Firstar Corp. is bent on becoming the preeminent asset management company in the Upper Midwest, which promises confrontations with formidable rivals outside its traditional home territory.

"My main mission is to lead the charge to be the dominant provider of trust and investment services in our markets," said Steven R. Parish, who was promoted last month to executive vice president for trust and investment management.

Mr. Parish replaced Michael J. Bills, 52, who resigned to pursue another venture, Firstar said. Mr. Bills' resignation came less than four months after Firstar, as part of a broad restructuring, reaffirmed him as its top trust and investment management executive.

The 38-year-old Mr. Parish previously headed Firstar's institutional trust business. A 12-year veteran of the banking company, Mr. Parish isn't bashful about his ambitions for Firstar's asset management unit: "We're not here just to compete; we're here to be dominant."

The Milwaukee-based banking company can already claim dominance in Wisconsin and Iowa, despite a restructuring that will cut its work force by 25%. "Everyone left standing has a lot to do," a company spokeswoman conceded.

Lifting the bank into the top ranks of money managers around Chicago and in Minnesota - even after recent acquisitions in those markets - may prove very difficult, several analysts said.

For instance, Ben R. Crabtree, an analyst at Dain Bosworth Inc., Minneapolis, praised Firstar's agreement to acquire $1 billion-asset American Bancorp, based in St. Paul. But he doubted that Firstar would seriously challenge either Norwest Corp. or First Bank System anytime soon in Minnesota asset management.

"They'll become the alternative to the giants, but being dominant is another thing," Mr. Crabtree said.

Yet Firstar's Mr. Parish refuses to back off: "We think we can compete head-to-head and win market share in both those areas."

Even before its expansion, asset management was the $19 billion-asset banking company's largest source of fee revenue.

"Asset management over the past three to five years has been one of their showcase areas of performance," said Martin A. McDevitt Jr., an analyst at Cleary Gull Reiland & McDevitt Inc., Milwaukee.

Last year, trust and investment management fees totaled $132 million, outpacing service charges on deposit accounts of $81 million and more than double the $63 million reaped from credit card servicing.

And at a recent analysts meeting, Firstar management pledged growth in assets under management of 10% to 15% a year.

Even if assets grew only 8% per year, as Mr. Crabtree expects, management fees should continue as a healthy slice of revenue.

Already Firstar solely manages assets of more than $16.3 billion: $9.5 billion through trust affiliates, $3.3 billion of institutional assets, and $3.5 billion in the bank's proprietary Portico mutual fund family.

"The biggest problem they've had in asset management is underutilization," said William W. McGinnis, an analyst at Robert W. Baird & Co., Milwaukee.

Firstar's money management expertise begs to be better exploited, Mr. McGinnis said, citing its enviable "performance track record, good people, and generally good products."

And in fact, as many banks look to outsiders to help manage their fund portfolios, Firstar pulled a turnabout and recently snared a contract to co-manage a bond fund for SEI Corp., Wayne, Pa., a major provider of trust services and mutual funds through banks.

Firstar also has a burgeoning mutual fund servicing unit that supplies transfer agency, accounting, custody, and administrative services to almost 180 funds. Its revenues are expected to grow 12% this year.

Mr. Crabtree said that Firstar, despite its modest size, may have found efficiencies in mutual fund servicing as it has in credit card processing, another scale-driven business. And he conceded that bank management has expressed pleasure at the unit's profitability.

Still, Mr. Crabtree questioned how Firstar could compete successfully with servicing giants like State Street Boston Corp. "One thinks of that as an economy of scale business where there should be very clear advantages for size," he said.

While Mr. Parish acknowledged the mutual fund servicing unit is now a "niche player," it is the fastest-growing segment of Firstar's trust and management business.

Management even forecasts that by the year 2000 it will account for half of the trust unit's revenues.

"We're sought out based on the level of service we provide," Mr. Parish said. "And we're keenly interested" in rapid growth of the business.

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