When First Union Corp. said in July that it would to sell up to 90 branches as part of a massive restructuring, Firstar Corp. saw an opportunity ripe for the taking.

On Monday, Milwaukee-based Firstar announced plans to buy all 41 of First Union's branches in Tennessee, a state the Charlotte, N.C., company said it is ready to exit. The branches bring Firstar a total of $1.7 billion of deposits and $474 million of loans.

Firstar, which entered Tennessee in 1998 through acquisitions, has 20 branches there. "This fits our strategy of taking our paradigm in commercial banking, trust and investment, and the retail banking business and extending" our geographic presence, said Firstar chairman Jerry A. Grundhofer, in an interview Monday.

The banking companies have opposite opinions of what Tennessee offers them. For Firstar, the move would substantially increase its branch presence in a market where it expects faster than normal growth. For First Union, the sale helps it focus resources in markets where it has a more substantial presence.

Firstar said it would retain all of the roughly 450 First Union employees who would be affected by the transaction. The deal would make Firstar the seventh-largest banking company in the state when it closes next quarter. Financial terms were not disclosed.

Analysts said the move was small potatoes for $74 billion-asset Firstar but in line with a strategy the company has followed when trying to build its presence in a specific market. "They like to have market share wherever they go," said Timothy Willi, an analyst at A.G. Edwards & Sons in St. Louis. The fill-in acquisition is the first of its kind in two years for Firstar.

More recently the company has been occupied with making much larger deals, like the $10 billion acquisition of Mercantile Bancorp last year. Two years ago, Mr. Grundhofer forged a $7.2 billion merger of his company, Cincinnati-based Star Banc Corp., with Firstar of Milwaukee.

The new company kept the Firstar name and placed its headquarters in Milwaukee.

The last time Firstar bought a collection of branches similar to the deal announced Monday was in 1998, when it bought 50 sites in Ohio from the former Banc One Corp.

Mr. Grundhofer offered other examples: "In 1993 and 1994 we had little presence in Cleveland and later grew that substantially," he said in the interview.

"Three years ago in Kentucky we were the 12th-largest bank, and now we're the second-largest in deposits and first in terms of branches," he added. "A major reason the Tennessee deal is so attractive stems from the rapid growth in the state and the mid-South region."

"This enables us to increase our presence in markets that are much faster growing than others we are in today," he said. The Tennessee market is growing "at a rate of 7%, compared to a slower rate in other markets that the bank is in and under the U.S. average of 5.1%," Mr. Grundhofer said.

For its part, First Union said its reason for opting out of Tennessee was simple. "It's a strategic decision for us to focus on the markets where we have a greater market share," said Walter Price, a First Union spokesman.

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