Sandy Spring Bancorp is doing a balancing act as it prepares to expand its three-year-old investment products program.

The $1 billion-asset banking company, based in Olney, Md., is recruiting to increase its investment sales staff from two brokers to five. It is also adding services geared to customers who are planning for retirement or investing for the first time.

The aim is to increase mutual fund and annuity sales-which are on track to total $14 million this year-by 75% to 100% in 1998, said Sandra B. Stockdale, the vice president overseeing investment products.

But Sandy Spring is determined not to push customers into investing, said president Hunter Hollar.

"We're all for using investment products to give people some level of risk, diversity, and the attractive yields they need," Mr. Hollar said. But "we will not take the approach that this is the product we will push this week" to produce fee income.

"If I think a person should stay in certificates of deposit, I'll tell them that," Ms. Stockdale added. "But there can be risks to not diversifying by investing in mutual funds."

Sandy Spring's easy-does-it strategy is typical of those at many community banks, which are intent on walking a fine line to avoid alienating long-standing customers.

"Some community banks want nothing whatsoever to do with investment products because they're afraid it will taint their image," said Stanton C. Selbst, the principal of a White Plains, N.Y., consulting firm that bears his name. But as small banks gain experience selling mutual funds and annuities, many become convinced that "investment products keep customers closer to the institution."

Keeping customers in the fold is particularly important to Sandy Spring, which prides itself on its community ties.

Founded by Quaker farmers in 1868, the bank is satisfied that its image has been enhanced in the three years since it created its brokerage program in conjunction with GNA Securities, Seattle.

"Neighbors talk over their fences in this community," Ms. Stockdale said. "We've had people come in and say, 'I want to invest money with you. I understand you did a good job with my neighbor.'"

Such word-of-mouth publicity should help Sandy Spring reap $440,000 in fees from investment sales this year, Ms. Stockdale said. The bank's offerings include mutual funds from Aim Management Group, Franklin Resources, and Putnam Investments.

In looking for more brokers to offer the products, Ms. Stockdale said, she is determined to avoid salespeople who are "more interested in receiving fees" than in building long-term relationships.

"I'm doing things slowly," she said. "We've taken over a century to earn customers' respect. You don't want to lose it by suddenly running roughshod." u

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