Bancorp Hawaii Inc. has embarked on an ambitious mutual fund marketing campaign that emphasizes selling its fledgling proprietary funds through nonbank brokerages.

Not content to offer its Pacific Capital Funds solely through the bank's own broker-dealer and trust department, executives are targeting the local offices of national and regional brokerage firms to fuel new sales.

"The name of the game in mutual funds is how many channels you develop to deliver your product through," said Deborah G. Patterson, senior vice president in charge of mutual funds at Bank of Hawaii, Honolulu.

This fall, the bank inked selling agreements with Merrill Lynch & Co. and Wedbush Morgan Securities for its Pacific Capital proprietary funds.

The bank is poised to seal agreements with two more "national firms" as soon as this month, Ms. Patterson said.

In its push to develop alternative marketing outlets, the bank is making up for lost time. Bank of Hawaii did not launch its own mutual funds until late 1993, making it a relative newcomer to this business, Ms. Patterson said.

The bank's Hawaiian Trust Co. subsidiary now manages mutual fund assets totaling almost $2 billion, comprising $1.2 billion in its own Pacific Capital funds and $670 million in the Hawaiian Trust Tax-Free fund distributed by Aquila Management Corp., New York.

While its trust subsidiary has an enviable record managing assets, the bank's foremost advantage in positioning its mutual funds with Hawaiian nonbank brokers is geographic.

Honolulu's 5,000-mile, five-time-zone separation from Boston and New York make it difficult for some major nonbank mutual fund companies to fully support sales through local brokerages, Ms. Patterson said.

"Effective wholesaling requires frequent contact," she said. To that end, the bank hired a Honolulu-based wholesaler in September.

It also helps the bank company's marketing effort to have locally based portfolio managers who are readily available to support sales seminars and field customer inquiries.

In the end, local consumer preferences may prove even more critical than nonbank brokers' comfort level in selling the funds. Many Hawaiians simply prefer doing business with a home-state institution, said Lacy B. Herrmann, chief executive of Aquila Management Corp.

"Hawaii is an insulated and isolated community," Mr. Herrmann said. "There is a feeling there of wanting to do business with a local business, if given the choice."

Although Ms. Patterson said it's premature to gauge the effectiveness of the sales agreements with outside brokers, she's optimistic about the prospects, based on the strong sales of the tax-free fund distributed by Aquila.

But several observers said the bank's optimism about brokerage sales may be exaggerated.

"Having selling agreements assures of you of only one thing-that you have a drawer full of paper," said Geoffrey H. Bobroff, a mutual fund consultant based in East Greenwich, R.I.

"The fact that Bank of Hawaii builds it doesn't mean people will come."

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