Mutual fund sales are down, and so is performance.

But that doesn't bother Integra Financial Corp. Instead, the Pittsburgh-based banking company, with a branch network spanning much of western Pennsylvania, introduced its first proprietary fund family this fall.

The reason for rolling out the Investor Funds, officials say, is that $13.8 billion-as-set Integra needs its own funds to be a full-service bank. And even though the mutual fund market isn't exactly gangbusters right now, it hasn't been bad enough for Integra to abandon its goal.

"The atmosphere could be better," acknowledged Debra Sherman, an Integra product development manager. "But it was not enough to be a deterrent."

The Inventor Funds were seeded with $440 million from 3,400 trust accounts managed by Integra. This is just under a tenth of the trust assets over which Integra has investment discretion.

Douglas W. Sherratt, Integra's executive vice president of asset management, acknowledged that the Inventor Funds will have to get bigger to be economically viable. In two years, he thinks they need to be a billion-dollar complex. They should probably grow even larger after that, he said.

To get there, Integra is focusing on internal sales to retail customers, to corporate cash managers, and to retirement savers through a new 401(k) retirement plan service for small to midsize companies. Acquisitions and outside distribution haven't been ruled out, though they aren't on the immediate horizon.

Even though Integra employs 12 trust portfolio managers, it decided to tap outsiders to run the fund portfolios, rather than ask its current staff to learn new skills.

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