Community Banks Inc. wants to significantly expand the trust and wealth management services in its Pennsylvania footprint as it looks to eclipse $1 billion of assets under management.
The Harrisburg, Pa., bank holding company said it expects to more than double its $300 million of assets under management once it closes the deal announced this week for Sentry Trust Co. The Chambersburg, Pa., trust company has $350 million under management and would be merged into the trust and asset management division of CommunityBanks, the holding company’s bank subsidiary.
Anthony N. Leo, a divisional executive vice president at Community Banks Inc., said in an interview Wednesday that expanding its trust and wealth management services has been part of the company’s strategic plan since 2004.
The company, which operates 73 banking offices in central and eastern Pennsylvania and northern Maryland, plans to keep making acquisitions and employing organic strategies in order to expand further in Pennsylvania, he said.
“Trust services is clearly a scale business, and as you exceed $1 billion in assets under management, those economies are better realized,” Mr. Leo said. “Our goal is to grow as far and as fast as we can grow. From our perspective, being north of $1 billion will allow us to leverage the platform. We want to grow and exceed $1 billion.”
Mr. Leo said the bank would keep looking for acquisitions similar to the Sentry deal. The trust unit of Omega Financial Corp. is in a section of the Community Banks footprint where it had no presence, he said.
Community Banks plans to open a retail banking office in Chambersburg early next year, he said. “This acquisition really complements our entry into this community, which is a dynamic and growing transportation and distribution center in south-central Pennsylvania,” he added.
Though the bank will keep looking for deals in Pennsylvania and Maryland, viable purchases could be scarce, Mr. Leo said.
“The opportunities in this region are relatively limited,” he said. “There are just not that many independent trust compan[ies] and trust departments of other organizations or independent wealth managers that can potentially fit with us. The opportunities in this geographic area are there, but they are just relatively limited.”
Analysts said banks and other financial services companies must reach a threshold of at least $1 billion in order to develop their own asset management businesses. This could be even more difficult in footprints that fall outside of large metropolitan areas, they said.
“The south-central region of Pennsylvania has a rather limited group of trust providers to acquire in order to develop business,” said Burton Greenwald, an analyst at BJ Greenwald Associates in Philadelphia. “Firms have to rely on organic growth and their own customer base in order to really develop business in this region.”
Mr. Leo said Community Banks has adopted an aggressive organic growth program. Its asset management arm, CommunityBanks Trust and Asset Management, offers insurance, investment products, trust and asset management, and title and settlement services. The bank also offers traditional trust services through Bryn Mawr Trust Co., he said.
“Our trust and management division is small relative to the size of the bank, so we think that there are tremendous opportunities through our banking customers to develop and deepen relationships,” he said.
The bank has developed asset management coverage throughout its footprint, Mr. Leo said, but certain areas, such as its base of operations in Harrisburg, could use an augmentation of offerings.
“We want to grow, and we want to grow quickly,” he said. “But we want to be sensible and find the best places in our footprint to develop new business.”
