Barnett, Fleet Profit Plunged In 2nd Quarter --- First Interstate Bancorp Had Loss; Continental And Republic Improved
Three major regional banks reported disappointing quarterly results, reflecting stubborn credit-quality problems despite the nation's tentative turn toward economic health. Two money-center banks posted improved results.</br></br>Second-quarter profit rose 7% at Republic New York Corp. but fell 50% at Barnett Banks Inc. and 48% at Fleet/Norstar Financial Group Inc. First Interstate Bancorp posted a sizable loss from recession-related problems in Oregon and Nevada and cited growing concern over weakening California real estate, while Chicago-based Continental Bank Corp. reversed a year-earlier loss caused by a restructuring charge.</br></br>"The first phase of the economic recovery is not a recovery for credit quality," said Carole Berger, a bank analyst with C.J. Lawrence Inc. in New York. Rising charge-offs and problem assets, a lagging economic indicator, will continue to climb at least until year's end for many banks, she said.</br></br>While loan losses remain high and loan demand is weak, banks did benefit from slight increases in improved cost control and in net interest margin, or the difference between what a bank charges its borrowers and pays its depositors, said Richard Fredericks, an analyst with Montgomery Securities in San Francisco.</br></br>While comparisons from a year earlier are down, he said that earnings changes from the previous quarter are moderately better than expected and are "positive in direction" for many. "These companies don't turn on a dime or sink like a stone," he said.