Stock of Union Planters Corp. dropped by as much as 2.5% Tuesday, indicating investor concerns about a sharp year-to-year rise in nonperforming assets and prospects for slower revenue growth.

Union Planters' shares also were hurt by lower profits from its mortgage-banking activities.

Despite Monday's report of solid second-quarter earnings, two securities firms produced research reports on the company that were lukewarm at best.

Friedman, Billings, Ramsey & Co. lowered its rating to "market perform," from "market outperform." Lehman Brothers kept its rating neutral.

Both reports said that though Union Planters produced relatively solid earnings, it had failed to prove it could sustain revenue growth.

Union Planters did not respond to a call for comment.

John B. Wimsatt, a banking analyst at Friedman, Billings, said, "While we expect improving fundamentals for the rest of the year, we have a hard time seeing any real near-term upside in the stock until management can produce meaningful operating improvement."

Mr. Wimsatt said management "needs to produce a solid, clean quarter that represents operating improvements, including real expense reduction and revenue growth without any significant one-time offsets."

Robert Patten of Lehman Brothers said, "While we remain encouraged by a return to revenue generation this quarter, we would like to see clearer progress on the earnings and integration front before taking a more positive stance on the stock."

Mortgage banking revenues declined 15.6%, "which will impact growth rates going forward, as it had previously been a large contributor to fee growth," Mr. Patten said.

The loan portfolio showed weakness. Nonperforming loans, at $225 million, were up 6% from the first quarter and 27% from the second quarter of last year. Chargeoffs increased to $22 million, or 0.42% of total loans and other real estate owned.

"We are surprised by the level of chargeoffs and nonperforming assets in the quarter," Mr. Patten said, "Especially after the substantial writedowns and portfolio cleanup that was done throughout 1998."

At the close of trading Tuesday, Union Planters regained ground and wound up at $47.1875, down 1.05%, less than the drop in the Standard & Poor's bank index, which was off 1.17%, to 691.11.

Analysts attributed the decline to profit taking after last week's run- up in response to good earnings reports.

"It seems as if the buyers are on strike," said Mark Davis, research director for Banc Stock Group of Columbus, Ohio.

"You don't have to go out and find sellers," Mr. Davis said. "They're already here."

Mr. Davis found it encouraging that banks stocks, while down, were off less than the general market.

"This is more of a broad market event," Mr. Davis said. "There's a falloff by other sectors, and it's dragging banks with them." The Dow Jones industrial average declined 1.71%, and the S&P 500 was down 2.17%.

As for bank fundamentals, asset quality was one of the concerns coming into the second quarter.

"It's remarkable how well asset quality stood up," Mr. Davis said. "We've only seen spotty problems."

Meanwhile, strong second-quarter profits earned many banking companies positive reviews from securities firms.

Diane Yates of A.G. Edwards & Son cited Bank of New York Co. for its skill at keep costs down.

"Bank of New York' ability to grow revenues at a high rate while holding expenses relatively flat positions the company for continued solid earnings-per-share growth," Ms. Yates said.

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