First Hawaiian Bank is jumping into the mutual fund business with a splash.
Last month, the $6.2 billion-asset bank - Hawaii's second largest - opened investment centers in 15 of its 60 branches.
Now First Hawaiian is gearing up to launch a family of proprietary mutual funds. The line of four stock, bond, and money market funds, dubbed the Bishop Street Funds, should be up and running by yearend, bank officials said.
Both steps are part of the bank's game plan to make mutual funds and investments a key component of its retail menu. And although First Hawaiian is ramping up the new offerings amid turmoil in the stock and bond markets, bank executives say they aren't worried.
"The timing's not the greatest in the world but we're doing this with the long term in mind," said Douglas D. Wilson, senior vice president in charge of asset management.
As part of its plan to gain more control over its mutual fund sales effort, First Hawaiian dropped its longtime investment marketing partner, GNA Corp., in March.
Like many other financial institutions that have learned mutual fund and annuity sales at the knee of a marketing partner, First Hawaiian decided it was time to take charge of the sales force.
The bank felt it had enough money-management expertise to justify running its own brokerage unit, and wanted to bring investment product sales and personal asset management under one roof, Mr. Wilson said.
The First Hawaiian Investment Centers opened last month, and are staffed with a mix of employees. Some carry the Series 7 license issued by the National Association of Securities Dealers, enabling them to sell a full range of securities products. Others carry the Series 6 credential, limiting them to mutual fund sales.
Plans to launch the Bishop Street Funds had been under consideration for two years, Mr. Wilson said.
Bank officials had hoped that Congress would enact legislation enabling the bank to convert trust assets into mutual funds without triggering tax liability, Mr. Wilson said.
But a measure to accomplish this has been pending in Congress for several years, and the chances of passage this year looked uncertain. So the bank decided not to wait any longer.
To start up the Bishop Street Funds, First Hawaiian will convert about $500 million from its money market and employee benefit trust funds. The bank is awaiting approval from the Securities and Exchange Commission.
The funds, named after the main street in the bank's home base of Honolulu, will be administered and distributed by SEI Corp. of Wayne, Pa.
The bank already has racked up some experience with investment management.
Its Investment Monitor Account, an asset-allocation service overseen by the bank's asset management area, brought in more than $150 million of assets last year, according to the bank's annual report. Catching the Mutual Fund Wave First Hawaiian is goingafter Investors with: * a proprietarymutual fundfamily, the BishopStreet Funds. * the creation of15 investmentcenters in
branches.
