First Union Aims For The Top Tier

Ed Crutchfield is determined to accomplish one goal: Making First Union (FTU) into a nationwide company that blends commercial banking, investment banking, and capital management. "We wouldn't get out of commercial banking, but we'd like to be a Merrill Lynch as well," says Chairman and CEO Crutchfield, and "that's where we're headed." He says he wants to have the national franchise in banking that Wal-Mart Stores has in retailing. How to do it?

First Union is likely to get back on the acquisition trail. But with one condition: "No expensive or high-premium super acquisitions for us," says Crutchfield, a stance that has attracted analysts to rate First Union--almost unanimously--as a buy. "First Union is gaining respect for the quality and depth of the financial services it is building," says Sally Pope Davis of Goldman Sachs.

"We will only go for a merger of equals," says Crutchfield. Some of the "equals" that are believed to have shown up on radar screens at First Union: Wells Fargo and Bank One. Crutchfield declined to comment on whether he has approached either of these two banks. "Management continues to describe a merger of equals as the way to reach its national goals, as opposed to its historic strategy of building through small to midsize acquisitions," notes Diane Glossman of Lehman Brothers. Sandra Flannigan of Merrill Lynch figures First Union will earn $4.33 a share this year, up from an estimated $3.76 in 1998. Her price target for the stock, now at 62 a share: 80.

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