The easy times are over for banks that sell mutual funds.

With interest rates on insured deposits moving up and investment returns on mutual funds losing their shine, banks must do some heavy lifting if they want to keep their fund businesses humming.

"The low-hanging fruit has been picked from the tree," said Richard White, senior executive vice president at Premier Bancorp, Baton Rouge, La.

Industry expects say the challenge for banks will be to cultivate a new crop of investors. And that means banks - which are notoriously shy about marketing their wares - will have to get used to selling.

"The next segment of the market really needs to be sold" on mutual funds, said Marcia Selz, president of Marketing Matrix, Los Angeles.

Ms. Selz points to a recent survey by her firm, in which 40 consumers where asked what banks can do to better position their investment product programs. The respondents included mutual fund investors and CD holders.

The common theme: Banks must demonstrate that .they are as good at investment as they are at making loans and gathering deposits.

Some banks are taking the message to heart, launching ambitious marketing programs aimed at prospective investors.

In Reading, Pa., for instance, Meridian Bank has begun appealing to the 170,000 members of its Club 50, an organization for older customers.

Free Consultations

The bank is mailing club members letters about investment products and offering them free consultations, with an emphasis on conservative products.

Meridian has also begun distributing to bank customers a pamphlet containing questions and answers about mutual funds.

"We want to become a bit more proactive," Said Harvey T. Corbett, senior vice president. "This enhances the business we derive from referrals."

In Kalamazoo, Mich., First of America targeted IRA rollover customers with a mailing about mutual funds.

The move is part of a drive by the bank to become more focused in its approach to the fund business, said William Shauman, senior vice president.

"We want to be more targeted, instead of throwing it up on the wall and seeing if it sticks," he said.

Premier Bancorp is also going after a narrower band of customers. The bank is arming sales representatives with laptop computers, hoping the high-tech approach will appeal to baby boomers.

Ways To Woo

Fund Customers

* Make hours for consultations more flexible.

* Promote casual "walk-in" conversations.

* Conduct consultations in private rooms.

* Dispel the percention that banks are not as capable as brokerages.

* Consolidate statements to include mutual fund account information.

Source: Marketing Matrix

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