Fourth-quarter earnings at First American Corp., Nashville, were down 18%, to $24 million, from the year-earlier quarter, although core profitability actually improved.

Year-to-year comparisons were muddied by numerous special charges and nonrecurring gains - for negative loan-loss provisions, securities losses, and accounting changes - taken in both fourth quarters.

On a core operating basis, taking out the special charges and gains, First American earned about 91 cents a share, up nearly 10% from 83 cents in the 1993 fourth quarter.

For the full year, First American, which has $7.8 billion of assets, reported $90 million of net income, or $3.48 a share, down 11% from 1993.

Higher deposit costs were responsible for a squeeze on First American's net interest margin, which fell 9 basis points, to 4.23%, from the year- earlier quarter. The margin had, however, improved by 2 basis points from the third quarter.

First American also took a $9.7 million securities loss on the sale of $85 million of low-yielding bonds during the fourth quarter. The sale's proceeds were reinvested in higher-yielding, shorter-maturity instruments.

Meanwhile, earnings at Baltimore-based Mercantile Bankshares Corp. gained 7% from the year-earlier quarter, to $22.9 million. Full-year net income was up 8%, to $90.4 million.

Mercantile, which has $5.9 billion of assets, ended the year with a formidable 1.56% return on assets. Return on equity of 12.84% was less impressive due to the company's unusually high capital level.

Mercantile's average equity-to-assets ratio in 1994 was 12.14%, compared to peer levels of about 8%.

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