A St. Louis-area bank founded to lend to businesses is now looking to compete in personal trust administration.
Enterprise Bank in Clayton, Mo., which focuses on privately held businesses, hopes that offering investment management and trust will help it retain customers who sell their companies.
The bank has $379 million of assets; its Enterprise Trust, which was chartered in October, has $2.5 million under management and $8 million in custody.
To get a head start in managing trust assets, the 10-year-old bank expanded a joint venture with a local financial planning firm, Moneta Group Inc. Moneta, which oversees $2 billion of investment assets for its clients, created a registered investment adviser, Argent Capital Management, to work with Enterprise Trust.
For start-ups and small trust departments, outsourcing has become a way to offer portfolio management comparable to what established investment companies provide. "It's going to become more prevalent," said Paul L. Vogel, president of Enterprise Trust.
It is hard to hire talented money managers for a new shop, Mr. Vogel said, and if you hire someone less skilled "you're going to sacrifice some performance just to call someone an employee."
Argent manages $25 million of assets. Its chairman, Steven L. Finerty, said it is seeking to pick up clients from its parent, Moneta; from Enterprise Bank; and independently.
One investment manager that had gotten a boost from the outsourcing trend is Wright Investors' Service.
Wright expanded from its Bridgeport, Conn., base by opening offices in Chicago in 1996 and Jackson, Miss., late last year to find more trust departments in need of outside investment management.
It now has 73, including old and new trust departments at banks and thrifts, up from 55 at the beginning of the year. Two more are expected to sign on by yearend, said Andrew Delgrego, president of the trust investment services group.
Many of the new clients are start-ups positioned to capture business that would have otherwise gone to entrenched trust departments that have been absorbed by mergers and acquisitions.
"Local community banks that provided trust service for 100 years got bought and are asking people to call '800' numbers to Philadelphia, Pittsburgh, or New York, and they don't like that," Mr. Delgrego said.
That dynamic, coupled with new entrants such as thrifts to the business, is helping Wright rebound. Trust assets under management, which had dropped from more than $1 billion in the early 1990s to a low of $700 million, have now jumped to $1.3 billion. The firm manages $4.3 billion for its clients, which include pension plans.
Mr. Vogel of Enterprise Bank said that though centralization of trust services makes sense for larger operations, he would like to put trust officers in all three of his bank's branches. He and his staff of four all work in the Clayton branch.
"You really need to go where your clients are," he said. "Until that strategy is costing more than I am making, I think that's the way to proceed."