Last November, First Union's Edward E. Crutchfield Jr. said that by 1996 many other banks would hit a "revenue wall."

"We don't intend to burn the furniture to improve the efficiency ratio," said the North Carolina bank's chairman and chief executive. "Many of our banker friends don't understand that."

At the time, Mr. Crutchfield said his bank would spend up to $120 million on expanding its credit card unit and small business lending, and beefing up the capital markets group.

That investment drive to boost revenues may have made First Union's planned acquisition of First Fidelity Bancorp. even more appealing.

"Basically, they'd like to spread that expense over a larger asset base and use it to generate revenues from new customers," said Anthony R. Davis, an analyst with Dean Witter Reynolds in New York.

Indeed, the merger illustrates the interplay among some of the larger forces reshaping the industry: concerns over long-term revenue growth, reducing the expense base, and making big investments in technology to remain competitive.

The issues are not always easy to separate. First Fidelity, which was in the midst of a restructuring program, offered little fat for an acquirer to cut.

The New Jersey bank, said Mr. Davis, "just simply refused to let expenses grow, period."

"They have gotten about as much as they could in terms of earnings growth from expense reduction," said Elizabeth A. Summers, an analyst with Ryan, Beck & Co. in West Orange, N.J., "They needed to have revenue growth."

But the bank did not have what she called a "blockbuster" opportunity to do so. She said it lacked, for example, anything like the highly profitable processing businesses at Bank of New York or Fifth Third Bancorp.

Frank R. DeSantis Jr., an analyst with Donaldson, Lufkin & Jenrette, said, "I think (First Fidelity) just ran out of things to buy, and at the time First Union said "We'll buy you."'

Another key issue - and one often intensely evaluated during reengineerings - is the need to invest in new technology.

"It's not impossible for a $10 billion bank to afford cutting-edge technology," said Mr. Davis. "But it's a hell of a lot easier for one that's $50 billion or $100 billion."

"Change is being brought by technology," said Ms. Summers.

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