Magazine article American Banker

First Bank System Discovers Merging Funds Is Hard to Do

Magazine article American Banker

First Bank System Discovers Merging Funds Is Hard to Do

Article excerpt

When Midwest giant First Bank System Inc. gobbled up the much smaller Boulevard Bancorp in May, it not only fattened its banking empire, it added heft to its mutual funds.

First Bank did this by merging Boulevard's funds into its own proprietary mutual fund family.

A handful of banks have had similar experiences, and more are likely to, as banks continue to get into the mutual fund business and as bank mergers continue apace.

But First Bank's experience is educational on one point. While the merger was successful, a senior official said the company was surprised by how hard it was to handle the combination.

"It has not been an easy process," said Jeffrey Wilson, a First Bank vice president who helped oversee the transfer of the Boulevard Funds for First Bank.

Minneapolis-based First Bank operates a proprietary family called the First American Investment Funds. Before the merger the family had almost $3.9 million of assets spread among major bond, equity, and money market categories

Chicago-based Boulevard's proprietary family, which was called the Boulevard Funds, had $118 million of assets in five portfolios in the same categories.

After First Bank bought Boulevard, managers had to decide whether to incorporate the Boulevard Funds into their own proprietary family, or to run the two separately.

Bank officials decided that most of the portfolios held promise and should be merged into the First American funds. …

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