A Pennsylvania-based banking company's retail brokerage unit is successfully peddling retirement plans to tiny businesses that other providers often overlook.

In the process, Meridian Bancorp, a $15 billion-asset bank based in Reading, Pa., is selling more of its proprietary mutual funds and cementing ties with the small companies that are the bedrock of its customer base.

"Large firms are saturated with retirement plans," said Timothy P. White, marketing and sales manager at Meridian Securities, the bank's brokerage unit. "But at firms below 50 or 100 employees, there's tremendous need and tremendous opportunity."

Most large corporations have already switched from traditional defined benefit pensions to defined contribution retirement plans, known as 401(k)s. But administrative complexity and costs weigh against small companies considering that option, Mr. White said.

Nevertheless, executives at many small companies feel the same pressure as their counterparts at larger outfits to offer attractive benefits to recruit, retain, and motivate employees, Mr. White said. And that opens a sweet marketing niche for the bank.

Meridian is using its strong lending relationships with small businesses to prospect for retirement plan customers, Mr. White said.

The bank has won the Small Business Administration's gold medal for making the most small-business loans in the Mid-Atlantic region in each of the past nine years.

Meridian offers small businesses a variety of retirement plans, including employer-funded individual retirement accounts known as simplified employee pension plans, or SEPs. Another variation, which allows employees to make tax-free contributions, is called the salary reduction simplified employee pension plan, or SARSEP.

Meridian's retail brokerage operation has packaged its Conestoga mutual funds in turnkey SEP and SARSEP plans that offer a ready solution for the harried entrepreneur, Mr. White said.

Depending on employer interest, the plans can include mutual funds from other providers, including Putnam or the Delaware Group, but most of the brokerage's more than 100 SEP and SARSEP customers rely on a menu of four to six Conestoga funds.

A small menu of Conestoga funds offers advantages, Mr. White said. Employers and plan participants value the familiarity of the bank name and are comforted by the fact that the funds are a bank product.

Additionally, for most SEP and SARSEP customers,"a simple and easy approach is often the best. They don't need as many bells and whistles," Mr. White said.

The simplified plans meet businessmen's needs, and for the bank, the plans require less paperwork than 401(k) accounts, reducing overhead and creating the opportunity for higher profits.

"There's virtually no group reporting and no administrative reports, so selling SEP and SARSEP plans can be very profitable," said Robert Wuelfing, president Access Research, a Windsor, Conn.-based consulting firm.

Besides reducing administrative headaches, the simplified plans may also offer the bank greater long-term profit potential through mutual fund management fees than do 401(k) accounts.

Because SARSEPs in particular often serve as much as tax-shelters for high-net-worth business owners as retirement plans for their employees, Mr. Wuelfing said, "Average individual account balances tend to be higher with these plans than with 401(k)s."

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