Mellon Bank last week bought the the public finance operations of Scheetz, Smith & Co., a Pittsburgh-based investment banking firm, Mellon officials said.

The move is expected to significantly increase Mellon's presence in the region. Scheetz Smith has co-managed about $319 million of municipal bond issues this year, compared to Mellon's $192 million, according to Securities Data Co.

Terms of the purchase were not disclosed. A press release from Mellon said Scheetz Smith had $4 million in revenues last year.

Scheetz Smith's president, Thomas F. Smith, said yesterday that the firm's operations will see few changes as a result of moving under the Mellon umbrella. It will be called "Scheetz Smith, a division of Mellon Bank." All nine employees of Scheetz Smith will remain at the firm, but Smith said he is not sure whether Mellon's public finance officials will be brought over, or remain in a separate division.

Scheetz Smith's money management division will break off into a new independent company, called Guyasuta Investment Advisors Inc., Smith said.

The acquisition of Scheetz Smith's public finance group "will strengthen significantly Mellon's financial and investment banking services to state and local governments," said Larry F. Clyde, executive vice president in Mellon's capital markets division.

"It will also provide Scheetz Smith customers with a sizable capital base and full access to Mellon's broad geographic reach, large distribution capabilities, and extensive products and services," Clyde said.

In 1993, Mellon Bank co-managed $905 million, according to Securities Data. Scheetz Smith co-managed $1.1 billion last year.

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