FAST EDDIE HAS TO PICK UP PACE TO MEET FIRST UNION’S FUND GOAL: CEO NEEDS, OH, A MERE $28 BILLION TO REACH AMBITIOUS ASSET TARGET

“Fast Eddie” Crutchfield’s deadline is fast approaching.

Edward E. Crutchfield, chairman and CEO of First Union Corp., the largest banking and investment services network on the East Coast, has set a goal that brings to mind his Hollywood-style nickname: to have $100 billion in mutual-fund assets under management by the year 2000.

As of this week, that’s 297 days and about $28 billion in mutual-fund assets away.

Yet observers of the powerful growth of First Union don’t take Mr. Crutchfield’s determination lightly. First Union has acquired more than 80 businesses in the past 15 years, hence its chairman’s nickname, and he has vowed to make First Union as much a financial services company as a traditional bank.

His resolve has been fired in the big-bank homeland shared by BankAmerica chairman and CEO Hugh L. McColl Jr. — Charlotte, N.C.

“Those Charlotte guys,” says one banker well out of the fray, “they’ve been competitors for years and both have egos the size of North Carolina. ‘Wall Street South,’ they call it, and they dream up these numbers and put them out there.

“Of course, both of them, through the years, have stepped up to the plate, boasted, and then they’ve come through.”

Across the financial services industry, institutions like First Union have been clamoring to build assets under management, so they can help stabilize their revenues. So First Union’s goal may be ambitious — it has over $72 billion in its Evergreen and Mentor fund groups — but it’s hardly unusual.

Some observers say Mr. Crutchfield’s goal is at least conceivable.

“I would not underestimate this guy,” says Scott Cooley, the Morningstar analyst who covers most of the Evergreen Funds, the larger of First Union’s two groups. “He’ll get there even if he has to buy his way there.”

“I think it’s possible,” agrees Joan T. Goodman, vice president of research in the Chicago office of Donaldson Lufkin & Jenrette Inc.’s Jersey City, N.J.-based Pershing Division. “Number one, they have very good management now, with the acquired firms. And the leadership is sales-oriented, more than it has been before.”

In recent years, the bank has merged two acquired fund groups — Evergreen and Keystone — and added the Mentor funds when it bought Richmond, Va., brokerage Wheat First Butcher Singer last year.

First Union wants to increase its fee-based business to help carry it through good times and bad, notes Stephen Biggar, bank analyst for Standard & Poor’s Equity Group in New York.

This is no surprise at a time when other banks are also diversifying into financial services — as brokers, meanwhile, offer banking services to their clients. Mr. Crutchfield’s $100 billion goal line is a pretty hard one to draw in the sand, though, and other observers cut First Union and its CEO less slack.

“That number’s sort of shocking,” says William R. White, who heads the investment services practice at San Francisco consultancy Spectrem Group. About $16 billion of the assets are with the Mentor Investment Group — 62% of which is in money market funds.

And that relatively low-margin product accounts for 37% of Evergreen Funds’ $56 billion in assets, Mr. White points out, adding, “you’re not going to grow there.”

On the plus side, First Union’s purchase of Philadelphia-based CoreStates Financial Corp. last year gives it a whole new customer base to pitch funds to. But the “dark story,” Mr. White contends, is that Evergreen funds “don’t have a lot of momentum at the moment.”

Mr. Cooley agrees. “I don’t view this as a really hot shop.”

William Ennis, president of Evergreen Investment Co., takes a longer view. “It’s no secret that 1998’s marketplace favored a surprisingly small handful of growth stocks. Evergreen’s funds, asset-weighted to small-to-mid-cap value stocks on a comparative chart vs. the Standard & Poor’s 500 stock index, did not do as well,” he concedes. “But long-term, our track record has been very good.”

Evergreen touts that record in its first television advertising campaign, launched last month as part of a five-year plan. The commercials were created by Publicis & Hal Riney in San Francisco, which has done campaigns for General Motors’ Saturn and Sprint PCS.

A spokesman says First Union expects to double its advertising budget next year to almost $30 million, and plans to double it in each of the following three years.

The ads, airing on CNBC, MSNBC, Fox News, CNN, CNNfn and Bloomberg TV, stress Evergreen’s 65 years of experience and the performance of funds like Evergreen Omega, which gained 35.43% in the 12 months ended Jan. 31.

If internal growth doesn’t propel First Union toward Mr. Crutchfield’s $100 billion goal, how will it be reached? One way would be to reset the clock.

“I don’t have to be there by the millennium,” says Mr. Ennis.”It is within the year 2000. That was always the target.”

Indeed, while Mr. Crutchfield has often used 2000 as his stated target for reaching the milestone, in a 1996 interview in American Banker he also used “the next three to five years,” that is, from 1999 to 2001.

In any case, no one can dismiss the growth in his mutual funds unit since 1994, when it held $7 billion.

In the clutch, a familiar strategy at First Union suggests itself: acquisition. But pundits don’t come up with many candidates.

“T. Rowe Price has got the numbers, and the track record,” observes Mr. White, “but it’s just horrendously expensive.”

And First Union would face competition from others seeking their own mutual-fund companies.

Some also question whether banks are going to make any big acquisitions as the uncertainties of Y2K-affected systems loom. Many predict that First Union, like other banks, would only pick up another company later in the year, executing the transaction after January 2000.

“They may not want to combine systems during that period,” says Pershing’s Ms. Goodman, though a candidate with compatible software could make that easier. And as she points out, U.S. banks generally are in pretty good shape for Y2K.

Still, Ms. Goodman suggests, rather than buying a big mutual-fund group, Mr. Crutchfield might do better to open and promote online fund sales. “That’s how I would do it,” she says.

Robert K. Becker, a financial services analyst at Argus Research in New York who rates First Union stock a buy, thinks financial considerations might work against a purchase.

“It’s just not a good time for them to try that. Their (price-to-earnings) multiple is a little too low for that, assuming that they’re going to pay for something in stock.” First Union traded in the $53 range late last week, with a price-to-earnings ratio of 19.2, slightly above the banking industry average of 18.4.

But S&P’s Mr. Biggar insists history suggests a big purchase. It normally takes First Union up to a year to digest a merger, he notes, making anytime from now until May a likely window for another acquisition.

“Keep in mind,” says Mr. Biggar, “that they have staffs that do these mergers and acquisitions, and they like to keep them busy. Towards the end of the term of integration, these guys start getting itchy for what else they can add to the portfolio.”