First Union Fund Sales Up 76% from 4th Quarter To Half a Billion

First Union Corp.'s mutual fund and annuity sales have sizzled this year, with sales through March approaching what the banking company booked for all of 1995.

The North Carolina giant sold $502 million of mutual funds in the first quarter, according to a report released by Dean Witter Reynolds Inc. last week. That's 76% more than in last year's fourth quarter and within hailing distance of the full year's $703 million.

"It's apparent that First Union is trying to get to the position where they are a dominant player," said Anthony R. Davis, a Dean Witter bank analyst, who wrote the report.

The strong showing follows a push into the Northeast and several months of record inflows for the mutual fund industry as a whole.

More than 30% of First Union's annuities sales and 25% of new mutual fund accounts came from customers of New Jersey-based First Fidelity Bancorp., which was acquired last summer.

First Union "appears to have had a significant acceleration" last quarter, said Avi Nachmany, a partner with Strategic Insight, a New York research and consulting firm.

Net cash flows into First Union's $14.6 billion-asset Evergreen Funds were $381 million, versus $504 million for all of 1995, Mr. Nachmany said. Most of the gain came from retail sales, he added.

Merrill H. Ross, an bank analyst for Wheat First Butcher Singer, Richmond, Va., said the bullish stock market helped to boost assets. The mutual fund units of Mellon Bank Corp. and PNC Bank Corp. also did well during the period, she added.

"All you had to do was have a net in the water and you would do pretty well out there," she said.

Ms. Ross estimated that 22% of the $115 million in fee income First Union's capital management group brought in last quarter came from the mutual fund and brokerage businesses. The rest was from more traditional lines such as trust and private banking.

First Union's total fee income for the quarter was $526 million.

Dean Witter's Mr. Davis said that while investment sales and management are still a small slice of the company's overall fee income, First Union is spending a lot to build up that capability.

For instance, the banking company is hiring more staff for its telemarketing unit, and is in the process of consolidating its recordkeeping systems to better market investments and other products to customers.

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