Love of the arts was not the only motive behind First National Bank of Arizona's first art show last week.
After more than 40 invited guests got a look at work by a local artist, Diana Clauss, at a gallery in tony Old Town Scottsdale, the bank gave a presentation on how to use artwork to enhance the value of a trust.
"Using art in estate planning is a growing concept," said Jane Puplava, a senior wealth manager at the $2.4 billion-asset privately held bank. "We'd like to provide more of these kind of events" to let more high net-worth people know about it.
For years big banking companies such as Citigroup Inc. and Bank of America Corp. have run divisions that manage trusts with art holdings, advise clients, and finance their purchase and sale of art.
Large banks have gone to great lengths to entice people who own valuable art and jewelry collections to use their services, said MaryAnn Johnson, the associate director of the American Bankers Association's professional development group. For example, some routinely treat preferred clients to exclusive previews of art auctions at prominent houses like Christie's and Sotheby's.
Burton J. Greenwald, an analyst at BJ Greenwald Associates in Philadelphia, said art shows are a creative way for a community bank to market wealth-management services. "These are natural hunting grounds for highly affluent people, and it's a good way for bankers to ingratiate themselves with the affluent," he said.
Ms. Puplava said First National gives advice about using art in charitable remainder trusts. These can sell the client's holdings, invest the proceeds in securities, and pay the investment income to the client or someone else for life or until the trust ends. Any balance goes to a designated charity, such as the American Red Cross.
Ms. Johnson said charitable trusts are getting more popular because more people are becoming philanthropic - "and while they may be altruistic in making these types of donations, there's also a tax advantage to it."
The trust shields the sale proceeds from capital-gains and estate taxes, and the trust income generates annual tax deductions for the client.
First National receives fee income - Ms. Puplava would not say how much - for administering such trusts. They make up only a small percentage of its assets under management, she said, but more art shows and other events should help that figure grow.
By the end of last year the bank's wealth management department, set up about two years ago, was managing $800 million of assets, said Bob Blakemore, the executive vice president who runs it. By the end of this year that figure should be $900 million, he said. The department's fee income jumped 50% last year, to $3.6 million, and should hit $5 million this year, he said.
During last week's art show, First National officials also informed attendees on how they could donate art directly to museums. Ms. Puplava said the bank would get no compensation from such donations but thinks giving the advice will encourage clients to consider it for estate planning.
"If we build deeper relationships with customers, the fee income will come later," she said.
First National may also give presentations at a prominent Scottsdale jewelry store about the benefits of using jewelry in estate planning, she said. It may also put on a fashion show to reach affluent people who frequent such events.
