CoreStates Financial Corp. is getting the jump on consolidating Meridian Bancorp's proprietary mutual funds with its own portfolios in advance of the April merger of the two banking companies.

Last month, the boards of directors of the two mutual fund families approved plans for CoreStates to absorb Meridian's Conestoga Funds.

"It's all over but the bank merger and the shouting at this point," said Richard J. Lindsay, senior vice president for investment products marketing at Philadelphia-based CoreStates. "The surviving complex will be the CoreFunds."

With the addition of nearly $1.6 billion from Meridian's funds, assets in CoreStates' fund family would swell to $3.8 billion, Mr. Lindsay said.

The planned combination of the two fund families would yield 20 funds carrying the CoreFunds name, Mr. Lindsay said.

Four of Meridian's 11 funds are slated to survive virtually unchanged. They are the Conestoga short-term bond, long-term bond, equity, and special equity funds.

Shareholders from both banks' mutual funds are expected to approve the transaction in a vote scheduled for March. The final fund merger would then be coordinated with the consummation of the deal between the parent companies.

While the shape of the new fund family has emerged, decisions about who will manage the individual funds' assets will not be made for at least six weeks, Mr. Lindsay said.

A Meridian executive referred all questions concerning the fund merger to CoreStates.

The first benefit from the marriage of the two fund complexes would be lower administration and distribution costs.

Each bank independently relied on SEI Corp., Wayne, Pa., to distribute and administer its funds. But CoreStates had negotiated the sweeter deal, and its contract will cover the combined fund operation.

"It turns out CoreFunds had a better fee structure with SEI," which more quickly discounts fees as assets rise, Mr. Lindsay said.

The savings to CoreStates would be SEI's loss. "It is a net down for us and will total in the hundreds of thousands" of dollars, acknowledged Richard B. Lieb, president of SEI Corp.'s division of investment systems and services. "But on a $40 million business the effect is modest."

CoreStates expects the main benefit of the fund merger to be increased fee income from the larger asset base, rather than cost savings, Mr. Lindsay said.

Besides bolstering marketing efforts, the increased assets may allow the combined fund family to lower or eliminate management fee waivers for some of the funds.

"How the bank then chooses to reinvest the money is a real opportunity in a fund merger," Mr. Lindsay said.

Whether the bank can actually afford to increase its share of management income by reducing fee waivers is far from assured.

"The savings can be the waiver issue, but to stay competitive they may still have to waive the fee," said Geoffrey H. Bobroff, a mutual fund consultant based in East Greenwich, R.I.

In a move Mr. Lindsay said was unrelated to the merger, CoreStates has reduced the maximum sales charges for retail shares of its mutual funds to 3.25% from 4.5%.

"It's a strategic decision to position our proprietary funds." Mr. Lindsay said. The bank is trying to boost retail fund sales, which currently contribute less than 10% of total assets.

CoreStates' fund sales have lagged those of outside funds from such companies as Massachusetts Financial Services and the Delaware Group, Mr. Lindsay said.

"We don't need to charge as much for our funds as we need to charge third parties for access to our distribution -j ust like private labels in grocery or department stores."

That may also ease the consolidation of CoreStates' sales channel with that of Meridian, which currently sells retail shares of its funds with a 2.0% load.

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