Trust managers at feisty Carolina First Corp., with just about $1.3 billion of assets, fashion themselves as world-beaters with their brand-new 401(k) product. They may be on to something.
The concept is simple. The Greenville, S.C., bank offers everything - but nothing of its own.
Through Capital Consulting Group Inc. in Charlotte, N.C., which the bank hired a few months ago as its investment manager, Carolina First picks mutual funds from nearly every company that sells them.
Core offerings for its two-month-old Carolina Compass Portfolios consist of five portfolios - ranging from conservative to aggressive - with mutual funds from a host of vendors, including Pimco, Neuberger & Berman, Crabbe Huson, and Morgan Stanley.
Carolina First has one model consisting of all Fidelity funds, a name that provides a certain "comfort level" for new customers, explains Andrew M. Crane, executive vice president in charge of the trust department.
The bank's trust managers tout the fact that they have no proprietary product and use no in-house funds. With no company product to promote, they can be totally objective in their recommendations.
"The big guys want to put you in their box," says Mr. Crane. "We don't have a box. We will build a box for you."
Though still in its infancy, the bank's 401(k) division has signed up five corporate customers, ranging from a 25-employee start-up to a 450- employee plan with several million dollars in assets.
Mr. Crane and his cohorts say that 30 more clients, representing about $100 million of assets, could come aboard within the next six months. By the year 2000, they think they can reach the $1 billion-asset threshold for the trust department, solely through its 401(k) plan service. This would be more than a threefold increase from its current size.
Ronald L. Bush, vice president of Access Research Inc. in Windsor, Conn., called the potentially rapid buildup a plausible goal for a smaller bank. "The products and services are out there now to facilitate a smaller bank with a small trust operation to offer a pretty competitive product," he said. "These components are easily accessible today."
Carolina First's trust department initially will focus on its traditional markets in South Carolina, but it intends to branch into neighboring states within the year. Eventually - perhaps as early as mid- 1996 - it wants to go nationwide as a distributor for its product line.
Jane C. Brissette, who joined the trust department in May after a career with NationsBank Corp., sees herself traveling around the country, helping community banks establish a service like Carolina First's.
Start of notes
End of notes
Ms. Brissette says Carolina First's 401(k) custom-fitting concept is what makes its Carolina Compass product so rewarding to sell. She says she knows she's selling her client the best of what's out there, rather than the best of what the bank has to offer.
"At NationsBank I was selling a limited menu at a time when I needed a niche product," says Ms. Brissette, who was NationsBank's vice president for institutional trust sales in South Carolina for five years. "I wanted to be able to look at my customer the next day and say, 'I sold you the best product' and know that I had."
And Carolina First believes it offers something else its bigger competitors can't - personal service. As a community bank, it specializes in relationship banking. Now, through its 47 branches statewide, the bank can extend those relationships into its 401(k) business.
"We want to know our customers, go to church with them, and build their barn back up when it burns down," says Mr. Crane.
So far, this approach has been the primary appeal for the department's new customers.
Down the road in Columbia, for example, Pella Window and Door Co. signed up with Carolina First last spring even before the bank's 401(k) product had been fully completed. The company, which does about $8 million in annual sales, had been using Wausau Insurance Co. for its pension plan service, and before that, NationsBank.
Thomas H. Page, president and owner of Pella Window, says he took his business, about $600,000 of assets, away from NationsBank because he wasn't getting the attention or returns he expected. Wausau's investments performed well, but he felt like an unknown there.
"I like the idea of being a big fish in a small pond," Mr. Page says. "This has increased my visibility at Carolina First."
This accessibility has made the service easier to understand and to use than what his 40 employees are used to, he says. He also likes the idea of having all of his financial needs handled by one company.
Potter-Shackelford Construction Co. in Greenville is considering signing on with Carolina First for similar reasons. It has used the same out-of- state bank for its pension business for more than 15 years, but now thinks a local vendor makes more sense.
"With a smaller bank you feel like you have a personality," says C. Bruce Smith, vice president of Potter-Shackelford.
The smaller-company market, with under 100 employees and around $1 million of 401(k) funds to be managed, has been largely ignored by most companies offering a 401(k) service, Carolina First believes. Smaller firms see only standard products, with little flexibility, Mr. Crane says.
Carolina First intends to fill the vacuum, recognizing that most companies in the state, as well as the nation, fall into the small-size category.
The bank's trust division managers believe they can make a go of it because of who they are - high-energy, entrepreneurial refugees from the big banks, primarily NationsBank. Six of the top people in the department, in fact, came from the Charlotte giant or from banks that it acquired.
"This is not a product for another bank to get into unless it's willing to hire a couple of gunslingers," says Ms. Brissette, who clearly plays that role. "And gunslingers don't come cheap."
To lure the high performers from the big banks and perhaps eventually from Wall Street, Carolina First has instituted an unconventional incentive-based salary structure for several of its departments. It's possible for a trust manager to pull in $200,000 or more, including bonus, in a good year, Ms. Brissette says.
Though Mr. Crane has 26 years of commercial and retail banking experience, most recently in charge of private banking for NationsBank in Nashville, he has no trust background - which was just the way Carolina First wanted it.
"We needed to break the paradigm," says Mr. Crane. "We didn't want to build a traditional trust department, because if we had, we never would have been able to compete with the Wachovias."