Bryn Mawr Trust Co. in Pennsylvania already brings in about one-third of its income from wealth management, but it aims to do better.
A familiar name among the Philadelphia area's wealthy people for more than a century, the $830 million-asset Bryn Mawr recently launched several initiatives that it hopes will attract more customers from its existing markets and beyond.
It has begun offering separately managed accounts with a choice of expert asset managers from outside the company, and it is creating a limited-purpose trust company in Delaware so it can offer trust services under that state's favorable laws.
The goal is to double its $2.5 billion of assets under management within five years, said Ted Peters, the chairman and chief executive officer of the bank and its parent Bryn Mawr Bank Corp.
Like other margin-squeezed banks, Bryn Mawr is seeking steady sources of noninterest income, "and the wealth area is clearly one of those," Mr. Peters said.
Bryn Mawr's first-quarter net interest margin of 4.65% was better than those of most of its peers but still down 57 basis points from a year earlier. Excluding a gain from the sale of a former branch site, Bryn Mawr reported first-quarter earnings of $3.1 million, or 36 cents a share, virtually unchanged from a year earlier.
It is hardly the only Pennsylvania banking company looking to compensate for slow loan growth and shrinking margins by expanding in wealth management.
But several analysts said Bryn Mawr has an advantage over competing banks, because wealth management is already a key strength.
Its wealth management assets, which totaled $1.55 billion in 2002, have grown steadily in the past five years, at a compounded annual rate of 12.8%. Its fees from the business had a compounded annual growth rate of 9% during the same period, rising from $8.8 million in 2002 to $12.4 million last year.
Still, it has lost some assets in the past whenever a key executive left, said Wilson Smith, an analyst at Boenning & Scattergood Inc. The move this year to open architecture … so that customers can opt for investment managers from outside of Bryn Mawr … should help, Mr. Smith said.
Open architecture is the best way for most financial institutions to expand assets and build relationships, he said.
Bryn Mawr hired Matthew G. Waschull in January to be its executive vice president for wealth management, and he is in charge of revamping that business. He oversees 49 employees in six business lines: fiduciary services, retirement services, investment management, brokerage, custody, and tax services.
Mr. Waschull, who was a managing director at Wilmington Trust Co., said he is working on several initiatives to enhance service, including the plan to start up the Delaware limited-purpose trust company. "Having just spent over a decade building a private wealth management business in Delaware, I have significant expertise in that area," he said.
He also said he aims to deepen Bryn Mawr's penetration of the fiduciary services business. Being able to offer these services under Delaware law will help attract customers because the law there is "extremely favorable" for creating and funding trusts, he said.
Bryn Mawr has a team of five lawyers on its staff, giving it an advantage over some competitors, because law firms feel more assured about working with a company that has such legal expertise in-house, Mr. Waschull said.
His group targets people with more than $1 million of investable assets, not including their homes. He said demographic data indicates that Philadelphia and its suburbs have a growing concentration of affluent people who fit that category.
Wealth management is just one of several growth initiatives underway at Bryn Mawr. Last month the company created a private banking group, headed by Walter Smedley, a managing director.
Though Bryn Mawr always provided those services, "we've never done it in a structured, holistic manner," Mr. Peters said. "It was one department did this, and another department did that."
Also as part of the effort to diversify income, Bryn Mawr started its own leasing company in September. Mr. Peters said it generated more than $20 million of business in its first five months and continues to grow by about $4 million monthly.
All the growth initiatives are expected to be dilutive to earnings this year. But David Darst, an analyst at First Horizon National Corp.'s FTN Midwest Securities Corp., said Bryn Mawr's long-term outlook is good.
Though he acknowledged that competition in the Philadelphia area is intense for both wealth management and bank customers, Mr. Darst said Bryn Mawr is "well entrenched," giving it an advantage in winning business there.
He said the company continues to be "firmly a high-performing institution," despite margin compression. Its return on equity rose 20 basis points last year, to 15.7%, and its return on assets rose 6 basis points, to 1.72%
After Mr. Peters joined the company in January 2001, he started to change the tone of its marketing to attract young entrepreneurs. He said he wants the Bryn Mawr brand to be perceived as modern in both its investment philosophy and use of technology.
A high profile in the national news is an important part of its strategy. A public relations firm helps get Bryn Mawr executives on national television newscasts and quoted in such publications as the Wall Street Journal and Barron's.
Mr. Peters credited the strategy with improving customer retention and attracting new business.
"Part of our branding is to show that we really have national expertise in the investment and trust area and that we're not just a local player," he said.
