Washington Mutual Inc.'s planned acquisition of American Savings Bank would bring together two of the thrift industry's most aggressive brokerage programs, creating another large competitor in the increasingly cutthroat California market.

The deal, which is expected to close this year, would increased Washington Mutual's brokerage and insurance sales force to 420 licensed employees. The Seattle-based thrift would be able to market its well- respected proprietary mutual funds and annuities to consumers in seven states, including American Savings' home market of California.

"This has the makings of a powerful combination," said Andrew Singer, president of Bank Insurance Marketing Research Group in Mamaronek, N.Y.

Washington Mutual has its work cut out for it. The West is already home to some of the most aggressive bank purveyors of investment products, including BankAmerica Corp. and Wells Fargo & Co. In addition, executives at the new Washington Mutual would have to figure out how to mesh two brokerage units with different cultures.

The $22 billion-asset Washington Mutual, for example, focuses on marketing its own $1.3 billion-asset mutual fund family. It was one of the first banks to have its own mutual funds, thanks to its 1982 acquisition of Composite Research and Management Co., Spokane, Wash. Observers also note that the company's current chairman, Kerry Killinger, was chief financial officer at Murphy Favre Inc., a brokerage firm that the company acquired at the same time.

The thrift has also developed proprietary fixed and variable annuities. "Anything progressive you can do in this area, they've done," said Mr. Singer.

The thrift sells investment products through hundreds of retail branch employees, who also sell certificates of deposits and other deposit products.

American Savings, by contrast, does not have its own funds and annuities. The thrift has about 70 investment representatives dedicated to selling annuities and mutual funds provided by other companies. The reps do not sell other banking services.

The program is considered highly successful. In 1995 - one of the worst markets for fixed annuities - American Savings' sales were the second highest among thrifts, and its rate of penetration was the highest in the banking industry, Mr. Singer said.

"American Savings Bank has such a different culture, but I doubt Washington Mutual would chuck one of the most successful programs in the country, just to do things their own way," said one insurance sales executive.

Many vendors of insurance products and mutual funds are wondering if the post-merger thrift would add their products to its menu.

"The jury is still out on that," said William Papesh, president of Washington Mutual's investment management arm. "We certainly see opportunity, but we don't want to interfere with what appears to be working."

Mr. Papesh added that he isn't convinced that his current portfolio menu has the breadth to compete in the California market. So, he may not push his funds through the American Savings Bank branches. The company's family of six mutual funds lacks portfolios that invest overseas, or in growth or aggressive growth stocks, he said.

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