First Union Corp. said it would earn $4.96 to $5.01 a share this year, after accounting for a preferred stock redemption premium of 24 cents a share in the fourth quarter.

Charlotte, N.C.-based First Union, which made the announcement late Tuesday, is the second major bank this week to announce a preferred stock redemption.

Pittsburgh-based Mellon Bank Corp. said Tuesday that it would take an 11-cent-a-share hit in the fourth quarter to cover the redemption of $160 million of preferred stock.

First Union's move caused analysts to reduce their 1994 earnings estimates, but it had no negative repercussion on Wall Street. First Union's stock rose 50 cents a share in Wednesday afternoon trading from Tuesday's close of $41.125.

Banks generally benefited from a rising market.

"People do not care about 1994 numbers," said analyst Anthony R. Davis of Dean Witter in New York. "The real area of focus is 1995. And to the extent that the industry can put these kinds of expenses into 1994, they're certainly justified doing it."

Mr. Davis said he had reduced his fourth-quarter estimate on First Union to $1.04 a share, from $1.37. He revised the full year down to $5, from $5.30.

He expects First Union to take some other expense accruals in the fourth quarter, Mr. Davis said, in addition to the redemption premium.

"As we close out 1994, a lot of banks are probably going to be pushing through expense accruals and things like that, which may make the fourth-quarter numbers a bit below where some of us had been," he said.

But Mr. Davis also boosted his 1995 estimate on First Union to $5.80 a share, from $5.70, because the bank predicted the preferred stock redemption would "have a positive impact to earnings of approximately 7 to 10 cents per share" next year.

First Union's board approved the redemption Tuesday of all 6.3 million outstanding shares of its Series 1990 Cumulative Perpetual Adjustable Rate Preferred Stock. This will be done March 31 at a price of $51.50 a share.

A quarterly cash dividend of 8.65% per year will be paid Dec. 31 to holders of preferred stock as of Dec. 15.

First Union said dividend payments on the preferred stock will total about $25 million in 1994.

Although the redemption premium will reduce this year's earnings by 24 cents a share, it will not reduce net income.

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