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First Union, First Fidelity OK merger Nation's 6th largest banking company


While some 200 demonstrators marched outside in protest, shareholders of First Union Corp. and First Fidelity Bancorp. voted overwhelmingly yesterday to merge, creating the sixth largest banking company in the country and the fourth biggest in Maryland.

Eighty-nine percent of First Union shareholders approved the merger, while 99 percent of First Fidelity shareholders gave it their blessing.

The merger, which is expected to close by January pending approval from the Federal Reserve Board, will create an East Coast giant operating under the First Union name with $126 billion in assets and nearly 2,000 branches in 12 states and Washington, D.C. Its holdings will stretch from Connecticut to Florida serving 11 million customers.

The merged operation will be a major presence in Baltimore, where it inherits First Fidelity's 52 branches and $2.6 billion in deposits. First Fidelity took over Baltimore Bancorp, parent of the Bank of Baltimore, last November and Household Bank FSB's branches here earlier this year.

In addition First Union operates 21 branches, mostly in the Washington suburbs. Together the combined operation will have 73 branches, 750 employees and $4 billion in deposits in Maryland.

Paul Levine, a spokesman for First Fidelity, said while some consolidation is expected, reductions will be made through attrition and cuts will be minimal because there is little overlap between First Union and First Fidelity operations.

The company is "trying as hard as we can to minimize staff cuts," he said.

Edward E. Crutchfield, First Union's chairman and chief executive, said in a statement that the shareholder votes were "two major and positive steps toward creation of an innovative and dynamic financial services leader."

The Charlotte-based First Union will exchange 1.35 shares of its common stock for each one of Newark, N.J.-based First Fidelity in a deal valued in June at $5.4 billion.

First Fidelity shares closed yesterday at $67.50, down 25 cents and First Union's at $51.25, up 12.5 cents, both on the New York Stock Exchange.

"I thought it was a great transaction," said Merrill Ross, an analyst with Wheat First Butcher Singer.

She said First Union will bring to consumers a vast array of products and services that are competitively priced.

Ms. Ross expects First Union to look at other acquisitions in the Baltimore area because management typically likes to be one of the top three in any given market.

"I think they are going to commit resources in Baltimore to achieve that goal," she said.

Currently the top three are NationsBank, First Maryland Bancorp. and Mercantile Bankshares Corp.

Yesterday's vote went off without a hitch in Philadelphia, where First Fidelity executives and about 100 shareholders gathered at the Philadelphia Museum of Art.

However, shortly before the First Union meeting commenced, about 200 demonstrators, dressed in yellow T-shirts with the slogan "Stop the Loan Sharks," gathered in front of the company's headquarters.

The demonstrators marched throughout the bank's lobby carrying signs that read "Fast Eddie" (in reference to Mr. Crutchfield), and "Stop First Union."

The group was led by Bruce Marks, a community activist who is executive director of Union Neighborhood Assistance Corp., who met with Mr. Crutchfield and First Union President John Georgius Monday to discuss ways the company could make more loans available to lower-income borrowers, according to Jeep Bryant, a First Union spokesman.

Mr. Marks could not be reached for comment.

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