RELUCTANT REBEL.

Loyalty is a trait that took Ken Thompson to the top. Now he bucks tradition to get his bank back up there.

Nearly an hour and a half go by before Ken Thompson shows the first sign of stress. The topic: Charlotte-based First Union Corp.'s generous dividend -- despite Wall Street pressure to lower it. Up to now, he's answered every question in a far-ranging interview about his background, how the bank stumbled and his decision to take a $2.8 billion restructuring charge to overhaul it. But when it comes to the dividend, he deftly defers. "I would just say that it was debated at our board. But at the end of the day, we've got plenty of capacity to generate all of the capital we need in this company. At the end of the day, we didn't need to cut the dividend."

Where Thompson, the new president and CEO, really stands remains a mystery, which is where he wants to keep it. The bank that in three decades clambered from North Carolina's second tier to the nation's sixth-largest, with $285 billion in assets, slipped on its success, missing earnings targets, shedding thousands of jobs, stung by analysts saying mergers had soured, by customers complaining its service was shoddy. The dividend had emerged as a defining issue, Wall Street wondering whether Chairman Ed Crutchfield, who ceded the CEO title to Thompson after being diagnosed with cancer, still rules.

But by casting Crutchfield vs. Thompson as the First Union story, the Street may be missing the big picture, which is where Thompson has already taken the company -- streamlining it, refocusing it, demanding better customer service. As for Crutchfield, Thompson owes his career to the man who built the bank into what it is today. Crutchfield moved him along, testing him with challenging assignments for two decades that culminating in naming him, after John Georgious left last year, president and CEO.

Whatever the disputes over the dividend, Thompson figures he can work around them. He knows he doesn't have much time. First Union's missteps have made it potential takeover prey. "They have 18 months to deliver 12 to 15% revenue growth, profit growth," says Tony Plath, banking professor at the University of North Carolina at Charlotte.

So who is this guy in the hot seat. How did he get there? For starters, he's likeable, the sort who prides himself as being approachable. Engaging rather than charismatic, he stands 5-8, with straight brown hair, wire-rims and a prominent, deep-dimpled chin. He listens rather than lectures, oozing empathy and calm. A deft salesman and handler of customers and employees, around First Union he's known as someone who gets the job done.

Mike Easley -- state attorney general and Democratic candidate for governor -- grew up with Thompson in Rocky Mount. Never flashy, always reliable is how he describes him -- "the type guy that you would always have been comfortable to have in the foxhole with you if you were in trouble. In sports, if you needed to get the job done, you knew he was the guy you could throw the pass to and he wouldn't drop it. If I was in a little trouble in this office and I needed a go-to guy, Ken Thompson is the one I would call down to say, 'I need this taken care of.'"

Page Lea, a longtime friend who is chairman of Wynd Communications Corp., a wireless Internet-access business he recently started in Virginia Beach, recalls playing golf with him, spending the round talking about his own career. The announcement came down the next day. "I think he knew he was about to be named president. But he didn't even mention it. He was more interested in what I was doing than telling me about what he was doing."

Avid reader and history buff, he took a two-volume biography of Winston Churchill on his honeymoon -- and finished a good part of it. In his own life, he might have more in common with Mikhail Gorbachev. A lifelong party apparatchik, the Soviet premier was conservative and loyal enough to advance through the hierarchy until his moment arrived. Steadfastly loyal, Thompson moved where Crutchfield sent him, succeeding at each assignment, finally inheriting a troubled regime. Gorbachev ordered market reforms and glasnost -- openness -- as an antidote to Cold War tensions and his nation's mounting economic problems. Thompson ordered a restructuring of First Union and declared a new era of "transparency" to thaw relations with Wall Street analysts.

Gorbachev's reforms, of course, were his ultimate undoing. Thompson's challenge as CEO is to keep both the old guard at First Union and the profit-hungry investment world of Wall Street happy. Wall Street, while impressed with his initial restructuring, is not sold yet. "Obviously there is some decisive action that has come out, which certainly says a lot about the lengths he is willing to go to right First Union," says David Stumpf, banking analyst at A.G. Edwards Inc. in St. Louis. "The issue is still execution. It is way too early to see if First Union under Ken's leadership will do better than it did under Ed's leadership."

Thompson acknowledges he has a long way to go. "There is nothing I can say that is going to make our stock price a lot higher next week. But if we perform, if we execute the plan we've got in place, I think our stock price can be a lot higher 24 to 36 months from now." If he produces, he can secure his future, capping a career of climbing the First Union ladder, rising with hard work, good timing, small-town values and big-city dreams, a career spent entirely at a company guided at every turn by Ed Crutchfield.

