First Tennessee National Corp. is one company that can be expected to weather whatever slowdown lies ahead for the banking industry, an influential analyst said.

Ruchi Madan of PaineWebber says she sees shares reaching $42 over the next 12 months as the Memphis banking company uses true revenue growth and not one-time gains to boost earnings.

"This should be a great stock to own as investors worry about slowing revenue and earnings growth in the banking industry," Ms. Madan said.

Shares closed Wednesday at $33.6875, off 50 cents.

In raising her 1999 earnings per shares estimate to $1.95 from $1.90, Ms. Madan projected a 15% growth rate for 1999.

While First Tennessee has its fans, Ms. Madan's endorsement is one of the more ringing ones. She said her enthusiasm is based on the company's unusual ability to tap traditional and nonbank revenue sources.

The right business mix and management are "key determining factors for long-term growth in banking," she said. "First Tennessee has among the very best of both."

First Tennessee has increased its deposit and loan share for each of the past nine years and substantially boosted the number of customers in its nonbank businesses, which has led to higher revenue growth than its peers.

Also, First Tennessee, unlike many other banking companies, is successfully focusing on building relationships with profitable customers, Ms. Madan said.

"It is well known in banking that all profits are made from about 20% of customers, so the key becomes growing and retaining these," Ms. Madan said.

In First Tennessee's case, the number of profitable customers has grown by 5%, while the roster of customers that are typically money-losers for banks has increased just 0.3%.

In trading Wednesday the Standard & Poor's bank index dropped 0.48% and the Dow Jones industrial average 0.21%. The Nasdaq bank index dipped 0.18%, but the S&P 500 rose 0.18%.

Shares of J.P. Morgan & Co. dropped $2.375, to $104.1875, when the company said fourth-quarter earnings would fall short because of weaker trading revenues from its own accounts.

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