modernization bill, U.S. Bancorp has blazed a trail for those poised to mix and match banking and other financial services.

The Minneapolis banking company "picked up a very good deal and got a head start" by purchasing the investment manager and broker Piper Jaffray for $730 million in cash 18 months ago, said Anthony Polini, a banking analyst at Advest Inc.

The deal put U.S. Bancorp in a vanguard of companies such as KeyCorp, the old NationsBank Corp., and Citigroup Inc., among others, that have acquired investment houses. "We wanted to be the first to wholly integrate banking and investment management services," said Richard A. Zona, vice chairman at U.S. Bancorp.

Given the modest gains the banking company reported in brokerage and investment management fees for the third quarter, the jury is still out on when and whether the deal will pay off. But by most accounts U.S. Bancorp has sidestepped the pitfalls of merging culturally disparate businesses. These pitfalls are seen as major obstacles to success for banking companies that try to take advantage of financial modernization, which is meant to ease entry into nonbank businesses.

Instead of riding herd on Piper, U.S. Bancorp "decided to be a facilitator," said R. Jay Tejera, a banking analyst at Ragen MacKenzie Securities in Seattle.

Mr. Zona, who is liaison between the parent company and U.S. Bancorp Piper Jaffray, said the key is to let some parts of Piper Jaffray's business remain autonomous while asserting control over the parts where it makes sense to meld operations.

The banking company exerts little managerial control over Piper Jaffray's investment banking and capital markets groups, including equity and fixed-income operations, Mr. Zona said. He said U.S. Bancorp had been more active in asset management and retail brokerage.

Analysts said the approach has gone a long way toward keeping the peace in Piper Jaffray's ranks. The deal came amid a rash of brokerage and asset manager deals by banking companies. KeyCorp acquired McDonald Investments Inc.; NationsBank bought Montgomery Securities; the former Bankers Trust acquired Alex Brown; and First Union Corp bought Wheat First Butcher Singer and then Everen Securities.

McDonald has been slow to produce the kind of profits that KeyCorp expected, analysts said. And Montgomery Securities lost many of its senior bankers soon after the merger closed.

Given banking companies' checkered success in melding these operations, the approach that U.S. Bancorp is taking bears watching, analysts said. "Their cultures seem to be well suited to each other, and they stayed out of each other's way," said Joseph Duwan, a banking analyst at Keefe, Bruyette & Woods Inc.

"They came up with more enterprising ways of keeping people through retainment pools and are operating the company as a separate sub-sidiary," said Stephen Biggar, a banking analyst at Standard & Poor's Equity Group.

On a senior management level, "we've lost virtually no one to the merger," Mr. Zona said. That includes the longtime guiding force at Piper Jaffray, Tad Piper, who is chairman of U.S. Bancorp Piper Jaffray.

Analysts estimated that Piper lost about 50 of its 1,100 brokers as a result of the deal, partly because retention incentives were offered just to a select group. But U.S. Bancorp executives said some of the losses were the result of routine attrition and should not be blamed on the merger.

The brokerage unit has about 1,200 brokers operating in branches and in outside offices, including 150 who had worked for U.S. Bancorp before the deal.

One aim has been to get brokers closer to the 4.5 million households that U.S. Bancorp serves. The brokers go after new accounts and "get a crack at all the bank customers who may be signed on with Merrill Lynch" or some other brokerage, Mr. Tejera said.

At the same time, Piper Jaffray's outside brokers now offer some products and services they did not have before the merger, such as trust and larger fixed-income investments.

U.S. Bancorp is also using the Piper Jaffray brokerage as a platform to roll out a program for higher-net-worth customers. The company estimates it has 26,000 customers who meet a criterion to be private banking clients -- $150,000 of annual net income, or $500,000 of investable assets, or net worth of $1.2 million. Only 10% of this group currently buys private banking services in the form of money management, tax supervision, charitable giving, and estate planning, said Andrew S. Duff, president of U.S. Bancorp Piper Jaffray. "We've barely cracked the surface."

As part of the initiative, U.S. Bancorp Piper Jaffray brokers undergo two days of training on how to recognize the needs of high-net-worth people.

Once the coaching is complete, the brokers are deployed as part of a private banking team that includes trust officers and personal bankers, or they take a spot in one of the bank's branches to be available to higher-net-worth customers as they come in.

The deal also brought together two asset management units. Piper Jaffray's operation was merged into U.S. Bancorp's First American Asset Management, which now oversees $80 billion of assets, including $30 billion in First American mutual funds. Growth has come from the sale of mutual funds to Piper Jaffray customers and by extending asset management services to pensions and other retirement programs, analysts said.

The deal also brought U.S. Bancorp underwriting abilities, especially in the area of technology, but also in health care, financial services, and consumer goods.

U.S. Bancorp declines to discuss pending underwritings but says its pipeline is "strong."

Technology is a hot business. Right now, more than 200 companies are going public, according to CommScan LLC, a New York firm that tracks initial public offerings. More than three-quarters of these are technology and telecommunications com-panies.

The fruits of these efforts have found their way to U.S. Bancorp's bottom line.

In the third quarter, trust and investment management fees rose 9% from a year earlier, to $113 million. Fees and commissions from investment products were up 5%, to $79.5 million, and investment banking revenue soared 57%, to $60 million. Commissions and profits from trading accounts were up 13%, to $48.4 million.

But as at other regional investment banking companies, operations income dipped from the second quarter, which some analysts argued is a more meaningful comparison. Retail investment sales and commissions fell 12%, and investment banking revenues were flat.

Michael Plodwick, a banking analyst at Lehman Brothers, described Piper Jaffray as "the weak link" in what was an otherwise solid third quarter for fee income at U.S. Bancorp.

But Mr. Plodwick said he expects a modest pickup in retail investment sales this quarter and "another strong quarter in investment banking, given a strong deal pipeline."

U.S. Bancorp executives say there is still more to be culled from the acquisition. "We do need to complete technology initiatives," Mr. Duff said.

This includes developing the ability to offer integrated account statements, with brokerage, asset management, and banking services on one document, he said.

The company has also begun testing an Internet brokerage, with an eye toward rolling out the service in the first quarter.

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