While it may be in for a rough fiscal year, Charlotte, N.C.-based First Union's ABS issuance looks to be continuing its smooth sailing.

Some analysts fear increased write-offs, after a week where First Union itself predicted a further $100 million in bad debt and an estimated top EPS for the year of $3.50, down from predictions of $4.29. That would make it the second year in a row the nation's sixth largest bank shot for the moon and ended up fizzling on the launchpad.

"Their credibility is pretty much shot," said one bank analyst, who predicted an extra $200 million in write-offs himself, calling his own figure "conservative."

But others say the bank's ABS programs are solid, especially the credit card master trust, which has actually been outperforming its bank counterparts.

"First Union's master trust has been performing very well," said Moody's Investors Service analyst Marjan Riggi, adding the bank's credit card issuance benefited from a previous asset replacement a little over a year ago.

She said the bank had been hit hard with delinquencies following a national solicitation plan to bring in new clients. "It didn't work out very well for them," she said, and they replaced $1.1 billion in assets of the $3.1 billion outstanding in December 1997, selling off those accounts to Providian.

Since then, the firm has not been a big card issuer, laying low during the madness at the end of 1998, and staying away for all this year so far. Last month, chargeoffs on the master trust were at 4.72%, "a bit low" for credit cards, said Riggi.

She added the firm's current woes may be due to some expense problems. The bank has been on a buying spree over the past few years, swallowing regional player Corestates Financial and consumer lender The Credit Store in an effort to become a national bank. The bank has also hinted at building at 100-story office tower in Charlotte. - TC

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