A midsize Massachusetts broker-dealer is inching into the business of providing brokerage services to banks.
Commonwealth Financial Network of Waltham has signed up three more bank clients since October, including Boston-based UST Corp. last month. UST had used Essex Corp. of New York.
Commonwealth is entering this line even as some banks are pulling financial services in-house.
"We have found that banks are a good avenue. It has been profitable, successful, and it works well," said Priscilla Hollenbeck, vice president of compliance and general counsel at Commonwealth.
Managers at two banks that recently signed on with Commonwealth said they were impressed with the firm's back-office support and technology.
David L. Yost, who manages the investment department at Commercial Trust and Savings Bank in Mitchell, S.D., said he was particularly impressed by its on-line trading and research capabilities. The $170 million-asset bank signed on with Commonwealth in late November.
"Having them local was a big plus," said Lee Cary, director of the investment program at UST, a $5.5 billion-asset banking company. "Commonwealth gives us all the support as if we had an in-house broker- dealer, without the expense."
Commonwealth began working with banks in 1991, when it was hired by Century Bank and Trust Co. of Somerville, Mass., to provide investment services. The bank was referred by Commonwealth's clearing firm, National Financial Services Corp. of New York, a unit of Boston-based FMR Corp.
Since then it has gained 11 other bank clients, primarily through word of mouth and referrals, said Janice Hart, director of field development. Forty of Commonwealth's 650 sales representatives work in banks.
Commonwealth is expected to sign up another bank in April and is in serious discussions with at least two more, she said.
In November, the firm began targeting banks through advertisements in Bank Investment Marketing, a sister publication to American Banker.
"We're not calling around from bank to bank," Ms. Hart said. "We're responding to inquiries coming into the broker-dealer."