Another bank mutual fund cooperative is in the works.
Summit Investment Advisers, Naples, Fla., is quietly assembling a private placement to finance a nationally branded mutual fund family for community banks.
Although Summit's plan is still evolving, the basic concept is to create a jointly held proprietary fund family that banks too small to support internal fund complexes could use as their own.
That differs from the models that New York-based investment bank Keefe, Bruyette & Woods Inc. and Cypress Holding Co., Boston, have floated. Their schemes are designed to consolidate the assets of existing bank fund families that are falling short of growth or profit goals.
"We're putting together banks from $50 million to $1 billion in size" as participants, said L. Edward Baker, principal at Summit. "Our plan is to bring big-name recognition in the money managers."
Mr. Baker headed the trust department at Piper Jaffray Co., a Minneapolis-based brokerage, until leaving in 1995 to start Summit. He previously worked as senior vice president for correspondent banking at Norwest Corp., Minneapolis.
Summit will use a network of regional banks as middlemen to reach correspondent community banks nationwide, he said.
"We're not trying to get regional correspondents to give up their mutual funds, but using them (instead) as intermediaries," Mr. Baker said. "They've got the relationships."
Summit has already firmed up relationships with several money management companies that will run the portfolios, Mr. Baker said. He declined to disclose either specific managers committed to the project or possible banking partners. However, he said, the plan calls for the banks to share in the investment advisory fees collected by the money managers.
One industry consultant voiced skepticism about regional banks' willingness to share hard-won customers. It is a "little suspect that regional banks would be motivated to share their business ... and dilute the strength of the asset base for their proprietary funds," said Heather A. Hiles at the Spectrem Group, San Francisco.
