In this Year of the Deal, Edward E. Crutchfield Jr. of First Union Corp. made one of the first bold moves, if not quite the biggest.
In any other year, the announcement of the $5.4 billion megamerger with First Fidelity Bancorp. would have vaulted its protagonist automatically into Banker of the Year consideration. But it was not just acquisitiveness that placed Mr. Crutchfield, 54, among a select few who truly personified this eventful year in banking.
Under his leadership, $87 billion-asset First Union has been especially aggressive in its efforts to wrest business back from nonbank competitors.
Some bankers have conceded defeat, saying the erosion of key commercial and consumer market shares is permanent. First Union's chairman and chief executive has put his money where his mouth is, spending about $250 million a year on projects aimed at producing growth in nontraditional lines of business.
In 1995, Charlotte, N.C.-based First Union, the nation's ninth-largest banking company, finally began to reap significant returns from its investments in capital markets, mutual funds, credit cards, and banking via personal computer.
Pretax earnings from the capital markets division, which has hired 125 Wall Street professionals since 1994, are on track to exceed the 1995 goal of $225 million. With First Fidelity folded in, they should beat 1996's $300 million target.
At the very least, First Union has demonstrated that a portion of its middle-market customer base has an appetite for such sophisticated financial products as derivatives, private placements, and asset securitizations.
Equally ambitious is First Union's drive to become a national powerhouse in asset management, which began with the 1994 acquisition of Lieber & Co., investment adviser for the $2.8 billion Evergreen Funds. With 2,000 licensed brokers, First Union's securities division, if broken out as a separate company, would be the country's eighth-largest brokerage firm.
Mr. Crutchfield says he aims for First Union to be managing $100 billion of mutual fund assets by 2000, up from the current $10 billion, through both acquisitions and internal growth.
First Union's expansion in investment activities flows directly from Mr. Crutchfield's view that banks must take the offensive against high-profile nonbank rivals.
During a recent interview, he flipped through chart after chart tracing the relative decline of traditional banks' market shares. "You know who my competition is?" he asked, stabbing his finger at yet another graphical display of bad news. "Merrill Lynch."
A skeptic might say the jury is still out on Mr. Crutchfield's and other bankers' ability to play permanently in that league. Under its harsh rules, Mr. Crutchfield runs the risk of seeing his highly paid Wall Streeters defect to other firms; touching off a derivatives scandal, a la Bankers Trust; watching mutual fund customers disinvesting to escape the effects of a market crash.
But Mr. Crutchfield is not one to abandon a crusade.
