execution record for mergers and potential revenue degradation in light of sharp cost-reduction initiatives. Shares of Mellon Bank Corp. of Pittsburgh rose 93.75 cents, to $72, after analyst James Schutz of ABN Amro in Chicago reiterated a "buy" recommendation.

Mellon's fee revenues grew 13% during the past 12 months, with trust and investment management providing most of the momentum, Mr. Schutz said.

Investment management revenues increased 37.6% in the past 12 months, reflecting acquisitions as well as increased asset levels from new business and market gains.

Mr. Schutz called it significant that proprietary mutual fund average assets under management came to $125 billion in the latest quarter, up 28.9% from a year earlier and 5.9% from the previous quarter.

Mr. Schutz is not the only banking analyst with good things to say about Mellon.

Keefe Bruyette's Joseph Duwan named Mellon to the firm's "Action List" and increased his earnings-per-share estimates to $3.65, from $3.60, for 1999 and $4.10, from $4.05, for 2000. "The new management team is very focused on the growth side of the equation," Mr. Duwan said.

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