NationsBank Corp.'s decision to raise its performance goals signals growing confidence at the Charlotte-based superregional.

It also suggests, to some analysts, that the banking company that used acquisitions to become one of the largest U.S. banks is less likely to undertake a sizable deal in the short term.

"Their higher performance targets make it slightly less likely for them to do a big dilutive deal - but the odds for that were already low," said Moshe Orenbuch of Sanford C. Bernstein.

While presenting its second-quarter earnings on July 15, NationsBank announced that it had revised several performance goals established in 1993. The target for return on equity has been moved up to a range of 17% to 20%, from 15% to 18% The bank hit 18% in the second quarter.

NationsBank also will shoot for an efficiency ratio "trending toward" 50% by 1999. The company reported a 55.6% ratio in the second quarter, comfortably within its previous range of under 60%.

The bank's target earnings per-share growth will remain the same at a range of 12% to 15%.

"We're sending a message to the market and to our own people that we've done a wonderful job of meeting our prior goals and it's time to move on," said NationsBank chief financial officer James H. Hance Jr.

NationsBank has often been criticized for sacrificing profitability for growth. But Mr. Hance disputed that assessment, saying the company's profitability has improved every year since 1993, when the last three-year plan was developed.

"We think we have been on a profitability kick," Mr. Hance said.

He said NationsBank's decision to raise the performance targets will have no impact on the company's acquisition policy. "For some time, we've indicated acquisitions have to meet our hurdle rates and pass our nondilution tests and be particularly beneficial," Mr. Hance said.

Though investors worry about NationsBank's pulling off an acquisition that would dilute the value of their shares, the company has focused on relatively small deals in the last several years. The largest of these, Atlanta's Bank South Corp., had $7.4 billion of assets, not a huge bite for a company the size of NationsBank, which now has $192 billion of assets.

NationsBank's largest acquisitions - C&S/Sovran, First RepublicBank Corp., and MNC Financial Inc. - were accomplished at fire sale prices.

"You'd have a hard time documenting that NationsBank has been a dilutive acquirer," said Dean Witter's Anthony R. Davis. "They tend to time their transactions and structure them in such a way that they don't take a lot of dilution."

Ruchi Madan, with Prudential Securities, said she believes NationsBank's appetite for a large deal has declined in recent months. Ms. Madan pointed out that NationsBank refused to meet the high prices bid for several mutual funds companies that sold earlier this year.

Over the longer term, NationsBank's ability to improve its financial performance will strengthen its ability to expand via acquisition, said Michael Mayo, with Lehman Brothers. "To the extent that raising the performance goals shows that their own house is in order, it makes it easier for them to go out and buy somebody," Mr. Mayo said.

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