U.S. Bancorp's proprietary funds seem sure to get a boost from the Oregon company's plan to buy West One Bancorp in Idaho.

Before the deal was announced last week, Portland-based U.S. Bancorp had been planning to sell mutual funds through branch employees instead of merely relying on its brokerage reps.

The merger, however, could mean that employees of West One's 223 branches would also become part of the expanded sales force for U.S. Bancorp's proprietary funds.

About 30 U.S. Bancorp branch employees have been selling mutual funds on a trial basis in 20 branches in eastern Washington State.

One executive at another banking company applauded U.S. Bancorp's plans to sell through branches.

"You don't usually see bank proprietary funds making up any more than 20% to 30% of sales done through a brokerage subsidiary," said the executive, who requested anonymity. "The challenge for U.S. Bancorp will be to get their mutual funds through as many of West One's distribution channels as possible."

Officials with U.S. Bancorp said that any discussion of how the company would integrate products or businesses as a result of the merger was premature. An integration committee headed by Robert D. Sznewajs, executive vice president at U.S. Bancorp, began meeting last week.

But some repercussions seem easy to predict.

For example, the merger will probably scuttle West One's plans for setting up its own brokerage unit. The Boise-based banking company was "just weeks away from filing the applications to create our own broker- dealer," said Leonard Gzesh, senior vice president and manager of the retail investment division at West One.

Now West One won't have to. U.S. Bancorp has its own brokerage subsidiary, U.S. Bancorp Securities. The unit oversees four major investment centers, and four smaller centers, with 60 licensed brokers. The banking company also has its own insurance subsidiary and a discount brokerage, U.S. Bancorp Securities/Discount Brokerage.

One headache the banks will avoid is merging fund families. Though West One sold $200 million in investment products in 1994, the banking company doesn't have its own family of funds.

That means that Qualivest, U.S. Bancorp's proprietary mutual fund family, will gain a new distribution channel without having to compete with a new set of funds.

The family of nine funds - including four equity funds, two bond funds, and three money market funds - has grown to $1.2 billion in assets. The company ranks 56th among banks selling proprietary funds.

Mr. Gzesh of West One says he believes that merging with U.S. Bancorp "bodes well for us." He said the bank had already begun to look into computer systems for clearing and trade execution in an investment subsidiary, but that the merger "saves us a lot of steps."

"I'm anticipating that we'll merge the insurance and investment operations as well," he said.

West One has always used a mixture of full-service brokers and branch employees to sell mutual funds. Mr. Gzesh said such an approach works well for small towns. "It's difficult from an economic standpoint to support a full-time broker, especially when they are being paid on the basis of productivity," said Mr. Gzesh.

Ms. Iida is a freelance writer based in San Francisco

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