The planned purchase of a New Hampshire thrift would let Phoenix Home Life Mutual Insurance Co. market trust services across state lines.
Phoenix, which is based in Hartford, Conn., already has a national presence in insurance and investment management. It applied last week for Office of Thrift Supervision permission to buy New London Trust, which has a federal thrift charter.
Terms of the deal, which was announced in April, were not disclosed.
"We are very strong in insurance and the money management business," said Martin J. Gavin, a senior vice president at Phoenix Home Life. "We are developing trust long term."
Trust is "a little bit of walk before you run," Mr. Gavin said, "so we're starting it in New England."
In three to five years, though, Phoenix will market trust services across the United States, he said.
Many insurers and brokerages are using federal charters to expand their trust operations nationally. A state-chartered trust company can market only in its home state and those with which that state has a reciprocity agreement.
But Mr. Gavin said Phoenix, which has already trust charters in Connecticut and New Hampshire, sees New London's federal thrift status as a bonus-not as the reason driving the acquisition deal.
New London "brings not only long-term possession of a national charter, but also a book of business," he said. "That was first and foremost. Even if it didn't have a national thrift charter, we'd be very interested."
The deal would almost double Phoenix Home Life's trust assets. New London Trust has $325 million of assets and manages $1 billion of trust assets. The company is a subsidiary of Sun Life of Canada, which is selling its U.S. banking businesses as part of a corporate overhaul that includes demutualizing.
Phoenix got into the trust business in 1996, when it launched Phoenix Charter Oak Trust Co. The Connecticut-chartered subsidiary manages $100 million of assets and administers another $600 million.
Phoenix bought 80% of a New Hampshire trust company-coincidentally named Charter Trust- in 1997. It overlaps with New London in some parts of New Hampshire, is 20% owned by six community banks, and manages close to $800 million.
Legg Mason Inc., based in Baltimore, took the direct route to a federal thrift charter.
Legg Mason, which has expanded its brokerage subsidiary from Baltimore to more than 100 offices in several states, received a federal thrift charter last month. The next step: Its Maryland-chartered trust company, Legg Mason Trust Co., will be merged into the federal thrift in the summer.
Legg Mason Trust, which administers $325 billion of trust assets, would rather take on broker referrals with federal powers than build an operation piecemeal with state charters, said Arthur P. Sims, the president and chief executive officer. "It's a much easier process to do with the OTS charter than to go state by state," Mr. Sims said.
That's not to say a federal charter makes the trust business cut-and- dried.
"Getting your wish fulfilled and being able to operate interstate is only the first step. The second step is complying with local law or making sure your home state law applies," said John P.C. Duncan, a partner in the Chicago office of Jones, Day, Reavis & Pogue.
