Net income from investment programs accounted for an average of 32% of banks' 2000 revenue, up from 28% in 1999, according to the Consumer Bankers Association.

Last year referrals per $1 million of bank deposits jumped 36%, to 1.5, after peaking at 2.1 in 1994 and drifting down to 1.1 in 1999, the group's eighth annual Consumer Investment Study found. The results, released Tuesday, showed that on average, investment program revenue reached $2,009 for every $1 million of retail deposits, up 12% from 1999. The average annual gross commission produced by licensed bank employees rose 40%, to $15,066 - the highest level since 1996, when branch employees produced $15,626 of commissions.

Kenneth Kehrer, the Princeton, N.J., consultant who conducted the survey of 676 banks and thrifts, gave partial credit to banks' training and licensing more branch employees to sell investment products.

In 2000, 57% of banks used both brokers and licensed bank employees to sell investment products, up from 55% in 1999 and 39% in 1997. And the number of banks using branch staff to sell investment products has risen steadily, according to the CBA. Last year, 60% of the banks surveyed said they used branch personnel to sell investment products - up from 57% in 1999, the year the CBA added the question to its survey.

Mr. Kehrer also cited better structuring of banks' investment sales programs, which promotes smoother teamwork. In the past, he said, many banks' branch employees sold CDs and retirement accounts in direct competition with bank brokers, who were trying to sell annuities and mutual funds. Now, hybrid sales programs help establish which products should be sold by bank employees and when a broker referral is appropriate.

One such program is at Hibernia Investments LLC, a unit of Hibernia Corp. in New Orleans.

M. Merritt Talbot, president of the unit, said that at Hibernia, licensed branch employees only sell fixed annuities, and refer other sales to brokers.

"When branch salespeople are profiling a customer and they uncover a fixed-annuity need, they are encouraged to make a sale. But when they uncover needs beyond fixed-annuity products, they will make a referral," Mr. Talbot said. "Branch employees can get involved and make a sale, but they can also get involved and make a referral."

Since it began using this approach in 1993, Hibernia's investment revenue per $1 million of deposits increased 22%, to $4,716, he said.

CalFed Investments, a unit of Golden State Bancorp of San Francisco, has used branch staffers in tandem with brokers for 13 years.

Deborah Bernot, president of CalFed Investments, said the bank's 800 licensed employees "supplement" the brokers. The licensed employees sell mutual funds and annuities, and allow the brokers to concentrate on consulting and financial planning. Licensed bank employees and brokers, she said, "are encouraged to work together as a team to bring the best product to the customer. No one sells against each other anymore."

First Union Bancorp has used a hybrid sales program for eight years. Its 3,000 trained and licensed employees in branches work closely with its 700 brokers, according to Dwight Moody, the president of the First Union Securities investment services group.

The program, he said, has enabled the bank to offer financial planning and other fee-based products and services in addition to mutual funds and annuities. "There are a lot more sales opportunities out there when you can look at the big picture instead of having to focus on the individual sale," Mr. Moody said.

Mr. Kehrer said the rebound in referrals is an encouraging sign for banks, and is clearly the byproduct of banks and brokers working together. "Teamwork helps stimulate referrals, and referrals improve profit margins because if someone is referred from the bank, they are more likely to buy than if a broker is calling someone on the phone," he said.

Moving management of bank investment sales programs to the retail level "is making investment products a core product of the bank rather than something ancillary," he said.

The more branch employees sell, the better for the bank's bottom line, according to Mr. Kehrer. That's because branch employees receive "a lot less" in commission than the brokers, he said.

Ms. Bernot of CalFed also said licensed branch employees receive lower salaries and commission payouts to sell investment products than bank brokers. "This lowers the cost of the sale to the organization, and suddenly the bank is getting more of the commission," she said. "That is a big part of why profitability is on the rise."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.