Birmingham, Ala.-based AmSouth Bancorp. on Tuesday reported essentially flat first-quarter earnings of $40.1 million, but First Tennessee National Corp. suffered a 21% drop, to $31.6 million, due to pressure on interest margins.

Memphis-based First Tennessee, which has $10.9 billion of assets, saw its return on average assets fall 33 basis points, while return on equity skidded a whopping 518 basis points. The bank's net interest margin was 3.92% at quarter's end, compared with 4.31% a year earlier.

Ralph Horn, First Tennessee's president and chief executive, argued that "restructuring activities executed in the first quarter and upcoming scheduled maturities" would reduce future exposure to interest rate hikes.

The bank also noted that one-time acquisition charges of $5 million after tax had a negative impact on earnings of 15 cents per share. First Tennessee reported earnings per share of 93 cents of March 31, compared with $1.16 a year earlier.

However, the bank did show an increase in total loans, to $6.9 billion from $6.7 billion.

At AmSouth, which has $17.1 billion of assets, the net interest margin increased 4.3% to $137.7 million, primarily due to a 33% jump in loans.

Noninterest income increased to $56.8 million, a 17.3% improvement, but noninterest expenses were also up - 9.6% above last year's level.

The bank's efficiency ratio - expenses as a percentage of revenues - improved dramatically, to 64.14% from 86.57% in the fourth quarter.

John S. Woods, AmSouth's chairman and chief executive, said it was "progressing on schedule toward the full assimilation" of recent acquisitions. "We are making steady progress in our ongoing efforts to improve efficiency and reduce costs," he said.

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