The stars are in alignment for Branch Banking and Trust Co.'s proprietary mutual funds.

The principal banking unit of Southern National Corp., Winston-Salem, N.C., has scored four-star ratings from Morningstar for four of its seven BB&T Funds.

That's pretty impressive, considering that only five funds were eligible to be rated and that the $800 million-asset fund family was started in 1992.

"It's quite unusual, and obviously they're proud as hell of it," said Burton Greenwald, a mutual funds consultant in Philadelphia.

BB&T won four-star ratings for trust shares of its growth and income stock fund, balanced fund, short-intermediate U.S. government bond fund, and North Carolina intermediate tax-exempt bond fund. Its U.S. intermediate government bond fund received three stars. Morningstar's top rating is five stars.

"When you have independent ratings like that, it really helps your credibility (with investors) and psyches up your sales people," said Eugene G. Purcell 3d, senior vice president for trust and mutual fund marketing. "It's a morale booster."

"They have been pretty consistently average-to-above-average in performance," said Amy Arnott, editor of Morningstar Mutual Funds. "The only real disappointment has been with their intermediate U.S. government bond fund."

The Chicago-based rating company awards five stars to the top 10% of funds per category and four stars to the next 22.5%, based on risk-adjusted performance. Three stars go to the next 35% of funds. BB&T's four-star ratings were for the three-year period through July 31.

BB&T's other two funds were ineligible - Morningstar doesn't rate money market funds, and a two-year-old small company fund won't qualify until its third anniversary.

Translating such standout performance into equally spectacular asset growth is far from automatic, one observer said.

"It's difficult to get distribution in a marketplace that has a lot of hotshots" even with great performance, Mr. Greenwald said.

BB&T has modest goals that hinge on using its 428 branches, existing business relationships, and name recognition throughout the Carolinas and Virginia to attract fund assets.

"We're not trying to market our funds on a nationwide basis," Mr. Purcell said. "We're trying to sell to our bank customers, and we think with that group we're getting pretty good exposure."

Participant choices within 401(k) plans, which account for almost half of new assets flowing into BB&T funds, are bearing him out.

In 401(k) plans that also feature funds from several big-name mutual fund companies, BB&T has managed to capture almost three-quarters of participants' contributions.

"In our marketplace, they've heard of us more than they have Aim or Fidelity," Mr. Purcell said.

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