The current merger wave will not force J.P. Morgan & Co. off its independent course, chairman and chief executive officer Douglas A. Warner 3d said Wednesday.

Speaking at his annual shareholders meeting, Mr. Warner said Citicorp and Travelers Group, with their $70 billion merger agreement announced Monday, are taking "the polar opposite" of Morgan's approach.

"I don't think bigness is a strategy," he said. "There needs to be a certain scale. Beyond that, the advantages are less compelling and can even be diminishing."

Mr. Warner said $262 billion-asset Morgan, the fourth-largest U.S. banking company, would continue providing a broad array of products to a limited number of large corporations, institutions, and wealthy individuals that fit within its strategy.

Mr. Warner said he has preferred to seek partnerships rather than outright acquisitions. Morgan paid $900 million last year for a 45% stake in American Century Cos., a mutual fund firm. Mr. Warner listed the deal Wednesday as "one of the highlights of last year."

Analysts said buying into attractive businesses this way allows Morgan to focus most of its resources on its own capital markets operations. Morgan managers try to "add value where they feel they can, and they would rather partner with others where they feel they can't," said Raphael Soifer, an analyst at Brown Brothers Harriman & Co.

But Morgan has continued to struggle to keep expense growth in line with sluggish revenues. The bank has been the subject of repeated rumors over the last few months that it would be forced into a sale, possibly to Deutsche Bank or Chase Manhattan Corp.

Morgan's share price fell $2.5625 Wednesday, to $137.375, amid a broad retreat by bank stocks.

Analysts said Travelers chairman and chief executive officer Sanford I. Weill had approached Morgan, only to be rebuffed.

Mr. Warner said Wednesday that the bank would take an unspecified charge in the first quarter, both to account for a restructuring and to pay for an ongoing reorganization of European operations, with support functions consolidated in London.

Analysts said they also expect first-quarter profits to be hurt by the designation of some of Morgan's Indonesian assets as nonperforming.

Mr. Warner declined to discuss how the Asian exposure would affect the earnings report. But he pointed out that difficulties in the Far East caused declines in the fourth-quarter and yearend figures. Morgan's $271 million net income that quarter was down 35% from the year-earlier period. The full-year earnings of $1.47 billion were off 7%.

Morgan announced in February that it would eliminate 5% of its work force as part of a restructuring designed to lower its 13% rate of expense growth, which last year outpaced its 6% revenue gain.

Much of the expense growth was traceable to Morgan's heavy investments in building businesses like equity underwriting over the last 10 years, analysts said.

Mr. Warner acknowledged Wednesday that the bank's decision to build these capabilities internally rather than acquiring them exacerbated the expense problem. "The building decision has, in our business, meant putting expenses ahead of revenues," he told shareholders.

Despite Mr. Warner's statement about independence, analysts see the Citicorp-Travelers precedent putting pressure on Morgan to seek its own combination or get lost in the shuffle.

"It seems to me that everything Morgan has built is rapidly being overtaken by mergers of firms," said David Berry, an analyst at Keefe Bruyette & Woods. He said Morgan is at a particular disadvantage overseas after the Citicorp-Travelers combination and its "product array."

Mr. Warner said Morgan's history was partly to blame for current problems.

"This firm was put together sequentially," he said, referring to a decade-long process of winning regulatory approval to enter new underwriting businesses. "Each time we got a new power, it mandated that we charge ahead as fast as we could go. You do what it takes. That creates inefficiencies."

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