First Western Corp. has made rigorous reviews of both in vestors and sales representatives a cornerstone of its investment products strategy.

For customers, that means the $314 million-asset banking company, based in Sioux Falls, S.D., relies heavily on financial planning techniques throughout its nine-branch retail network. The approach enables the bank to spot prospective mutual fund and annuity buyers.

Job applicants, meanwhile, face a battery of personality tests and extensive interviews with coworkers and bank managers. The aim is to ensure that First Western's recruits buy into the bank's sales-minded culture.

First Western fields a force of 30 "personal bankers" - sales representatives who offer customers both traditional retail banking services and a smattering of investments. All 30 are authorized to sell annuities; nine are also licensed to offer mutual funds.

"They have to meet the mold," says Doyle Stern, vice president of Western Bank, the company's lead unit. "If it isn't right, we don't want them."

The strategy has borne fruit, and investment products are contributing a growing share of earnings, according to Mr. Stern. First Western profitability has also caught the eye of Minneapolis-based First Bank System, which disclosed plans last month to buy the company.

Mr. Stern said sales of mutual funds and annuities totaled $6 million last year, yielding some $300,000 in gross commissions missions. The company's total earnings for the year were $4.2 million.

The precise contribution to earnings couldn't be learned because Mr. Stern declined to say how much of the gross commission figures goes toward expenses.

First Western is on track to boost fund sales to $3.5 million and annuity volume to 4.5 million this year, Mr. Stern said.

The company's product mix includes mutual funds managed by Putnam Investments and Oppenheimer Management Corp. and annuities offered by Allied Insurance Co,

The banking company has been selling investment products since the late 1980s, but its effort began to take off in just the past two or three years.

First Western, which had viewed investment sales as a defensive strategy to counter deposit runoffs, decided to make an active sales push.

"Something unexpected happened," Mr. Stern said. "Disintermediation stopped, and we began using investment products to enhance customer relationships."

The investment products efforts fort enjoys high-level support at the banking company. "We're a very sales-oriented organization and investment products fit very, very nicely," said T.J. Reardon, First Western's president.

It also wins kudos from local rivals. "What they're doing is right," said Le Roy Hofer, vice president with the Sioux, Falls-based insurance unit of Home Federal Savings Bank. "They are right on target in their approach."

The essence of that approach, Mr. Stern said, is that First Western's personal bankers avoid the order-taker mentality. The bank wants its staff to be on the look-out for opportunities to expand customer relationships.

"We would much rather have 1,000 customers receiving five products or services from us, than 10,000 customers with only one product," Mr. Stern said.

First Western works its relationships by using the same people who open checking accounts and make personal loans to handle investment sales.

The approach gives the banking company more time to focus on fewer customers, a good way of making sure products remain suitable for them, Mr. Stern said. The focus on relationship banking matches the preferences of the banking company's affluent, middle-aged customers.

To find the right people to work with these clients, First Western uses personality tests that help it to identify "hungry fighters - people with a passion to sell," Mr. Stern said.

Once sales representatives are on board, their work has just begun.

They must agree to participate in regular refresher courses on a host of topics, including sales techniques and securities regulations.

They must also show they can produce. Mr. Stern himself spends at least 25% of his time meeting with customers, and has set a personal goal of selling $1 million of annuities this year. Right now, he says, he is "real close" to that goal.

To motivate its sales force, Mr. Stern said, First Western pays heftier salaries and commissions than many of its larger peers. He said commissions can equal salaries.

First Western is careful to stay within parameters set by bank regulators, Mr. Stern said. A recent exam turned up no problems with the compensation structure or the overall selling program, he said.

Sales representatives seem to like the setup.

"We're given a lot of personal discretion to make decisions about what's best for our customers," said Kent Wiss, a Western Bank salesperson who's been in the brokerage business for more than decade.

That kind of responsibility, he added, "makes us work harder to do well by them."First Western Corp.At a Glance Headquarters Sioux Falls, S.D.Fund assets $314 millionBranches 9Investment $6 millionsales (1993)

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