DATE: Friday, July 11, 1997                 TAG: 9707110617

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   49 lines

FIRST UNION, CRESTAR EARNINGS UP, QUARTERLY RESULTS SAY

Despite suffering heavier losses on its credit-card porfolio, First Union Corp. said Thursday that net income for the second quarter rose 11 percent due largely to higher earnings on investment-related services.

Meanwhile, Crestar Financial Corp. said its net income for the June 30 quarter climbed 13 percent because of improved earnings from non-interest sources.

First Union, a Charlotte-based banking company with operations in Hampton Roads, said it earned $485 million in the April-through-June quarter, compared with $436 million in the year-earlier period.

Per-share earnings were $1.73, up from $1.55. First Union's results were slightly ahead of the consensus of analysts' estimates.

Net interest income rose 8 percent to $1.4 billion, while income from fees, service charges and other non-interest sources soared 38 percent to $755 million, First Union said.

Because of the higher losses on credit cards, the company has tightened its standards for issuing new cards and bolstered efforts to collect from past-due customers, First Union chief credit officer Mal Murray said.

Credit-card outstandings, which make up 6 percent of First Union's loans, are not growing, Murray said.

Responding to questions about the cost of adjusting First Union's computers to handle the year 2000, chief financial officer Robert T. Atwood said the company has already spent $43 million addressing the problem. First Union, he said, expects to bear the full cost of these adjustments by the end of 1998 without taking anyspecial charges against its earnings.

At many banks, brokerage firms and insurance companies, the computer programs in place will not correctly recognize securities or calculate transactions with dates of 2000 or later.

Separately, Richmond-based Crestar said it earned $75.8 million in the recent quarter, compared with $66.9 million a year earlier.

Earnings per share rose to 68 cents from 60 cents for the second quarter of 1996. Crestar's per-share results were in line with analysts' projections.

The company's net interest income of $221.2 million was unchanged from the 1996 second quarter, but its income from non-interest sources jumped 21 percent to $111 million.

Crestar's non-interest income included a one-time gain of $17.3 million from the recent sale of its card-processing business for merchants. The company said its second-quarter expenses included $4.3 million of costs related to making its computers compatible for the year 2000.

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