George M. Salem was one of the first bank analysts to take note of the industry's push into mutual funds, declaring nearly four years ago that mutual funds are "the bank deposits of the 1990s."

Mr. Salem, of Gerard Klauer Mattison & Co. in New York, is quick to acknowledge that banks haven't made much money on mutual fund sales and management so far. Nevertheless, he said in a recent interview, banks should risk hits to earnings and stock prices to acquire fund complexes.

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