ORLANDO -- As tropical storm Gordon loomed over a bank investment conference here, discussion centered on a storm of a different sort.
The buzz among attendees at the Bank Securities-Association meeting was over the impact this year's foul markets will have on banks' push into the retail brokerage business.
So far, bankers said, 1994 has been an especially hard year to weather.
Many said their sales this year have been running at two-thirds to one-half of last year's pace. For many banks and thrifts, this has been their first sales skid.
"I think a lot of the banks are shell-shocked," said Gregory McMahon, a relationship manager with SEI Corp., a Wayne, Pa., firm specializing in technology for banks' investment and trust departments.
But aside from some retrenchment and staffing changes, the consensus view was that banking companies remain committed to the investment products business.
"We firmly believe that for our customer base this makes sense," said William Hawkins, president of the retail brokerage unit of H.E Ahmanson & Co., Los Angeles, parent of Home Savings of America, the country's largest thrift.
Meanwhile, managers of bank investment units are facing hard questions from their superiors. Among those fielding such questions is Peter J. Succoso, president of the Bank Securities Association, and a senior vice president at Delaware's Wilmington Trust Corp.
Wilmington Trust's senior executives and board members "want an ongoing level of communication" about the investment business, Mr. Succoso said.
"It's been a tough year" for the industry, he added.
But Mr. Succoso, like others, said his superiors are confident that their push into mutual fund management and retail investment sales is a good one.
"There's no question management is still very much committed," he said. "They recognize that this will remain a growing area.
This year's tough markets have put managers of investment businesses at banks in a precarious position. Privately, senior officials from one mutual fund company said that a handful of brokerage managers in banks have lost their jobs, probably due to poor sales.
In order to keep his position secure, Mr. Hawkins of Ahmanson's Griffin Financial Services unit said he was taking "preemptive" action to warn senior managers of market turbulence and poor sales.
The prospect of the thrift's customers losing money on investments is an especially sensitive issue.
Having "gone through the [Charles] Keating and S&L debacle" Home Savings is very concerned about investor complaints, Mr. Hawkins said.
C. McNeill Baker Jr., senior vice president and mutual fund director for Barnett Banks Trust Co., Jacksonville, Fla., added that this year's markets are likely to keep more banks from getting into the business of running their own proprietary mutual funds.
More than 110 banks now have their own fund family, including Barnett, which ranks as the 27th-largest fund manager among banking companies.
But Mr. Baker said banks that haven't already launched their own funds aren't likely to be able to make a profit by doing so now. The reason is that the mutual fund management has gotten too competitive, he said.
To prosper, bankers said, it is important to become savvier sellers of investments.
"You have to continually come up with new products to stay ahead of the competition," said Stephen Stellhorn, group senior vice president for the retail brokerage unit of European American Bank, Uniondale, N.Y.
But even though the investments business is getting tougher, Mr. Stellhorn, like others, predicted that banks will rise to the challenge.
"Some are thinking that the bloom is slightly off the rose," said Robert M. Kurucza, a law partner and bank mutual fund specialist with Morrison & Foerster, Washington.
But, he added, "It's craziness to get out of this business. I very much believe we have only seen the tip of the iceberg in terms of where this business is going."