Bryn Mawr Trust Co.'s wealth management business has taken some hits in the past year, but executives of the Pennsylvania bank say their ambitious goals for the unit remain within reach.
The bank, a unit of Bryn Mawr Bank Corp., lost a big institutional asset management client late last year, and a slumping stock market trimmed its wealth assets under management. As a result, first-quarter wealth management revenue rose less than 1% from a year earlier, to $3.3 million.
But the goal that Bryn Mawr set last year — reaching $5 billion of assets under management within five years — is still feasible, said chairman and chief executive Ted Peters. Moreover, the bank is counting on wealth management fees to help it boost noninterest income — currently just under 40% of income — to 50% within a few years, he said.
Jason O'Donnell, an analyst with the investment firm Boenning & Scattergood Inc., said "it would be fairly unusual for a bank to do that" but "Bryn Mawr is one that could achieve it." Noninterest income such as wealth management fees can bring banks earnings stability, he said.
The bank has historically had a large asset management and administration business because it focuses on trust services. Its wealth assets under management or administration were $2.05 billion at midyear, however, down from $2.1 billion a year earlier, because of investment performance. Those assets are more than twice Bryn Mawr's banking assets, which averaged about $950 million in the first quarter.
Bryn Mawr last year ranked sixth in fiduciary services among 213 such providers in its size category, according to the Michael White-LPL Financial Community Bank Investment Program Report. It logged $13.1 million of such revenue. And its investment program income of almost $1.1 million ranked it 18th out of 298 banks of the same size that reported such income, according to the report.
But Bryn Mawr wants to build its wealth business even more. Early last year it hired Matthew Waschull, previously a managing director at Wilmington Trust Co., to do just that as head of the wealth management operation.
Within a few months the company created a private bank to unite services including deposits, loans, and wealth management for its wealthiest customers. The private bank now has about 1,000 customers, Mr. Waschull said. It started with Bryn Mawr clients, and several months ago surpassed its goal of increasing the client base by 15%, Mr. Peters said.
"We're kind of knocking the cover off the ball," he said. "And we don't spend any advertising money on it; it's totally a referral business."
Mr. Waschull has recently bolstered the wealth management unit with 10 new hires, including a financial planning executive as well as a sixth attorney within the fiduciary services group. Last fall the bank announced a partnership with Federated Investors Inc., of Pittsburgh, to offer its first nonproprietary separately managed account strategy. It is searching for additional partners, and could select another one this year. Mr. Peters said, "It's a priority."
Bryn Mawr will "hopefully" get the go-ahead this year to create a limited-purpose trust company in Delaware, Mr. Waschull said. That would allow it to offer trust services under that state's favorable tax laws.
"Our application is filed, we know how we are going to staff the office, and we've picked out the space," he said.
Among the encouraging signs for the wealth management business is a 50% increase in brokerage sales in 2007, Mr. Waschull said. And brokerage fees increased $30,000 in the first quarter of 2008 from a year earlier, while brokerage assets climbed to $87.8 million from $77.6 million.
That helped offset the loss of asset management subadvisory services for Community Banks Inc. of Harrisburg, Pa., which Bryn Mawr lost when Susquehanna Bancshares Inc. of Lititz, Pa., bought Community Banks. That business, subadvising $423 million of assets, brought in revenue of about $450,000 a year for Bryn Mawr, Mr. Peters said.
Mr. O'Donnell said that Bryn Mawr's noninterest income could grow to 42% or 43% of its total next year but that it may need to make an acquisition to push that number to 50%.
When Mr. Waschull was asked if the bank was scouting buyout targets, he would only said that its board of directors is "always reviewing potential opportunities."
