Poring over details of Union Planters Corp.'s surprising profit shortfall, analysts pointed to the company's failure to cut expenses and an apparent customer runoff as the key reasons for the lone sour note in a solid fourth-quarter earnings season for big banks.

What they also noticed was a simple failure to communicate. The quarter was by no means a flop. The Memphis-based company said after markets closed Thursday that fourth-quarter profits had more than tripled, to $97.4 million. But earnings per share of 69 cents were 12 cents shy of Wall Street's latest estimate for the quarter, making Union Planters the only one of the nation's 25 largest bank companies to miss expectations by more than a penny.

Analysts said that the company, unlike Bank One Corp. and National City Corp., for example, failed to own up to problems ahead of time. That lapse exacerbated the shortfall, they said, because it allowed estimates to stretch further out of reach.

"I wouldn't characterize this quarter as a disaster, but it was way wide of expectations," said Christopher T. Kelley, an analyst with Morgan Keegan & Co. in Memphis. "I believe close communication with analysts would alleviate some of the problem."

John B. Moore Jr., an analyst with Wachovia Securities Inc. in Charlotte, N.C., said that Union Planters "would benefit from having a person who deals directly with investors. A company that size could manage Street expectations much better than they do."

Union Planters has already moved to prevent a repeat of the problem in 2000. In its earnings statement, the company said it was "budgeting" for 8% to 12% earnings per share growth this year, a move that led some analysts to trim estimates on Friday.

Analysts said they had figured considerable cost savings into their 1999 estimates, expecting the $33 billion-asset company to cut much of the fat from the 18 banks it acquired in 1998. However, excluding merger-related costs, total expenses actually increased by $90.8 million in 1999, to $1.1 billion.

"The story for 1999 was supposed to be about reaping benefits from all of the deals they have completed," said Charles N. Ernst, an analyst with Putnam, Lovell, de Guardiola & Thornton Inc. in New York. "But that just didn't happen."

Mr. Ernst said that if interest rates rise as expected, there will be even more pressure on the company to cut costs. Union Planters' net interest margin narrowed by 10 basis points in the fourth quarter, to 4.39%. "With rates rising, we don't see a lot of revenue growth during the first half of the year," he said.

Union Planters officials did not return calls seeking comment. But in a release accompanying the earnings statement, the company said that savings from integration "were more than offset by 1999 acquisitions, increased spending on advertising, promotion, and training, and efforts to expand future fee income."

Shares of Union Planters fell to their lowest levels in more than three years on Friday, closing at $31.9375, down $1.25 for the day, on three times the average daily volume. Morgan Keegan's Mr. Kelley said the company is going to have a hard time getting its share price up unless it can prove it can control costs.

"At one point, Union Planters actually had a fine reputation for identifying expenses and eliminating overlap," he said. "Everyone is waiting to see that start to happen again."

Besides expenses, there were other signs of trouble in the earnings report, analysts said. For example, deposits at the company fell 4.7%, and loans 1.6%, from the third quarter of 1999. Though some of the deposit drain was planned - Union Planters said late last year that it purposely shed some of the high-rate certificates of deposits it acquired - non-interest-bearing deposits also fell, from $4.3 billion at the end of the third quarter to $4 billion at yearend.

"Some of the numbers seem to be telling a customer attrition story," said Jefferson L. Harralson, an analyst with Robinson-Humphrey Co. Inc. in Atlanta.

Mr. Moore said that despite the problems, he still believes the Union Planters story can have a happy ending for investors. The company, he said, "is one of the best underwriters of loans out there, and credit quality is fine." But none of that is going to matter unless it can get its efficiency ratio down from its current 62.5%, he said.

"Union Planters at one point ran a bank with expense ratios near 50%," Mr. Moore said. "The trick to this pony show is for them to do it again."

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