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Analysts who were optimistic early on about the Union Planters Corp.- Leader Financial Corp. merger are now gaining some company.

The Memphis bank's acquisition of the crosstown thrift - expected to close later in the year - is now being hailed as its most impressive to date.

"I don't think the Street (was) focusing on what this merger is about," said analyst John Moore of Morgan Keegan & Co. "This is probably the most significant transaction that they have ever done. But some analysts have a 'hold' on the company."

Mr. Moore, who has a "strong buy" rating on Union Planters, explained that Leader Financial's strong hand in the mortgage business has made it one of the most "profitable thrifts in the country."

Yet, after Union Planters announced the deal, analyst's ratings on the $3.1 billion-asset holding company tumbled. According to First Call, Union Planters' mean rating dropped to "neutral" on March 8.

The mean rating on the stock has gradually climbed back to "outperform."

After its costly 1994 acquisition of Mississippi's Grenada Sunburst System Corp., Union Planters was perceived as an spendthrift acquirer, said Scott Edgar, director of research for the California-based Sife Trust, which owns one million shares in the company.

But "if they ever overpaid for an acquisition that is history," said Mr. Edgar. "The more recent acquisitions seem to indicate that they are trying to be more rational with the prices that they are paying."

Analyst Alan Morel of J.J.B. Hilliard, W.L. Lyons also endorsed the deal. "It was a terrific acquisition," said Mr. Morel, who has a "buy" rating on Union Planters. "Leader is more profitable than Union and is more efficiently run."

Investors were also concerned that Union Planters' acquisition of Leader made the bank less attractive as an acquisition target, said analyst Dennis Shea of Morgan Stanley & Co.

But Mr. Shea, who once criticized the acquisition as expensive, recently raised his 1997 earnings estimates by a nickel to $3.50 because of Leader's potential.

"The earning power of Leader has improved and will contribute more than I initially thought," said Mr. Shea, who has a "neutral" on the bank. "There should be significant cost savings coming out of it. It is an intriguing stock right now."

Mr. Moore said that Union Planters' stock price had lagged slightly because investors were buying Leader stock and shorting Union's, in a hedging strategy that is often applied in pending merger deals.

Mr. Moore expects Union Planters stock to reach $40 in the next six months. On Wednesday, the shares rose 25 cents to $32.375.

Separately, Northern Trust Corp.'s stock price established a new 52-week high, as investors continued to react to robust second quarter earnings. Shares in the Chicago bank rose $1.50 to $66.50 on a day when banks stocks performed sluggishly.

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