A community bank in North Carolina is helping some neighboring smalltown banks sell investment products.

Bank of Stanly, Albemarle, is offering the investment sales services through a broker-dealer affiliate that it launched nearly two years ago.

The brokerage, Strategic Alliance Corp., has six employees who handle securities trades and record keeping, as well as training for sales representatives and bank workers. In exchange for its services, the $111 million-asset bank collects a slice of the sales revenue its client banks generate.

So far, two community banks are using Bank of Stanly's brokerage service. While the bank wants to expand its client roster, it isn't in a great hurry to do so.

"We want to build up our resources so we can deliver on our commitments," said Roger L. Dick, the bank's president.

Marketing brokerage services to other banks is an offbeat strategy for a bank so small. Indeed, while much larger institutions have tried to syndicate their investment services this way, most have met with mixed results.

First Colonial Bankshares, Rosemont, Ill., has been successfully setting up investment programs at other banks for two years, according to officials at the $1.6 billion-asset banking company. But last fall, a similar effort by NationsBank Corp. was scrapped before it even got off the ground.

Bank of Stanly certainly could be in for an uphill battle. Most community banks turn to investment product marketing companies to get into the mutual fund business. And these providers, who are scrambling for market share now that investment programs have become commonplace at banks, have been especially aggressive in recruiting community banks.

But Mr. Dick said community bankers in his area would rather work with a local company or bank than turn to an out-of-state source for help in selling investments.

The reason, he said, is that "they're scared of the cannibalization of their deposit base."

Reid K. Pollard, president of Randolph Bank and Trust, Asheboro, N.C., said he signed on with Strategic Alliance Corp. because it let his bank control its customer records.

"A lot of arrangements basically cut you off from your customers," said Mr. Pollard. "If we changed providers, we would have to start from scratch."

To head off potential conflicts of interest, Strategic Alliance has agreed to hand over all customers' account records and information should a bank decide to terminate its contract, said the unit's president, Christy Stoner.

In Concord, N.C., 20 miles from Bank of Stanly, Lawrence Kimbrough said he's taken a look at the bank's investment program but isn't ready to commit himself.

Mr. Kimbrough, president of First Charter National Bank, said, however, that he would prefer to work with another community bank because "at least we'd be working with someone we know, someone who will be responsive and run a clean shop."

When asked whether he was leery of working with a competitor to offer investments, Mr. Kimbrough said, "Heavens, no. North Carolina is so competitive that competition is a nonevent."

Richard A. Ayotte, president of American Brokerage Consultants, St. Petersburg, Fla., observed that, while banks have had correspondent relationships for years, it is uncommon for them to offer brokerage services to others.

Bank of Stanly stands a chance, he said, as long as it doesn't try to compete with its clients or limit the type of investments the banks can offer.

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