ATLANTA - Patrick L. Flinn has his dukes up.

"We're hurting people," said the chairman and chief executive of Bank South Corp. "We're starting to get into people's pockets."

Mr. Flinn, who joined the Georgia company almost two years ago, carefully cultivates his image as a feisty hometown banker who is pestering the devil out of big competing banks from North Carolina. He came from C&S/Sovran Corp., which had just been absorbed by NationsBank Corp., one of those Carolina interlopers.

|We're the Home Team'

Winning in Atlanta makes a big difference, and we're the home team," Mr. Flinn said in a recent interview. "People want to do business with the local player."

Mr. Flinn asserts that the $4.4 billion-asset company has wrested away 50,000 accounts from its competitors in the past year.

Indeed, it's hard to turn on a television or radio here without catching an ad proclaiming Bank South's hometown roots or lambasting its alien rivals. It's a natural sell: Suntrust subsidiary Trust Company of Georgia is the only other major bank company with headquarters in Atlanta.

First Union Corp., the Charlotte-based bank company that recently purchased two Atlanta area thrifts, is a prime target. Bank South's newest advertising billboard shows one of the thrift's logos side by side with First Union's.

The advertising copy reads: "If they changed your bank, so can you."

A television spot depicts a Pac Man-like TV monitor with First Union's name on the screen pursuing other monitors with names of local banks and thrifts. As a voice-over touts Bank South's hometown virtues, the First Union monitor closes in on Decatur Federal, a thrift it recently bought.

The campaign is timed to coincide with that tricky period in which Decatur's branches are adopting the First Union name.

"We've known for months they would be changing their signage in the middle part of this year," said Bank South spokesman Bolling P.Spalding.

Merely |An Annoyance'

Harald R. Hansen, chairman of First Union's Georgia subsidiary, concedes Bank South's advertising has "been effective from the standpoint that it has captured community attention."

But he described it as merely "an annoyance" for First Union, whose $4.7 billion in equity capital exceeds Bank South's entire asset base.

"Being a hometown bank captures the imagination of some people," Mr. Hansen said. "But when the time comes to deliver - that's where the rubber meets the road."

The Midsize Bank Dilemma

Indeed, for all its bluster, Bank South faces a dilemma common to midsize banks. It might "outhome" the interloping superregionals, but it is having trouble matching their technological sophistication. And it also must compete with the highly personalized service of Atlanta's many community banks.

Mr. Flinn likes to say he can "outsmall the small and outbig the big." But even he concedes the limitations of Bank South's local-hero marketing approach.

As Atlantans become more familiar with First Union, NationsBank and other out-of-towners - most of whom have similar southern accents - they will inevitably accept them as part of the local terrain.

Meanwhile, Bank South is still contending with some its financial problems. Although its nonperforming assets fell 50% last year to $91.6 million, they still represent a high 3.43% of total loans.

Bank South also has far to go in trimming expenses. Its 69% efficiency ratio "stinks," Mr. Flinn said. The ratio - which measures the degree to which operating revenue is eaten up by noninterest expense - will fall to about 60% within two to three years, Mr. Flinn has promised.

In the past year, he has cut Bank South's employee roster by 9% to 2,600 people, shaving $1.9 million of expenses. He also eliminated perks like a corporate jet, the executive dining room, and a stadium box for entertaining customers during Atlanta Braves games.

He even claims to have saved $85,000 a year by having employees water their own plants.

The Only Way to Grow

But the challenge ahead is to find more revenue.

"We've got an engine that can pull a 100-car train," Mr. Flinn said. Unfortunately, we only have about 82 cars."

With the Atlanta economy relatively stagnant, Bank South can grow only by grabbing business from somebody else. That's where his aggressive, and distinctly uncourtly, marketing campaign comes in.

Their advertising certainly isn't consistent with the genteel image of banking," said John W. Coffey, a banking analyst at Robinson Humphrey Co. in Atlanta.

Bait and Switch Tactic

Along with the new attack ads, Bank South is reviving last year's "trade in your bank" campaign offering free checking and other enticements to customers who switch their accounts from rival banks.

The four-month campaign generated 50,000 new accounts last year, boosting consumer deposits by 21% to $3.5 billion.

On another front, Bank South is pouring money into refurbishing its network of 45 branches at Kroger supermarkets throughout Georgia - one of the largest in-store systems in the country.

Strategy Bearing Fruit

It's part of Mr. Flinn's big bet on consumer banking. Traditionally known in Atlanta as a middle-market lender, Bank South wants its consumer loan portfolio to rise to 50% of total loans by 1996 from 45% today and is willing to cut fees and boost rates to get there. After 22 months on the job, Mr. Flinn's strategy seems to be bearing fruit. Bank South earned $28.3 million last year, rebounding from a loss of $55.2 million in 1991.

In the first quarter of 1993, it netted $13.2 million - and also freed itself from a regulatory agreement to raise capital and improve its reserves. It also was permitted to acquire Barnett Banks Inc.'s $790 million-asset Atlanta bank (in exchange for some stock and Bank South's Florida operations).

Shareholders have enjoyed the rebound. From a nadir of $5 a share in 1991, Bank South now trades at $11.50, representing a 141% market-to-book value.

That raises the inevitable question: Will one of the last of Atlanta's large independent banks succumb to a takeover offer? Bank South consistently ranks near the top of analysts' acquisition lists.

But Mr. Flinn, 51, says he's not managing the bank to sell it.

"Our people are getting excited about winning," Mr. Flinn said. "They're not second-class citizens working for a secondclass organization anymore."

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