Even among the pantheon of successful bank mutual fund managers, Stephen A. Lieber stands tall.

Top bank funds rarely outperform all of their nonbank rivals. But Mr. Lieber's largest portfolio First Union Corp.'s Evergreen Foundation Fund has dominated the balanced fund class since Mr. Lieber launched the fund in January 1990. Over the past five years, the portfolio made up mostly of value- oriented stocks and Treasury bonds outperformed all of the 59 other bank and nonbank balanced funds tracked by Lipper Analytical Services. The portfolio which is distributed by a unit of Furman Selz delivered an average annualized return of 20.72% during that period, outpacing the S&P 500 by more than three percentage points per year. And on top of that, the fund managed to outperform all of its bank competition for the past year, with a 23.29% return. For his efforts, Mr. Lieber, a Westchester County, N.Y., native with 45 years of investment management experience, was recently nicknamed King of the Balanced Funds by Fortune magazine. Investors have crowned Mr. Lieber with their dollars. As of Sept. 30, the fund stood at $920 million in assets, more than triple the $290.5 million that was sitting in the account when First Union acquired the Evergreen portfolios in July 1994. Mr. Lieber, who manages two other Evergreen portfolios, attributes much of that asset rise to the marketing boost that First Union's ownership has given to the fund. The Foundation Fund is a big seller through the bank's brokerage network, which stretches from Florida to the Middle Atlantic states.

The bank has provided a sales outlet that we didn't have, said Mr. Lieber, whose firm, Lieber & Co., acts as a subadviser to Evergreen Asset Management Corp.

But First Union made out well by gaining the services of a veteran stock and bond picker. A graduate of Williams College, Mr. Lieber got his start in 1950 as an investment researcher with the old firm of Oppenheimer, Vanden Broeck. Today, Mr. Lieber's firm manages 16 Evergreen funds. Two of the portfolios U.S. Real Estate and Global Real Estate are run by Mr. Lieber's 39-year-old son, Samuel.

In choosing bonds for the Foundation Fund, Mr. Lieber shies away from credit risk. That's why you won't find corporate debt in the account. But he is willing to take on an above-average share of interest rate risk through the purchase of long Treasury bonds in order to generate above- average returns. In recent years, it's worked.

When it comes to building a portfolio of stocks, Mr. Lieber looks at companies that are priced below their franchise values and are therefore ripe for acquisition. Not surprisingly, many commercial banking companies fit this definition. As of press time, Mr. Lieber held 25 bank stocks, accounting for 7.7% of total fund assets. To get his mind off the market, Mr. Lieber, a resident of Mamaroneck, N.Y., sails his 39-foot sloop on Long Island Sound.

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