Community Assets Management Inc., a company conceived by bankers sitting around a fire during a retreat, has ended up burning its supporters and possibly itself.

The Denver company gained notoriety this week with the disclosure that a money market mutual fund it managed has become the first in recent history to break the buck, and drop below $1 a share. The fund is to be liquidated at cost of nearly $5 million to the 94 banks that invested in it.

The blow to Denver-based Community Assets could be mortal. President John Backlund, in his first interview since the fund's troubles became public, said the company may have to shut its doors. He emphasized, however, the decision "isn't official yet."

Such a move would bring to an end one of banking's most unique investment product marketing experiments.

Community Assets was envisioned in 1986 in a retreat attended by a group of Illinois bankers led by Mr. Backlund's father, B .F. "Chip" Backlund. The senior Backlund is chairman of the Better Banks, a Peoria-based company operating seven community banks in the state, and a former president of the Independent Bankers Association of America.

Community Assets was conceived as a way of allowing bankers to supply investment products and services to their own institutions. John Backlund started as executive vice president of Community Assets when it was founded in 1987 and became its president in 1992.

Now, many of the same bankers who originally planned Community Assets face a double backlash. Not only will they lose money from the fund. They could lose the start-up capital they put into Community Assets.

Some 67 institutions spent $2.3 million to become owners of Community Assets during separate stock offerings in 1988 and 1991.

Many of the bankers involved in the company are declining to talk about the matter.

"I have nothing to say about CAM3' said Steve Akers, executive vice president of State Street Bank and Trust Co., Quincy, Ill. "No comment. That's it."

The younger Mr. Backlund maintains that Community Assets is not ultimately to blame for the problems.

"We hired people to manage our money and got involved in a situation where the risks weren't explained," he said.

Mr. Backlund was talking about Prospect Hill Advisers, a MilWaukee start-up that was run by a group of former Banc One Corp. employees.

Community Assets hired Prospect Hill early last year to manage investments for the illfated money fund, and trumpeted the fund's subsequent top-notch performance in "CAMRecorder" bulletins sent to banks across the conntry.

"These guys were the experts in money management," Mr. Bacldund said.

But the $82.2 million asset money market fund ran into trouble early this year, as derivative investments, which had accounted for 43% of the fund's holdings and had juiced the performance, tanked. Prospect Hill, meanwhile, shut its doors on July 31.

"None of the reports we got" indicated the fund had such extensive derivative holdings, Mr. Backlund said.

Reached at his home, Prospect Hill president Mark Elste laughed when told of the assertions.

"I won't comment one way or another on what John has to say," Mr. Elste said.

To be sure, Community Assets has had other disappointments. Last year, the company saw its efforts to offer retail mutual funds to bank clients evaporate as community banks declined to promote the products.

In another bid to boost business, Community Assets partnered with Chandler/Burdt, an investment products marketing firm that has since been sold to another company. That initiative didn't take either, and Mr. Backlund began shopping Community Assets around !ate last year, again with no success.

Now, observers say that Community Assets may well have reached the end of the line.

"I think it would be impossible for them to continue in business," said Michael Chandler, the founder of Chandler/Burdt.

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