Offitbank Seeks a Partner To Enhance Trust Services

A year after acquiring a bank charter, Offitbank is looking to aligh with another institution to offer trust services.

The New York-based bank, which previously was an investment management firm, said such a partnership would help it satisfy client requests. A relationship with another trust division would allow Offitbank to "tap into all their internal capabilities," said Morris Offit, head of the bank that bears his name.

Mr. Offit called trust services the bank's next priority, but he did not say whether discussions had been held with other institutions.

Alliances with financial institutions are essential to the bank's niche strategy. As overseas financial institutions look to the lucrative U.S. market for affluent customers, Offitbank is hoping to team up with a foreign institution to share business lines other than trust or even partial ownership, Mr. Offit said. The Pitcairn Financial Management Group, which owns a private bank in Jenkintown, Pa., is one of Offitbank's investors, with a $500,000 stake.

Focus on Money Management

Mr. Offit aims to provide investment management services to clients, but not a full range of banking services. The bank's 52 employees focus entirely on managing money.

Offitbank takes no deposits and refers customers to other institutions for loans. "There are so many deposit-taking institutions out there," said Mr. Offit, who views commercial banks as supplementary service providers rather than as competitors.

Since it converted to a bank, Offitbank has grown to $3 billion in assets under management from $2.2 billion, and its client base has expanded to 200 from 170. Customers are primarily individuals and families with at least $10 million to invest, but include corporations, universities, and religious and cultural groups.

Mr. Offit, who is also chairman of Johns Hopkins University in Baltimore, said converting to a bank charter has allowed the firm to increase its foreign exchange business and to work in consort with foreign-owned institutions.

Entree to Markets

"Certainly, it's given us, I think, a lot of entree to business potential globally that we may not have seen before," Mr. Offit said of the bank charter.

Offitbank can now buy foreign currency instead of relying on other banks to execute orders. About a third of the bank's products and investments are global, and about 10% of its client base is from Europe or Asia.

The bank, which is capitalized at $10 million, concentrates on low-risk Treasuries and mortgage-backed bonds.

"The strategy of investment management in the '90s is right on," said David Ross Palmer, a private banking consultant and managing director of New York-based David Ross Palmer & Associates. "That's where the major focus of client needs and the profit opportunities are for private banking in the '90s."

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