First Bank System Inc. seems to be winning Wall Street's support for its proposed acquisition of Metropolitan Fiancial Corp., apparently on the strength of projected cost savings.

Although thrift acquisitions often are controversial, First Bank saw its stock hold constant on Friday after reporting a preliminary agreement to acquire Metropolitan, a $7.85 billion-asset thrift holding company.

The stock-swap deal has an estimated value of between $811 million and $877 million, or between 159% and 171% of Metropolitan's book value, and is scheduled to close in the first quarter of 1995.

Some details will remain sketchy until First Bank and Metropolitan complete a definitive agreement.

On Tuesday, First Bank's stock fell 25 cents, closing at $36.

"Even at the high end of the proposed exchange ratio, the deal looks pretty good to us," said Carole Berger, and analyst with Salomon Brothers Inc. It is fairly rare for a bank to win analysts' open approval for a thrift acquisition, because the deals are usually so difficult.

For example, a balance sheet restructuring probably will be required at Metropolitan, which has outsized concentrations of mortgage assets and certificates of deposit. Some worker retraining will be required to support an expanded product line.

And care must be taken not to disrupt Metropolitan's customer base, encompassing 300,000 households in eight states.

However, First Bank is projecting annual pretax cost savings of $74 million, or a whopping 34% of Metropolitan's noninterest expenses. The savings will be fully realized by 1996.

Combined with a modest $9 million, or roughly 3%, increase in Metropolitan's pretax revenues, the deal will boost First Bank's earnings per share by at least 1.5% in 1995 and 2% in 1996, First Bank estimates.

In-market merger dynamics are driving the aggressive projections, analysts say. Not only are First Bank and Metropolitan both headquartered in Minneapolis, but they have overlapping branch operations in four states: North Dakota, South Dakota, Minnesota, and Wisconsin.

Beyond cost savings, First Bank chairman John Grundhofer hopes to capitalize on the transaction by offering Metropolitan customers an expanded menu, including mutual funds, debit and credit cards, and revolving credit lines.

Still, analysts say First Bank can't take for granted that it can simultaneously slash Metropolitan's expenses while boosting revenues.

"The key is retaining customer relationships," said Henry C. Dickson, a banking analyst with Smith Barney Shearson. "It is not always the case that acquirers realize projected savings while preserving or enlarging revenues, principally because of merger-driven customer erosion."

At the same time, analysts say, $26.5 billion-asset First Bank is experienced with thrift acquisitions, having absorbed more than $2.5 billion of thrift assets and 53 branches in Colorado.

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