Compass Bancshares Inc. says it plans to aggressively expand its wealth management business in the Southwest by acquiring investment management firms in cities where it has developed a banking presence.
William C. Helms, who was hired last month to run the $23.7 billion-asset Birmingham, Ala., banking company’s investment unit, said it wants to develop an asset management presence in Denver, Phoenix, Dallas, Houston, and Austin, Tex.
“We are looking at buying firms with significant reputations in markets that we can leverage off of to cross-sell banking products and private banking products,” he said.
Mr. Helms said Compass has opened 60 bank branches in the Southwest, including 20 in Texas, since the beginning of last year. The strategy is to gain revenue through noninterest-bearing ac-counts, he said, and this means buying insurance agencies and money managers in specific cities.
The company manages $4 billion of assets, and most of these are in Houston, Dallas, and Birmingham. Compass gets 36% of its revenue from noninterest income. Mr. Helms said it plans to increase this share to 40% by the end of this year.
The company’s strategy is to buy money managers with different investment styles in different regions, Mr. Helms said, and to let them work independently to leverage their reputations and build Compass’ asset management unit.
Mr. Helms, a former executive in Bank of America’s wealth management unit, said the difference between Compass’ strategy and those of other midsize banking companies is that it is developing an asset management presence in markets where it already has a banking presence. Baltimore’s Mercantile Bancshares and Los Angeles’ City National Bank have in the past month taken the reverse approach, buying money managers outside their banking footprint in an effort to expand.
The Compass strategy has worked in Houston, Mr. Helms said, where it made three asset management deals in the past 15 years after developing a strong branch network in the region. To develop a private banking presence in Houston, it bought Weslyan Bancshares Inc. in February 1988, River Oaks Bancshares in March 1991, and Post Oak Bank in April 1996.
“We believe there is a niche from $1 million to $20 million that is underserved by the banking industry,” Mr. Helms said. “We believe that we have an opportunity to provide additional services to our clients and we can provide these services better than anyone else can.”
He added, “Too many banks have forced a sales culture on clients that are just better off doing what they are doing. [Every bank] has the same strategy out there. The key is to be nimble and execute. … We want to find acquisitions that are digestible and can be effectively merged into the bank.”
Kevin Daniels, an asset management analyst in Boston, said, “Every bank believes they are a beachhead away from dominating a region. It takes more than just one acquisition to control a region. It takes time.”
Mr. Helms, 51, was hired a month ago from Trustmark Corp., a Jackson, Miss., banking company, where he ran the investment management unit. Before joining Trustmark last September, he had worked at Bank of America and its predecessors for 16 years and helped develop its private banking and private-client groups. He rose to co-president of the Charlotte company’s private bank before being ousted in April 2001 along with other private banking executives during a restructuring.
Mr. Helms will make his headquarters in Houston and will be responsible for Compass’ wealth management and private banking services groups. He began his career in the national corporate division of Texas Commerce Bank in Houston.
