Sending its roots deeper in search of new business, Invest Financial Corp. has a hit upon a novel way to offer its wares to a hard-to-serve segment of community banks.

The Tampa, Fla., company, a leading seller of mutual funds and annuities through banks, has developed a program that links banks with $150 million or less in assets to larger Invest clients.

Under the arrangement, these small banks can share sales representatives, marketing materials, and back-room operations with the bigger banks.

In return, the bigger banks will receive a portion of the revenue generated from sales.

So far, Invest has recruited 25 current clients to act as agents for community banks bear their areas, said23 Merlin Gackle, president of Invest, in a recent interview. The first were Hinsdale Federal,k a thrift just outside of Chicago, and Home Savings Bank, Salisbury, N.C.

No community banks have started the program as of yet, but negotiations are under way with several, according to Invest officials.

Community banks -- those with assets of $1 billion or less -- are seen as the last frontier for expansion by marketing companies like Invest, which help banks set up and manage investment product sales programs.

Although most big banks have sales programs firmly in place, community banks have been underserved by marketing companies, Mr. Gackle said.

That's because few small banks could generate enough investment sales volume to justify having a full-time broker assigned to the job. Mr. Gackle said 40% of banks with $1 billion or less in assets offer no investment services at all.

Sharing Resources

Under the community banking program, a small bank would share resources with an established Invest client as if it were a branch of the bigger bank.

However, sales transactions at the community bank would be flagged to ensure that the big bank doesn't gain access to the small bank's customer lists.

This feature was designed to overcome community bankers' fears of bringing potential competitors into their bank lobbies.

Mr. Gackle said the community banks can expect to realize anywhere from 15% to 35% of the revenue generated by the managed program, depending on how much help they get from the bigger banks they align with.

Competitive Pressure

For example, community banks that require a full-time sales representativ would take a smaller cut than one that simply shared a representative.

Mr. Gackle said he expects the Invest program to catch on because community banks are under competitive pressure to expand services.

"If they want to offer what NationsBank down the road is offering, then this puts them in the drivers seat," he said.

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