CoreStates Financial Corp.'s planned acquisition of neighboring Meridian Bancorp would force the companies to confront a key question on the money management front: Which proprietary mutual funds should survive and which should be laid to rest?

Each of the Pennsylvania-based banking companies has a proprietary mutual fund family, and they are roughly equal in size. CoreStates has $1.8 billion spread among its 29 Core Funds, and Meridian Bancorp has $1.6 billion in its 22 Conestoga Funds, according to Lipper Analytical Services, Summit, N.J.

Observers say some consolidation would be inevitable. "Fifty-one funds in two families is way too many," said an executive at a major mutual fund service company, who requested anonymity. "Every bank that we've been involved with combines funds" after a merger.

"It's a matter of looking at the product lines and trying to match funds that are similar and merging them," the fund service executive said.

Not surprisingly, CoreStates and Meridian haven't even started sorting out how to proceed. Mutual funds aren't a big enough piece of either company's business to register on the pre-merger agenda.

"We haven't really gotten into any in-depth tactical" planning about the consolidation of the funds, said Mark E. Stalnecker, president, CoreStates Investment Advisers. But the merger would double total assets and "should generate economies of scale," he said.

A Meridian Bancorp spokeswoman declined to comment on the plans for the Conestoga Funds. She said the "business line was under evaluation about how we market and distribute bank investment products" even before the merger announcement.

But rejiggering established fund families can drag on for months and tie executives up in nettlesome details.

Putting two fund families together is like assembling a jigsaw puzzle, said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I. "And you can end up with pieces still on the table if you put them together wrong."

For their part, CoreStates and Meridian are dealing with mutual fund families that look similar on the surface, but are actually quite different.

Both fund lineups are divided evenly between retail and institutional portfolios. But the proportion of assets in each share class is starkly different: Retail shares account for less than 3% of the Core Funds' assets but make up more than half of the assets in the Conestoga Funds.

Even after decisions are made about combining portfolios, regulatory provisions can slow final consolidation by as much as two years, Mr. Bobroff said.

One complication could arise from the principle that a fund merger must not not place an "undue burden" on shareholders. That has been widely interpreted to mean that fund expenses can't rise for two years, Mr. Bobroff explained.

Another potential pitfall is that three quarters of the merged funds' board of directors must be unrelated to the new fund manager, he said.

One thing is clear: The banks won't have to find a new administrator and distributor for their fund families unless they want to. SEI Corp., Wayne, Pa., handles those duties for both banks' funds.

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