"I don't know that I've ever been one to plan things out," he says. "But I knew when I joined this company that I wanted to be a leader on this team. Really, I have worked toward that, not necessarily being CEO but working toward playing a bigger role in the company, as long as I have been here. I flirted with the idea of leaving the company. I had opportunities that seemed unbelievable to me at the time and would have paid me a lot more money and all that. But both times, I just could not bring myself to leave. It would have been like leaving my family."

Kennedy Thompson was born in Clarksville, Va., in 1950. When he was 4, Burlington Industries Inc. bought the textile company his father worked for and transferred him to Rocky Mount. His daddy's name was Maynard, but everybody called him Stumpy. Maynard Thompson, 5-6, managed mills and coached youth sports. His wife, Stacy Kennedy Thompson, taught school and managed the home. Thompson grew up a sports-loving, hard-working kid, middle child in a family of three boys. When he could read, he started each morning with the sports section. "We very much had a middle-class, Leave It to Beaver kind of experience. I worked every summer. I was an electrician's helper, I worked for a construction company, I worked for tobacco companies in warehouses -- all manual-labor kinds of jobs. It was just expected that you worked in the summer to get spending money." One summer, he staked out a miniature-golf course on the lawn, Easley recalls, and invited friends to give it a try -- at a nickel a game.

"He ran faster, was the best baseball player, the best football player," recalls Norman Chambliss III, who now runs Chambliss and Rabil Contractors Inc. in Rocky Mount. "He was always the best, but it never bothered anybody because of the way he handled it." When they were 12, they competed in a speech contest sponsored by the Optimist Club. Thompson calls it a turning point in his life, but he can't remember his five-minute soliloquy on "Youth's Approach to World Forces." Chambliss can't recall his either -- but can recite parts of Thompson's, which won local, state and regional championships, taking him to the international competition in Canada. He didn't win but walked away with a $500 scholarship. "He inspired me so much that next year, when he didn't compete, I won," Chambliss says.

In high school, Thompson played baseball, basketball and football. Neither the biggest, strongest nor, by that time, the fastest, he made up for it with determination. On the football team, players came to dread, after a botched play, his helmet-to-helmet: "You can do better than that." He studied hard but enjoyed parties, liked to dance but didn't drink or get into trouble. "My family certainly thought he was a good influence on me," says Christie Bishop, now a Raleigh lobbyist for the road-construction industry, who dated him.

Rocky Mount began integrating its schools when he was in the seventh grade. In his senior year, when it prepared for full desegregation, he was chairman of a group from the white high school that met with students from the black high school. "That was really the first time I realized how much desegregation was going to change everybody's lives. But then I moved on, I went to college, and the desegregation occurred after I left high school."

He wanted to go to Duke -- he was a fan of the basketball team -- but won a Morehead Scholarship to Carolina, arriving in 1969 amid anti-war protests and a strike by the mostly black cafeteria workers. He watched from a distance.

He joined a fraternity, kept his grades up, played intramural sports. He recalls returning his sophomore year, taking up his usual place on the basketball court at his frat house and seeing others return with long hair, mustaches and beards. "I let my hair get longer, although I was not a hippie. I was conservative when I went, and I was still conservative when it was over. But what it did do was let me know that there was a lot more to the world than what I knew when I went there."

when he was a senior, his mother was diagnosed with breast cancer. Completing his bachelor's degree in American studies in 1973, he had no clear-cut career choices. He went home, painted houses and helped his father tend his mother in her final months. After she died, he mulled his future. He had heard about Wake Forest's Babcock Graduate School of Management and liked how it combined straight academics with case study. He started classes in 1974.

It was another turning point. He found his talents matched the demands of management. Thompson put his public-speaking skills to use, showing he could not only analyze problems but communicate solutions. In an accounting class, assigned to fix problems at a fictional, money-losing military rest-and-relaxation base, he raised his hand, then picked the problem apart: Repair required overhauling it, refocusing on the core mission of making servicemen happy.

That was the answer Bern Beatty, the associate professor of management who taught the class, wanted. "I've been using it since 1975. I update it and change the location. But I've never found anyone who cut through to the insights and recommendations that he made as quickly as he did."

When recruiters showed up, Thompson missed his first interview with First Union and nearly didn't get a second chance. He went to Charlotte, thought it felt right and accepted a spot upon graduation in commercial-banking training. He arrived in May 1976, flat broke, having to ask for an advance on his paycheck. He figured he'd be handling commercial customers at a branch. He wound up in national accounts. Based in Charlotte, he traveled extensively. Two years later, his results propelled him to New York.

