With takeover speculation swirling, Bank South Corp., Atlanta's largest remaining independent bank, on Thursday reported a 20% drop in first- quarter earnings, to $15.4 million.

The stock price fell $1.50 a share to $22.125, exactly reversing Wednesday's 7% rise to a 52-week high of $23.625.

A likely suitor, according to rumors, was Banc One Corp. of Columbus, Ohio, which declined to comment Thursday.

Bank South's earnings per share, 26 cents, fell 5 cents short of consensus estimates. The $7.7 billion-asset company blamed special charges of 5 cents a share, or $4.5 million before taxes, for the decline.

The charges included an insurance premium tax, acquisition-related expenses, and severance payments in connection with recent layoffs.

The year-earlier quarter also benefited from a special 5-cents-per-share tax benefit to cover prior years' losses.

"We expect to see a return to more normal earnings levels in future quarters and for the year," said chairman and chief executive officer Patrick L. Flinn.

Mr. Flinn reportedly declined to discuss the acquisition rumors at the annual shareholders meeting Thursday. A bank spokesman said Mr. Flinn simply described the process by which buyout proposals are analyzed and then submitted to the board.

Bank South stock was already falling Thursday morning in advance of the 11 a.m. shareholders meeting and 11:30 earnings release.

"People flood into this thing, and if the acquisition doesn't happen, they flood out," said Dean Witter analyst Anthony R. Davis.

Mr. Davis attributed Wednesday's runup to "rumor-mongering" in Atlanta, but he added, "Down the road, it's inevitable somebody is going to make a run at them."

Merrill Lynch analyst Livia Asher said she believes Bank South's management is focused, for now, on a reengineering and expense-control program.

"My reading on that management is, they're not out to sell the company near-term," she said.

Ms. Asher also said she was not disappointed in Bank South's first- quarter earnings shortfall. She said the company had signaled analysts to expect the one-time charges.

Bank South did report 13% loan growth in the quarter, to $4.1 billion. The bank said it expects $17 million of additional pretax earnings next year as a result of efficiencies in its reengineering program.

Elsewhere in the region, First American Corp., Nashville, reported a 9% increase in first-quarter earnings, to $23.9 million. First American, which has $7.6 billion of assets, reported 92 cents in earnings per share, 1 cent above consensus estimates.

The company attributed its performance to strong loan growth, which drove net interest income up 6% from the year-earlier quarter, to $73 million.

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