Keefe, Bruyette & Woods Inc. may need to order new stationery.

Its well-known slogan -- "specialists in banking" -- always tucked neatly beneath its letterhead, could soon be supplanted by the motto "specialists in financial services."

Keefe is diversifying its advisory services to include a range of businesses, from mortgage companies to asset managers to technology firms.

This foray into new territory underscores the increased interest among bankers in expanding their business lines.

"It is a recognition that we have to sell a lot of different products to banks," said Emmett Daly, an investment banker at Keefe.

"It is not just pitching bank deals anymore, it is pitching anything that a bank needs. And that includes mortgage banks, money managers, credit cards companies, finance companies, and consumer finance companies."

Earlier this year, Keefe represented Plaza Home Mortgage Co. in its sale to Fleet Financial Group, one of the firm's first nonbank advisory deals.

And Hamilton Financial Co., a West Coast mortgage company, retained Keefe last month to sell the company.

Keefe has yet to make a major splash as an adviser outside banks and thrifts. Keefe president James McDermott described the firm's activity as "cultivating the market in what I would call a limited but meaningful way."

But John Duffy, Keefe's director of corporate finance, predicts that could change as early as next week when the firm may announce several asset management deals.

And there are various technology transactions the firm hopes to conclude sometime next year.

Keefe is not alone among regional firms in its desire to move beyond a traditional bank and thrift practice.

Montgomery Securities has represented a number of nonbank financial companies. And Alex. Brown & Son also has expressed a desire to expand its banking practice to include these other lines of businesses.

But nowhere is the change in banking more apparent than at Keefe, which has long been strictly a bank and thrift house.

"We were blown away by the number of $1 billion or more asset managers out there. There are hundreds of deals out there, in fact more than in the banking industry," Mr. Duffy said.

"So why not devote some resources, especially if the bank industry is going to be one of the logical buyers?"

In devoting resources, of course, the firm runs the risk of diluting its highly prized and lucrative bank and thrift services business.

There has been only one addition to the investment banking team in the past 12 months, bringing the total number of members to 15.

And the research department is still debating whether to expand coverage to include asset managers. If it does, some banks could be dropped from coverage unless new analysts are hired.

In pure dollars, the new energies directed at these businesses will also cost in the short term.

"This is going to be a loss leader for us for a while. And then we are going to get involved in it, and we are going to establish an expertise in it, and it is going to work out for us," Mr. Daly said.

Already, a host of nonbanks have contacted the New York firm about advising them on competing with banks.

As a specialist in banking, Mr. Daly said, Keefe can offer insights into these institutions that they otherwise could not get.

Currently, Keefe is working with one of the country's largest mutual insurance companies to buy a trust company, a money manager, and perhaps even a savings and loan.

On the bank side, a growing expertise in nonbanks may be the only way to get a foot in the bank's door, Mr. Daly said.

"If we were to pitch an idea to a Baltimore bank about the Baltimore bank market, we are not going to bring anything new to the table," he said. "But we are going to get some airtime in the CEO's office if I can bring money management ideas, mortgage bank ideas."

More than half of the money management deals that Keefe pitches are to banks with less than $10 billion in assets, Mr. Duffy said. These institutions all have trust departments, he said, so money management is a perfect business for them.

The smaller institutions are the toughest sells, he said, but the ones with the most to gain. Community banking is being squeezed by technology, and unless fee businesses are found, survival will be tough.

"Our regional banking clients are not appreciative of the value of money managers and mortgage companies," Mr. Daly said. "But we can bring these ideas to them when it is cost prohibitive for a Goldman [Sachs & Co.] or a Solly [Salomon Brothers] to gear up and do that kind of stuff without seeing a huge deal flow."

Keefe also sees a big business in brokerage firms, but not for a while.

Banks still have a tough time understanding the broker-dealer relationship, Mr. Duffy said.

But as soon as banks begin to understand the risk they take by distributing mutual funds, they will begin buying brokerage firms, he said.

For example, a Vermont bank has been sued for distributing a failed Piper Jaffray fund. If the bank is going to be sued, Mr. Duffy asked, why not at least own the funds?

As this new banking world emerges, the Keefe executives are convinced that they must move beyond the traditional bank and thrift M&A focus or be left behind.

"In 10 years, if Duff and I are still at Keefe, I guarantee you, banks won't be our primary product," Mr. Daly predicted. "It will be a financial services company."

Mr. Duffy paused for a moment when asked what the firm's new motto would be in three years.

"Financial services, I guess," he said, adding with a laugh, "if some bank hasn't bought us."

Changing Times

Keefe Bruyette & Woods is no longer a bank- and thrift-only consultant.

Represented Plaza Home Mortgage Co. in its sale to Fleet Financial Group.

Retained by Hamilton Financial to help arrange sale of company.

Increased its involvement with asset manager firms.

Contacted by numerous nonbanks that hope to compete better with banks.

Consulting with a major mutual insurance company on acquisition plans.

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