First Union CEO, Leading Analyst Trade Punches

The industry's rapid-fire consolidation has fueled an open and vitriolic dispute between a high-profile chief executive officer and a leading stock analyst.

The tensions flared up last week as Edward E. Crutchfield of First Union Corp. briefed analysts on his megadeal for CoreStates Financial Corp. Questions from Thomas K. Brown of Donaldson, Lufkin & Jenrette Inc. immediately drew a caustic response from the CEO.

As Mr. Brown suggested that First Union's earnings growth had been subpar, Mr. Crutchfield snapped: "I'm not going to try to educate you now."

Mr. Crutchfield first asserted that Mr. Brown doesn't visit First Union enough, then acknowledged that the analyst had been barred from the premises.

It wasn't the first time the two had clashed.

Mr. Brown first drew the ire of Mr. Crutchfield's as an analyst at PaineWebber Inc. in 1990, by lambasting his acquisitiveness and salary. Mr. Crutchfield flew to New York from First Union headquarters in Charlotte to personally rebut the accusations.

Two years ago, at an American Banker merger and acquisitions conference, Mr. Crutchfield spoke dismissively during his keynote address of a "little red-haired boy"-Mr. Brown. The analyst had criticized the projections for First Union's acquisition of First Fidelity Bancorp. as "wildly optimistic."

Mr. Brown insists that it's nothing personal. "I have a tremendous amount of respect for him, but I disagree with his acquisition strategy," he says.

In the latest tangle, played out at New York's Metropolitan Club, Mr. Crutchfield seemed confident that his bank's performance has justified past deals. But he was clearly irritated to have to face Mr. Brown during the question-and-answer session on his latest deal.

Here is what transpired after Mr. Brown raised his hand:

CRUTCHFIELD: Tom?

BROWN: I'm a little confused, Ed. If you achieve these dramatic cost savings and these revenue enhancements, if we measure since '93 or '85, why has the earnings per share growth rate of First Union trailed the top 50 banks, and why is the stock price performance ...

CRUTCHFIELD: You know, Tom, if you'd come down and spend a little time with us, every decade, you'd have some of the answers to that. I'm not going to start now trying to educate you. You haven't been in this house in two years, and, you know, you got somebody speaking to you at night, I guess, who gives you your data? That's how I answer to your question.

BROWN: I believe, Ed, that Alice (Lehman, First Union's head of corporate communications and investor relations) will tell you you have instructed her to ...

CRUTCHFIELD; That's right, that's right-we've instructed her to keep you off the place.

BROWN: It's pretty hard (inaudible) to find that out isn't it?

CRUTCHFIELD: Why don't you come here and talk about that bet you and I made about what we would get out of the old First Fidelity merger. Some of the people in the room are staring at you. You and I bet each other $1000 ... I haven't seen you since then.

BROWN: I believe, Ed, that you said that you were going to have independent auditors.

CRUTCHFIELD: I did (laughter) but I still haven't seen you. You know what? We'll get the independent auditors. You know. Tell you what ... .Next!

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