Unique Transaction To Benefit Underserved Housing Market

    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
subsidiary.
    "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
Credits.
    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
nation.

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