First Union Corp. is marching to its own drummer.

At a time when other banks are taking conservative steps to bolster reserves and shrink balance sheets to improve their capital ratios, First Union is moving in the opposite direction.

At a lively and sometimes contentious meeting before New York analysts on Wednesday, Edward E. Crutchfield, First Union's chairman and chief executive, said his bank would deplete what he viewed as "excess reserves" in order to spend more on technology and a host of other initiatives.

He also suggested that the bank has no current plans to reduce the size of the loan portfolio.

"We have $400 million more in reserves than our models call for," Mr. Crutchfield said, rejecting arguments that First Union should stay in line with other superregionals which have higher reserve ratios.

The issue of how much capital First Union should have on hand has become charged. Many analysts view the Charlotte, N.C.-based superregional as thinly capitalized. That perception, combined with concerns about deteriorating credit quality and the possibility that First Union might make yet another acquisition, have been putting pressure on the bank's share price for some time.

"If there's one thing that's clear to me it's that they have yet to develop a consistent capital management philosophy," said Nancy Bush, an analyst with Brown Brothers Harriman.

But Mr. Crutchfield told analysts to view his bank differently from others in its peer group. Even if the bank's reserve ratio is lower than at other institutions, he added, analysts making comparisons should keep in mind that about one-third of First Union's nearly $90 billion loan portfolio is in low-risk residential mortgages.

First Union has a loan-loss reserve of $1.46 billion, and a reserve-to- loan ratio of 1.62%. That's well below the superregional average of around 2%, according to Goldman Sachs & Co. analyst Sally Pope Davis. However, taking out nearly $27.5 billion worth of residential mortgages, the bank's ratio climbs to more than 2.3%.

John R. Georgius, a First Union vice chairman who also attended the meeting, said the bank has about $50 billion in consumer loans which could readily be securitized should First Union feel the need to boost its capital-to-asset ratios.

Mr. Crutchfield did not specify just how much First Union planned to draw from reserves and shift into other investments. However, Ms. Davis noted that the bank had pulled out close to $120 million in reserves last year and estimated First Union would probably take another $175 million out of its reserves this year.

"They have a good track record, and they've presented a reasonable case given the amount of mortgages on their balance sheet," she said. "But there's a certain point at which investors, and even more, rating agencies, start to worry about their ratios."

Ms. Davis added that at a time when other superregionals are continuing to add to their reserves, it makes First Union look very much like "it's heading in the other direction."

First Union, which completed it's acquisition of Lawrence N.J.-based First Fidelity Bancorp, thus far has not followed other major institutions like Fleet Financial Corp. in reducing its balance sheet after large acquisitions.

Several analysts such as Bear, Stearns & Co.'s Lawrence R. Vitale also suggested the bank follow other institutions and shrink its balance sheet as well as replace lower-yielding assets with higher-yielding assets.

But they also that noted First Union has been reluctant to follow other banks because of the immediate impact this would have on earnings.

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