Mutual fund companies are seeing a modest but welcome increase in sales opportunities as bank acquisitions bring small institutions into the investment products fold.

In recent months several banks have announced deals for community banks that did not offer brokerage services. Among the buyers are Hibernia Corp., New Orleans; Regions Financial Corp., Birmingham, Ala.; Peoples Heritage Financial Group, Portland, Maine; and Sovereign Bancorp, Wyomissing, Pa.

Such deals effectively enable mutual fund companies to add sales outlets in the bank channel, because banks typically extend their investment programs to the banks they acquire.

Distribution "is the name of the game," said Michael C. Vessels, a senior vice president at AIM Management Group, Houston. "The more you have, typically the more your sales will be, assuming you can cover and penetrate that additional distribution."

To be sure, executives at fund companies do not expect their sales efforts to be radically transformed as their leading bank clients grow through acquisitions. And they stress that it takes work to bring an acquired bank into its new parent company's sales program.

Even so, fund executives are glad to have a shot at the extra business. Selling through small banks is labor-intensive, and unless the banks use third-party marketers, a relationship is often not cost-effective for fund companies, observers said. But when community banks are bought by bigger ones, it is easier for fund companies to serve them, for the simple reason that keeping up with 100 banks is easier than keeping up with 1,000 banks.

"Even though the total community bank market represents billions in deposit dollars, it's all fragmented," said Tony Fadool, senior vice president and national sales manager at Federated Investors, Pittsburgh. He said a bank cannot simply "develop a marketing plan and push it through hundreds of banks."

"Just the amount of work we would have to do with the bank's home office for a limited amount of performance doesn't make sense," said Michael Forstl, a vice president at John Nuveen & Co., Chicago. "You want to concentrate on the largest banks."

Still, fund companies have work to do if they want to maintain relationships. "Our market becomes bigger. It's up to us to increase our market share," Mr. Forstl said.

Sales could be influenced by whether the acquired bank already sells nontraditional products in other departments of the bank, whether it is open to the idea, and who composes its client base, said Michael Kellogg, executive vice president of Fidelity Institutional Investment Services Co.

A client bank's acquisitions can also test a fund company's resources.

As "you add more distribution, you have to be very careful to keep your territories manageable," said Mr. Vessels of AIM. For example, he said, most wholesalers can cover only about 500 to 750 brokers every quarter, which means companies must add wholesalers in some regions and reduce them in others.

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