Many community banks arrived on the investment product market scene just as the bottom fell out, making it tough at times to drum up business.

But in a round of interviews last week, several bankers told how they were tryign to make the best of the rocky market.

Most are spending considerable time reassuring their customers. Some are thinking up ways to reach new ones.

"You have to hold their hand more than usual," said Craig D. Moss, a vice president at Post Oak Bank, Houston. "There is a flight to safety from last year."

Mr. Moss said customers of his $300 million-asset bank are buying fewer bond funds than usual, and more certificates of deposits. "People's perception is that it was a bad year," he said.

To change that perception, Post Oak Bank next month will host a special luncheon for both loan and investment-product customers. Dr. Gary Schilling, a consultant and a columnist for Forbes, will be the featured speaker.

The goal, according to Mr. Moss, is to "educate people" to take a long- term view when assessing investment products.

John Philip Sousa 4th, a Nevada-based consultant, maintains that community banks are struggling in part because they have been ill-served by investment product marketing firms.

"These firms have done a dismal job in working with community banks," Mr. Sousa said. Community bank customers could benefit from products, such as tax, estate, and financial planning, in addition to the annuities and mutual funds that marketing firms usually offer, he said.

"Because of the very close relationship community banks have with their customers, it's a different sales process," Mr. Sousa said. "This is where I see that the branch managers and even small community bank presidents need to get involved in the process."

Many bankers are rolling up their sleeves. At Farmers & Merchants Bank of Central California, executives are brainstorming on how to attract customers to their two-month-old investments program.

"I think we have a lot to do to communicate to our customers that we have this service available," said James E. Quaschnick, a vice president at the $566 million-asset bank in Lodi, Calif.

Mr. Quaschnick said treasury securities have made up 90% of the products sold through the bank's investment product program.

"It looks like consumers are kicking the tires to see what this is all about," he said.

But even though sales are down, most bankers say competition compels them to stay in the business.

"Everybody in town sells" investment products, said Michael G. Flaton, of Pulaski Bank, St. Louis.

Mr. Flaton said his $190 million-asset bank has seen a 20% decrease in annuity sales from last year, and 40% less than several years ago, most of it due to competition.

Robert C. Dietz, a director of member services for Western Independent Bankers, a San-Francisco community bank trade group with 250 members, said banks have to recognize, and in turn respond more aggressively to, outside pressures.

"The reason why customers aren't asking for it is because they're getting it across the street," Mr. Dietz said.

But nevertheless, banks are willing to wait for better times in the investment product market, and for customers to come around.

"The next six months will be one of the better opportunities to invest," said James W. Terry, president of Carolina First, a $1.1 billion-asset bank in Greenville, S.C.. He added that the investment market will soon be "active" as interest rates will peak, favoring stocks and bonds.

Myron L. Pfeifle, president of Bank Center First, in Bismarck, N.D., agrees.

"There is an emerging market (of customers) looking at investment products," he said. "They'll dribble back when the investment market improves and the rates come down."

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