"The New York job was a place where you had a chance to shine. First, I was dealing with a big customer base. I like that. I like dealing with customers. Second, it's a great market. We had a chance to bring in a lot of new customers. I got to hone my relationship skills dealing with customers, my sales skills, because obviously growth is important. That experience helped me, because I was in a whole geographic setting that was new to me, and I learned a little bit about dealing with diversity issues and different kinds of people."

Three years later, he was back in Charlotte, novice manager in the national division, supervising about 40 people.

Who knows how much Ed Crutchfield knew about Ken Thompson at this point? But Crutchfield would soon tap Thompson as one of a select group he would call upon to implement his strategy of conquest through acquisition.

Crutchfield had spent the '70s securing his power. He became bank president at 32 in 1973, eight years after he came to work there. A decade later, he was president of parent First Union Corp. Then CEO in '84 and chairman in '85, the year the Supreme Court OK'd interstate bank mergers. Crutchfield marched into Florida, buying Atlantic Bancorporation of Jacksonville for $3.8 billion, the first move in what would become one of the biggest bank-buying binges in U.S. history.

To work, it needed strong managers who could run remote outposts. In 1985, Ken Thompson was dispatched to Atlanta. Crutchfield's plan: Buy small banks that, combined, built a metro Atlanta bank. A year later, he hooked Georgia State Bankshares Inc. A month later, he landed First Railroad & Banking Co., a far-bigger fish in Augusta, and starting casting to Florida.

Thompson had just settled in Atlanta, buying an older home to remodel. "My wife and I were painting the kitchen to the house. We still had the furniture in one room. We went to bed and were sound asleep when the phone started ringing. I had to get up and run to the kitchen, because at that point we only had one telephone. It was Ed Crutchfield. It seemed like the middle of the night. He said, 'We want you to come back and head human resources.' I remember thinking, 'This is not something I want to do, but I think it is probably something that will be good for me to do.' And it was."

He flew to Charlotte the next day and told his new staff it would have to train him while he managed them. He spent 18 months. "I got a tree-dimensional view of the company. It's not just, 'We're here to increase revenues, and anyone that's not working on increasing revenues is not an important part of the company.' It gave me the view that there are a lot of support people who support the revenue producers and what they do is just as important as anybody else's job. I got a sense of how things fit together holistically in the company."

In the meantime, Crutchfield reeled in Florida banks in Fort Myers and Naples, Sarasota and Pensacola, Bradenton and Miami. The state became a major test of what deregulation would bring. One Sunday afternoon in 1987, Thompson came into his Charlotte office to catch up on work. Crutchfield strode in and started talking about how the bank needed to get managers out to the provinces to "First Unionize" them. Thompson was soon on a plane to Jacksonville.

He reported to Billy Walker, who had been chairman and CEO of Atlantic and held the same position at First Union's Florida bank. He had asked Crutchfield for a strong manager with a flair for landing and keeping commercial accounts. "Crutchfield said, 'You think you need a rainmaker?' I said that is precisely what we need."

Thompson coddled clients and wooed new ones, marshaling commercial bankers under him to do the same. Eventually, he became president of the Florida bank. He didn't negotiate deals but was responsible for making them work. One person who noticed was Erskine Bowles, the Charlotte investment banker who was head of the Small Business Administration and chief of staff in the Clinton administration. In 1995, between White House jobs, Bowles started Carousel Capital, a Charlotte merchant bank. He asked Crutchfield for names of executives who might be good contacts and went down to Jacksonville to size up Crutchfield's new whiz kid. "I was impressed by his energy, his enthusiasm, his knowledge of our industry, the investment-banking business, the private-equity business. I thought, this is a pretty incredible guy. I had a chance to talk to a few people who worked for him. You could tell this guy was a leader."

Thompson never made it to CEO of the Florida operation. But while he was there, it grew tenfold, from $4.5 billion to $45 billion in assets, one of the key engines that powered income growth for the company. Acquisitions and a strong economy accounted for a good deal of that. But Thompson still gets credit for being the rainmaker who drove the commercial side and made sure acquired banks joined the First Union family without the friction that would rub existing customers raw. It turned out to be a showcase job, and it led to another.

It was 1996, and once again, Crutchfield called. One of two men running Capital Markets, the bank's new investment arm, was retiring. Thompson spent three days considering the offer. "My kids grew up for 10 years in Jacksonville. Our family was very happy there." He returned to Charlotte as co-head of Capital Markets with Louis "Jerry" Schmitt, who had created the division with Crutchfield just two years earlier. A savvy insider, Schmitt already had sized up Thompson as a possible successor to Crutchfield.

