The people in charge of mutual funds at First of America sure have a knack for being in the right place at the right time.

The Kalamazoo, Mich., bank launched its first stock and bond funds five years ago -- a move that just missed the market crash of 1987 and allowed the funds to ride the bull market that followed.

Then, in January of this year, First of America added an international equity fund, avoiding the trouncing these funds took in 1992 and enjoying the rapid rise they've seen so far this year.

|There Is a God'

Just this month, First of America was the first bank to roll out its own variable annuity after Congress adopted a tax package that makes these tax-deferred investment products even more attractive to consumers. "I'd like to say this was all very carefully orchestrated," said R. William Shauman, senior vice president who oversees First of America's investment products program. "But I have to say, |There is a God.'"

Divine intervention or not, the company has built its mutual fund sales effort into one of the most active in the banking industry. And further growth is very much on its agenda.

Looking to Expand

The bank uses a three-state branch network to sell its own funds, including five equity funds, and expects to expand distribution through acquisitions and arrangements with outside marketing companies.

On the home front, First of America will boost the number of securities sales people in branches from 95 to 115 by year end. Its sales representatives cover 566 branches that serve 1.2 million customers in Michigan, Illinois, and Indiana.

The Crown Jewels

The bank's 14 Parkstone funds, with $4.2 billion of assets under management, are the crown jewels in a retail lineup that also includes several outside fund families.

The Parkstone funds ranked 10th among bank-managed fund families at midyear, according to a ranking prepared for the American Banker by Lipper Analytical Services, Summit, N.J.

Parkstone funds accounted for more than 50% of the $173.6 million in branch mutual fund sales during the first nine months of this year.

By comparison, First of America sold $114 million during the same period last year.

|Central Scheduling Service'

To round out its mutual fund lineup, First of America also offers funds from Putnam Financial Services, Franklin Group of Funds, and Fidelity Investments.

The bank does everything possible to make mutual funds easily accessible to customers, Mr. Shauman said.

A "central scheduling service" connects sales representatives to prospective investors. The system uses five employees at headquarters to relay appointment information from branch managers to sales representatives.

Familiarity Encouraged

All of the bank's sales representatives hold Series 7 licenses from the National Association of Securities Dealers, permitting them to offer mutual funds as well as individual securities.

Many of the bank's sales representatives were steeped in the brokerage house sales culture during previous jobs. But, even the most experienced must make the trip to the home office in Kalamazoo to meet Parkstone's money managers and others involved with the program. "They should know us and we should know them," Mr. Shauman said.

The bank is planning a media advertising campaign to raise the funds' visibility and assist the beefed-up sales force. "Until now, we've been pretty grass roots, relying largely on word of mouth," Mr. Shauman said.

The campaign doesn't stop at the bank's branch offices. Walk-in brokerages have just been added to mortgage origination offices in Tampa, Phoenix, and St. Louis.

First of America wants to further distribution by arranging for the Parkstone funds to be offered by marketing firms that supply a variety of investment products to banks nationwide.

Plans to Buy Distributor

First of America also wants to buy a small retail brokerage or a financial planning firm to expand the distribution of Parkstone funds.

The trust department would be taking a page from the parent corporation, which purchases other institutions to fuel growth. "The bank itself is acquisition minded, and this hasn't been lost on the trust department," Mr. Shauman said.

The Parkstone funds were rolled out in the mid-1980s with three money market funds.

The bank converted common and comingled trust fund money to seed its first stock and equity bonds October 1988. "Not 1987, when the market crashed," Mr. Shauman says proudly.

Important Milestone

Those seven bond and equity funds are coming up on their fifth anniversary -- a distinction few other banks can claim. Industry experts say the five-year record is crucial in selling to today's more savvy investors. Without it, investors often choose mutual fund companies which have much longer histories. The seven funds have all achieved respectable annualized returns -- double digits or high single digits -- since their inception on Oct. 31, 1988.

The bank has assembled a crackerjack team of portfolio managers to make sure the funds continue to deliver, Mr. Shauman said.

First of America uses multiple portfolio managers for each of its funds to avoid creating a superstar system under which one manager wins accolades and is wooed away by competitors.

Performance Sustained

The practice is not common among banks, industry observers say. But it appears to be bearing fruit.

The Parkstone funds have continued to perform well, even in cases where managers have left, although there has not been a large turnover, Mr. Shauman said.

Two of the bank's funds -- a small capitalization growth fund and an equity fund -- were cited by Nelson Publications as having some of the best money managers in the industry.

Just Enough Distance

The fund managers, employees of First of America Investment Corp., work in offices down the street from First of America's corporate headquarters.

That distance appears to be just enough to give the managers a feeling of autonomy without severing them from the retail mutual fund program.

Certainly Richard Wolf, president of First of America Investment Corp., likes the distance. "My job is to make sure outsiders don't come in an screw up our operation," Mr. Wolf said.

These "outsiders" can be customers, or even bank executives who think they know more about money management than his unit does, Mr. Wolf said.

Mr. Wolf's group isn't shy in talking up the retail mutual funds. He and the portfolio managers regularly conduct investment seminars for customers and prospects.

"We're behind the [retail] program 100%," Mr. Wolf said.

Teamwork is central to the business plan of Mr. Shauman who has spent the last 19 years with First of America's trust department.

He knows that cultural divides between different departments can hamper overall success.

To avoid pitfalls, Mr. Shauman goes out of his way to demonstrate that the bank's trust employees are just plain folks, not stuffed shirts.

Mr. Shauman also emphasizes that the trust department is not losing business to brokers in branches. "Today's mutual fund customers are tomorrow's trust customers, and that's the message throughout the bank," Mr. Shauman said.

First of America positions its mutual funds with just this in mind.

"We're not selling products, we're selling a process," said David Morrow, trust marketing director.

The process uses asset allocation to build a comprehensive investment portfolio for branch customers.

Many of these investors will get used to this disciplined approach and become trust customers when they get older, Mr. Shauman believes. "They'll come full circle. And we'll be there to fill their needs every step of the way."First of AmericaAt a GlanceHeadquarters Kalamazoo, Mich.Assets $20 billionBranches 566, in Michigan, Indiana, and IllinoisProprietarymutual funds 14 Parkstone FundsMutual fundsundermanagement $4.2 billionMutual fundssalespeople 95

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