Investors leafing through First Union Corp.'s second-quarter earnings announcement were jolted to discover that merchant banking - formerly a quiet backwater at the North Carolina superregional - delivered $44 million, or 16 cents a share, to the company's bottom line.

The profits came from cashing in on two major investments initiated by First Union Capital Partners. They also represented the first time that the five-year-old merchant banking unit contributed significantly to the parent company's earnings.

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