Liberty Financial Bank Group, a leading bank investment products marketer, suffered a decline in sales in the first half of the year after losses of key clients, said the firm's top executive.
Porter Pierpont Morgan, president of Liberty, attributed the sales decline to two negative trends affecting businesses like his.
During the past year, he said, the company has lost two major bank clients that decided to take control of their brokerage operations.
And Liberty also lost two smaller clients that were taken over by competitors as part of the nationwide bank consolidation wave. In losing these clients, the company lost commission revenues.
Because the firm's parent, Liberty Financial Cos., does not break out midyear sales or earnings results along business lines, Mr. Morgan did not reveal sales or operating earnings numbers for his unit.
However, he did say that total sales of all its mutual funds and annuities through banks had dropped from $1.4 billion in 1993 to $1 billion in 1994. Moreover, Mr. Morgan predicted that 1995's investment products sales would be even lower.
"Unless a miracle happens, our sales will be down," he said.
The sales decline at Liberty Bank Group, however, didn't prevent the parent from reporting sharply increased second-quarter earnings.
Liberty Financial Cos., which owns a mutual fund company and a life insurance subsidiary that sell through banks, reported net income for the quarter of $21.1 million, 42.5% more than in the same period last year.
Mr. Morgan said his group lost its largest account, M&T Bank, Buffalo, in May. The $10.3 billion-asset bank had accounted for about 20% of Liberty Bank Group's sales before deciding to run its own operations.
Liberty is responding to its sales decline by targeting community banks as potential clients. And the group hopes business picks up from its pending acquisition of the bank marketing business of Wall Street Investor Services, a New York company with about 50 bank clients.
While losing big bank clients means losing revenue opportunities, Mr. Morgan said, the banking group's highest priority is to find investors through banks so that the parent company can manage assets over a long period.
The banking group contributes about 13% of the $40 billion of assets under management at Liberty Financial Cos. The unit also contributes more than 10% of the annuity assets generated for Liberty's Keyport Life Insurance Co. The bank group is also a heavy contributor to the Colonial Group, the mutual fund company Liberty acquired in March.
"We run this business not with a goal of making a profit but as an asset gatherer," Mr. Morgan said.
