Deserving banks are finally earning recognition for their trust departments and should, say officers at Centura Banks, Inc., exploit their expertise.
Analysts have rated trust performance at Centura, a $3.6 billion-asset banking company in Rocky Mount, N.C., among the best turned in by U.S. banks over the last five years.
To be sure, small banks tend to stay within niches other than private banking. But John Bell Jr., Centura's director of trust and investments, says all banks should at least pursue the fee opportunities of financial services -- if not through a trust department.
|Out of the Woodwork'
In the case of centura, however, trust has been the keystone of an effort to build nonbank business.
"Banks are coming out of the woodwork," says Mr. Bell. "Since the early 1980s, it's been tough to compete with Merrill Lynch and the other investment houses, but our goal is building that side of the business.
"We very definitely want to remain independent, and we plan to develop a range of services so we can compete with anyone in the marketplace."
Centura Banks was formed through the 1990 merger of Planters National Bank and Peoples Bank and Trust, both of Rocky Mount. At that point, the size of the newly joined trust departments was about $450 million. It has since grown to $625 million in marketable securities.
Centura's Carolinas Fund, which ubuys the stocks of corporations in the Carolinas, was down 12.5% at yearend 1990, but jumped 47% in 1992, and 23.6% through the third quarter of 1993 -- for a five-year average of 19.3%.
Its equity growth fund for individuals has averaged 17.5% growth over the last five years, and the pension fund for employee retirement plans has posted an 18.2% average return over the same period.
Carliste Whitlock, senior vice president, trust investments, attributes the strong performance of the funds to the joint efforts of three portfolio managers.
"Based on our relatively small size, we are not able to employ analysts, as such, but, rather seek to identify at the major and regional brokerage firms the brightest analysts in various industries.
"I'd say we're primarily growth stock investors, but we won't exclude a compelling situation or companies with major capital. But the |big cap' names are in the minority -- and they're value plays, not growth plays.
American Express, Ford Motor Co. and, recently, Disney and Boeing are among the stocks of large firms bought by Centura. Smaller stocks in Centura's portfolio are, among others, Nucor, Stewart & Stevenson, Unifi, Office Depot, and Cabot.
The average volatility of the issues bought by Centura is "slightly above the market bet for the S&P 500," Mr. Whitlock says.