A midsize Pennsylvania banking company is playing an aggressive game of catch-up in the investment products business.

Starting in August, Keystone Financial Inc. plans to train about 225 branch managers to sell mutual funds.

The initiative would complement a referral program that lets managers and assistant managers in about 200 offices tell customers about funds but does not let them sell the products, said Mark A. GaNung, president of the Harrisburg banking company's brokerage affiliate.

"We're trying to use investment products as a catalyst to our becoming a full-fledged financial services company," Mr. GaNung said.

Observers said the effort is a notable example of a bank's accelerating its investment program but added that the $6.8 billion-asset company has some catching up to do. Many mid-tier banks had begun licensing platform employees to sell mutual funds by the early 1990s.

"It's not too late, but one might wonder what has taken them so long," said Richard Ayotte of American Brokerage Consultants, St. Petersburg, Fla. "They should have been more aggressively in the business for a very long time."

What's more, Keystone should have at least two licensed representatives for every branch, said Kenneth Kehrer, a Princeton, N.J., consultant. "It increases the investment activity in the branch," he said.

Mr. GaNung replied that one manager for every branch will cover the bank's needs in the short term, and that he expects more to be trained. "I think each organization is unique, and we're taking this in a very systematic way," he said.

Since 1995 bank managers and assistant managers with Series 6 licenses have referred potential investors to the bank's brokerage subsidiary under a program called "License to Talk." The unit, Keystone Brokerage Inc. of Williamsport, Pa., has about $300 million of assets under management.

The system seemed adequate at the time, but a 1997 task force study convinced the bank's executive management that its employees should sell the funds as well, Mr. GaNung said.

"For us to limit the sale of these products through 23 brokers is crazy," he said. "We will never achieve any significant level of penetration of our customer base or achieve meaningful market share without broadening the distribution of investment products."

Initially, sales will be limited to the banking company's family of seven mutual funds, the Key Premier Funds, and another family that has not yet been chosen. Putnam Investments, Massachusetts Financial Services, Delaware Investments Family of Funds, and Franklin Templeton Group are all likely candidates, Mr. GaNung said.

Employees may eventually sell additional funds, but there are no definite plans. "There's only so much that platform bankers can absorb and understand, and only so many products that they can get comfortable with," according to Mr. GaNung. He added that bank employees may also eventually sell variable annuities and perhaps a mutual fund wrap.

Cassandra Toroian, a research analyst at Ryan, Beck & Co. in Livingston, N.J., called the move a step in the right direction. "Banks can't ignore the fact that people look for alternative places to invest their money other than a savings account," she said.

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