For many banks, it isn't enough to sell mutual funds and annuities. They also offer stocks and bonds.

Life Savings Bank, Norfolk, Va., believes the banking industry will be selling more and more direct securities as its investment product programs mature.

"Last year mutual funds took off," said Harry Bybee, president of the thrift's Life Financial Services Corp. "As the markets fluctuate it's important to have services to meet those needs.

According to the survey by American Brokerage Consultants, some 47% of institutions active in investment products have opted to offer discount brokerage in addition to mutual funds and annuities. Among players with more than $1 billion of assets, more than 55% have chosen this three-pronged strategy.

By contrast, just 10.3% of all institutions selling investments offer only mutual funds.

At Life Financial, direct securities currently make up just 5% to 10% of all investment product sales. But the company sees securities as an important part of establishing itself as a broad-based provider of investments, Mr. Bybee said.

There are, however, some clear risks in banks pushing stocks and bonds. Since these investments inherently lack the diversification of mutual funds, customers can et burned, hurting the reputation of the bank.

As a result, many banks offering securities brokerage say they refrain from actively promoting the service.

Instead, they offer it mainly as an accommodation to customers. For example, Mechanics & Farmers Bank, Durham, N.C., says most of the securities transactions that it handled last year involved sales of securities purchased elsewhere.

"We try to limit our exposure to potential bad publicity," said Lee Johnson, senior vice president and chief financial officer.

Some bankers offering direct securities doubt that the service will ever amount to much.

While Cohoes Savings Bank in Cohoes, N.Y., offers direct securities, its head of retail banking, Michael R. Novak, says the conservative nature of most bank customers will keep the business small.

In Cohoes. Savings' case, a majority of the customers have small nest eggs between $20,000 and $40,000, he said. That doesn't make them candidates for heavy direct securities activities.

Michael McConville, head of investment services at Urban National Bank in Franklin Lakes. N.J.. is looking at the bank investment world as he prepares for a new investment product program to be unveiled in a few months. And he, too, has reservations about direct securities.

"It's very hard to make money at," he said. "You can't just jump into the securities business, throw your doors open, and say we're here."

Still, many banks seem to think the effort is at least worth a try. According to the survey, the strategy is popular even among banks in the smallest size group - assets of $50 million to $250 million. Anion, such banks active in investment products. nearly 46% offer discount brokerage in addition to mutual funds and annuities.

The strategy is widely used in most parts of the country, though it is somewhat less prevalent in the Northeast. There, 37.2% of institutions selling investments offer all three services, versus a high of 51.4% in the Mountain region, the survey found.

Institutions in the Northeast are more likely than others to offer only mutual funds. In fact, nearly 15% of the Northeast's institutions active in investments offer only funds.

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