They ran Capital Markets, which includes stock-and-bond trading and investment banking, until 1998, when Schmitt retired. Capital Markets posted the company's fastest growth rate. When Schmitt started the division, there were 700 people. When he left, there were 4,600. Thompson got his first taste of doing deals. Crutchfield put him in charge of negotiating the purchase of Richmond, Va., brokerage house Wheat First Butcher Singer in 1997 and Charlotte investment-banking firm Bowles Hollowell Conner & Co. in 1998.

He was building a full, balanced portfolio. In 1996, after Bowles left the White House, Crutchfield asked him to join the First Union board. He asked about the line of succession. Crutchfield's response, Bowles says, was Ken Thompson.

But First Union's problems were about to explode. It closed the $19.8 billion deal for Philadelphia-based CoreStates Financial Corp. in 1998, at the time the most expensive bank deal ever. To make the merger pay off, it cut hundreds of jobs and shut branches, alienating customers. Crutchfield had bought The Money Store Inc. of Sacramento, Calif., for $2.1 billion, making First Union a major player in sub-prime home-equity lending. The Money Store proved to be a disaster as the sub-prime market soured. None of this touched Thompson, who took over as head of Capital Markets when Schmitt retired that year.

While he and Capital Markets continued to shine, things started unraveling for the rest of the bank. In January 1999, First Union announced it would miss earning targets it had stated just a month earlier. In addition to the CoreStates and Money Store woes, Future Bank -- a branch overhaul that tried to push customers onto computers and telephone lines -- backfired. In March, First Union announced a restructuring that included 5,850 job cuts -- 7% of its work force.

The cuts were supposed to solve its problems. Instead, things got worse. In May, the bank announced it would miss even the lowered earnings targets it had set for itself. Wall Street's reaction was swift and savage. In July, President John Georgious took early retirement -- fall guy for Crutchfield, some claim. Others say he wound on the wrong end of a board battle with the CEO. Thompson was tapped as his replacement.

"We were in a little bit of a firestorm," he says with typical understatement. "But coming into the job from Capital Markets, I didn't have hands-on experience over the last couple of years in a lot of areas where we were having some issues. I just tried to immerse myself in what was going on in our company. I spent a lot of time talking with employees, a lot of time visiting with customers, listening to people on our board -- really listening, trying to, as fast as I could, get totally absorbed in all the different areas of our company. What that led to is a process that we put in place that led to the restructuring that we announced in late June."

Wall Street clearly wanted some bold action. First Union stock, which traded at $60 a share before the first earnings surprise, lost half its value by the end of 1999. But there was one more step prior to the restructuring. "Literally, Ed walked into my office one day, closed the door and told me that he had cancer and that he was going to propose to the board that I be made CEO." One source at First Union says that Thompson, sensitive to the cancer issue from his mother's illness, wept later that day telling others what was about to happen.

On March 10, Crutchfield went public, announcing he had curable cancer, which he would step down to battle. Thompson was named CEO. As rumors of a major announcement began to circulate, he revealed his restructuring on June 26. He opened an analysts' conference to explain it by saying, "I'm not looking at this company through rose-colored glasses." Then he delivered a series of bombshells. He was shuttering The Money Store, taking a $1.7-million charge. He would sell the company's Raleigh-based mortgage-servicing operation and its credit-card business, plus get rid of 90 branches. He shed hundreds of millions of dollars of poorly performing investments and other assets. The final tally: more than $3.7 billion in charges and close to $1 billion in gains from asset sales, for a net charge of $2.8 billion.

Wall Street had been anticipating some action, but nothing like this. Thompson said he was ditching low-performing businesses so the company could focus on three core areas: Capital Markets, Capital Management and its General Bank. Two of the businesses he discarded had ties to two of the company's most powerful figures.

Crutchfield had executed The Money Store deal. Thompson was declaring it a disaster. "What Ed has allowed me to do is to very publicly change some of the things he did," Thompson says. "That was a very gutsy thing on his part." Having said that, Thompson adds that The Money Store deal was doomed from the start because the bank failed to do a proper job of examining the company's books.

The mortgage-servicing business had been purchased in 1964 from Cliff Cameron, who joined the bank after the deal and eventually rose to CEO. Cameron is the man who groomed Crutchfield. Now Thompson was casting off the company that began the line of succession. "Sometimes," he explains, "you just have to make decisions that are right and move on, and you can't be sentimental about those decisions."

These are just the kind of steely decisions Wall Street demands. But First Union's market price still languishes, held down not only by its own performance but the miasma most financial-service stocks share. Part of it is the lingering question about the dividend. More is about whether the new CEO can deliver what he promises. The clock is running, but patience has always paid off for Ken Thompson. Throughout his career -- because he was ready, because he has performed -- good things have come his way.