'Retail' Strength Aids Cross-Sales.

New York -- Retail banking skills will increasingly determine the success of regional banks in the years ahead, according to analysts at Merrill Lynch.

Retail banking will be key to spread-based revenue growth, cross-sales and fee-revenue growth, analyst Edward Najarian said in a recent report from the investment banking firm.

"Banks that successfully combine strong service quality with a wide product array and an expansive distribution network should demonstrate better customer retention and cross-sale statistics. However, only a few banks will effectively pull this off, given the difficulty in executing a cross-sale strategy," the report said.

And banks that gain market share and cross-sell products and services should generate better fee revenue in addition to countering a flatter yield curve, according to Merrill Lynch.

Not surprisingly, some of the stocks that top Merrill Lynch's list of recommended companies have a strong presence in retail mortgage banking and mortgage servicing. Wachovia, Bank of America and Wells Fargo are "in the best position to expand" their ...