RICHMOND, Va. - People who live in and around this historic city are getting the Signet treatment.

Starting last month the company, known in banking circles for its direct marketing prowess, began targeting likely buyers of mutual funds and other investment products through phone and mail solicitations.

James Eads, president of Signet Banking Corp.'s brokerage, aims to double the bank's $2.3 billion of proprietary mutual fund assets in less than three years. And that's just part of a much larger direct marketing campaign meant to make the $12 billion-asset banking company a national player in the financial services game.

"We are going to extend our reach as far as it will go," Mr. Eads said in an interview at Signet's modern headquarters near the Virginia statehouse.

Some observers don't share Mr. Eads' confidence in building the bank's fund business.

After all, almost half of the assets in Signet's proprietary funds came not from internal growth but from the July acquisition of the Blanchard Funds from Sheffield Management Co.

To become profitable, a mutual fund family needs to manage at least $5 billion, according to some analysts.

Signet's mutual fund management and sales effort is "clearly in the investment phase," said Merrill H. Ross, an bank analyst with Wheat First Securities in Richmond. "It's barely break-even now, and it will probably be another two years before it sees any incremental profits."

To that Mr. Eads responded, "The company is really positioned for the long term. We'll take it on the chin in the short term to make a profit later."

Much of Signet's ability to compete in investment products stems from its experience in the credit card business.

Though Signet sold off its credit card accounts this year, it kept the proprietary data base and the unit's marketing systems.

The company also kept most of the Blanchard Funds marketing team intact. The mutual fund complex has been one of the industry's most successful proponents of direct mail marketing, experts said. It persuaded thousands of investors to buy shares by simply filling out a form and dropping a check in the mail.

Now Signet is applying some of the same marketing strategies to the rest of its retail products, which Ms. Ross said are "ideally suited for their direct-marketing approach."

Already Signet has blanketed areas of Virginia, Washington, and Maryland with direct mailings touting its asset allocation, or wrap, program. The product includes Signet's Virtus Funds, as well as no-load portfolios from Janus Capital Corp., T. Rowe Price, Wellington Management, and Twentieth Century Cos.

Mr. Eads said he expects the wrap product to be the cornerstone of his investment sales program.

"The way we see it, the company that owns the assets has the longer, steadier revenue stream," Mr. Eads said. Many brokerage firms, "on the other hand, have to sell a product every day just to turn a profit."

Between 5% and 6% of Signet bank customers use the bank's investment services, Mr. Eads said.

Right now, the banking company has 20 full-service brokers that work out of its 248 branches. But most sales come from branch-based platform representatives who perform various banking duties in addition to selling investments.

Roughly a quarter of Signet's 1,270 branch employees are licensed to sell mutual funds and annuities, and Mr. Eads expects to have 500 employees licensed by sometime next year.

The reps sell the Virtus Funds, along with mutual fund portfolios from AIM Capital Management, Eaton Vance Distributors, and Federated Investors - Signet's top-selling outside vendor.

Signet's latest marketing effort is telephone soliciting. The sales reps use software that enables them to generate calls to people who are most likely to be interested in buying investments. The calls are scripted and designed to gather data on the individual even if their response to the sales pitch is initially negative.

"Even if we don't get a sale, we can still find out what approaches worked or didn't work" to woo prospective investors, said James McCoy, Signet's marketing director.

Mr. Eads, a former broker with E.F. Hutton, says the telephone soliciting techniques Signet uses are far more efficient, and less costly, than the face-to-face sales he used to make years ago as an investment counselor.

"If I was lucky, I'd get 50 calls out in a day. With this system one of our operators can make thousands, and average about 300 connections (apiece) with people every day," he said.

Even so, telephone sales are a fledgling effort for the bank, and represent an insignificant amount of its total investment sales so far, Mr. Eads said. Though he would not disclose total sales figures, he said that his branch-based platform and dedicated investment products representatives are expected to sell an average of $400 million of packaged investment products this year.

To help those sales along, the banking company's chief executive, Robert M. Freeman, has said Signet will spend $25 million on marketing this year.

But some observers say the amount is too small to help Signet fight off competition from established mutual fund companies like Fidelity Investments and Vanguard Group, and even some banks.

"There are other banks that are thinking of going nationwide with their direct marketing, but they are much bigger than Signet," said Kenneth Hoffman, president of Optima Group, a Fairfield, Conn., consulting firm.

Without giving names, Mr. Hoffman said that, by contrast, these other banks have said they would spend up to $50 million in a serious push to market investment services nationwide.

Mr. Hoffman added that while Signet has "done an extremely good job of creating an infrastructure for credit cards," the company may find that "giving people credit and asking them to commit their money are two entirely different propositions. I don't know what level of capital expenses (Signet) is willing to commit to that effort."

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