First Union Corp. is on a spending and investment drive to boost revenues in 1995, says Edward E. Crutchfield Jr., chairman and chief executive of the Charlotte, N.C.-based superregional.

Meeting with analysts in New York on Monday, Mr. Crutchfield said First Union would use $100 million to $120 million in discretionary spending this year to build up lines of business crucial to earnings growth.

The company will spend about $30 million on its credit card unit and another $30 million to expand small business lending. It will also use about $15 million to make hires in its capital markets group, and another $15 million to license brokers in the mutual funds area.

"There's a tune for overhead efficiency therapy" and a nine for investing for growth, Mr. Crutchfield said. "Come 1995 or 1996, other people will hit a revenue wall. We don't intend to bum the furniture to improve the efficiency ratio. Many of our banker friends don't understand that," he said.

First Union Corp. now has an efficiency ratio, which measures expenses versus revenues, of about 62%. Mr. Crutchfield argued that the investments the company is now making will goose revenues up enough to lower the ratio in 1995.

Analysts seemed pleased with Mr. Crutchfield's presentation, which comes right on top of a particularly strong third-quarter showing.

Many on Wall Street who follow First Union have recently changed their ratings for the company's stock to "buy" from "hold."

First Union had profits of $235 million or $1.35 per share at Sept. 30, a 24% increase over the $189 million or $1.12 per share earned in the same period last year.

For the first three quarters, the bank earned $675 million, 12% more than the same period last year. The stock was recently trading around $42, or eight times earnings.

Despite the positive overall earnings prospects for 1995, both the bank and its watchers expect a compression in interest rate margins.

"As short-term rates rise, relative to intermediate and longer-term rates, there will be a flattening in the yield curve and in bank margins," said Interstate/Johnson Lane's John Mason. He expects the margin to shrink approximately 12 basis points for the year.

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