Buoyed by its acquisition of First Fidelity Corp., First Union Corp. is making a play for the hotly competitive Northeast trust market by actively managing investments for charities.
The Charlotte, N.C.-based banking giant recently appointed a onetime First Fidelity trust executive to oversee its business with charities in the Northeast. In addition to looking to manage large pools of assets for these groups, Eileen M. Wilhem plans to network with the prominent individuals found on their boards with an eye towards building First Union's personal-trust business.
"We've had a lot of change in banking in the Northeast because of mergers," said Ms. Wilhem, who arrived at First Union after a stint at Fleet Financial Group. "Communities are looking to make sure banks are committed to them. First Union is."
Based in New Haven, Conn., Ms. Wilhem is now director of charitable funds services for First Union's northern region. She reports to Linda M. Bowden, senior vice president of personal trust services for First Union in the Northeast.
"We are serious about this business," Ms. Bowden said. "(Charities) are great revenue producers."
Thanks to its acquisition of First Fidelity, First Union doubled to $4 billion the amount of assets it manages for community and private foundations, hospitals, educational institutions, and other cultural, religious, and service organizations.
Both banks had teams and products dedicated to the market. Now, First Union is culling talent from both efforts to develop an even stronger campaign.
"We've now put together a network of people from Connecticut to Nashville that provides these services," said Kenneth Brown, managing director of charitable funds services at First Union. "Different people have different talents so we can draw from a much more experienced well."
But the $131 billion-asset company is particularly intent on building its charitable business in the Northeast. That is not surprising, considering that New York is home to approximately 30,000 charitable organizations, and New Jersey houses another 5,600.
Ms. Wilhem spent this week travelling around the Northeast, meeting with charities and consultants to establish First Union's new identity. The meetings have gone well, she said, because the merged bank has much to offer. Former First Fidelity clients, for instance, can now access First Union's 36 proprietary Evergreen Funds.
First Fidelity also brought products to the effort, including three common trust funds designed to meet the spending needs and investment goals of charities.
Aside from boosting assets under management in large swoops, the charitable business has other benefits for trust departments, which rely heavily on word-of-mouth advertising.
"The members of the boards of trustees are typically wealthy people so you get exposure to potential private asset management clients," said Robert M. Tetenbaum, executive vice president of First Manhattan Consulting Group."These are people who have prominence and they tend to get asked, 'gee, who do you use?' They become part of your advertising."
First Union is already making inroads with charities in the South, striking an alliance in February with Foundations for the Carolina, which gave $13 million to 500 charities last year. The bank will manage money donated to the foundation by clients of its private bank.
Competitors say they are not surprised First Union wants to cozy up to charities. The business remains a core profit center for many trust departments as banks have closer ties to prominent citizens than their nonbank competitors do.
"It would be foolish to throw away the last advantage banks have over the brokerage community," said Fernando Garip, a vice president at Summit Bancorp. in Princeton, N.J.
