First Union Capital Markets Corp., Bear, Stearns & Co. Price Securities Offering Backed By Affordable Mortgages

Unique Transaction To Benefit Underserved Housing Market

Oct 20, 1997, 01:00 ET from First Union Corporation

    CHARLOTTE, N.C., Oct. 20 /PRNewswire/ -- First Union Capital Markets Corp.
 and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
 securities backed by Community Reinvestment Act (CRA) loans - marking the
 industry's first public securitization of CRA loans.
     The affordable mortgages were originated or acquired by First Union
 Corporation and subsidiaries.  Customers will experience no impact - they will
 continue to make payments to and be serviced by First Union Mortgage Corp. CRA
 loans are loans targeted to low and moderate income borrowers and
 neighborhoods under the Community Reinvestment Act of 1977.
     "The securitization of these affordable mortgages allows us to redeploy
 capital back into our communities and to expand our ability to provide credit
 to low and moderate income individuals," said Jane Henderson, managing
 director of First Union's Community Reinvestment and Fair Lending Programs.
 "First Union is committed to promoting home ownership in traditionally
 underserved markets through a comprehensive line of competitive and flexible
 affordable mortgage products. This transaction enables us to continue to
 aggressively serve those markets."
     The $384.6 million in senior certificates are guaranteed by Freddie Mac
 and have an implied "AAA" rating. First Union Capital Markets Corp. is the
 investment banking subsidiary of First Union Corporation (NYSE:   FTU).
     "We are extremely pleased by how well this transaction was received by
 investors as many of the tranches were significantly oversubscribed," said
 Owen Williams, managing director of fixed income sales and trading at First
 Union Capital Markets Corp. "This offering is further proof of investors'
 strong desire for a diverse range of collateral."
     Brian Simpson, managing director of First Union Corporation's Structured
 Products and Real Estate Group, said the transaction exemplifies First Union's
 effective use of asset securitization in managing its own balance sheet.  Last
 July, First Union Capital Markets Corp. completed a $405.6 million securities
 offering backed by student loans originated by a First Union Corporation
     "Securitizing assets enables First Union to continue to grow its loan
 portfolio, while at the same time generate additional fee income," Simpson
 said. "We also have been very successful in providing innovative asset finance
 services to clients. We believe there is opportunity to expand our CRA
 loan securitization capabilities to other companies in the market."
     First Union has completed 20 asset-backed transactions for clients in 1997
 totaling $4.3 billion, including a $268 million public offering backed by
 equipment leases for Heller Financial Inc. and a $67 million public offering
 for National Auto Finance Company secured by retail auto loans.
     First Union Capital Markets Corp. provides a full range of investment
 banking products and services, including asset-backed finance, public finance,
 syndicated loans, merger and acquisition advisory, private finance, equity
 underwriting and investment grade and high-yield debt finance.
     First Union has grown its capital markets business substantially over the
 last three years. First Union's Capital Markets Group reported 1997 fee income
 through Sept. 30 of $531 million, up from $464 million for the full year of
 1996 and $265 million in 1995.
     First Union's community reinvestment activity averages $3.5 billion per
 year. First Union offers a broad range of financial products and services to
 low and moderate income communities, including affordable housing mortgages,
 home improvement loans, consumer loans, secured credit cards, small
 business loans, small farm loans, micro-lending and Low Income Housing Tax
     Charlotte-based First Union Corporation is the nation's sixth-largest bank
 holding company with assets of $144 billion as of Sept. 30, 1997. The company
 serves approximately 12 million customers throughout the East Coast and

SOURCE First Union Corporation