IDENTITY CRISIS.

• Author: Speizer, Irwin
• Position: First Union Corp.

First Union's efforts to build its brand backfired. Will name dropping be the best way to change its image?

In 1996, First Union Corp., intent on being a player on the national financial scene, prepares for its final expansion binge of the decade. To find out what people in its East Coast markets think about First Union -- the name and what it means to them -- the Charlotte-based bank commissions a public-opinion survey.

The results are humbling: Nine out of 10 people don't think about First Union at all. The few who do have little to say -- good or bad -- about the brand. "Frankly, when people were questioned cold, they came up pretty empty-handed," recalls Jim Garrity, a First Union senior vice president and director of marketing. "Except they could link the color green. The green bank."

Embarking on a quest for recognition, the green bank marshals not only its considerable resources but some of the best creative minds on Madison Avenue and in Hollywood. It spends hundreds of millions of dollars in one of the most expensive and most unusual advertising campaigns ever launched by a financial institution. From a virtual unknown, First Union becomes the 12th most-recognized name among financial institutions.

But, as the bank discovers, gaining name recognition is just part of building a brand. Performance is what shapes the image, and First Union's falters on so many fronts that its new notoriety amplifies the negatives. It's nice when everybody knows your name, but not so nice when they don't like what they know about you.

"The First Union brand does not evoke particularly favorable response on the part of the consumers and investors," says Chris Blum, a financial-services analyst at Edward Jones in St. Louis. "If you think about where First Union has been, they have a couple of black eyes, particularly if you are in the Southeast and have had legitimate complaints about service or are an investor who is not happy with the stock at these levels."

So it's no surprise that when Wachovia Corp. proposes a merger and demands that its name be the one that survives, First Union agrees, even though it's bigger and has spent millions more to build its brand. With assets topping $254 billion, it is the nation's sixth-biggest bank holding company, three times the size of Winston-Salem-based Wachovia, at $74 billion.

Taking Wachovia's name, First Union says, is a condition of the merger to create the nation's fourth-largest commercial bank, a concession to its older partner's desire to preserve its heritage. But banking analysts and branding experts wonder about swapping an easy-to-remember, easy-to-pronounce, widely recognized name for one that people in such key territories as New Jersey or Pennsylvania will have trouble pronouncing, spelling and even identifying as a financial institution. It's a sign, some say, that the First Union brand is so damaged it would be cheaper and easier to rebuild anew under the Wachovia banner.

"Once you have established the reputation of a brand, it is difficult to correct," says Tony Plath, professor of banking at UNC Charlotte. "Look at Firestone. What's the first thing you think of? Their tires blow up. What's the first thing you think of with First Union? They give rotten service. That's no longer true. From what they are telling me, they have corrected a lot of the problems. But it takes a long time for perception to catch up with reality."

The merger faces numerous hurdles, including a hostile bid for Wachovia by Atlanta-based SunTrust Banks Inc. If it somehow gets blocked - Wachovia shareholders are scheduled to vote Aug. 3 -- First Union insists it's comfortable moving forward under its own banner. While fighting for the merger, which would give it Wachovia's name, it is running commercials touting First Union as a traditional, neighborhood bank -- the very image it tried to push aside in it its bid for national recognition. "Probably what happened,"...