Strong loan growth and fee income pushed First American Corp.'s second- quarter earnings up 11%; but Bank South's net was down 4% due to a higher tax rate, though its income before taxes jumped 17%.

"Both companies had some decent numbers," said PaineWebber analyst Thomas D. McCandless.

Nashville-based First American, which has $8.1 billion of assets, earned $24.6 million. Gains were fueled by loan growth, particularly from small and midsize businesses. Fee income also gained 6% from the year-ago period, to $25.5 million.

The major drag on earnings came in net interest margin, which fell 18 basis points from the first quarter, to 4.12%, due to a higher cost of funds.

Atlanta-based Bank South, which has $7.4 billion of assets, also reported margin slippage, down 14 basis points, to 3.90%. Offsetting that was a 13% growth rate in both commercial and consumer loans.

Mortgage originations, which led the consumer category, reached a record $127.7 million. Bank South combined the loan growth with strong fee income and rigorous expense control. "We are very, very impressed with the fundamentals at Bank South," said Dean Witter analyst Anthony R. Davis.

But year-to-year comparisons at Bank South suffered because of a higher tax rate. The company's second-quarter 1994 earnings included 5 cents a share in tax benefits related to losses sustained in previous years.

For the moment, Bank South's loan losses are at historic lows. No loss provision was taken in the quarter, compared to a $2.3 million charge in the year-ago period.

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